The direct tax department has started scrutinising invoices of companies to check for tax evasion even as the indirect tax department continues its aggressive drive against tax dodgers.

The income tax department has started scrutinising financial statements of companies to check if there are any fraudulent transactions or false entry that could result in low payment of taxes.

The tax department is questioning certain transactions where it suspects either the sale has not happened or in cases where it’s difficult to verify details of companies or clients, said people in the know.

The tax department suspects that several companies are forging financial statements so that they have to pay fewer taxes.

The tax department is relying on a newly inserted section in the tax regulations that refers to a “false entry (accounting entry) or omission of an entry” for evading taxes.

The tax department would also start scrutinising sale and purchase invoices of companies and whether this corresponds with the financial statements and taxes paid.