Panama Papers:Officers asked to be specific in sending queries

With 'Panama Papers' showing British Virgin Islands as most-favoured location of Indians for offshore accounts, Income Tax Department has asked its field officers to be specific in their information requests to the authorities there and reply promptly to their queries.
Noting that a large number of information requests are pending with the British Virgin Islands (BVI) and the clarifications sought by them have not been provided in a timely manner, the Department said the replies must be given to them within 15 days to expedite the process.
The I-T Department on May 12 issued an internal guidance to officers on requests for exchange of information (EOI) made to BVI in order to achieve better outcome from the requests.

It has asked the officers not to opt for 'Request to refrain from notifying the taxpayer' in the proforma for sending EOI request.
A request to 'refrain from notifying' the taxpayer should not be made in a routine manner and such request should be made only if it is essential and can be justified on the basis of documentary evidences, the department said.
"The reason that the taxpayer concerned is likely to file an appeal against the supply of information would generally not be a valid reason for making such a request," it said.

Field officers, it said, should keep in mind that this option should not be exercised while seeking information that is not likely to be in possession of the BVI tax authorities, but instead is likely to be available only with the taxpayer.

"In such a situation, if the request to refrain from notifying the taxpayer is made, then the BVI authorities may not be able to approach the taxpayer to obtain the requested information," it said adding information like details of bank account, immovable property etc are generally not readily available with tax authorities.
Only under exceptional cases, a request can be made that the taxpayer/holder of information may not be so notified. This may be justified by stating that the information is of a very urgent nature and the process of prior notification to the taxpayer will delay supply of information and undermine the investigation, it said.

"Even though the EOI Cell of India has been making continuous efforts to improve the efficiency and efficacy of the information exchange process with BVI, a large number of deficiencies are being observed in the EOI requests sent by field officers," the guidance note said.
Commenting on the guidelines, Rakesh Nangia, Managing Partner, Nangia & Co, said, "Currently, the EoI request sent to BVI is vague and general in nature, which leads to the request being considered as having been made in a casual and perfunctory manner and hence do not receive adequate attention by the BVI authorities.
Adhia said: "Non declaration of undisclosed cash or

deposit in accounts under the Scheme will render such undisclosed income liable to tax, surcharge and cess totalling to 77.25 per cent of such income if it is declared in the income tax returns.
"In case the same is not shown in the return of income a further penalty of 10 per cent of tax shall also be levied followed by prosecution."
The government, he said, through the Financial Intelligence Unit (FIU) is getting data about every single deposit in bank account. Also, Income Tax, Enforcement Directorate and other investigative agencies are keeping a close watch on the information.
"We have information from FIU regarding how much deposits have been made in dormant account, (zero-balance) Jan Dhan, urban cooperative bank, how much repayment of loans have been made in cash, RTGS transfers, withdrawal and hence I-T department has been successful on raids," Adhia said.

With the help of professional agencies, a thorough analysis of all deposits that come till December 30 will be done to try and join all the dots, he said, adding that raids conducted so far are based on information analysis.
"Mere depositing of money in bank account does not make it white. People should not make the mistake of thinking cash deposited in bank is white," he said.
Till taxes are paid and full investigation is completed on the deposits that have been made in bank accounts, black cannot become white.
"We want people to come forward and declare on their own unaccounted cash/deposit. The moment all the deposits come by December 30 we will analyse the voluminous data that we get. We would scrutinise all the data in a non-intrusive manner so that the fear of 'Inspector Raj' is not there in the minds of people," he added.

To get information on money launderers, the tax department has created a special email address where anyone can provide information about them.
"People who have knowledge of money launderers can give direct information to us. We have created a email id: blackmoneyinfo@incometax.Gov.In (for the purpose)," he said.
Adhia said President Pranab Mukherjee last night gave his assent to the Taxation Laws (Second) Amendment Bill and the Taxation and Investment Regime for Pradhan Mantri Garib Kalyan Yojana, 2016 scheme will open tomorrow and end on March 31.
CBDT Chairman Sushil Chandra said tax department is keeping an eye on all suspicious activities.

"So the assessees should know that their deposits in bank accounts are being watched. We are examining whether it is explained money or not. Therefore, they should come very very clean under this scheme which is the last window available for anyone," he said.