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Government of India
Department of Revenue
Ministry of Finance
Central Board of Direct Taxes
New Delhi, 12th January, 2021
PRESS RELEASE
Income Tax Department conducts searches in Hyderabad
The Income Tax Department carried out a search and seizure action on 07.01.2021 based on investigation in income tax evasion using bogus sub- contractors/shell entities along with enquiries made relating to entities flagged for providing fake Input Tax credit.
The search was carried out on a prominent civil contractor working in Telangana, generating cash through the use of bogus sub-contracts and bogus billers. The search has been conducted on 19 premises across Hyderabad. The search has also covered a network of individuals running the racket of entry operation and generation of huge cash through fake billing.
Several shell entities/firms were used by the searched entry operators for layering of unaccounted money and cash withdrawals against fake bills issued wherein bogus Input Tax Credit (ITC) was passed on. Statements of such entry operators, their dummy partners/employees, the cash handlers of the beneficiaries have also been recorded, clearly validating the entire money trail.
The search has led to seizure of evidences of bogus sub-contracts being given through intermediaries operating shell entities. Evidence of the use of this modus to generate huge unaccounted cash was found along with details of the entire network of the entry operators, intermediaries, cash handlers, beneficiaries and the firms and companies involved. Forensic analysis of digital data including pen drive, retrieved mails has given clinching evidences in this regard.
So far, documents evidencing accommodation entries of more than Rs. 160 crore have already been found and seized. The assessee company has also admitted the same in its statement.
Further investigations are in progress.
(Surabhi Ahluwalia)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT
Government of India
Department of Revenue
Ministry of Finance
Central Board of Direct Taxes
New Delhi, 12th January, 2021
PRESS RELEASE
CBDT launches e-portal for filing complaints regarding tax evasion/Benami
Properties/Foreign Undisclosed Assets
Taking another step towards e-governance and encouraging participation of citizen as stakeholders in curbing tax evasion, the Central Board of Direct Taxes has launched an automated dedicated e-portal on the e-filing website of the Department to
receive and process complaints of tax evasion, foreign undisclosed assets as well as complaints regarding benami properties.
The public can now file a Tax Evasion Petition through a link on the e-filing website of the Department https://www.incometaxindiaefiling.gov.in/ under the head “File complaint of tax evasion/undisclosed foreign asset/ benami property”. The facility allows for filing of complaints by persons who are existing PAN/Aadhaar holders as well as for persons having no PAN /Aadhaar. After an OTP based validation process (mobile and/or email), the complainant can file complaints in respect of violations of the Income-tax Act, 1961, Black Money (Undisclosed Foreign Assets and Income) Imposition of Tax Act, 1961 and Prevention of Benami Transactions Act (as amended) in three separate forms designed for the purpose.
Upon successful filing of the complaint, the Department will allot a unique number to each complaint and the complainant would be able to view the status of the complaint on the Department’s website. This e-portal is yet another initiative of the Income Tax Department to bring about enhanced ease of interaction with the Department, while strengthening its resolve towards e-governance.
(Surabhi Ahluwalia)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT
Government of India
Department of Revenue
Ministry of Finance
Central Board of Direct Taxes
New Delhi, 12th January, 2021
PRESS RELEASE
Income Tax Department conducts searches in Assam
The Income Tax Department carried out search and survey action on 08/01/2021 in the cases of renowned Doctors/Medical professionals of Assam. The search and survey actions were carried out at 29 locations in Guwahati, Nalbari and Dibrugarh in Assam.
The main allegations against the groups were that they had grossly understated their medical receipts both in their individual capacities and the turnovers in their hospitals/nursing homes, diagnostic centres and pharmaceutical business. During the course of the search & seizure operation, it has been established that the groups engage in out-of-books transactions. Many documents and cash receipt slips were found which highlight the hugely suppressed turnover in the case of medical professionals and their hospitals/clinics. The quantum of suppressed turnover detected in few cases alone appears to be upward of Rs. 50-60 crore. Further, the net profit shown in the medical/pharma business is also extremely low.
Total cash of approximately Rs. 7.54 crore was seized by the Department from various residential and business premises of the medical professionals and their allied business, with an amount of Rs. 1.76 crore cash seizure from a distant town of Nalbari in Assam. The cash seized was found to be unexplained in the hands of various hospitals and medical professionals. Papers of huge parcels of land/immovable assets purchased in cash were also seized. Hand written notes/diaries of investments made in immovable assets in cash of around Rs. 20 crore were also seized. The cash generated was found to be diverted in building of new hospitals, reconstruction of nursing homes and acquisition of undisclosed assets.
During the course of the search action, it was found that huge amount of Kachha Cash receipts and transaction were made outside the regular books of accounts, In one such case, it was found that an amount close to Rs. 20 crore was undisclosed.
Further, daily receipts were found to be digitally maintained in Excel / hard disk at Medical clinics that had not been recorded in the books of accounts. In the case of another assessee, the annual receipts were approximately Rs. 15-20 crore, while in the audited books, he had shown the gross receipt of around Rs.5 crore only. Hence, it is apparent that in the case of this particular assessee, suppression for each year should be around Rs.10-15 crore.
In all, unexplained investment/receipts/expenses exceeding Rs. 100 crore has been unearthed due to the search & seizure action.
Further investigations are in progress.
(Surabhi Ahluwalia)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT
Ministry of Commerce & Industry
Dated: 07 JAN 2021
The U.S. administration had announced initiation of investigation under section 301 of the U.S. Trade Act, 1974 against the taxation on digital services adopted or under consideration by countries, including the Equalisation Levy applied by India. Other counties under investigation include Italy, Turkey, and United Kingdom.
With respect to India, the focus of the investigation was on the 2% Equalisation Levy (EL) levied by India on e-commerce supply of services. The U.S. investigation included whether the EL discriminated against the U.S. companies, was applied retrospectively, and diverged from U.S or international tax norms due to its applicability on entities not resident in India.
In this regard, the U.S. requested for consultations, and India submitted its comments to the USTR on 15 July 2020, participated in the bilateral consultation held on 5 Nov 2020, emphasizing that the EL is not discriminatory; but on the contrary seeks to ensure a level-playing field with respect to e-commerce activities undertaken by entities resident in India, and those that are not resident in India, or do not have a permanent establishment in India. It was also clarified that the EL was applied only prospectively, and has no extra-territorial application, since it is based on sales occurring in the territory of India through digital means.
India based e-commerce operators are already subject to taxes in India for revenue generated from Indian market. However, in the absence of the EL, non-resident e-commerce operators (not having any Permanent Establishment in India but significant economic presence) are not required to pay taxes in respect of the consideration received in the e-commerce supply or services made in the Indian market. The EL levied at 2% is applicable on non-¬resident e-commerce operator, not having a permanent establishment in India. The threshold for this levy is Rs. 2 crores, which is very moderate and applies equally to all e-commerce operators across the globe having business in India. The levy does not discriminate against any U.S. companies, as it applies equally to all non-resident e-commerce operators, irrespective of their country of residence.
There is no retrospective element as the levy was enacted before the 1st day of April, 2020 which is the effective date of the levy. It does not have extra territorial application as it applies only on the revenue generated from India. In addition, EL was one of the methods suggested by 2015 OECD/G20 Report on Action 1 of BEPS Project which was aimed at tackling the taxation challenges arising out of digitization of the economy.
The purpose of the Equalization Levy is to ensure fair competition, reasonableness and exercise the ability of governments to tax businesses that have a close nexus with the Indian market through their digital operations.
It is a recognition of the principle that in a digital world, a seller can engage in business transactions without any physical presence, and governments have a legitimate right to tax such transactions.
The office of USTR on 6th Jan 2021 released its findings on the section 301 investigation into India's digital Services tax (DST) and concluded that India's DST -the equalisation levy - is discriminatory and restricts US commerce. Similar determinations were also made against Italy and Turkey on 6th Jan, 2021, itself.
The Government of India will examine the determination / decision notified by the U.S. in this regard, and would take appropriate action keeping in view the overall interest of the nation.
Government of India
Department of Revenue
Ministry of Finance
Central Board of Direct Taxes
New Delhi, 08th January, 2021
PRESS RELEASE
Income Tax Department conducts searches in Kolkata
The Income Tax Department carried out search and seizure action on three real estate and stock broking groups of Kolkata on 05.01.2021. The search operation was conducted based on the available data in the departmental database, analysis of their financial statements, on market intelligence and field enquiries.
The search action has resulted in unearthing of incriminating evidences revealing various shell entities being used for raising bogus share capital/unsecured loans. Evidences of out of the books cash transactions have also been found. Further, significant amount of un-booked revenue on account of sale of flats was detected. During the course of search proceedings, as a result of enquiries conducted, it has been established that the persons of the group have used paper/shell companies to route back their own unaccounted money. A total concealment of income amounting to Rs. 365 crore has been detected so far. The assessees have made an admission of undisclosed income amounting to Rs. 111 crore.
The search action has resulted in seizure of unaccounted cash of Rs. 3.02 crore and jewellery worth Rs. 72 lakh.
Further investigations are in progress.
(Surabhi Ahluwalia)
Commissioner of Income Tax
(Media & Technical Policy)
Official Spokesperson, CBDT