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Black money: SIT seeks probe unit, changes in DTAA

The report also recommends redefining “Beneficial Ownership”, which guides the ownership of trusts and corporate vehicles.

Written by Appu Esthose Suresh | New Delhi |
October 29, 2014 2:02:05 am

In its first report submitted to the Supreme Court, the Special Investigation Team (SIT) on black money has sought an investigation unit, with the Enforcement Directorate as the nodal co-ordinating agency.

The court-appointed SIT, headed by retired Supreme Court judges M B Shah and Arijit Pasayat, has made several recommendations like redrafting the Double Tax Avoidance Agreement (DTAA), audit by Comptroller and Auditor General (CAG) on suspicious exports and appointing officers to complete pending investigation in top 15 tax evasion cases.

In the HSBC Geneva account holders’ case, the SIT summoned all investigation-related information from the Income-Tax Department as well as the inspection report of the Reserve Bank of India on the bank’s activities in the financial year 2012.

As first reported by The Indian Express, the SIT has also suggested sweeping changes in various laws in connection with the money laundering.

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Most significant of all, the SIT wants DTAA, under which the Indian government receives information, to be rewritten. After the SIT recommendation, the Finance Ministry has asked Attorney General Mukul Rohatgi’s opinion on the matter.

The SIT also wants the Prevention of Money Laundering Act (PMLA) and Foreign Exchange Management Act (FEMA) amended to introduce seizure of value equivalent to the assets or funds stashed abroad. It has recommended including tax evasion as a predicate offence under the definition of PMLA, which attracts stringent punishment.

The report also recommends redefining “Beneficial Ownership”, which guides the ownership of trusts and corporate vehicles.


While critical of the lack of co-ordination between various enforcement agencies, the SIT has directed the Income-Tax Department to give access to 360 degree data profiling facility to Customs and Central Excise to detect tax evasion cases.

It has also put a time frame on both Income Tax and Central Board of Excise and Customs (CBEC) for completing cases. The CBEC has been asked to put three officers on job to complete top 15 cases pending with them, while Income-Tax Department has been asked to place officers to look at 8,080 pending cases and not transfer officers until they complete their assignments.

The Income-Tax Department has been directed to introduce a new column in its return forms for disclosing foreign bank accounts in past eight years and scrutiny of those years.

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First published on: 29-10-2014 at 02:02:05 am
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