Mumbai: The Income Tax Department has searched six firms in Mumbai as part of a nationwide verification exercise into suspected irregularities in foreign remittances.The Mumbai searches are part of a wider exercise covering around 394 entities and 36 professionals, including 117 entities located in districts along India’s land borders, according to the Central Board of Direct Taxes (CBDT).
The department is examining the entities that remitted money overseas, the individuals behind them and the professionals who certified the transactions. The exercise follows data analysis and ground intelligence that flagged entities that allegedly remitted substantial amounts of foreign exchange despite reporting little or no corresponding business activity.
According to the department, the operation builds upon an earlier search action directed against a group of fictitious charitable trusts allegedly involved in providing accommodation entries against bogus donations and contributions. That initial probe uncovered a mechanism whereby bogus contributions were disguised as legitimate transactions, enabling beneficiaries to secure accommodation entries and leading investigators to uncover the broader network of irregular foreign remittances.
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Preliminary verification found that entities making the foreign remittances were either non-filers or had filed income-tax returns showing very small turnovers. The department said the reported turnovers had no apparent correlation with the large sums remitted overseas.The stated purposes of the remittances, including payments for freight, import of software and consulting services, also did not appear to correspond with the entities' financial profiles, the CBDT said.
Ground-level intelligence further indicated that some of the entities making the remittances were not operating from the addresses declared by them, raising further questions about their actual operations and the nature of the transactions.
The investigation also revealed that a large number of Form 15CB certificates had been issued by a relatively small group of professionals. The funds covered by these certificates were subsequently received by a cluster of entities, raising concerns over whether adequate due diligence had been carried out by the Chartered Accountants before certifying the transactions, the department said.
Form 15CB is a certificate issued by a Chartered Accountant for certain foreign remittances. It requires the professional certifying the remittance to examine its taxability with reference to the books of account and other relevant documents. The corresponding provision under the Income-tax Rules, 2026 is Form 146.
Officials said the Chartered Accountants were also brought under scrutiny as part of the exercise because of concerns over certificates issued in connection with the foreign remittances. The department is examining whether the professionals had adequately verified the underlying transactions and supporting documents before certifying them.The latest exercise is aimed at establishing whether the remittances were backed by genuine transactions and whether the entities and professionals involved complied with the applicable tax requirements.
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