Operation clean money: Govt to issue notice to non-respondents

Over 9 lakh responses have come in I-T department's e-filing portal

Keeping up the heat, the income tax department will issue statutory notices to all those who have failed to respond to its SMS and e-mail queries seeking explanation on bank deposits made after demonetisation.

Notice under Section 133(6) of the Income Tax Act will be issued to any 'person under verification' who has failed to file online response in a timely manner in spite of the reminder, the Central Board of Direct Taxes (CBDT) said in an instruction on Friday.

CBDT, however, said the notice can be issued only after taking permission of no less an officer than a commissioner or directorate of income tax.

The tax department generated hundreds of queries on suspicious deposits made after November 8 decision to junk old 500 and 1,000 rupee notes.

Under Operation of Clean Money, 18 lakh SMS and e-mails have been issued to people who have made suspicious deposits of over Rs five lakh during the 50-day demonetisation period ended December 30.

Over nine lakh responses have come in the I-T department's e-filing portal and the department will issue the notices to the rest.

The suspicious deposits were referred to as 'person under verification' who were asked to file the explanation about the source of the cash.

Valid explanations were considered 'Accepted' and further verification closed.

"In case no response is furnished within the specified timeframe, the assessing officer may form a view that 'person under verification' has no plausible explanation to offer regarding the cash deposits in his/her bank account(s) and consequently, the case may be escalated as 'Not-Acceptable' for further action in accordance with the procedure prescribed," it said.

The notice under Section 133(6) gives the department-wide powers of investigation, including the one to seek information about an assessee even from outsiders that include banks.\

Such a notice can be issued to "any person including a banking company or any officer thereof".

The 'person' can be an individual, an HUF, a company, a firm.

Information under this section cannot be sought for in the case of any hypothetical proceedings which may or may not take place.

"Notice under Section 133(6) of the Act is required to be issued, after obtaining prior approval of principal commissioner of income tax, commissioner income tax, principal DIT as provided in the Act, in case where the 'person under verification' fails to file online response in a timely manner in spite of the issue of reminder by the assessing officer," the CBDT instruction said.

It said the notice will be generated through the Income Tax Department System only and no hand written and typed notice is required to be issued.

"Response to notice under Section 133(6) of the Act has to be furnished within the stipulated period by the person under verification only through the online mode," it said.

It reiterated that verification under Operation Clean Money is to be made through the online verification portal only.

The Big Data analysis by the tax department has revealed that deposits of over Rs 2 lakh totalling Rs 10 lakh crore were made in about 1 crore bank accounts in the 50-day window after the demonetisation decision that cancelled 86 per cent of currency in circulation.

Chartered accountancy firm Prakash Sachin & Co Partner Prakash Sinha termed the step as "a good move" by the department against corruption.

"The department will issue the notice as well as get reply through the online system. Further suitable administrative checks have been created to avoid the misuse of the discretionary power of officer," Sinha said.