The Central Board of Direct Taxes (CBDT) has widened its probe against Indians with respect to the information leaked by the ‘Pandora Papers’. On 3rd October, the International Consortium of International Journalists (ICIJ) obtained confidential documents that expose tax haven secrecy.
Notices can be Sent for 10 Years. As, there may have been cases where persons have quickly shut their accounts and overseas outfits after getting a wind of the leak, a senior tax official said. Such person would say ‘no’, when you simply ask him whether he has one. Technically, he is right. So, these additional questions are aimed to make the exercise more comprehensive,” the official added.
Accordingly, beside disclosing their ownership in existing foreign assets, they are being told to disclose details of bank accounts which no longer exist and were closed long ago, firms that were dissolved, directorships in overseas firms and tax residency status over the past 16 years.
Further, they are also being asked to identify the ‘service providers’ in the tax havens, according to the first set of summons issued a week ago by the tax department under section 131 (1a) of the I-T Act which empowers tax officials to make enquiries if it suspects non-disclosure of earnings.
Once the identities of service providers are known, the department can seek additional information by approaching authorities in various jurisdictions under the exchange of information pact or double-taxation avoidance agreement
However, several Indians who have been named in the Pandora leak have claimed their overseas investments and interests in trusts and companies abroad are legitimate transactions carried out for business and family requirements. While, the officials have to convert the leaked information into evidence in building its case.