'Operation Clean Money', an initiative to eradicate black money from the economy successfully entered into its second phase, identifying more than 60,000 persons, including 1300 high risk persons for investigation into claims of excessive cash sales during the demonetisation period.
More than 6000 transactions of high value property purchase and 6600 cases of outward remittances shall be subjected to detailed investigations. All the cases where no response is received shall also be subjected to detailed enquiries
The Income Tax Department (ITD) launched Operation Clean Money (OCM) on January 31 2017 to leverage technology for e-verification of cash deposits made during the demonetisation period that is November 9 to December 30, 2016.
The first phase of the operation involved e-verification of cash deposits made in the banks. The entire phase was conducted online, wherein 17.92 lakh persons, who entered into cash transactions that did not appear to be in line with their tax profile, were identified and requested for on-line responses on such transactions. 9.46 Lakh persons responded on per pre-defined parameters of sources of the cash deposits. Online queries were raised in 35000 cases and on-line verification was completed in more than 7800 cases.
It was decided to close the verification in cases where explanation of source of cash was found to be justified. In cases where the cash deposit had been declared under Pradhan Mantri Garib Kalyan Yojna (PMGKY), the verification would be closed.
The operation moved into the next phase with identification of high risk persons for detailed investigations by the ITD. The identification has been done through use of advanced data analytics, including integration of data sources, relationship clustering and fund tracking.
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The high risk categories identified include businesses claiming cash sales as the source of cash deposits which is found to be excessive compared to their past profile or industry norms; large cash deposits made by government or PSU employees; persons who have undertaken high value purchases; persons who have used shell entities for layering of funds; and where no responses were received.
Government has already taken extensive enforcement action including search and seizure and surveys largely based on the information received during the demonetisation period. More than 2,362 search, seizure and survey actions have been conducted by ITD during November 9 2016 to February 28, 2017, leading to seizure of valuables worth more than Rs.818 crore, which includes cash of Rs.622 crore, and detection of un-disclosed income of more than Rs.9,334 crore.
More than 400 cases have been referred by ITD to the Enforcement Directorate and the CBI. Surveys have been conducted in more than 3400 cases by Assessment Units.
The impact of the Government action cab be deciphered through the increase of 21.7 percent in the returns of income received in FY 2016-17; 16 percent growth in gross collection, the highest in the last five years; 14 percent growth in Net Collection - the highest in last three years and above 18 percent, 25 percent and 22 percent growth in personal income tax, regular assessment tax and self-assessment tax respectively.
One of the stated objectives of demonetisation was 'elimination of Black Money that casts a long shadow of parallel economy on our real economy'. The opportunities created by demonetisation is being used by the ITD for widening and deepening of the tax base and create deterrence, not seen before, and to curb generation of black money in the Indian economy.
The complete exercise of examining all the doubtful and non-tax compliant accounts may take more than one year but with the help of technology and continuous enforcement action all the liable accounts will be brought to tax.
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