The country's apex tax body, the CBDT or Central Board of Direct Taxes has expressed concern over the rampant involvement of corporates amongst other entities in a hawala racket where bogus bills are used to suppress taxable income. Speaking to ET NOW, KV Chowdary, Member, Investigation, CBDT said, "It is a disturbing trend, there is no doubt about it. So far, we have verified bogus billing of Rs 7000 crore in Maharashtra based on leads from the sales tax department and our independent probe. We expect the scale of the racket to be around Rs 25,000-Rs 30,000 crore. Overall, we have found similar trends elsewhere also. Obtaining bogus bills and creating different layers to route transactions appears to be the common feature of tax evasion."

When asked to elaborate on the involvement of corporates in the ongoing probe, Chowdary added, "It would be difficult to name one or two corporates. There are several corporates who have availed these bills. The hawala racket is spread across all sectors, manufacturing and steel to name a few. Basically, if the billing itself is not genuine and there is an intent to evade tax, the sector is not very relevant. It is only the naming of the bill giver which may change. For example, if its a software company which is availing bogus bills, then they may like to take the bill in the name of another software company."

Chowdary also indicated that in cases where bogus billing has been detected, a number of corporates have come forward voluntarily in a bid to revise their IT returns. "Some of these are direct cases of inflation of expenditure and inflation of purchases. Quite a few corporates want to come out of this situation and we would welcome them to come and clean up their accounts," he adds.

Chowdary says similar trends have been detected in Kolkata, Hyderabad and Delhi but adds that the magnitude of the racket appears to be very large in Maharashtra. He doesn't rule out stern action against corporates who do not co-operate with the income tax department. "If an assesse has done activities which amount to either furnishing of inaccurate particulars or concealment of income, then the penalty will follow and in appropriate cases, prosecution cases will also follow," he says.

The CBDT is looking at a non-intrusive way of widening the tax base and raising revenues and Chowdary says work has begun on that front. "In the case of taxpayers who have not filed their returns, we have sent two batches of 35,000 letters to them. The next batch of 35000 letters is on its way." (Economic Times)