I-T department detects over 60,000 entities to probe under second phase of operation 'clean money'

The first phase of operation clean money which was launched on January 31, scrutinised cash deposits of over Rs 10 lakh.

The black money hoarders cannot breathe easy anymore as the Income Tax Department on Friday commences the second phase of operation black money. The I-T department identified over 60,000 entities for the second round of its investigation.

The move comes after a poor response to the Pradhan Mantri Garib Kalyan Yojana (PMGKY), an income declaration scheme which forced the Income Tax department to launch another drive to catch hold of tax evaders who could have deposited large sums during the demonetisation period.

The first phase of operation clean money which was launched on January 31, scrutinised cash deposits of over Rs 10 lakh. The second phase however, would recongnise the deposits between Rs 5 lakh and Rs 10 lakh.

According to Central Board of Direct Taxation (CBDT), the I-T dept has detected unaccounted income worth Rs 9,334 crore after the demonetisation till February 28th, 2017.

"More than 60,000 persons, including 1,300 high risk persons, have been identified for investigation into claims of excessive cash sales during the demonetisation period. More than 6,000 transactions of high value property purchase and 6,600 cases of outward remittances shall be subjected to detailed investigations (under Operation Clean Money II). All the cases where no response is received shall also be subjected to detailed enquiries," the CBDT said.

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The CBDT said the category of people who will undergo "detailed investigations" as part of the next phase of the operation include businesses claiming cash sales as the source of cash deposits, like petrol pumps and other essential services like hospitals, which is found to be excessive compared to their past profile or industry norms during the notes ban period.

It will also probe those government or Public Sector Undertaking employees who made "large cash deposits", people who have undertaken high value purchases, those who "layered" or laundered funds by using shell companies and those who did not respond to taxman's queries under the first phase of the said operation.

A senior officer said there is no threshold of deposits that has been identified under the latest operation and all suspicious and similar inter-related transactions have been chosen and brought under it.

"The deposits under scrutiny of the latest operation are no doubt high value ones," he said.

The officer added that while the initial communication to these 60,000 people will go via the online medium, the taxman will also undertake search and survey action and also seek physical documents from the assessee as part of the operation.

The CBDT said the complete exercise of examining "all the doubtful and non-tax compliant accounts" may take more than an year to complete but with the help of technology and continuous enforcement action all the liable accounts will be brought to task.

The latest operation has been initiated based on "identification" of huge cash deposits through use of advanced data analytics "including integration of data sources, relationship clustering and fund tracking".

The CBDT said the taxman also undertook "extensive enforcement action" of search, survey and seizure post demonetisation and has detected undisclosed income to the tune of Rs 9,334 crore between November 9 and February 28.

"More than 2,362 search, seizure and survey actions have been conducted by the department...leading to seizure of valuables worth more than Rs 818 crore, which include cash of Rs 622 crore and detection of undisclosed income of more than Rs 9,334 crore," it said.

"More than 400 cases have been referred by the tax department to the Enforcement Directorate and the CBI. Surveys have been conducted in more than 3,400 cases by assessment units," the statement added.

The demonetisation of two high value currencies of Rs 1000 and Rs 500 was announced by Prime Minister Narendra Modi on November 8 last year.

Under the first phase of the operation, it said, 17.92 lakh people, who entered into cash transactions that did not appear to be in line with their tax profile, were contacted via the online medium.

"Online queries were raised in 35,000 cases and online verification was completed in more than 7,800 cases," it said, adding the department has decided to close the verification in cases where explanation of source of cash was found to be justified.

"In cases where the cash deposit has been declared under Pradhan Mantri Garib Kalyan Yojna (PMGKY), the verifications would also be closed," it said.

The 'Operation Clean Money', the CBDT said, is being conducted by the tax department through use of advanced data analytics allowing "optimisation of government resources and causing minimum inconvenience to the taxpayers".

It added that the impact of government action is already visible in the increase of 21.7 per cent in the returns of income received in Financial Year 2016-17.

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Sixteen per cent growth in gross collection was seen, the highest in the last five years, 14 per cent growth in net collection- the highest in last three years and above 18 per cent, 25 per cent and 22 per cent growth in personal income tax, regular assessment tax and self-assessment tax respectively.

The statement said the demonetisation exercise was aimed at the "elimination of black money that casts a long shadow of parallel economy on our real economy" and the latest operation is one of the major steps aimed to achieve this goal and also widen the tax base.

with inputs from PTI