The Income Tax Department has kicked off a nationwide verification exercise after uncovering a pattern that raised serious red flags: a set of entities that had sent large sums of money abroad over the past three years, despite reporting little to no actual business turnover.
How the Investigation Started
The trail began with a search operation targeting a group of fictitious charitable trusts allegedly involved in providing accommodation entries against bogus donations and contributions. What started as a probe into fake charitable donations ended up leading investigators to a much wider network of entities remitting funds overseas.
Preliminary ground checks found that many of these entities were either non-filers altogether or had filed returns showing turnovers so small they bore no real relationship to the scale of the money being sent abroad. Adding to the concern, the stated purposes for these remittances, things like freight payments, software imports, and consulting services, often didn't line up convincingly with what was actually happening on the ground. Investigators also found that a number of these entities weren't even operating from the addresses they had officially declared.
A Pattern Around Who Signed Off on the Remittances
One detail stood out in particular: a relatively small group of professionals had issued a disproportionately large number of Form 15CB certificates tied to these transactions, and the funds themselves were often flowing to a similarly clustered group of recipient entities.
Form 15CB, governed by Rule 37BB of the Income-tax Rules, 1962 (now corresponding to Form 146 under Rule 220 of the Income-tax Rules, 2026), requires the certifying accountant to verify the taxability of a foreign remittance against the actual books of account and supporting documentation before signing off on it. Given the patterns investigators found, this has raised real questions about whether that level of scrutiny, the kind that proper auditing services in India are meant to provide, was genuinely being applied before these certificates were issued.
The Scale of the Crackdown
On August 18, the department launched a detailed, nationwide verification exercise covering these remittances, with a specific focus on shell entities, the individuals behind them, and the professionals who certified the transactions. The exercise also specifically covers entities located in districts along India's land borders that were found to have sent significant sums abroad.
In total, the verification drive covers roughly 394 entities, including 117 located in border states, along with 36 professionals connected to the certification process.
What the Department Is Asking of Accountants
The Income Tax Department made clear that accountants issuing Form 15CB or Form 146 certificates are expected to exercise genuine due care, diligence, and professional judgment, properly examining the underlying transactions and relevant facts before certifying any remittance. As the department put it, this certification process plays an important role in maintaining trust across the entire system, and lapses here don't just affect one transaction, they undermine confidence in the broader compliance framework.
Further investigation into the flagged entities and professionals is currently underway.
FAQs
Q1. What triggered the Income Tax Department's verification exercise?
It followed a search operation on fictitious charitable trusts allegedly involved in bogus donation entries, which led investigators to a wider network of entities making unusually large foreign remittances despite minimal reported turnover.
Q2. How many entities and professionals are covered under this exercise?
Approximately 394 entities, including 117 located in states along India's land borders, along with 36 professionals involved in certifying the remittances.
Q3. What is Form 15CB, and why does it matter here?
It's a certificate under Rule 37BB (now Form 146 under Rule 220 of the 2026 Rules) where an accountant verifies the taxability of a foreign remittance against actual books of account. Investigators found a small group of professionals had issued a disproportionately high number of these certificates.
Q4. What is the department asking of accountants going forward?
It has emphasised that accountants must exercise genuine due care, diligence, and professional judgment, properly examining transactions and facts before certifying any remittance.