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| Taxmen turn to computers for detecting frauds |
| Press Trust of India / New Delhi Jun 10, 2009, 15:58 IST |
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In the wake of recurrent corporate frauds, the income tax department has decided to use a new computer-assisted tool for detecting suspicious entries in the accounts of taxpayers.
One of the functions of the the new tool would be 'fraud detection', wherein it would find out whether purchases and expenses have been inflated through fictitious entries.
The Departmment initiatlly plans to install the new tool, named Computer Assisted Investigation Tool (CAIT), at 25 locations amd extend it to other locations at a later date.
In a request for proposal (RFP) from potential vendors, the Income Tax Department has said that the software application would be used for "investigation and analysis of computerised accounts of tax payers and identification of suspicious features in such accounts."
At present, the department's scrutiny of books of accounts and the subsidiary records is mostly manual, although most of the taxpayers have switched to computer-based method of maintaining their books.
The Income Tax Department said that most of its global counterparts, especially those in developed countries, are using software tools for analysis of computerised accounts and accordingly it has also decided to computerise all its functions in line with the best international practices.
"One of the components of this roadmap is to develop software-based audit tool to analyse accounts to assist in scrutiny assessment process," the department said, adding that the new tool would help its officers in conducting "audit and investigation on a number of parameters."
While technology has helped organise bulky account books, it has also come in handy for tax evaders who use it to generate fictitious bills as was the case in Satyam Computer.
In the first phase, the new tool would be installed on the PCs of each of its Assessing Officers, while in the second phase the audit tool would be moved to a centralised database.
Among its various functions, CAIT would identify the duplication of values, check the sequencing and detect gaps, summarise fields and would also have a find or search option.
About its 'fraud detection' function, the I-T Department said in the RFP that it often "gets lists of purchasers who give bogus or fictitious entries for others to inflate the purcases and expenditures.
The software should have a facility for the user to query the accounting data containing the purchase information against the bogus or fictitious purchasers based on the name, address, phone number, VAT or sales Tax number etc."
Besides, the software would also be used for "identification of anomalies and exceptions in accounting data."
The Department plans to first test the software at its premises in Hyderabad, following which it would be installed at other centres.
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