CBDT Directs Various Assessing Officers to Finalize the Assessments for all Actionable Cases, whose names are appearing in the HSBC List – Second Report of SIT on Black Money Released

Press Information Bureau 
Government of India
Ministry of Finance

16:33 IST

Relevant Portions of the Second Report of the
Special Investigation Team (SIT) on Black Money Released; On the Directions of
SIT, CBDT Directs Various Assessing Officers to Finalize the Assessments for
all Actionable Cases (427), whose names are appearing in the HSBC List Received
by the Department 

Placed below are the relevant portions of the Second Report of the Special
Investigation Team (SIT) on Black Money which was recently submitted by the SIT
to the Hon’ble Supreme Court:


I.                   In response to the directions issued by the SIT,
CBDT has directed various Assessing Officers to finalize the assessments for
all actionable cases (427), whose names are appearing in the HSBC list received
by the Department.


As per the information received from France, there are in all 628
persons/entities (except in 2 cases where the same names have appeared twice).
Out of these 628 persons/entities, amounts/balances are shown against 339
persons and no amounts/ balances are shown against 289 persons/entities. In
respect of the latter category also, further investigations and assessments are
being taken to logical end.


of the said 628 persons, 201 are either non–residents or non–traceable, leaving
427 persons’ cases as actionable cases.


The amount involved in these cases as per details available in the information received,
is about Rs.4,479 crores approximately ($ converted @ Rs.45).
Out of these,Department has finalized assessment of 79 assessees (involving
more than 300 assessments). An amount of Rs.2,926 crores has
been brought to tax towards the undisclosed balances in the accounts relating
to these persons. For the said amount, these assessees have been levied tax and
interest at the appropriate rates. Penalty proceedings under Section 271 (1)(c)
of the Income Tax Act, 1961 (I.T. Act) have been initiated in 46 cases. Such
penalties have been levied in 3 cases so far. With regard to the other
assessees, proceedings are pending.


Further, prosecutions have been initiated in 6 cases u/s. 276C (1) of
the Income Tax (I.T.) Act for willful attempt to evade taxes and in 5
cases, proceedings have been initiated u/s. 276D of the I.T. Act on
account of willful failure to furnish information in response to the notices
issued by the Income Tax Department.

Cause Notices for filing prosecution have been issued in 10 more cases and further action would be taken at the

In other cases, necessary action is being expedited and substantial progress is
expected in coming months. 


II.                Apart from HSBC list, further actions taken by
various agencies on the basis of directions given by SIT:-


1.      Directorate of Revenue Intelligence:––


a)      Details have been furnished in respect of 31
cases of iron ore export cases.


In 11 cases, the concerned parties have admitted
the undervaluation and before issuance of show cause notices, paid Rs.116.73
crores. Further action would
be taken, in accordance with law.

   In 10 cases, show cause notices have been issued. Preparation
of show cause notice is in progress after completion of investigation in other


b)      In respect of other categories of trades,
investigation is pending in 33 cases. In some cases, references have been made
to Financial Intelligence Unit – India (FIU–IND), ED and CBDT.According to
the agency, the total amount involved could be Rs. 14957.95 crores.


2.      Directorate of Enforcement:––


a)      From the details furnished by Directorate of
Enforcement in relation to mining cases, on the basis of previous illegal
mining of iron ore reports relating to Orissa, Goa and Karnataka, action has
been taken. In one case of Orissa, accused persons were taken into custody by
the Enforcement Directorate and properties worth more than Rs. 400
crores have already been identified and are under process of attachment.
Regarding other cases, the efforts are on to get the data from the Director of
Intelligence Bureau and State Government.

b)     In respect of Karnataka, 3 attachment orders
have been passed attaching deposits in bank worth Rs.54.84 crores, properties
(Rs.37 crores) and shares (Rs.904.13 crores) and the orders have been confirmed by the
adjudicating authority.

c)      Further efforts have been made to ascertain
whether any other proceeds of crime exist so that they can be provisionally
attached. In respect of Goa and Jharkhand, the preliminary scrutiny and
investigation is in progress.

d)     It has been pointed out that because of stay
order passed by the Hon’ble Kolkata High Court, the Directorate is facing
difficulty in taking coercive action in Ponzi/chit fund scheme cases.

e)     In respect of certain other cases, prosecution
complaints have been filed. In case of one group case in Jharkhand,
provisional attachment orders attaching properties worth Rs. 452.43 crores were
passed and adjudicating authority has confirmed attachment of properties worth
Rs. 263.73 crores.

f)       5 Letters Rogatories (LRs) have been issued by
the PMLA Court. Replies to 4 LRs are pending while 1 LR has been returned and
effort is being made to issue fresh LR.

g)     In another mining case in Karnataka, provisional
attachment for Rs.884.13 crores have been issued and confirmed by the adjudicating
authority. Appeals are pending.

h)     In respect of another group cases of Andhra
Pradesh, provisional attachment orders for Rs.1093.10 crores have been
confirmed by the adjudicating authority. It is directed that necessary
steps be taken immediately for realization of the amounts involved.



In respect of most of the above noted
cases, the CBDT has reported about the actions taken by the assessing officers.




1.      Suggestion made by Financial Action Task Force
(FATF) on TBML in its report, as quoted above, that Data Analysis &
Research for Trade Transparency System adopted by USA requires to be adopted
and accepted, as it would control over/under invoicing to some extent. There
should be institutional mechanism through a dedicated set up which examines
mismatch between export/import data with corresponding import/export data of
other countries on at least a quarterly, if not a monthly basis.


2.        It is established since years that
over invoicing or under invoicing is known method for stashing black money
outside the country. Main question is how to control this malady. If there is
proper vigilance to a large extent by the Customs Department, mis–invoicing can
be controlled because, now–a–days, price of various goods/machineries is known
in the international markets. For this, data is also published and is available
on computer at any point of time. Hence, it was suggested that in a Bill of
Export/shipping Bills, an entry should be included, namely, what is the
international market price of the goods/machineries which were sought to be
exported. The said suggestion is under consideration and is likely to be
implemented within short time.


3.       Further, it is of utmost necessity to curb
the creation of fake/bogus bills. One important step which can be taken to curb
this menace is to make declaring of PAN number mandatory for all sales, where
payment is in cash or through bank, above a value of Rs. One lakh. The
purchaser would also be under obligation to ensure that the invoices he gets
have the PAN number of the seller.


Further, considering the
fact that at present, purchase or sale of goods/services by cash is rampant,
which undoubtedly utilizes/generates unaccounted money in the society. For this
purpose, a suitable rule is required to be brought under I.T. Rule 114 B made
under Section 139 A (5) of the IT Act. By such amendment, purchaser is required
to disclose his identity either by PAN number or UID (Aadhar card) or any other
centrally recognized documents of identity.


Transactions relating to
purchase and sale of goods, provision of services of any nature where the
payment/consideration is Rs. One lakh or above, either by cash or cheque, may
be covered under this rule.


4.      It is suggested that for regulating the possession
and transportation of cash, particularly putting a limitation on cash holdings
for private use and including provisions for confiscation of cash held beyond
prescribed limits, provision in the Act should be made. It is to be stated that
a number of European countries bar any cash transaction above a particular
limit. This can be done in India too. Again, while implementing the
suggestions, to ensure that small transactions, which make a bulk of common
man’s daily transactions, are not affected and for that, a threshold limit
could be kept.


for holding of cash/currency notes also, there should be a limit, by
prescribing a reasonable threshold, may be Rs.10 lacs or Rs.15 lacs. This would
control holding of unaccounted money to a large extent. This would also control
transfer of unaccounted cash from one destination to other, which at present is
rampant, may be by Angadias or by other means.


5.      The aforesaid suggestion is also in conformity
with the observations in the case of Rajendran Chingaravelu vs. UoI, in CA
No.7914 of 2009; ORDER DATED November 24, 2009 (320 ITR 1)) by the Hon’ble
Supreme Court. Therein, it had been observed that “The nation is
facing terrorist threats. Transportation of large sums of money is associated
with distribution of funds for terrorist activities, illegal pay offs, etc.
There is also rampant circulation of unaccounted black money destroying the
economy of the country.


is known to all concerned and, therefore, suggestion made above, be implemented.


6.      Financial Action Task Force (FATF) on Money
laundering recommends “tax crimes” to be made a predicate offence so that
action can be taken under Prevention of Money Laundering Act, 2002. There are
more than 25 countries in the world which have made “tax crimes” as a predicate
offence. The Government needs to seriously examine the issue and take steps to
make “tax crimes” as a predicate offence. To prevent any hardship to salaried
or small tax payer, a high threshold of say, more than Rs.50 lakh of tax
evasion could be considered as being a predicate offence.


7.      Foreign Exchange Management Act, 1999 (FEMA)
provides for confiscation of any property held abroad, if found to be held in
violation of Section 4 of the Act. For various reasons, it is difficult to
proceed against property held abroad. To strengthen the provisions, S. 13 and
S. 37 need to be amended to provide for seizure and confiscation of property of
equivalent value within the country, if it is held that property held abroad is
in violation of Section 4 of FEMA.


8.      FIU is uniquely positioned as the national
center for receiving, analyzing and disseminating information related to
suspected cases of money laundering. Its unique architecture connects it to the
entire financial sector on one hand to law enforcement authorities and on the
other through an electronic network that makes it possible for information to
flow freely in a secure environment. Further, FIU is also connected to the
other FIUs of the world through the Egmont Secure Web which makes it possible
to access information in foreign jurisdictions. This unique architecture can be
harnessed to exchange actionable intelligence on proceeds of crime. Some
recommended measures are as follows:-


a.      FIU should be given access to law enforcement
information (i.e. information about perpetrators of crime) that can be shared
with the reporting entities to locate proceeds of crime laundered in the
financial system. This will be in line with the FATF standards which require
that “FIU should have access to widest possible range of
financial, administrative and law enforcement information.


b.      The latest amendments to the PML Rules (2013)
have introduced a new report to be furnished to FIU every month i.e. Cross
Border Wire Transfer Report in respect of all transactions of more than Rs.
Five lakh whose origin or destination is in India. As FIU builds this database
over a period of time, the information could be used, in conjunction with
information available with other relevant agencies, to analyze suspected cases
of cross border illicit financial flows, which have been identified by the OECD
and other global bodies as a major area of concern, especially as they relate
to significant transfer of funds from developing countries.



c.       FIU’s international network (Egmont Group)
should be fully harnessed to exchange information/intelligence on proceeds of
crime transferred abroad. However, for this to be successful, utmost importance
should be given to following protocol for international exchange of information
so that it is done in a sustainable and credible manner.


d.      The law enforcement authorities, through the
FIU, invest in improving reporting entities capacity to identify and report
suspicious transactions. Substantial proceeds of crime may be laundered in the
domestic financial system but the reporting entities may be constrained by lack
of access to information on perpetrators of crime. Facilitating access to such
information, through FIU, and sharing red flag indicators for suspected
proceeds of crime would lead to better quality, actionable
intelligence/information from the reporting entities.



e.      Post investigation, feedback should be shared
jointly with FIU and reporting entities in order to develop better
understanding of money laundering trends and typologies, which in turn will
improve capacity to identify and report suspicious transactions. There should
be a more dynamic interaction among between the stakeholders, i.e., reporting
entities, FIU and the law enforcement authorities, which are part of the same
value chain.



9.    Malady of present enforcement system may be
organic problem which leads to increase in corruption and that corruption money
is always unaccounted. On occasions, officers fear to take appropriate action
for various reasons. These can be controlled only by appropriate directions by
the concerned Ministry that in a case where a person is involved in offence
relating to taxation or money laundering, evasion of duty and levies, then in
such cases, higher officers should not intervene in midst of investigations.


10. It appears that for one or other reasons, Enforcement
Directorate attaches the property of a defaulting assessee, then income tax
department is not in position to recover the income tax dues, as it is
contended that the property is attached by ED. This appears to be unreasonable.
Income tax dues are also amount payable to the Central Government and this
problem can be sorted out easily by mentioning in the attachment order passed
by the E.D. that it would be open for the Income Tax Department to recover its
dues in respect of the attached property. There can not be any conflict of
interest between two Departments of Central Government. For this, even
statutory rule can be made, if required.


11.  It appears that, in number of cases,
income tax dues or other duty recoveries are stayed without referring to the
law laid down by the Hon’ble Court; namely Siliguri Municipality Vs. Amulandu Das, AIR 1984 SC 653,
Somariyas Trading Co. Pvt. Ltd. Vs. S. Samuel AIR 1985 SC 61, Asstt. Collector
Vs. Dunlop India Ltd., (1985) 19 ELT 22 and Benara Valves Ltd. Vs. Commissioner
Central Excise, (2006) (204 ELT) 513. It is also noticed that in many
cases, even at the show cause notice stage, stay orders are passed staying
further proceedings which delay the entire process. Hence, it is submitted
that the aforesaid ratio of the judgments may be reiterated.


12. At present, for entering into financial/business
transactions, persons have option to quote their PAN or UID or Passport number
or driving license or any other proof of identity. However, there is no mechanism/system
at present to connect the data available with each of these independent proofs
of ID. It is suggested that these data bases be interconnected. This would
assist in identifying multiple transactions by one person with different IDs. A
central KYC Registry should be established with all law enforcement agencies,
Registrar of Companies and financial institutions having access to its


13. As suggested in first report, at least 5
Additional Chief Judicial Magistrates Courts in Mumbai are required to be
established for deciding approx. 5000 pending IT prosecution cases. It appears that without direction by the
Hon’ble Court, it would be difficult to establish 5 Courts as suggested. For
the establishment of 5 courts, Central Government shall bear the entire cost.


we submit that appropriate directions may be issued to the Central Government
for implementation of suggestions/recommendations made above so that
substantive result could be achieved in curbing the menace of black money and
stashing thereof in foreign tax havens.








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