Taxmen chase 1.16 lakh people for suspicious deposits as returned notes leave clues to black money

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Updated: November 28, 2017 4:47:17 PM

When 99% of scrapped currency notes during demonetisation came back to the Reserve Bank of India, it was propagated that Prime Minister Narendra Modi's idea of banning the notes has failed and has allowed the mass conversation of black money into white.

Black money, Black money crackdown, BEPS, tax deals, tax evation, HSBC, OECD, Panama PapersThe Income Tax Department has slapped notices on 1.16 lakh individuals and firms. (Image: PTI)

When 99% of scrapped currency notes during demonetisation came back to the Reserve Bank of India, it was propagated that Prime Minister Narendra Modi’s idea of banning the notes has failed and has allowed the mass conversation of black money into white, while the government assured action. Over a year later since the demonetisation drive, the action has finally started taking shape. The Income Tax Department has slapped notices on 1.16 lakh individuals and firms which made cash deposits of more than Rs 25 lakh in bank accounts post note ban but failed to file returns by the due date, CBDT Chairman Sushil Chandra said.

The tax department has identified as many as 18 lakh people who had deposited junked 500 and 1000 rupee currency notes of over Rs 25 lakh each post demonetisation. The individuals and companies were then segregated into two categories: Those depositing more than Rs 25 lakh in bank accounts and those putting in Rs 10-25 lakh each. The notice is under section 142(1) of I-T Act.

Nearly 2.4 lakh people who had made cash deposits of Rs 10-25 lakh and filed returns so far will get notices in the second phase. The official further said the number of people prosecuted for violating the I-T law has more than doubled to 609 in April-September this year from 288 in the same period last fiscal.

The crackdown on black money is not the first since demonetisation. About 58,000 bank accounts involving 35,000 companies, which have deposited and withdrawn Rs 17,000 crore post demonetisation, are under Finance Ministry’s scanner. The Ministry of Corporate Affairs (MCA) also struck off around 2.24 lakh companies which were inactive for two years or more, most of which are suspected to be shell companies.

Post-demonetisation, Prime Minister Narendra Modi had asked the authorities concerned — the Enforcement Directorate and the Income Tax Department — to launch a massive crackdown on shell companies, which give platforms for syphoning off money.

The Enforcement Directorate conducted nation-wide raids on April 1 in 16 states swooping down at marketplaces, business centres, residential premises and even houses put up on rent to hunt down allegedly dubious and suspicious firms which the agency believed were the “backbone” of black money in the country.

The government even said that more than 1.06 lakh directors would be disqualified for their association with shell companies and the role of auditors have come under the scanner for alleged connivance in facilitating illegal transactions.

The government in September had directed freezing bank accounts of more than 2.09 lakh companies whose names have been struck off from the records and said action would be taken against more such firms.

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