CBDT is trying to complete this investigation early so that other investigative agencies can speed up their investigation. The Central Board of Direct Taxes (CBDT) is currently investigating on these cases in the Foreign Exchange Management Act, as soon as the tax department begins filing criminal cases CBDT will have the basis to convert these cases into the Money Laundering Act.
CBDT after completing the investigation may file prosecution charges against these entities, to help other agencies to take action against those entities.
About 426 Indian companies with offshore accounts were under income tax department scrutiny in 2016. Over Rs, 1,000 crores of hidden income had been discovered by the department in Panama Papers alone, listing many famous personalities including KP Singh from DLF, Amitabh Bachhan, Aishwarya Rai, Sameer Gehlaut.
- Around 714 companies and individuals had been identified in the case of Paradise Papers that came to light in 2017
- Former state minister of Jharkhand Jayant Sinha is also named in this case who is a member of the Hazaribagh parliament in Jharkhand state.
Appleby, A Bermuda-based legal services provider and Asiaciti based in Singapore, disclosed much of the data on Paradise Papers which facilitated the establishment of low or zero tax rates on offshore firms.
Currently, CBDT is investigating these cases within the context of the Foreign Exchange Management Act. Once the tax department begins filing prosecution cases we have the basis to transform our case under the Money Laundering Prevention Act.
These cases are currently being investigated by the income tax department under the 2015 Black Money Act. Under this Act, if any person who is unable to justify the source of the funds in question will be required to pay a penalty of nearly 300 percent of the applicable tax liability on it.
These cases are not subject to domestic inquiry; the department is entirely dependent on foreign agencies for information. For the investigator as well as for the agency, therefore, setting a deadline for completing the investigation is not desirable.
Panama and the Paradise Papers mentioned only company names. Finding data from foreign agencies requires proper information that is not available to the department, thus slowing the investigation. Sometimes the department’s own machinery strikes down the request because the department has set unfulfilled SOPs.
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