The income-tax department has identified more than 60,000 persons, some of them of advanced data analytics allowing “optimisation of government resources and causing minimum inconvenience to the taxpayers, described as “high-risk”, under the second phase of Operation Clean Money launched to detect the generation of black money after demonetisation.
The Central Board of Direct Taxes (CBDT) said the entities that will undergo “detailed investigations” as part of the next phase of the operation include businesses claiming cash sales as the source of cash deposits, such as petrol pumps and other essential services like hospitals, which are found to be excessive compared with their past profile or industry norms after the note-swap was announced on November 8 last year.
It will also probe government or public sector employees who made “large cash deposits” as well as people who made high-value purchases, “layered” or laundered funds by using shell companies and who did not respond to queries under the first phase of the operation. The initial communication to the 60,000 will be via online queries. Tax officials will also undertake searches and surveys and seek physical documents from the assessee.
The threshold under the first phase of the operation, which began on January 31 and ended on February 15, was kept at deposits of Rs 5 lakh and above.
“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,” CBDT said in a release. “More than 6,000 transactions of high-value property purchase and 6,600 cases of outward remittances shall be subjected to detailed investigations.
All the cases where no response is received shall also be subjected to detailed enquiries,” CBDT said. It said examining “all the doubtful and non-tax compliant accounts” may take more than a year to complete but technology and continuous enforcement action will be deployed to ensure no one slips through the net.
The latest operation has been initiated based on “identification” of huge cash deposits through the use of advanced data analytics “including integration of data sources, relationship clustering and fund tracking.” CBDT said tax officials also undertook “extensive enforcement action” of search, survey and seizure after demonetisation and detected undisclosed income to the tune of about Rs 10,000 crore between November 9 and February 28.
Under the first phase of Operation Clean Money, 1.79 million people who entered into cash transactions that did not appear to be in line with their tax profile were contacted.
“In cases where the cash deposit has been declared under Pradhan Mantri Garib Kalyan Yojana (PMGKY), the verifications would also be closed,” it said. It added that the impact of government action is already visible in the increase of 21.7% in returns received in FY17. Gross income tax collections grew 16%, the highest in the last five years.
The statement said demonetisation 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 at achieving this goal and also widen the tax base.