Income Tax Department Launches Nationwide Probe Into Suspicious Foreign Remittances

The Income Tax Department has initiated a nationwide investigation into potentially suspicious foreign remittances, following intelligence and data analysis on significant overseas transfers of foreign currency. This probe targets entities suspected of sending unusually large sums to foreign destinations over the past three years.

Around 394 entities, including 117 in states bordering India, and 36 professionals, have been scrutinized. Investigations are ongoing. The department claims the focus is on shell companies, their operators, and those issuing Form 15CB certificates.

The probe follows ground intelligence and data analysis suggesting massive remittances by entities with little or no documented business activity. Subsequent investigations revealed that many involved in these transfers were either non-filers or had minimal income-tax filings. The financial profiles of these entities often seemed mismatched with the size of their overseas transfers, and the purported purposes, like freight payments and consulting services, did not align with their reported activities.

Some entities were also found not to be operating from the addresses listed in their records. Data also showed a small number of professionals issued a large number of Form 15CB certificates, while the remitted funds ended up with a smaller group of entities. The department has expressed concern over the adequacy of due diligence before issuing Form 15CB.

The tax authority has urged Chartered Accountants to diligently verify the underlying transactions and supporting facts before certifying foreign remittances. Taxpayers receiving notices should compile source-of-funds documents, previous income tax returns, and relevant Form 15CB/CA or Form 145/146 paperwork, and respond within the given timeframe.