Clean Money casts wider net: I-T probes property deals, forex remittances

CBDT probes property deals, forex remittances; tax wing to probe real estate deals of Rs 6,000 cr

The income tax department (I-T) has widened the net to nab tax evaders who have not just deposited unaccounted cash during the note-ban period but have also made high-value property deals and sent money abroad under the guise of outward remittances in the second phase of Operation Clean Money, which kicked off last week. 

The tax department last week identified 60,000 individuals; 1,300 of them were termed high-risk under the second phase of Operation Clean Money to detect the generation of black money in the system.

“The shortlisting of these individuals was not only based on cash deposits but also included other crucial factors,” said Central Board of Direct Taxes Chairman Sushil Chandra in an exclusive interaction with Business Standard.

These 1,300 individuals have been described as “high-risk”, mainly due to their real estate deals and land purchases, which were found to be excessive compared with their tax profile and earnings; the total value of their property deals is estimated to be over Rs 6,000 crore. 

In another 6,600 cases, the I-T wing has found people misusing the outward remittance route under the Liberalised Remittance Scheme and remitted over Rs 1,800 crore. 

According to Chandra, the exercise in the second phase is based on integrating data sources, which the department has received from third parties.

This includes statement of financial transactions submitted by banks, property dealers and registration authorities which had shared the list of top property deals that have taken place in the past three years.  

Chandra further explained that cash deposits made during the demonetisation drive exposed the hidden bank accounts and permanent account number (PAN) details which helped them unearth more information on the individuals.

Chandra met tax officials from across the country in Mumbai last Friday and Saturday to discuss details of the second phase of its operation. “Under the second phase, we have outlined three options to identify tax evaders. First, we will do a deeper scrutiny of the individuals identified. Second, we may launch an open enquiry, if we get more information, apart from the data compiled. Third, in case of strong evidence, we would undertake enforcement action and book the individuals on the spot,” said Chandra. 

According to tax officials, of the seven million accounts of PAN cardholders that saw surge in devalued note after the currency swap, 35 per cent had never filed their tax returns or their deposits did not match with their tax profile.

Tax department sources also said that during the probe, they found information concerning the role of some bankers, government officials and bureaucrats during the demonetisation drive. Sources said government officials such as bankers, doctors and others, were on the radar as they had deposited cash in the range of Rs 5-10 lakh. A senior I-T official said that during their enquiry, there were some government employees who claimed to have used their accounts and PAN to deposit other people’s money. Some government servants said they were helping individuals who didn’t have bank accounts to deposit the invalidated currency. 

The CBDT is shortly expected to write to the respective departments and offices of these employees for an internal enquiry and share the details with the Central Bureau of Investigation. “The matter needs to be examined further,” said Chandra.