The income tax (IT) department is on a quest to enhance the skills of the assessing officers (AO) to detect black money laundered through shell companies. As an effort towards this goal, the Direct Taxes Regional Training Institutes (DTRTI) have asked AOs to scrutinise the accounts’ books, income tax returns (ITR) for the current liabilities, advances, and loans, considering them as the sources of tax evasion.
Instead of taking the usual approach of checking the penny stocks and cash deposits, a senior IT official suggested the AOs expand their thought process. He said that these companies take advantage of ITR to deviate the investigators.
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The officer mentioned that a company must not be overlooked based on the profit and loss account showing a small income. He advised the AOs to carefully validate the current liabilities, loans and advances that usually go out of notice. Good coordination during the investigation can bring many ‘unexplained credit’ to light which can result in detecting tax evasion.
In addition, the IT department has realised the need to improve the quality of assessment results in the accuracy of assessments. Similarly, it reduces litigations and takes ramps up the revenue generation.
The officer shared that a time lapse of a month has been declared between the search, seizure operations and the conclusion of assessments. This step is taken as a measure to reduce the delay, he said.