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I-T Dept crackdown on black money: 2,000 Indians identified with properties in Dubai

Divyesh Singh     February 12, 2020

The Income Tax Department's criminal investigation wing has identified 2000 Indian citizens who hold properties in Dubai but had failed to declare it in their IT returns. In its ongoing crackdown on black money ,the agency has identified Indian citizens who purchased properties in Dubai but failed to declare and explain the source of funds used to purchase these properties. It has been observed in the past few years that payments have been received as properties in overseas countries purchased and transferred through shell corporations to hide ill-gotten money or to evade income tax.

The Income Tax Department has pulled up sleeves to track down those involved in major tax evasion and parking black money overseas. Dubai remains the closest and most sought after spot for parking black money. Of the 2,000 persons and companies identified, many are businessmen, top professionals and government officials. The I-T Department will initiate action against the accused under Black Money Act. Citizens found owning properties outside the country without explaining the source of funds or income for their purchase could be prosecuted under the Black Money Act.

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According to the Income-tax Act, under the Section FA (Foreign Assets), while filing the Income Tax returns one has to declare purchase and ownership of properties, assets, companies outside the country. I-T Department in the recent drive found that the 2,000 Indian nationals identified had failed to provide information on the same while filing I-T returns.

Of the 2,000 citizens owning properties in Dubai, around 600 couldn't explain any source of funds or income or any documentation regarding payments made while buying the property.

Those who haven't been able to explain the source of funds used for purchase of the properties could be prosecuted and their properties can be attached by the agency. Other than attachment of the property, they can face monetary penalty upto 300 per cent of the property value, and also face imprisonment under the Black Money Act.

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The properties owned by Indians in Dubai has raised red flags as the modus operandi is used by money launderers, smugglers, underworld gangsters and drug traffickers to make payments to propel working for them. Of the 2,000 citizens identified, highest number of Indian nationals reside in Mumbai, followed by Kerala and Gujarat.

The clause under Section FA (Foreign Assets) came into effect in the year 2011-12 and it has been mandatory since then for people owning properties outside India to declare it in their I-T returns.

Those identified by the I-T Department could also face action by the Enforcement Directorate (ED) under under Section 4 of Foreign Exchange Management Act(FEMA).

Recently the ED launched crackdown on black money parked overseas by tracking and identifying immovable assets overseas bought by Indian nationals illegally.

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The move is being carried out under rules laid down under the Section 4 of FEMA (Foregn Exchange Manipulation Act), 1999. The Section 4 of FEMA states that no person resident in India shall acquire, hold, own, possess or transfer any foreign exchange, foreign security or any immovable property situated outside India.

On January 17, the Enforcement Directorate (ED) conducted searches at the residence of a former chief engineer of Brihanmumbai Municipal Corporation (BMC) in connection with an inquiry related to FEMA. In the raids, the ED officials recovered documents related to purchase of a property in Dubai in an alleged illegal manner. The ex-BMC chief engineer was posted with some of the most crucial wings of the municipal corporation -- the building proposal department and development plan department. The agency did not disclose the name of the ex-BMC chief engineer but it has been learnt that he had superannuated around seven years ago from the municipal corporation.

ED, in a statement, said incriminating documents with regard to illegal acquisition of a property held in Dubai was recovered during the search operation.

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The former BMC chief engineer has stated that he had purchased the property in Dubai at 'Park Island, Bonaire Marsa, Dubai' measuring 89 square metre for Rs 70 lakh in 2012. The property is held jointly in his name, his spouse and son.

The retired BMC officials couldn't furnish any documents which would help ascertain the value of the property and also couldn't provide details on how the payments were made to buy the property in Dubai. The citizens identified by the IT department are the same case as that of the BMC engineer booked under FEMA by ED.

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