Compared to the Panama leak, the taxman is believed to be on a stronger footing in Paradise cases as it has access to information like bank account details.
A look at the passport of persons in question will reveal their travel destinations and the number of trips made over the past few years, two persons familiar with the development told ET. Some of the offshore banks ask for copies of passport of account holders. In its communique, the I-T department has asked the persons to disclose whether they have any bank accounts, own any assets or are shareholders of overseas companies.
Paradise Papers is a compilation of leaked information from Appleby, a law firm. It’s similar to the Panama Papers which was a collection of leaked documents from Mossack Fonseca, a legal services firm.
“In case of Panama, the tax department took months to fish out information from various jurisdictions after invoking the treaties and information sharing pacts with respective countries. However, in Paradise, a lot of crucial information is available on a platter..,” said a source.
“When individuals or their lawyers are appearing before the I-T department, they are being asked whether the Paradise information is accurate; secondly, whether the accounts were opened or companies formed legally. If they can demonstrate that this was under RBI’s liberalised remittance route (LRS) or through other authorised channel, the matter is closed. But if this cannot be substantiated, the tax department is reopening the matter, and the stage is set for penalty or further action,” he said.
According to tax circles, many (outside the Paradise list) have come under the glare of I-T office and Enforcement Directorate for remitting more than what was permitted under LRS at that point.
“Some made the mistake of remitting more than $1,25,000 in 2015 after the RBI governor announced in the monetary policy that the limit would be revised to $2,50,000. However, the RBI circular, endorsing this was issued in the next financial year. By then, they had already remitted the money. So, despite investing legally using banking channels, they have been caught on the wrong foot,” said an industry source.
Appleby records revealed names of companies, shareholders, trusts, and beneficiaries in offshore financial structures set up to hold wealth — a lot of which the tax office suspect has never been disclosed. In parking untaxed, undisclosed funds, companies and individuals choose destinations where firms can be set up without remitting foreign exchange and where names of ultimate beneficial owners of such companies need not be spelt out.
However, Appleby, being the legal advisor, held all such confidential information — now in public domain following the data hack.