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9 Lakh accounts under scanner of I-T departmentt who fail to verify cash deposits of over Rs 5 lakh Featured

Written by  Feb 22, 2017

NEW DELHI: The Income Tax department under the operation "Clean Money" has decided to crack the whip on those who fail to verify cash deposits of Rs 5 lakh or more during the 50 days demonetization drive.

Nearly 9 lakh people are under the I-T scanner for suspicious bank deposits post cash ban have been put in the ‘doubtful’ category, but action against them will follow only after the new tax amnesty scheme ends on March 31. 

The Central Board of Direct Taxes (CBDT) has also asked officers to act against those who have offered or repaid loans in cash, which attract 100% penalty. As per law, no loans can be advanced in cash, even to friends, and cannot be repaid in cash. This has been done to avoid a situation where cash is shown as a loan or repayment, something that has been avoided in recent years.

With a majority of the 18 lakh who had deposited more than Rs 5 lakh cash into their bank accounts failing to electronically verify the funds, the tax department has been forced to push the cases to its field officers but with a clear message that the entire process should be electronic and non-intrusive.

"It is reiterated that no independent enquiry or third party verifications are required to be made by the assessing officer outside the online portal. Whatever information is necessary for verification, the same has to be collected through the person under verification using online platform only. Even telephonic queries are to be avoided," CBDT said in the standard operating procedure for assessing officers.

Apart from insisting on "very polite language", all information required for further verification has to be communicated within five days. The steps are meant to ensure that taxpayers are not harassed and the entire process is transparent.

At the same time, the tax department wants its field officers to clearly state if the data submitted by those under the lens is "acceptable" or "non-acceptable". The officer has to escalate the "non-acceptable" response for "possible tax evasion".

The real focus is, however, on those who have so far failed to verify the deposits on e-filing portal. "In case the person under verification does not respond within the timeframe prescribed, it might lead to a possible inference that the cash deposit under verification is prima facie undisclosed and consequently the AO (assessing officer) may treat these cases under the 'non-acceptable' category with relevant remarks," the tax agency said. It, however, cautioned that officers needed to factor in aspects such as family size, financial status and the person's background while forming a view on the quantum of undisclosed income.

Those who fail to comply with the verification requirements will see their profile scrutinised including the tax deducted at source and the information available under the Annual Information Return that captures high-value transactions. In case the cash deposit is not in line with the earlier returns or information profile, officers have been asked to call for further information and also initiate surveys - which involve scrutiny of books. CBDT has also asked its officers to refer some of the cases to the investigation wing.

In case the transaction being loan received/repaid in cash above the permissible threshold comes to notice, the AO may consider initiation of penal proceedings under the relevant provisions separately.

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