All eyes on black money: I-T even looking into FY11 cash deposits, realty purchases

I-T dept may order reassessment if no response is given or the response is found to be unsatisfactory

Cash deposits made even before the Modi government's demonetisation drive that began in November last year are under the income tax (I-T) department's scanner, reported the Economic Times on Thursday. 

According to the financial daily, tax sleuths have gone as far back as financial year 2011 in their hunt for suspicious cash deposits and sought explanations from the depositors in question. Further, the I-T department has sent notices to home buyers where the declared value of the purchase was found to be lower than the prices that prevailed in past transactions in that area. 

In fact, according to the financial daily, tax authorities have classified cases from FY11 as high priority since they would become time-barred soon. In case the tax sleuths don't receive a response regarding the cash deposits under their scanner or the response is not found to be satisfactory, they can order a reassessment. According to the report, the I-T department has asked individuals and entities involved in the transactions in question to provide their permanent account numbers and the returns they filed for the financial year in question.

The move comes at a time when the I-T department is moving ahead with concluding investigations into high-risk category individuals suspected of evading taxes. In an interview with Livemint, Central Board of Direct Taxes (CBDT) Chairman Sushil Chandra said that his department would conclude its investigations into the financial dealings of close to 100,000 individuals who were suspected of tax evasion. Further, Chandra told the financial daily that the department would persuade assessees who found themselves in breach of the law to start filing tax returns. 

As part of this exercise, the I-T department is undertaking a massive data-crunching exercise aimed at making it difficult for tax evaders to hide from scrutiny, Chandra told the news organisation. 

According to the report, as part of its operation "clean money" that has been looking into post-demonetisation cash deposits, the I-T department has identified 754,000 medium-risk, 595,000 low-risk, and 341,000 very low-risk assessees based on the amount of tax they might have evaded. The 100,000 individuals referred to before fall under the high-risk category. Further, according to the report, the CBDT chairman has said that the I-T department would be taking action against 14,000 individuals who have purchased property worth over Rs 1 crore but have not filed their returns. 

Hunting down black money hoarders or questionable transactions is not the only thing on the I-T department's plate. As reported earlier, the I-T department is "coaxing" top corporate entities to make 45 per cent of the total advance tax payment by September 15, the due date for the second instalment.

Sources said tax officials were meeting executives of the top 45-50 advance tax-paying firms to persuade them to make the payment of 45 per cent of the full-year’s advance tax.

The Central Board of Direct Taxes (CBDT), in a recent meeting, directed income-tax commissioners to pull up their socks on revenue collection. The CBDT has set an October deadline for achieving the desired growth rate of tax collection.