Government sets timelines for black money probe, makes sweeping changes in existing laws
NEW DELHI: The Union government has changed the rules to bring in timelines for expeditious prosecution of cases of undisclosed foreign income and assets and black money stashed abroad.
As per the new rules, once a probe is initiated in an undisclosed foreign income or asset, the relevant foreign authorities should be approached under available tax treaties/legal instruments within 21 days.
A follow-up reference to the foreign authorities, if any, is now required to be made within 15 days. The assessing officer is also required to provide to the CBDT within 15 days any additional information or clarification about the reference made to a foreign authority.
The changes in rules governing conduct of officials are aimed at closing loopholes and efficient and expeditious implementation of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, or the ‘BM Act’.
The government had noticed that in spite of specific information, investigations dragged on endlessly, thereby defeating the very purpose of the Act. Therefore, it decided to bring in timelines.
The new rules state that the assessing officer should issue a show-cause notice to the assessee within 30 days of receipt of information from all sources, including foreign authorities, and completion of further enquiries.
The assessing officer is then required to put up within 30 days a draft assessment order for approval by his concerned senior officer.
The senior officer is required to respond to this within 15 days. In case the senior officer suggests further enquiry, it should be completed by the assessing officer within the time period specified by his senior.
If no further enquiry is required, the assessing officer is required to pass the assessment order within seven days of receiving approval from his senior.
After the assessment order is passed and approved, the same is required to be submitted to the head of the department within 30 days.
And once the head of the department accords sanction for filing of prosecution complaint, the assessing officer is required to file such a complaint before the competent court within 15 days of receipt of sanction.
The assessing officer is required to then inform the details of the case to the Enforcement Directorate within 15 days of filing such a case.
In order to cut the time period in dealing with black money cases, a scheme of concurrent jurisdiction was also introduced whereby the investigating officer (IO) was given the dual charge of assessing officer.
Under this scheme, the CBDT empowered the IOs to act as assessing officers to expeditiously deal with the cases.
The decision enabled the IOs of the income tax department to undertake assessment, prosecution and other related functions under the BM Act.
This was done as most of the cases of undisclosed foreign income/assets were detected by officers of the investigating directorates.
These officers would then hand over the cases after completing their investigation to assessing officers for further action. The assessing officers then went over the entire case afresh.
And the cases dragged on. With the scheme of concurrent jurisdiction, the cases are expected to conclude quickly.
With the new changes in rules, many prominent cases, including those revealed in the Pandora Papers, are likely to reach a conclusion.