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TMI BlogRevised Standard Operating Procedure (SOP) for management of Suspicious Transaction Reports and exchange of information with Financial Intelligence Unit-IndiaX X X X Extracts X X X X X X X X Extracts X X X X ..... nderstanding (MOU) has been signed with FIU-IND and new experiences have been gathered. On the basis of these, the Board has reviewed the existing SOP and decided to issue the 'following,guidelines as the new SOP in supersession of the existing SOP for compliance by all. This SOP will be effective in respect of STRs of all categories (online/ paper or Category A/ others/ P1/P2/P3) which have not been closed as on 1st October, 2014 and all subsequent STRs till further order. 2. Registration of officers on FINNET: Since 2013, STRs are disseminated by FIU-IND to CBDT online only through Finnet at https://finex.gov.in. The Deputy Secretary/ Director, Investigation IV, CBDT, is the 'Nodal Officer' for all matters related to STRs (as mentioned at Para 9.2.1 infra, Director of Income Tax (Recovery), New Delhi, is the Nodal Officer for all matters relating to exchange of information with FIU-IND for the purpose of recovery of taxes). The Nodal Officer, i.e., Deputy Secretary/ Director, Investigation IV, CBDT, will be the first gateway of Finnet in CBDT for all STRs. An officer, subordinate to him, is registered as the 'Alternate Nodal Officer', who may receive STRs online if Nodal Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... user on FINNET on behalf of DGsIT/DsIT. (iv) The names of all officers who acted as user at any point of time appear on the list as a result of which users at other stations may get confused as to whom they should transfer STRs to, if required, out of all the names that are appearing. To obviate such confusion, the Nodal Officer will circulate names of new users to other users immediately after registration of a new user. DGsIT will ensure that user-officers work on Finnet regularly and STRs reach investigating officers promptly. 2.2. Change of Registered user: Finnet involves a stage where 4-digit password is sent for every login. When an existing user is replaced, the SIM card, to which the password used to go, will change and hence others cannot work on Finnet. Further, unless the change is intimated to the Nodal Officer, the latter will continue to disseminate STRs to old users. Therefore, whenever an existing user is to be changed for transfer/ retirement/ training/ long leave for more than three months etc. reasons, the existing user will: (i) Obtain approval of the higher officer, on behalf of whom he was acting as user, for registering a new officer in his place. To il ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as expired, then user can change it when he logs into the application. These passwords must be noted securely. 4. Receipt and dissemination of STRs: All STRs will be disseminated online. However, top priority STRs may sometimes be disseminated offline through CD/print/email for prompt action. The Nodal Officer may accept or decline STRs from FIU-IND depending on their relevance and usefulness in CBDT. 4.1 Decline by Nodal Officer: Even though Finnet has the features enabling the Nodal officer to decline STRs without accepting, for the purpose of declining, he will first accept the STR, download the PDF copy, save it for record so that it can be viewed later as to why it was declined, enter brief particulars of it in the database of all STRs being maintained in .xl file, submit feedback in the designated page stating the reason for decline and then click on 'close' for closing the STR. However, if the dissemination note itself carries remark by FIU IND that it is 'relatively insignificant' and Nodal Officer agrees to the same on the basis of preview of facts, he may decline without accepting and saving PDF copy. In such case, Nodal Officer will enter in the database maintained in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of Nodal Officer at Board and other users in the field: The Nodal Officer and other users of Finnet will take back-up of PDF files of saved STRs and the database in .xl file on daily basis in storage devices like pen drive. Additionally, PDF files of saved STRs will be stored on weekly basis in an external hard disc drive with greater storage capacity. All such files will be preserved in safe custody with utmost confidentiality and handed over by outgoing users to their successors as part of charge handover note. 4.4.1. Feedback reports will also be archived in systematic manner and preserved by Investigating Officers for 16 (sixteen) years in cases involving foreign assets, i.e., the period mentioned in Section 149(1)(c) of Income Tax Act, 1961 and for 8 (eight) years in other cases. 4.5. The STRs received in DG's office will be transferred within a week of receipt to the jurisdictional DsIT (Inv)/ DsIT (Intelligence)/ DsIT (I&CI), as the case may be, after entering the following details in a register (electronic form in Excel or other searchable database with secure back-up): (i) Serial no. (starting from beginning of financial year) (ii) Name of the main person in the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requiring relatively detailed enquiry, may be identified with clear directions and extent of enquiries in a time bound manner. (iii) STRs, prima facie indicating potential for search/survey, may be classified in a separate category for taking further necessary action and the Addl. / Joint DIT will chart a plan of action separately. (iv) Joint / Addl. DsIT will not assign cases routinely but only with appropriate guidance or directions to Investigating Officers (IOs). (v) However, the process of assignment should be completed within 10 (ten) days of receipt by the Addl. /Joint DIT. 5.4. Investigating Officers will keep in mind the following while investigating STRs: (i) Before issuing summons, notices etc. an attempt should be made to see if the verification can be done from internal sources such as IT return, ITDMS, AIS, ITS, AIR, CIB, OLTAS, eTDS etc. so that the assessees are not called upon to furnish data already available with the Department. If the contents of STR can be verified with the help of these sources with reasonable satisfaction, the same can be closed without undertaking any further inquiry and feedback should be sent in applicable cases. (ii) If open i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... connected with concealment of income [e.g., 276, 276C (2), 276CC, 276D, 277 and also IPC provisions] attract in his cases for any year. (f) Whether there is any existing or likely demand for which we do not have sufficient asset in India and need to attach the fund abroad to protect interests of revenue (g) Even if the income of the assessee out of transactions in a bank account in a foreign country is not taxable in India in a year when his residential status is claimed as Non-resident because of Sec. 5(2) of IT Act, 1961, it is relevant to refer to section 142 (1) (iii) of the IT Act, 1961 under which Income tax Authorities are empowered to ask for details including a statement of all assets and liabilities of the assessee, whether included in the accounts or not. Hence assessee cannot claim that he cannot be asked any question about his funds abroad. It is therefore necessary to verify whether he has disclosed the relevant a/c in his IT return or any of the statements in course of search or subsequent proceedings under the Act. (vi) Enquiry and final disposal of STRs in Category A/P1 cases should be completed within 90 days of receipt by Investigating Officer and in other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be followed while preparing feed-back report in prescribed pro forma: (i) At the top of feedback form : Name and PAN of the main person, in respect of whom the STR transactions pertain, have to be mentioned. (ii) Para - 1.1 : Against "FIU-IND case reference number", the STR number must be written correctly to save from problem in database maintenance, matching feedback with STR and reporting. (iii) Para - 2 : Comments in different paragraphs like that against "Was the information found useful?" in Para - 1.3 and that in Para - 2 should be compatible and not contradictory to each other. Such report is obviously contradictory, incorrect and misleading. (iv) Para - 2 : against "Usefulness of information" there are following options: √ Para -2.1 : Identification of a new case √ Para -2.2 : Investigation of an existing case √ Para -2.3 : Identification of unexplained assets √ Para - 2.4 : Initiation of prosecution √ Para -2.5 : Assistance in ongoing prosecution If "Y" is written in Para - 1.3, any one or more of Para - 2.1 to 2.5 must be "Y" and the reporting officer must select the applicable option out of these. Also, in cases wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comment in the proforma introduced by FIU- IND is found inadequate, the space of the box may be extended, but to the minimum required extent only. In any case, comments in this pro forma" must not exceed 1 (one) page of A4 size paper. (i) The date of sending the Investigation report, if any, to the AO must be mentioned with identifiable designation of the AO. (j) In several cases it has been found that investigating officer commented that "STR information has been passed to jurisdictional Assessing Officer". Information of STR along with findings of investigation by investigating officer will be sent to jurisdictional Assessing Officer only after conclusion of enquiries, if findings suggest fair possibility of assessment of additional income/ wealth and not without enquiry. (k) On conclusion of inquiries, if the findings suggest fair possibility of assessment of additional income/wealth, a report should be sent to the AO with copies to the Range Head & CIT concerned along with all the relevant supporting material for further necessary action. In the feedback reports to the Board, the dates of sending the findings of investigation to Assessing Officer with copies to the Range ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tious disposal of STRs. 9. Getting information from FIU-IND on request basis : Financial Intelligence Unit-India (FIU IND) is the designated authority under Prevention of Money Laundering Act, 2002 (PMLA) to receive information from different reporting entities. Accordingly, it has a database of, inter alia, bank accounts and transactions therein, transaction in securities, insurance premium paid on policies etc. 9.1 FIU-IND shares information spontaneously with, inter alia, CBDT under Section 66 of PMLA. Also, Central Board of Direct Taxes (CBDT) and FIU-IND have executed Memorandum of Understanding (MOU) for exchange of information. On the basis of these, Income Tax authorities under CBDT can seek information from FIU-IND for both domestic bank accounts etc. as well as those from foreign countries. Such information may be useful for recovery from bank accounts hitherto unknown to Income Tax authorities or bringing to tax the transactions that might have been done through undisclosed bank account(s). 9.2 The following guidelines may be followed by all Income Tax authorities in the field formations while requesting FIU-IND for information: 9.2.1. For the purpose of exchange of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... &CI) who are registered as "Designated User" on FINNET. Income Tax authorities in field formations may send their requests to the DGsIT (Inv) of their respective territorial jurisdiction. On receipt of such request the "designated users" at the offices of DGsIT (Inv) may, upload the requests on FINNET and coordinate with FIU-IND through email at [email protected] or its Helpline Phone No. 011-24109792/93. 9.2.5. Online request has several advantages inasmuch as it has facility for uploading individual request very fast in paperless manner as well as for uploading bulk requests in respect of large number of persons/ entities at a time by entering all data in .xml file (format is available on Finnet website) and uploading the said file on FINNET. Responses to such requests may be sent by FIU-IND to such requesting "designated users" online, upon which the ''designated users" may forward the same to the requesting officers. However, if for any technical reasons such requests cannot be sent to FIU-IND online, the printed copies may be sent by post to FIU-IND. 9.2.6. However, Income Tax authorities in field formations, who are unable to send such requests online through the "desi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... go to the custody of any official below the level of Income-Tax Officer (ITO); that too only when authorized. However, information and documents received from foreign countries either spontaneously or on request will NOT go to the custody of any official below the level of Assistant Commissioner of Income Tax (ACIT); that too only when authorized. 10.1. As per Para 5.17 of media policy dated 31.1.2014 circulated by the Board (URL link: http://www.irsofficersonIine.gov.in/Documents/OfficalCommunique/125201422553. pdf) it is only the Member (Inv), CBDT, who is authorized to speak to media on search & seizure, special investigation, I&CI and other issues and actions pertaining to Investigation wing. Hence, no other official will interact with media on these issues. 10.2. In the assessment orders and other communications AOs/ Addl CsIT/ CsIT or DDsIT/ Addl. DsIT/ DsIT may not refer to the source of the information and name of FIU should not be mentioned. Illustratively, it may be mentioned that "credible information/ source Information has been received to the effect that.......". 103. DGsIT (Investigation) and (I&CI) will organize workshop(s) every year after AGT (Annual General Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P2 category STR DIT(Inv),.. DIT(Inv),.. Total P3 category STR DIT(Inv),., DlT(Inv),.. Total Foreign intelligence DIT(Inv),.. DIT(Inv),.. Total FEEDBACK ON DISSEMINATED INFORMATION (1) Feedback Details (Y-Yes, N-No, NA-Not Ascertainable) 1.1 FIU-IND Case Reference Number 1.2 Name of main person/ entity 1.3 PAN of main person(s) / entity (ies) 1.4 Category (A/ Others/ P1/P2/P3) 1.5 Is this first feedback on this case? (Y/N) 1.6 Was the information found useful? (Y/N/NA) (2) Usefulness of Information (Y-Yes, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vestigation Agency, India) Name Title Telephone Fax E-Mail Signature______________Date______________ DD/MM/YYYY Authorising Official Title Telephone Fax Signature _______________ Date __________________ DD/MM/YYYY Official Use Only iii. SUBJECT INFORMATION REQUESTED SUBJECT IDENTIFYING DATA Subject Name (Natural Person or Business): Last First Middle Alias(es): Address: Relationship of Subject to Investigation: Professional Activity : Identification No : Issuing jurisdiction : Phone No. : Other (specify) : Nationality : Sex : Date of birth : Place of birth : State/Province : Country : FINANCIAL AND OTHER INFORMATION Related/Associated Business(es): Bank Name, Bank Account No(s), Bank address: iv NATURE OF THE INVESTIGATION 1. Describe the case under investigation and state ..... X X X X Extracts X X X X X X X X Extracts X X X X
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