The Income-Tax Department on Tuesday launched a nationwide exercise targeting suspicious foreign remittances made by unscrupulous elements and shell entities in the last three years, which covers approximately 394 entities, including 117 entities located in India’s land-border states, the Central Board of Direct Taxes (CBDT) said.
Preliminary ground verification revealed that the entities making these remittances were either non-filers or were filing income-tax returns showing very small turnovers,” it said. Further ground-level intelligence revealed that these entities were not actually operating from the addresses declared by them, it said. “A nationwide network of entities engaged in remitting funds abroad was uncovered during a search operation conducted on a group of fictitious charitable trusts involved in providing accommodation entries against bogus donations/contributions. They also did not appear to match the stated purpose of the remittances, such as payment for freight, import of software, or import of consulting services. Form 15CB is issued by a qualified chartered accountant (CA). Form 15CB requires the accountant certifying a foreign remittance to verify its taxability with reference to the books of account and other relevant documents.
The Form 15CB is required for payments made to non-resident, not being a company, or to a foreign company which are taxable and if the payment exceeds ₹ 5 lakh during financial year, according to the law.
Based on ground intelligence and analysis of data on outward foreign remittances, the Income-Tax Department identified several suspicious entities that remitted large amounts of foreign exchange over the last three years, it said in a statement. The turnovers had no apparent correlation with the large amounts of money being remitted abroad, according to CBDT. “Further analysis of the data also revealed that a large number of Form 15CB certificates were issued by a relatively small group of professionals,” it said. CBDT said the remitted funds were also received by a clustered group of entities. “However, the findings raise concerns about whether adequate due diligence was carried out by the Accountants before issuing these certificates,” the statement said.
