The Income Tax Department’s ongoing investigation into 394 companies and trusts and 36 chartered accountants across several cities has reportedly uncovered suspicious financial transactions involving CSR funds and foreign entities in Singapore and Hong Kong.
According to the initial findings, investigators have identified entities that allegedly transferred large amounts of foreign exchange despite reporting relatively modest turnover or, in some cases, not filing income-tax returns. The transactions are now being examined to determine whether they were linked to shell companies, accommodation entries or potentially fraudulent CSR-related arrangements.
The investigation, which entered its third day, is based on data analysis and intelligence gathered over the past three years. Officials have reportedly identified a network involving charitable trusts that allegedly provided accommodation entries in exchange for purported donations and contributions.
Foreign Transfers Under Scanner
Investigators have reportedly found large overseas payments made in the name of software imports, consultancy services and freight-related transactions where the underlying commercial justification was not immediately established.
Some of the entities under investigation allegedly did not exist at their registered addresses. Authorities are also examining cases where organisations with relatively low reported turnover were involved in foreign-exchange transactions involving substantially larger sums.
A further area of concern is the reported issuance of an unusually high number of Form 15CB and Form 146 certificates by a small group of professionals.
Under the applicable tax framework, professionals certifying certain overseas remittances are expected to examine relevant financial records and determine the tax implications of the transactions. The investigation is examining whether adequate due diligence was carried out before such certificates were issued.
CSR Funds Linked to Earlier Investigation
The latest developments follow an earlier Income Tax Department investigation into the alleged diversion or misuse of CSR funds provided by private companies.
That case came to light following searches at the premises of trusts and chartered accountants in Agra and Mathura last year. According to the report, the investigation by the Agra unit of the Principal Chief Commissioner of Income Tax, Kanpur, uncovered transactions involving CSR funds received from prominent companies.
The funds were reportedly transferred to organisations including Jan Jagriti Seva Sansthan in Mathura, Ragini Ben Vipin Chandra Seva Karya Trust in Ahmedabad and Brij Mohan Saput Kala Sanskriti Seva Sansthan in Bhilwara.
Three chartered accountants from Agra and Mumbai also came under the investigation during the earlier probe.
Investigation Expands
The current investigation has now brought 394 entities and 36 professionals under scrutiny, including 117 entities located across border districts and states.
The authorities are examining whether the organisations involved had legitimate operations and whether the transactions represented genuine charitable activity, legitimate overseas payments or arrangements designed to move funds through multiple entities.
The investigation remains ongoing, and the reported findings are allegations and investigative leads rather than established findings of wrongdoing. Further scrutiny of financial records, tax filings, bank transactions and supporting documentation will determine the nature and extent of any irregularities.
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