Report No. 29
Appendix 13
Points as to Evasion and Avoidance Discussed in The Report of The Taxation Enquiry Commission (1953-54)
Page etc. of the Report |
Gist |
(1) |
(2) |
Report, Vol. II, pp. 189 and 190, paras, 1 to 6 (contain a general discussion on the subject), as to income-tax. | Evasion i.e. deliberate distortion of facts after the liability is incurred and avoidance i.e. so arranging one's affairs before the liability is incurred so as to prevent its occurrence or to reduce the incidence of the tax have been discussed. Avoidance, though legal, was regarded as anti-social. It was suggested, that the Department should keep a vigilant eye on inroads into revenue by avoidance, so that prompt remedial action by legislation is taken by Government. As regards evasion, it was stated that it could be tackled effectively only by improving and strengthening the enforcement machinery, the existing arrangements were reviewed under the following heads:-
(b) exchange of information collected from the records of existing assessees available in the Income-tax Department; (c) Collection and collation of information obtaining from outside sources (including informers);
|
Report, Vol. II, p. 202, paras. 36 and 37 (Income-tax). | Recommendations were made to increase the maximum limit of penalty to three times the amount of tax evaded and to provide that abetment or instigation to evasion should be made an offence punishable as the main offence. It was also observed, that prosecutions under sections 51 and 52 of the Income-tax Act, 1922 were seldom resorted to in actual practice. |
Report, Vol. II, p. 320, para, 11 (Customs duties). | Certain recommendations were made as to the law relating to smuggling. |
Report, Vol. II, pp. 353-361, paras 142 to 197. | Summaries the various recommendations relating to evasion and avoidance. Most of these concern administrative matters or topics. |
Report, Vol. Ill, pp. 72, 73, 74, paras 19, 20, 21 (Sales Tax). | Discusses the reasons for evasion and avoidance of sales-tax. (See also pp. 49 and 65, para. 5). At p. 72, para. 19, the practice of showing the sales-tax separately in the cash memo is also discussed as a source of evasion. At p. 74, the following categories of methods of evasion are listed:-
|
Report, Vol. III, p. 99, para. 12 (Stamp duties). | Observes that since stamp duty is levied on the instrument, it is theoretically possible that the party may refrain from executing the instrument, but the scope of such evasion is very limited, as an instrument would later be required as legal proof. But undervaluing the transaction is a common method of evasion. Another common method was to show a type of instrument which was not in conformity with actual facts (e.g. pro-note instead of a bond). Practice of blank transfers was mentioned as an example of "avoidance". |