Income Tax Department Searches Six Mumbai Firms Over Foreign Remittances
The Income Tax Department has searched six firms in Mumbai as part of a nationwide verification exercise into suspected irregularities in foreign remittances, according to the Central Board of Direct Taxes (CBDT).
The Mumbai searches were conducted as part of a wider operation covering approximately 394 entities and 36 professionals across the country, including 117 entities located in districts along India’s land borders. Investigators are examining the entities that remitted money overseas, the individuals managing them, and the professionals who certified the transactions.
According to tax authorities, the exercise was initiated following data analysis and ground intelligence that identified entities remitting substantial amounts of foreign exchange despite reporting little to no corresponding business activity.
Preliminary checks revealed that many of the entities making the outward remittances were either non-filers or had submitted income-tax returns showing very small turnovers. The department noted that the reported turnovers showed no apparent correlation with the large sums sent overseas. Additionally, the stated reasons for the remittances—such as freight payments, software imports, and consulting services—did not match the financial profiles of the businesses.
Ground-level intelligence also indicated that several entities involved in the transactions were not operating from their registered addresses, prompting further scrutiny of their actual operations.
The operation builds on an earlier investigation into a group of fictitious charitable trusts accused of providing accommodation entries against bogus donations and contributions. That inquiry revealed a network where bogus contributions were disguised as legitimate transactions, which subsequently led investigators to the broader system of irregular foreign remittances.
Investigators also found that a small group of professionals had issued a large volume of Form 15CB certificates, which are required for certain foreign remittances to certify taxability. The funds covered by these certificates were routed to a cluster of entities, raising concerns over whether the Chartered Accountants had conducted adequate due diligence and verified supporting documents before issuing clearances.
The department stated that the verification drive aims to determine whether the overseas remittances were backed by genuine commercial transactions and whether all parties complied with statutory tax requirements.
