The Central Board of Direct Taxes has begun a crackdown on those found to have undislcosed foreign bank accounts, intensifying its drive against black money. The apex direct taxes body has asked income tax officials to initiate prosecution if a taxpayer is found to have assets overseas but has not declared them.

"The CBDT has issued an instruction making it clear that prosecution could be launched in such cases even without adjudication," said a department official.

This means that tax authorities could begin prosecution without waiting for the assessment to be over in such cases.

"This would cut time for the tax department but would put greater pressure on assessees to disclose unaccounted income as they will have criminal libility instead of civil one," Sanjiv Chaudhary, Executive Director, KPMG.

The issue of black money being stashed away in the foreign countries such as Switzerland has taken centrestage in India with the Supreme Court taking a tough posture on the issue. The apex court had criticised the government for its reluctance to reveal the names of Indians who held European banks from 2002 to 2006 terming it "plunder of the nation".

The current rules require Indian taxpayers to disclose their global income when they file tax returns.If they fail to do it, they have the option of filing a revised return after forking out the tax money along with the penal interest.

The income tax department has found it difficult to locate overseas accounts, which rarely have paper or electronic trail as transactions are mostly in cash routed through tax havens.

The new Direct Taxes Code seeks to check this by making it mandatory for both individuals and corporates to declare foreign bank accounts in their combined wealth and income tax return.

The CBDT has also asked its intelligence wing to intensify tab on all sources that could provide data on foreign accounts including agents of foreign banks that facilitate opening of such accounts. This will ensure flow of specific info on such accounts and help the department track black money.

India is also seeking to enter into wider tax information exchange agreement with tax havens to source information about Indian nationals.

The income tax department, that has the names of account holders in Liechtenstein's LGT Bank has recovered about 38 crore as unpaid tax in these cases. (Economic Times)