CBI, ED action may now follow I-T default probes
The officials said that the two agencies and the tax department have been successfully able to detect and act swiftly against crimes of financial nature in recent months because of the help they get from data analytics and mutual cooperation and coordination.Updated: Oct 22, 2019 04:41 IST
Trouble will now descend in threes for income tax defaulters with tax investigations coinciding or being followed by probes by the Enforcement Directorate and the Central Bureau of Investigation, with the three agencies coordinating among themselves as well as using the power of higher-order data analytics, two government officials said on condition of anonymity.
The idea is to identify major crimes behind tax cases, they added.
This doesn’t currently happen, one of the officials explained, which means that sometimes people get away lightly.
“Most of the violations under the income-tax law are compoundable and people used to get away easily by paying a penalty of 20% or so... serious crimes hidden behind tax violations can no longer remain hidden,” one of the officials cited above said.
The officials said that the two agencies and the tax department have been successfully able to detect and act swiftly against crimes of financial nature in recent months because of the help they get from data analytics and mutual cooperation and coordination.
“HDIL [Housing Development Infrastructure Limited] is one such case where data analytics played a significant role and the ED could effectively act against the accused,’’ the first official said.
The official was referring to the alleged fraud involving the Punjab and Maharashtra Co-operative (PMC) Bank. The PMC Bank allegedly created over 21,000 fictitious accounts to hide loans given to the bankrupt realty firm HDIL. The Reserve Bank of India last month took over the PMC Bank’s functioning and initiated a forensic audit besides capping withdrawals. HDIL and its directors, Rakesh Kumar Wadhawan and Sarang Wadhawan, are accused in the fraud case.
The official cited above said that gone are the days when agencies worked in silos. “Now they share information.”
The revenue department is constantly using technology to reduce the compliance burden on the honest taxpayers, but at the same time, it is also using the technology to nab wilful defaulters, who earlier used to defraud the system with impunity, the officials said. As a result, in about 10 days, the I-T department alone has detected about a half-a-dozen serious cases of tax evasion and fraud, they added.
On Friday, the I-T Department searched the premises of a prominent business group in Hyderabad having an interest in infrastructure, irrigation, hydrocarbons, and power sectors, according to the income tax department. Besides evidence of large-scale bogus expenses, over-invoicing of purchases and sub-contract expenses, the department also detected that the group was indulging in illegal payments through hawala channels, according to I-T department.
Naturally, the data will come handy for other agencies like ED and CBI, the officials said without disclosing the name of the firm. “It is the resolve of the government not to trouble honest taxpayers and law-abiding citizens. But, at the same time, it is also the duty of the government not to spare any criminal, irrespective of his clout,” the first official quoted above said.
The officials said that data analytics is used by agencies to detect serious crimes, including terror funding, smuggling of drugs and money laundering and it is not against minor lapses by ordinary people in taxation-related matters.
A documentation identification number (DIN) system was activated on October 1. Every I-T related communication now has a DIN. Any communication without DIN would now be treated as invalid. This is aimed at serving honest taxpayers better, the officials said.
The government has also introduced a faceless e-assessment system for greater efficiency, transparency, and accountability in tax assessment processes by eliminating any physical interface between the taxpayers and officers.
Under the system, taxpayers receive notices on their registered email IDs with real-time alerts via SMSes on their registered mobile number, specifying the issues for which their cases have been selected for scrutiny. The replies can be sent to the tax authorities through email via the National e-Assessment Centre. “All these facilities are meant for scrupulous taxpayers. More tax-related reforms are expected shortly. But there will be no respite for criminals who try to con the system as there is an absolute synergy among agencies, which are vigilant because of data analytics,” the second official said.