Tax payers with minor procedural default will not be prosecuted: Sitharaman

New Delhi, Sep 14: In a big relief to the small taxpayers, Finance Minister Nirmala Sitharaman on Saturday said small offences do not need to go through the prosecution rank.

"Whether or not an income tax error has to be prosecuted will be decided on the basis of the quantum and severity of the offence. Minor errors will be exempt from prosecution,'' the FM said.

She said prosecutions in defaults below Rs 25 lakh will be initiated only after approval from a collegium comprising two senior officials. "It is not that just because someone wants to start prosecution that he/she will be allowed to do so," Nirmala Sitharaman said.

She also said that a system of electronic numbering of tax department communication has been implemented that will remove discretion at the level of officers.

The scheme for assessing tax returns electronically without any personal contact between officials and taxpayers notified on Friday allows personal representation in specific circumstances such as appeals against the assessment.

Recently, the income tax department has come under fire over charges of tax terrorism following Cafe Coffee Day founder V G Siddartha's suicide note in which he pointed to harassment by tax authorities.

Siddhartha said that he felt harassed when the department attached "our shares on two separate occasions to block our Mindtree deal and then taking a position of our Coffee Day shares, although revised returns have been filed by us".

"This was very unfair and has led to a serious liquidity crunch," he said.

Refuting the charges, the sources said the provisional attachment made by the department was undertaken to protect the "interests of revenue" and was based on credible evidence gathered in the search or raid action.

"The department has acted as per provisions of the Income Tax Act," one of the sources told PTI.

They said Siddhartha fetched Rs 3,200 crore from the sale of Mindtree shares, but paid only Rs 46 crore out of total Rs 300 crore minimum alternate tax (MAT) payable on the deal.

They claimed that the signature of Siddhartha on the letter being circulated on the social media under his name "does not match" with the record available with the department.

Siddhartha, the son-in-law of former Karnataka chief minister and BJP leader S M Krishna, was last seen near a bridge across the Netravati river in the Kotepura area in Dakshina Kannada district on Monday night. Authorities have launched a massive search for him.