Demonetisation: In crackdown, Income Tax dept finds petrol pump owners laundering money

By: and | Published: March 9, 2017 5:44 AM

The findings were part of the survey conducted by the I-T department, leading to a conclusion that some of the fuel pump operators may have indulged in widespread involvement in manipulated conversion of unaccounted cash held in high-value demonetised currencies.

The findings were part of the survey conducted by the I-T department, leading to a conclusion that some of the fuel pump operators may have indulged in widespread involvement in manipulated conversion of unaccounted cash held in high-value demonetised currencies. (Reuters)

The income tax department has cracked down on fuel station operators, including petrol pumps, CNG pumps and LPG distributors, for possible tax evasion, after it was found that many of these dealers had deposited cash having much higher value than the reported sales during the demonetisation period between November 9 and December 30. The findings were part of the survey conducted by the I-T department, leading to a conclusion that some of the fuel pump operators may have indulged in widespread involvement in manipulated conversion of unaccounted cash held in high-value demonetised currencies.

The survey revealed that, on an average, these entities “deposited well over 20% more cash over and above their sales during the 50-day period when the scrapped currencies were allowed to be used to pay utility bills,” a government source told FE on the condition of anonymity. The source added that it was being investigated whether some of the cash deposits were being shown as payments from fake debtors.

Moreover, if the investigation leads to conviction, a person could face a seven-year jail term in addition to cancellation of licence to run a dealership. It should be noted that the petrol and CNG pumps had been allowed to accept Rs 500 notes till December 2. However, payment for LPG supply continued to be exempted even after that date.

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A petroleum ministry official said that the fuel pump operators are likely to be a part of the 18 lakh people identified by the I-T department as those that had deposited over R2.5 lakh cash during demonetisation. In February, the government had launched ‘Operation Clean Money’, whereby it sent notices to 18 lakh individuals who had deposited more than R5 lakh, but the same didn’t correspond to their income profile or previous income tax returns.

On December 8, in a surprise move, the government declared that the R500 and R1,000 currency notes would cease to be legal tender from the midnight of the same day. The government introduced new R500 and R2,000 notes and allowed the public to deposit these notes in their accounts till December 31. The high denomination currency constituted 86% of the value of total currency in circulation amounting to R15.4 lakh crore. The Reserve Bank of India is yet to release a definitive number on the amount of cash that came back to the system as it has said that it is still cross-checking from various sources on the deposits made during the period.

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