Pandora Papers: IT Department widens dragnet

"There may have been cases where persons have closed their accounts and quickly shut down overseas outfits after getting wind of the leak. Some did it when discussions on the black money legislation were underway," ET quoted a senior tax official as saying.

The tax department issued the first set of summons a week earlier under Section 131 (1a) of the I-T Act, which allows it to question individuals suspected of non-disclosure of earnings. Those summoned are being asked to name the service providers in the tax havens, who set up offshore entities and handled communications for these individuals.

Once these service providers are identified, tax officials can get more information from the governments under the double-taxation avoidance agreement or exchange of information pact.

“Information gathered under the Income Tax Act is available for use under the Black Money Act, which came into effect from July 1, 2015. There is a possibility of invocation of Black Money Act in case of proven undisclosed offshore incomes and assets, however, some important provisions of this Act, which have a retrospective effect are under constitutional challenge before various courts," Ashish Mehta, partner at the law firm Khaitan & Co, was quoted as saying by ET.