In a move to detect black money through the shell companies, the income tax department has decided to focus and enhance the skills of Assessing Officers.
At the Direct Taxes Regional Training Institutes, AOs have been asked to look closely at books of accounts and income tax returns for current liabilities, loans and advances, which could be used for tax evasion.
According to a senior Income Tax Officer, the department has asked the AOs to expand their outlook and not treat shell companies as mere money laundering entities that use penny stock route or have received cash deposit during demonetisation. The AOs will need to look closely as such companies use IT returns to confuse investigators.
The training also focusing to improve the quality of assessment orders for accuracy in tax assessments which would ultimately reduce the tax disputes and litigations.
The officer said the department has reiterated that AOs handling assessment of such companies must not perceive that a case is small based on Profit and Loss Account, which shows a very small amount as its income. Such AOs miss huge amounts of current liabilities, loans and advances that go without scrutiny in such companies.
In such cases, coordinated investigation of the transactions of all entities by various AOs would result in the detection of “unexplained credit” in the shell company books, which will help in effectively detecting tax evasions, said the officer.
“Just like the concept of the quality circle is ingrained in the minds of industrial managers on a regular basis. Quality assessment is being stressed as a mantra for the AOs,” said the officer.
The officer pointed out that in order to reduce the time gap between the conduct of search and seizure operations by the IT officers and conclusion of tax assessments, a time limit of only one month has been set. This is being communicated to all the personnel.
