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Demonetisation: Income tax department to make checklists to classify suspicious cases

FE Bureau
In March, CBDT had asked senior I-T officials to go after over 87,000 people who were yet to file I-T returns in response to the notices issued to them.

In what is expected to assist assessing officers in further analysis, the income tax department would now make a verification checklist for taxpayers who were found to have made suspicious cash deposits during demonetisation. The verification checklist aims to break down thousands of such cases into a few categories, the Central Board of Direct Taxes (CBDT) said in a letter to zonal chiefs.

The checklist would gather information regarding a taxpayers’ compliance in filing regular income tax returns, total income and percentage of cash deposit to gross total income. Further, taxpayers would be classified based on the nature of deposit — whether it was out of loan received, out of repayment of loan, gift and cash in hand, among others.

For taxpayers engaged in business, the information regarding nature of businesses, use of cash in a normal year and whether books of account are properly maintained or not will be filed in the checklist. Further, cash deposit made by these assessees in earlier years and its comparison with their yearly sales will also be recorded.

This is another attempt by the income tax department to streamline information gathered from taxpayers who were shortlisted as potential tax evaders because of their activities during demonetisation.

In March, CBDT had asked senior I-T officials to go after over 87,000 people who were yet to file I-T returns in response to the notices issued to them.

The assessment in all these cases should be completed by March-end, the board had said, in a missive to the field formations.

Tax officials were instructed by the board to gather additional information about the above persons and establish a trail of the funds deposited by them. Further, a detailed analysis of any past income tax returns of these people should also be made to ascertain the nature of their transactions during the demonetisation period (November 8 to December 31, 2016), the CBDT had said.

As FE reported earlier, the income tax department had identified 23.5 lakh permanent account numbers (PANs) for post-note ban cash deposits being inconsistent with income profiles under the Operation Clean Money (OCM) programme.

Subsequently, the department issued statutory notices to three lakh among these. Of these 3 lakh PANs, “a total of 2.1 lakh persons filed income-tax returns and total amount of self-assessment tax was Rs 6,560.88 crore,” the department had told FE, in response to a RTI filed by the paper earlier. So some 90,000 of these people haven’t filed returns despite receiving statutory (Section 142-1) notices, whose cases are now being followed up.

The department had further said that of the original 23.5 PANs, over 17 lakh filed e-returns after receiving communication. Out of these, over 14.5 lakh PANs filed their income-tax returns for last 3 assessment years — AY2015-16,2016-17 & 2017-18. As on January 7, 2019, out of the 23.5 lakh persons, a total 4.15 PANs had never filed income-tax returns.

Just before demonetisation, the government had launched the Voluntary Income Disclosure Scheme which ran from June 1 to September 30, 2016. It managed to mop up Rs 12,700 crore in tax from 71,726 persons who had declared undisclosed income of Rs 67,382 crore under the scheme.

Additionally, coinciding with demonetisation, the government had launched another income disclosure scheme namely the Pradhan Mantri Garib Kalyan Yojana which was open from December 2016 to March 31, 2017. However, the response to this scheme was lukewarm as only 21,000 persons declared Rs 4,900 crore of undisclosed income, eventually yielding Rs 2,451 crore in tax.