CBDT Vs Black Money

Initiatives taken by the Investigation Division of Central Board of Direct Taxes for unearthing black money :

CBDT Track Tax Evaders CBDT Vs Black Money

It is not only time to cheer up 6 Olympic medals won by Team India. It is time to cheer up Central Board of Direct Taxes for their determination to unearth black money.

Of course they may have a tough time ahead. But the recent action by CBDT against some of the MNCs shows they are really serious about their plan. Not just press releases.

Here are the latest updates of Initiatives taken by the Investigation Division of Central Board of Direct Taxes for unearthing black money and Amendments made through the Finance Act, 2012 - another Initiative by CBDT.

I. The Government of India has commissioned a study on unaccounted income/ wealth both inside and outside the country bringing out the nature of activities engendering money laundering and its ramifications on national security.

The study is being conducted by three national institutes viz.

  1. National Council of Applied Economic Research (NCAER),

  2. National Institute of Public Finance & Policy (NIPFP); and

  3. National Institute of Financial Management (NIFM),

with inputs from various ministries/departments. The study will be completed by the end of 2012.

II. A Directorate of Criminal Investigation (DCI) has been created as an attached office of the Central Board of Direct Taxes to track financial transactions relating to illegal / criminal activities, including illicit cross-border transactions, from the direct tax angle and bring such activities to justice.

Creation of DCI is also in line with FATF recommendations to exclusively deal with tax crimes, including direct taxes.

III. CBDT is coordinating with the Election Commission of India (ECI) for controlling political expenditure and verification of affidavits filed by candidates of political parties.

IV. In order to strengthen the existing laws relating to black money, the Government constituted a Committee under the Chairman, CBDT to examine the measures to strengthen the existing legal and administrative framework to deal with the menace of generation of black money through illegal means including, inter alia,

  1. Declaring wealth generated illegally as national asset;

  2. Enacting / amending laws to confiscate and recover such assets; and

  3. Providing for exemplary punishment against its perpetrators.

The Committee submitted its report to the Government on 29th March 2012. The report has been sent to different Ministries / Organisations and State Governments for necessary action.

V. Information received under DTAA – Information from Germany & France has been investigated. Tax evasion of more than Rs.600 crore detected and taxes of Rs.200 crore has already been realized. Prosecution proceedings have been launched in 17 cases pertaining to LGT Bank accounts.

Assessment proceedings have been initiated in cases relating to HSBC accounts. Further information from outside the country is awaited in several cases.

Information received from different countries under the automatic exchange of information arrangement is appropriately utilized for the purpose of investigation and assessment.

CBDT Track Tax Evaders Track Tax Evaders

VI. Search & Seizure, Surveys – In the last three financial years, the Investigation wing of the CBDT has detected undisclosed income of over Rs.32,000 crore besides seizing undisclosed assets valued at over Rs.2,600 crore.

The Income Tax Department (ITD) has further detected undisclosed income of Rs.17,325 crore in surveys conducted at business premises.

VII. Tax Prosecutions – Out of 1,548 prosecution cases disposed of during the last three financial years, the ITD has obtained conviction in 97 cases besides fiscal compounding in 771 cases of admitted tax evasion, leading to a success rate of 56.1 percent.


Amendments made through the Finance Act, 2012 to deal with the Menace of Black Money:

Some of the amendments made through the Finance Act, 2012 to deal with the menace of Black Money and to deter the generation and use of unaccounted money are summarized as under:

  1. Introduction of General Anti Avoidance Rules to counter Aggressive Tax Avoidance Schemes.

  2. Introduction of compulsory reporting requirement in case of assets held abroad.

  3. Allowing for reopening of assessment upto 16 years in relation to assets held abroad.

  4. Tax collection at source on purchase in cash of bullion or jewellery in certain cases.

  5. Tax collection at source on trading in coal, lignite and iron ore.

  6. Increasing the onus of proof on closely held companies for funds received from shareholders as well as taxing share premium in excess of fair market value.

  7. Taxation of unexplained money, credits, investments, expenditures etc., at the highest rate of 30 per cent irrespective of the slab of income.

  8. Introduction of a reporting mechanism for assets and bank accounts in a foreign country.




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