More than 60,000 people face probe

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New Delhi | Published: April 15, 2017 6:31:33 AM

I-T department crackdown on suspicious cash transactions after note ban

As many as 9.46 lakh people responded on sources of their cash deposits, while online queries were raised in 35,000 cases and online verification was completed in more than 7,800 cases.

The crackdown against black money is getting harder after demonetisation, with taxmen zeroing in on more than 60,000 people — including 1,300 high-risk ones — for investigations under the second phase of the so-called Operation Clean Money (OCM).

More than 6,000 high-value property purchases and 6,600 cases of outward remittances will be subjected to detailed investigations under the OCM, the Central Board of Direct Taxes (CBDT) said on Friday. The categories of people or entities that will also be probed include businesses such as petrol pumps and other essential service providers like hospitals whose claims of cash sales as the source of their cash deposits are found to be much higher than their past profile or industry norms during the note ban period (November 9-December 31 last year).

The hardening of the crackdown comes amid speculations that the Pradhan Mantri Garib Kalyan Yojana, also known as the Income Disclosure Scheme-II (IDS-II) — the window provided by the government for people to deposit their unaccounted cash after the note ban to come clean after paying a hefty fine — seems to have come a cropper. Although the government hasn’t yet released the tax collections from IDS-II, various reports have pegged it in the range of just `2,000-3,000 crore, belying expectations of a massive mop-up through the scheme running into over `1 lakh crore.

Government or PSU staff who made “large cash deposits” or undertook high-value purchases or those who “layered” or laundered funds by using shell companies and those who did not respond to the taxman’s queries following demonetisation will also be investigated. During the note ban period, some bank employees were found to be aiding back money holders to park their unaccounted cash. Official sources said although no transaction limit has been set above which investigation will start, high-value transactions will be probed first. The informally-set limit of cash deposits for investigations under the first phase of the OCM (January 31-February 15) was `5 lakh and above.
Under the first phase of the operation, 17.92 lakh people, who entered into cash transactions that did not appear to be in sync with their tax profile, were contacted through the online medium for explanations.

As many as 9.46 lakh people responded on sources of their cash deposits, while online queries were raised in 35,000 cases and online verification was completed in more than 7,800 cases. The taxmen have decided to close the verification in cases where explanations of the source of cash were found to be justified and where adequate disclosure has been made under IDS-II.

More than 2,362 searches, seizures and surveys were conducted between November 9, 2016, and February 28, leading to seizure of valuables worth more than Rs 818 crore, including cash of Rs 622 crore, and detection of undisclosed income of more than Rs 9,334 crore. More than 400 cases have been referred by the income-tax department to the Enforcement Directorate (ED) and the Central Bureau of Investigation (CBI) for suitable action. Surveys have been conducted in more than 3,400 cases by assessment units, the CBDT said.

It added that the impact of the government action is “already visible” in the 16% growth in gross tax collection in 2016-17 (the highest in the last five years) and the 14% rise in net tax collection (the highest in the last three years).
Also, growth in personal income tax was over 18% in 2016-17, while there has been an increase of 25% and 22% in regular assessment tax and self assessment tax, respectively. According to sources, around Rs 13,500 crore or roughly half of the estimated tax proceeds from IDS-I — the window for which was open between June and September 2016 — had come in by March 31.

Net of this, personal income tax revenue would have grown some Rs 52,000 crore — or at a much slower pace — in 2016-17 from the previous fiscal. Also, although the rise in personal income tax collection in 2016-17 was much higher than the annual growth levels in years of comparable economic expansions in recent past, the IDS-II imprint was clearly absent in the tax data released by the finance ministry earlier this month.

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