Functions of Intelligence Wing. - Income Tax - 1079/CBDT

INSTRUCTION NO. 1079/CBDT Dated : July 21, 1977 The Intelligence Wing performs the following functions: (a) collecting information regarding tax evasion, (b) assisting the Commissioners in organising search and seizure operations, and (c) processing fraud case for prosecution. The wing has been successful in unearthing many rackets involving substantial tax evasion and in launching prosecutions in a number of cases. The emphasis has generally been on building up cases on the basis of seizures made during search operations. It is, however, felt that the Intelligence Wing should play a more positive and dynamic role in countering tax evasion. The following guidelines are accordingly issued. Gathering of information regarding tax evasion. 2. Information may be gathered through (a) suo motu enquiries,(b) follow-up of leads available from the departmental records, petitions, evidence of informants, press reports, and other publications, and (c) liaison with enforcement agencies of other Department, e.g. Enforcement Directorate, Revenue Ingtelligence (customs Central Excise) etc. It has been observed that Officers of the Intelligence Wing some time tend to keep themselves confined to their own offices and to be content with processing information which comes to them from outsiders and have yet to venture out into the din and bustle of the market place to gather useful information on their own. The Board expect the officers of the Intelligence Wing to display initiative of a high order in collecting useful information regarding tax evasion devices employed by the assessees and making full use of it. If they keep their eyes and ears open and go about their work in a methodical manner, it should be possible for them to unearth many more cases of tax evasion through suo motu enquiries than it has been possible so far. 3. Whenever any item of useful information is gathered or received, it should not be passed on to the Income-tax Officer in a routine manner. In every case in which the information is likely, in the opinion of the DDI/ADI, to lead to detection of concealment of large income, necessary enquiries should be made in the Intelligence wing to the extent practicable, and a comprehensive note specifying the lines on which investigation is to be pursued, should be sent to the Income-tax Officer concerned, with endorsements to the IAC and the CIT., who will watch the progress of the case and provide any further guidance that the I.T.O. may need before it is finalised. The Intelligence Wing should keep track of every case in which a fraud has been or can be established with clinching evidence and the income concealed is considerable, so that it ends up in prosecution. 4. Anonymous and pseudonymous petitions should be handled by the Central Information Branches. The Commissioner may have the necessary enquiries, made by the Intelligence Wing - (a) where he feels that the allegations are specific and the quantum of concealment is likely to exceed Rs. 10 lakhs at Bombay, Calcutta, Madras, Delhi, Ahmedabad and Kanpur, and Rs. 5.lakhs at other places and (b) where the I.T.O in the normal course, may not be able to develop the case adequately. 5. Ordinarily, an informant should first be interviewed in the Intelligence Wing and the information given by him processed in the wing itself, before it is brought to the notice of the Commissioner and transmitted to the assessing officer. If it is found that the suspected concealment is below the monetary limit specified in para 4 above, and the nature of allegation is such that it can be quickly enquired into by the assessing officer himself, without any assistance, it should be passed on to the latter with the CIT's approval without avoidable delay. The Intelligence Wing will make recommendations for payment of reward to an informant only if it has made a substantial contribution in the building up of the case. 6. The Intelligence Wing will continue to associate itself with operations conducted by the sister enforcement agencies, viz. the Enforcement Directorate, the Directorate of Revenue Intelligence, and the Central Bureau of Investigation. Coordination with Government departments in routine matters will be maintained by the Central Information Branches. 7. The wing will conduct enquiries in sensitive cases specifically entrusted to it by the Commissioner, and also cases involving Parliament questions etc. as directed by the Director of Inspection (Inv) or the Board. There should be a separate dossier in the wing for every case involving tax evasion on a large scale, so that all the particulars that may be needed in respect of that case in future are readily available. 8. Separate files should also be maintained for every trade/industry of importance in the Commissioner's charge, recording and indexing all significant information received from time to time. Copies of techno-economic surveys and reports of Committees and working groups etc. going into the problems or particulars aspects of the individual industries in the area should be kept with the relevant file, for use if and when necessary. Statements/allegations made in the State assemblies or the Parliament should also be compiled and the relevant information distributed by the Intelligence Wing to the concerned officers. Searches u/s 132 9. The search operation covering CIT charges with headquarters at different places will continue to be coordinated by the Director of Inspection (Inv .) 10. In all search cases, the officers of the Ingtelligence Wing should be associated with the investigations that may be required after the search for the finalisation of relevant assessments/penalty proceedings. They should also see that all aspects of the case are duly considered and neither any item of unaccounted asset nor any crucial evidence found in the seized documents is missed in the draft order under Section 132(5) submitted by the Income-tax Officer dealing with the case for the approval of his IAC. Prossecutions 11. A successful investigation should ordinarily lead to conviction of the tax evader in a court of law. Every intelligence unit must endeavour to a work up an adequate number of prosecution cases each year. Ordinarily, the Intelligence wing will only process cases for prosecution under the Indian Penal Code and under sections 276C, 277 and 278 of the Income-tax Act and the corresponding provisions of the other Direct Taxes Acts. Such cases may either be referred to the wing by the commissioner on the basis of the information available with him or may be suggested by the Intelligence Wing itself. The aim should be to process only cases of big concealment and not fritter away the wing's energies in petty cases of no consequence. As soon as a case with prosecution potential is discovered, the assessing officer must be assisted in taking all the essential action without any avoidable delay. The ADI will (i) help the assessing officer in conducting investigation and gathering the requisite evidence to strengthen the case for prosecution, (ii) consult the counsel on the possibilities of success before actually launching prosecution, (iii) assist in drafting complaints, and (iv) keep a watch on the trial and appellate/revision proceedings. It is not enough merely to come down with a heavy hand on tax-evaders. Widest possible publicity should be given to the punishments meted out in such cases so that others who might be tempted to evade taxes know the serious consequence they will have to face. 12. Officers of the Intelligence wing are expected to work in harmony with the assessing officers and the Investigation Wing of the Directorate of Inspection (Inv). They will keep the Director of Inspection (Inv) informed of the work being done in cases which have intercharge remifications, or involve suspected concealment exceeding Rs.20 lakhs, or are otherwise of special interest indicating deftly organised manoeuvres malpractices. The latter will keep a watch over the progress of enquiries and issue instructions wherever necessary. 13. At places where the Intelligence unit is headed by a Deputy Director, the Central Information Branch may be put under his administrative control and he will be responsible for its smooth functioning. At Bombay, Calcutta and Madras, the senior-most Deputy Director will be incharge of the Central Information Branch. At other places, the Commissioners themselves should see that the Intelligence unit and the Central Information Branch work in coordination. Evaluation and Inspection. 14. Each Intelligence Unit will maintain a record of the gain to revenue resulting from its efforts, and will make monthly and annual reports indicating broadly the work done and the results achieved. These reports will be made to the Director of Inspection (Inv) so as to reach him by 7th day of the following month/within one month of the close of the year. In his turn, the DI(Inv) will circulate the following reviews of the performance of the various units, the problems faced and his suggestions for dealing with them, among the Commissioners of Income-tax concerned and the Board. (i) Monthly review of the working of the Intelligence units headed by Deputy Director (Bombay), Calcutta, Madras, Delhi, Ahmedabad and Kanpur): (ii) Quarterly review of the working of the other Intelligence units; and (iii) Yearly review of the working of all the units. 15. The Intelligence unit(s) at a particular place will be under direct supervision and control of the seniormost Commissioner of Income tax at the place, who may allocate the duties to the individual officers on a functional basis, in consultation with the local commissioners and with the concurrence of the Director of Inspection (Inv). The Director of Inspection (Inv) will exercise overall control over the Inteligence units in all the Commissioner' Charges. The Director of Inspection (Inv) will inspect the work of the Intelligence units periodically norms for inspection being drawn up by him in consultation with Director O M Services.