Individuals have the freedom to self assess income and pay taxes. That doesn't mean you can avoid declaring a particular stream of income to evade taxes and expect to get away with it.
Tax evasion is an illegal activity which includes not filing income tax returns altogether or misrepresenting the tax payable amount. It is different from tax avoidance, which is a legal activity because tax laws are used to reduce the tax amount payable.
Income tax returns are scrutinized only if income tax authorities feel that there is tax evasion. If they conclude that you have deliberately concealed income to reduce tax liability, you will be penalized.
What does scrutiny of income mean?
Scrutiny essentially means evaluating the income tax return for its authenticity i.e. the income tax assessing officer will go through the returns filed and various other documents such as bank statement, Form 16 among other things to check if there is any mismatch in tax liability assessed by the individual and theRead More »from What happens if you are caught evading tax?