Taxman may use official evidence from abroad to nail black money hoarders

Investigations into cases of Indians with alleged undisclosed foreign income and assets and whose names have appeared in leaks over offshore accounts may soon see a breakthrough.

Sources said 13 countries had provided information on actionable cases sought by the income tax department. The information reveals “incriminating material” against the persons named in these leaks. These countries include the British Virgin Islands, Jersey, the UAE, Switzerland, Luxembourg, the UK, Bahamas, the Isle of Man, Hong Kong and Singapore.

“Information received about persons named in the British Virgin Islands and Panama leaks match data furnished by foreign jurisdictions in at least 60-70 per cent actionable cases,” said an official privy to the development.

These persons were mostly from the film, steel and jewellery industries, he added.

Following the Panama leaks, the tax department had sought information in 147 actionable cases from 28 foreign jurisdictions. Of these, it has received complete information in 31 cases and is awaiting further inputs in 46 cases. Investigations had led to the detection of Rs 7.92 billion, said the official cited above.

Acting on the data received, tax sleuths have started sending notices and summonses to persons against whom they found incriminating evidence and have launched prosecution in 23 cases.

In the British Virgin Islands leaks, the tax department has received information in 281 cases from countries such as Singapore, Israel, Canada and the British Virgin Islands. These are among the 612 Indian residents named in the list exposed by the International Consortium of Investigative Journalists (ICIJ) in 2013. The consortium released information about thousands of secret companies, trusts and funds in offshore hideaways.

A multi-agency group set up by the government to probe the Paradise Papers, a recent leak containing 13.4 million confidential electronic documents relating to offshore investments, is also in the process of sending requests to foreign authorities in 106 cases about 714 Indians named in the data, according to figures released by the ICIJ.

“The response from foreign jurisdictions has been overwhelming. Earlier, the information was basic in nature, but now we are getting specific details of each case. This will help us reach out to those account-holders who have denied having ever opened accounts in tax havens,” said a tax official.

All these cases are being probed under the newly enacted Black Money Act, which has the strict provisions of 60 per cent tax on foreign assets and jail term of 10 years in case of wilful evasion.

However, a challenge that tax officials are facing is the information needs to be segregated because the identified persons have links in multiple jurisdictions. Besides, some names appear in more than one leak, according to another official.

Explaining the process, an official said the information received through foreign tax and tax research (a tax department division responsible for exchange of information) was subjected to preliminary filtering and processing. After verification, the tax department conducts searches and files prosecution accordingly.