The government’s income-declaration scheme has ended, and the Income-Tax department has launched another crackdown to bring tax evaders to task. This time, though, the department is expected to take severe action against erring assessees. Till now, the I-T department had been trying to get people to declare their money under the Pradhan Mantri Garib Kalyan Yojana (PMGKY), which closed on March 31. I-T officers verified financial documents and if satisfied with the explanation, they simply left the assessees alone. However, tax evaders caught in the second phase will have to face severe action ranging from heavy taxation to imprisonment for up to 7 years under the new Benami Act.
The government gave a chance to the people by letting them deposit their money under Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY) but most of them decided against doing so, thinking that I-T officials would not come after them, said chartered accountants from the city. “Thousands of people deposited large sums of money showing it was cash on hand, obtained from sales or was loaned to a relative who now gave it back. People created fictitious cash balance by drawing new cash books and faking entries. All these people who abused the system will now be under scrutiny,” said Sunil Talati, former national President of the Institute of Chartered Accountants of India (ICAI). For example, a city-based textile firm owner whose company earns a profit of Rs 1 crore annually showed a profit of Rs 60 lakh by September. However, he deposited Rs 3 crore of unaccounted money in November. The owner is now looking for a way to somehow justify the deposit to the I-T department, in case he receives a notice. Similarly, a jeweller deposited Rs 98 lakh during demonetisation. Usually, he doesn’t deposit more than Rs 30-35 lakh usually in his bank account. He is now anxious that the I-T may end up finding about all the illegal transactions he carried out by back-dating his receipts. During the first phase, the department had sent online queries to the people so that they could explain the source of cash deposits. In the second phase, people are going to directly receive notices and summons. A source in the I-T department said, “The list is being compiled and the department will soon start sending out notices. Searches and surveys have been going on round the clock. After builders, jewellers are to be the next likely target. The Sensitive Transactions Intelligence Unit (STIU) of the department is specifically looking after such cases.”
Former chairman of ICAI (Ahmedabad chapter) Vikas Jain said, “Those found guilty will not only face heavy taxation in the range of 77%-128% but might also face criminal prosecution under Section 276C of the I-T Act. The Act pertains to wilful attempt to evade taxes and could lead to imprisonment for up to 7 years. People who used dormant bank accounts of other individuals to deposit their money will face a crackdown under the newly enforced Benami Transactions Act.” He added that under the Act, violators could be sentenced to a jail for seven years and in cases of property involvement they shall also be liable to a fine which may extend to 25% of the fair market value of the property.
Looking for big fish
The I-T department has launched Operation Clean Money-II at a national level in which more than 60,000 people have been identified for investigation. While phase 1 of the operation launched on January 31, was aimed at people who deposited Rs 10 lakh or more, phase two launched last week was expected to target people who deposited between Rs 5 and Rs 10 lakh. However, recent searches on some of the city’s biggest real estate groups, who are believed to have committed tax evasion of several crores, has given rise to theories that the department is going to focus on the big businessmen. The tax agency is reported to have used Advanced data analytics to detect suspect cash deposits. A data analytics firm has already started the analysis of such cash deposits made during demonetisation drive.
The data analytics firm has been analysing the deposits in bank accounts before and after November 8 last year — the day the government decided to junk 86 per cent of the currency in circulation. This exercise will also attempt to link individuals with multiple accounts or PAN numbers who have deposited large sums of money. The I-T Department has begun analysing accounts which show a pattern of deposits or have some common linkage like common address, PAN, telephone number, email address or name. The income-tax department statement said that since demonetisation, it has detected Rs 9,334 crore of undisclosed income across the country and referred about 400 cases to the Enforcement Directorate and the Central Bureau of Investigation.
By : Ahmedabadmirror/18.4.2017