Tag Archives: black money

IT Department conducts searches on some prominent business groups in Maharashtra

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The Income Tax Department carried out a search & seizure action on 25.08.2022 on two groups engaged in the business of sand mining, sugar manufacturing, road construction, healthcare, running of medical college etc. The search action covered more than 20 premises spread over Solapur, Osmanabad, Nashik & Kolhapur districts of Maharashtra.

During the course of the search operation, a large number of incriminating evidences, in the form of hard copy documents and digital data have been found and seized. These evidences reveal various modus-operandi of tax evasion adopted by the group including booking of bogus expenses, undisclosed cash sales, unexplained loans/ credit entries, etc.

In case of the group engaged in sand mining and sugar manufacturing, documentary evidences of unaccounted cash sales of sugar exceeding Rs. 15 crore have been found & seized. The search action has revealed that the group has introduced its unaccounted income in the form of bogus unsecured loans in its books of accounts. Several lenders to the group, as well as promoters of the group have admitted that unaccounted cash generated by the group exceeding Rs. 10 crore was routed in its books of account in this manner.

Evidences of capital gains of about Rs. 43 crore on sale of assets by a non-filer corporate entity have also been seized.

In the other group engaged in the business of healthcare and running of medical college, as also road construction, evidences of undisclosed cash receipts representing capitation fee and refund of salary and stipend paid to the doctors/PG students have been found. Moreover, evidences regarding booking of bogus expenses and contractual payments etc. have been found & seized. Preliminary estimates of such undisclosed income of the group is to the tune of Rs. 35 crore.

Income-Tax

Income-Tax

So far, the search action has led to detection of unaccounted income of more than Rs. 100 crore.  Further, undisclosed assets of more than Rs. 5 crore have also been seized.

Further investigations are in progress.

Impact of Demonetisation on Black Money, Widening of Tax Base and Direct Tax Collections

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The Government of India launched a concerted drive against black money with Demonetisation being an important step in that direction. Among the main objectives of Demonetisation was the flushing out of black money and also conversion of the non-formal economy into a formal economy to expand the tax base. The impact of Demonetisation on black money, widening of tax base and Direct Tax Collections is summed up hereunder:

A. Impact on black money:

Quantum jump in Enforcement actions based on Demonetisation data:

Searches

· 158% increase in number of searches (from 447 to 1152 groups)

· 106% increase in seizures (from Rs. 712 crore to Rs.1469 crore)

· 38% increase in admission of undisclosed income (from Rs.11,226 crore to Rs. 1,54,96 crore)

Surveys

· 183% increase in surveys (from 4422 to 12520)

· 44% increase in undisclosed income detected (from Rs. 9654 crore to Rs. 13920 crore)

Operation Clean Money:

The Income Tax Department launched ‘Operation Clean Money’(OCM) on 31st January, 2017 to analyse the data of the persons who deposited large sums of cash and whose returns of income were not in sync with such deposits.

Phase 1:

· In the first phase of OCM, 18 lakh suspect cases were identified through use of data analytics where cash transactions did not appear to be in line with the tax profile of depositors.

· Online verification in these cases was enabled and done in a record time of 4 weeks.

· The success of the first phase was also attributable to the massive taxpayers’ awareness and media campaigns on Operation Clean Money launched by the Department.

· The scale of the Operation may be gauged from the fact that response of 9.72 lakh persons in respect of 13.33 lakh accounts involving cash deposits of around Rs.2.89 lakh crore, as per pre-defined parameters on sources of the cash deposits was captured by the Income Tax Department within a short span of 3-4 weeks. Online queries were raised in more than 35000 cases and online verification was completed in more than 7800 cases.

Phase 2:

· The Operation Clean money has since moved into the next phase that includes enforcement actions in high risk cases, taxpayer engagement through a dedicated website in medium risk cases and close monitoring in low risk cases.

· The high, medium and low risk cases have been identified through use of advanced data analytics, including integration of data sources, relationship clustering and fund tracking.

· The exercise has also unearthed large number of persons and clusters having suspect transactions. These include about 14,000 properties of more than Rs.1 crore each where persons have not even filed Income Tax Returns. The investigations are in progress.

B. Impact on Widening of Tax-base:

· The number of e-returns of Individual taxpayers filed till 5th August, 2017 (due date of filing) increased to 2.79 crore from 2.22 crore returns filed during the corresponding period of last year, registering an increase of about 57 lakh returns (25.3%). This shows marked improvement in the level of voluntary compliance as a result of action taken by the Income Tax Department on the basis of data of cash deposits in the wake of demonetization.

· The total number of all returns (electronic + paper) filed during the entire Financial Year 2016-17 was 5.43 crore which is 17.3% more than the returns filed during FY 2015-16.

· For FY 2016-17, 1.26 crore new taxpayers (return filers + non-filers making tax payments) were added to the tax base (till 30.06.2017).
C. Impact on Direct Tax Collections:

The effect of Demonetization is also clearly visible in the growth in Direct Tax Collections. Collection of Advance Tax under Personal Income Tax (i.e. other than Corporate Tax) as on 05.08.2017 showed a growth of about 41.79% over the corresponding period in F.Y. 2016-2017. Collection of Self-Assessment Tax under Personal Income Tax showed a growth of 34.25% over the corresponding period in F.Y. 2016-2017.

India Seeks to Revise Tax Treaties with Foreign Nations: Minister

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Indian government is planning to revise the tax treaties with partner countries to enable the Central Bureau of Investigation (CBI) and Enforcement Directorate (ED) to use the data for prosecution of those who have stashed black money abroad, said a statement.

Treaty partner countries have been requested to modify the tax treaties to explicitly include provisions that will enable information exchanged for tax purposes, including criminal proceedings in non-tax matters.

About 40 treaties for avoidance of double taxation have been revised accordingly and India has also signed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters, which also similarly facilitates exchange of information.

India is gearing up drive on compiling information by non-tax agencies, subject to agreement by the Competent Authorities of the Requested Contracting State.

However, not all treaty partner countries have agreed to the proposal. Since a bilateral treaty cannot be modified unless both treaty partners agree, it is not possible to provide any time frame for this purpose, said Mr. Santosh Kumar Gangwar, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha.

IT Raids Unearth Rs.2,600 Cr Since Nov. 8

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The Income Tax Department has carried out investigations since the de-monetisation of Old High Denomination (OHD) currency announced by the Government on 8th November, 2016 and unearthed  Rs.2,600 crore in 291 cases across the country. In addition, open enquiries have been effected in more than 3,000 cases.
Approximately Rs. 393 Crore including Rs. 316 Crore cash and Rs. 77 Crore worth of jewellery has been seized. Of the cash seizure, about Rs. 80 Crore is in new currency. As a result of these investigations, approximately Rs. 2600 Crore of undisclosed income has been admitted by the taxpayers.

The success of the Department in unearthing undisclosed incomes and detecting large scale malpractices is due to its focused enforcement actions based upon high quality data analytics under various categories thereby identifying and prioritizing high risk persons/groups.

This, coupled with the professional manner of conducting the investigations in a swift and confidential manner, has helped the Department make an impact in a short time.

Ministry Asks Banks to Show New Currency Deposit Receipts

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The Ministry of Finance, Government of India through its Department of Financial Services(DFS) has asked all the Public Sector Banks(PSBs) and the Indian Bankers Association (IBA) to ensure hundred percent(100%) that deposits of new currency is properly reflected in the customers’ counterfoils.

In a letter addressed to all the Managing Directors (MDs) & Chief Executive Officers (CEOs)/Chairman cum Managing Directors (CMDs) of PSBs and Chairman, IBA, the DFS has stated that maintenance of records regarding deposit of SBN and Non-SBN, as the case may be, is essential both in the bank record as well as the customer’s record.

The letter further states though most banks providing correct information to the customers yet to ensure that it is done in 100% of cases without fail, all the bank branches in the country be alerted to reflect correctly the cash deposit in old and new currency and inform the customers about the same.

The Ministry has asked the MDs &CEOs/CMDs of PSBs and Chairman, IBA that this must be followed scrupulously and any deviation in this regard has to be prevented and if noticed, dealt with firmly and immediately.

The letter further states that to educate the public, banks may clearly display a prominent sign (including in the local language) in their respective branches requesting their customers to fill-up deposit slips clearly indicating old and new currency and the denomination of the notes..

The DFS has asked all the MDs &CEOs/CMDs of PSBs and Chairman, IBA to consider this urgently and action taken in this regard be reported by 16.12.2016.

The Ministry also appreciated the role played by the banks post-demonetisation especially when the old currency was accepted and till 24th November, 2016, when exchange of old currency to specified limit was also permitted.