One of the functions of the new tool would be 'fraud detection', wherein it would find out whether purchases and expenses have been inflated through fictitious entries.
The department initially plans to install the new tool, named Computer Assisted Investigation Tool (CAIT), at 25 locations and extend it to other locations at a later date.
In a request for proposal (RFP) from potential vendors, the income tax department has said that the software application would be used for "investigation and analysis of computerised accounts of tax payers and identification of suspicious features in such accounts."
At present, the department's scrutiny of books of accounts and the subsidiary records is mostly manual, although most of the taxpayers have switched to computer-based method of maintaining their books.
The income tax department said that most of its global counterparts, especially those in developed countries, are using software tools for analysis of computerised accounts and accordingly it has also decided to computerise all its functions in line with the best international practices.
