CAAT - Going to use by IT Department

Last updated: 03 October 2007

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The Income Tax department will soon introduce a new accounting tool that will be used against business houses suspected of concealing huge income by fudging their accounts and making fake entries to concoct balance-sheets. To be called Computer Assisted Analysis Tool (CAAT), the new accounting technique will be used during scrutiny assessments of corporates and also by the income tax investigation wing to analyse records seized during I-T raids. The new accounting tool will be capable of identifying squared up loan accounts, new loans, journal entries which are out of balance and posted at the end of the month or towards the end of the year to manipulate balance-sheets. Equipped to spot suspect transactions, CAAT can show up missing invoices besides recognising patterns and linkages between different groups of data and identify items requiring detailed investigation. The software has been developed after reviewing various accounting devices used by the investigating agencies in some of the developed countries to audit company accounts and banking business. It is believed to be similar to the Win-Idea, an analysis tool used by the Canadian tax department to investigate cases of tax evasion. Sources said CAAT would help the department identify hawala entries as it would be equipped with data of all known hawala operators in the country. Books of a suspect business house would be analysed using the tool to identify the details of hawala entries. Some of the other utilities of the specialised tool include search for post box addresses, identical phone numbers and addresses of fictitious vendors, identification of duplicate invoices and spotting purchase quantities not mentioned in the agreement. Coming soon after the finance ministry’s decision to set up Computer Forensic Laboratories (CFLs) under the investigation arm of the I-T department, the tool would help proper analysis of data seized during raids and kept in the safe custody of CFLs. The CFLs are supposed to store digital records seized during search-and-scrutiny operations of the department and will be used as a ‘library’ by sleuths for extracting corroborative evidence in reference to a case at any future date. Information in CFLs will be kept in compact discs (CDs) that will be protected by special security safeguards difficult to tamper and which can serve as forensic proof

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