I-T dept sends notices to firms to enquire about their foreign assets

New Delhi, November 28, 2022

The Income Tax department's intelligence unit has sent notices to at least eight firms in Mumbai and has also asked for information on their directors

The Income Tax (I-T) Department's Foreign Asset Investigation Unit (FAIU) has reportedly sent notices to local companies, including some listed entities enquiring about the hidden assets overseas. The bid to hunt for black money by FAIU was earlier limited only to individuals but has now expanded to companies, a report by the Economic Times (ET) said.

The intelligence unit has sent notices to at least eight Mumbai firms and asked for information on their directors. Earlier, FAIU's enquiries were limited to residents' hidden assets, including their bank accounts and shareholding in foreign firms and trusts.

"But now, the FAIU is enquiring into payments by Indian companies to overseas persons and entities. Probably, they may have found cases where there were reasons to believe that the foreign recipients of the money were just intermediaries," a senior tax practitioner told ET.

Another tax expert said that such transactions are usually tracked by the Enforcement Directorate (ED), and it is currently unclear what aspects the FAIU will investigate. The cases will reportedly be investigated under the Black Money Act.

Under the current rules of the Black Money Act, which came into force in 2015, the authorities can question the assets acquired decades ago but have been discovered now. Unlike the I-T Act, which empowers the authorities to claim the tax on an undisclosed asset, the Black Money Act also allows them to investigate the acquisition.

FAIUs were created in all 14 investigation directorates of the tax department in 2020. They were responsible for probing international data leak cases like the Panama Papers.

[The Business Standard]