Centre orders multi-agency investigation into Pandora Papers leak

I-T dept may evoke Black Money Act; ED to examine FEMA violation

The Centre has ordered a multi-agency probe into the offshore secrets of wealthy elites unravelled in Pandora Papers—the latest leak of offshore financial records.  The complex ownership structures and ringfencing of wealth in the records will be scrutinised by a group headed by the chairman of the Central Board of Direct Taxes (CBDT).

The government will work along with foreign jurisdictions to obtain information on individuals named in the list. 

The list of around 300 Indians in the Pandora Papers includes Anil Ambani, Vinod Adani, Niira Radia, Sachin Tendulkar, Jackie Shroff and Satish Sharma among others. Many of those featured in the list have denied any wrongdoing.

The relevant agencies would undertake investigation in these cases and appropriate action would be taken as per law, the Finance Ministry said on Monday. With a view to ensure effective investigation in these cases, the government will also proactively engage with foreign jurisdictions for obtaining information in respect of relevant taxpayers/entities, the ministry said. 

Officials in the ministry said that the Income-Tax Department has already initiated a probe from the tax evasion perspective. The Enforcement Directorate is likely to take up the matter to check flouting of foreign exchange laws.  

UNDER SCANNER

• I-T dept initiates probe to check tax filing mismatches
• May issue notice seeking explanati­on in the case of undisclosed assets
• Complex ownership structures to be scrutinised by a group headed by CBDT chairman
• Govt will work with foreign jurisdictions to obtain information on individuals named in the list
• As on Sept 15, undisclosed credit of Rs 20,352 crore was detected in investigations related to Panama and Paradise Papers

Since wealth creation overseas is not a crime, it would be assessed whether the tax returns filed by the named entities match with their wealth outside, besides  any violation of FEMA on a case to case basis, a senior government official said.

In case of mismatch in tax filing, the department may seek explanation through a notice, he explained.

The official also added that since foreign assets are involved, agencies could evoke Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. It’s meant to check  black money, undisclosed foreign assets and income by imposing suitable tax and penalty. In earlier instances of such leaks such as Panama Papers and Paradise Papers, the Black Money Act was evoked. 

As on September 15, undisclosed credit of around Rs 20,352 crore was detected in the investigations related to Panama and Paradise Papers.

The finance ministry pointed out that it’s part of an inter-governmental group that ensures collaboration and experience sharing to effectively address tax risks associated with such leaks.

On Sunday, the International Consortium of International Journalists (ICIJ) exposed offshore secrets of wealthy elites from more than 200 countries and territories. This was based on a leak of confidential records of 14 offshore service providers which offer professional services to wealthy individuals and corporations seeking to incorporate shell companies, trusts, foundations and other entities in low or no-tax jurisdictions.