In a rather candid disclosure, a top Income Tax official has admitted that the diamond trade has one of the highest prevalence of black money, with investigations revealing that books in the sector are "completely manufactured".

"(In) certain areas like real estate or diamond trade there is a lot of circulation of black money...but in the case of diamond merchants, the books are completely manufactured," Director General of Income Tax (Investigations), B P Gaur, said.

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In the case of the diamond trade, there may be a "complete mismatch" between what "is the real transaction and what is being shown in the books," which makes the job of the Department very difficult, he said.

"It requires very deep investigations to find out the truth," Gaur said. Tracking the black money trail in the realty sector, also notorious for black money transactions, has, however, been easier for the I-T authorities as it has been able to collect evidence in different forms like computer hard disk drives of the assesses.

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The DG was speaking in presence of the Central Board of Direct Taxes member, Prakash Chandra, after the unveiling of a reference book for I-T officials which explains the 'dos and dont's' while carrying out an assessment or investigation with sector-wise real-life cases as examples.

In recent years, the Department's task was getting increasingly harder as frauds are becoming more and more sophisticated, Gaur said, adding it was vital not to allow fraudsters to take advantage of loopholes in the law.

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On the presence of tax havens and strategies of the Department to deal with them, Chandra said the government will soon be posting 10 officers in "important countries" who will help in curtailing the menace.

"The officers have been shortlisted and some approvals are necessary (before they are posted)," he added. When asked about the direct tax collection target for Mumbai region, which contributes a third to the direct tax kitty, Chandra declined to give an exact number but added that normally, the target is 20 per cent higher than the previous year.

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Last fiscal, Mumbai achieved a direct tax collection of over Rs 1.50-lakh-crore.

Among the sectors which are facing trouble, Chandra said the cement industry is going through a difficult patch which is more "cyclical" in nature.

However, he was quick to point out that what worries the taxmen the most is the performance of the oil companies.