Income Tax Dept trains officers to detect tax evasion in shell companies

Rahul Wadke Mumbai | Updated on May 28, 2019 Published on May 28, 2019

Assessing Officers will scrutinise the books of accounts of shell firms as they use IT returns to confuse investigators   -  AndreyPopov

The Income Tax Department continues to focus and enhance the skills of Assessing Officers (AO) to detect black money laundered through shell companies.

At the Direct Taxes Regional Training Institutes, AOs have been asked to look closely at books of accounts and income tax returns for current liabilities, loans and advances, which could be used for tax evasion.

Tax evasion

A senior IT officer said that the department has asked the AOs to expand their outlook and not treat shell companies as mere money laundering entities that use penny stock route or have received cash deposit during demonetisation. The AOs will need to look closely as such companies use IT returns to confuse investigators.

The officer said the department has reiterated that AOs handling assessment of such companies must not perceive that a case is small based on Profit and Loss Account, which shows a very small amount as its income. Such AOs miss huge amounts of current liabilities, loans and advances that go without scrutiny in such companies.

In such cases, coordinated investigation of the transactions of all entities by various AOs would result in the detection of “unexplained credit” in the shell company books, which will help in effectively detecting tax evasions, said the officer.

The department has also stressed on improving quality of assessment orders for accuracy in tax assessments, reducing litigation and enhancing revenue of the Department.

“Just like the concept of the quality circle is ingrained in the minds of industrial managers on a regular basis. Quality assessment is being stressed as a mantra for the AOs,” said the officer.

The officer pointed out that in order to reduce the time gap between the conduct of search and seizure operations by the IT officers and conclusion of tax assessments, a time limit of only one month has been set. This is being communicated to all the personnel.

Published on May 28, 2019
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