The Income Tax Department has picked 1.34 lakh cases specifically related to demonetisation for scrutiny in 2018-19, an over six-fold increase from the 20,088 cases that came under the scanner in 2017-18, according to Finance Ministry data. Tax officials said a majority of the 1,34,574 cases picked for scrutiny were for revising Income Tax Returns (ITRs) for 2015-16, the year prior to demonetisation.
“It has been found through data analysis that many taxpayers went back to revise their tax returns for 2015-16, the year before demonetisation. Many such taxpayers have revised details such as cash in hand and other details for 2015-16 in an effort to conceal the detection of cash post-demonetisation,” a senior tax official said.
Separately, 2,99,937 notices were sent by the department during 2017-18 to those who deposited large sums during demonetisation but did not file income tax returns, the data tabled in Parliament show. “Those notices were mainly sent to depositors who deposited huge amounts of cash, even exceeding Rs 10 lakh, and did not file income tax returns,” the official said.
A region-wise break-up of the data shows that Gujarat topped the list of states where cases related to demonetisation have been selected for scrutiny in 2018-19, with 11,769 such cases. It is followed by the north-west region (Punjab, Haryana and Himachal Pradesh) with 11,158 cases, Karnataka and Goa with 10,985 cases and Tamil Nadu with 10,797 cases.
This is a sharp rise from the cases selected by the department for scrutiny in 2017-18: Gujarat with 1,561, Tamil Nadu with 1,712, Karnataka and Goa with 1,455. To put these numbers in perspective, 6.85 crore returns were filed in financial year 2017-18.
The Income Tax Department has also issued more than 1,800 showcause notices under Section 24(1) of the Prohibition of Benami Property Transaction Act. The returns for demonetisation, through which old currency notes of Rs 500 and Rs 1,000 were withdrawn in November 2016, were supposed to be filed in assessment year 2017-18.
Taxpayers can revise their income tax returns before the completion of one year after the end of the assessment year or two years after the end of the relevant financial year. So, for 2015-16, they could have revised their returns till the end of financial year 2017-18, which is March 2018. The tax department analysed the data by September 2018 and selected the cases for scrutiny in the current financial year 2018-19, the official said.
In Budget 2018-19, however, the time limit for filing revised returns was reduced to the completion of the relevant assessment year.
As a part of post-demonetisation exercise, the Income Tax Department launched Operation Clean Money on January 31, 2017, to analyse the data of those who deposited large sums of cash and whose returns of income were not in sync with such deposits to identify possible cases of tax evasion.
A preliminary assessment was undertaken to analyse the distribution of large cash deposits across various taxpayer segments, for example, business, non-business. This resulted in the identification of about 17.92 lakh persons for the verification process in the first phase, as per government data.
The second phase focused on analysing information about high, medium and low-risk cases. It also unearthed large number of persons and clusters having suspect transactions, including about 14,000 properties of more than Rs 1 crore each where persons have not even filed ITRs.