Another window will defeat purpose: Centre to SC

The court was hearing petitions challenging the government’s notification which disallowed people from depositing old notes after a prescribed time. In its affidavit, the Finance Ministry said that a window of 51 days, barring closed bank holidays, was provided for exchanging old currency — unlike in 1978, when there were only six days. During this time, anyone could have deposited the notes in their possession, either in person or through their authorised agents, said the ministry, citing clause 2 of the November 8 notification which permitted deposit of the SBNs through third-party authorisation.

The Centre also drew the court’s attention to post-demonetisation inputs from its various enforcement agencies. A Home Ministry communication citing intelligence agencies had referred to reports of “largescale misuse of the window for exchange of old notes”, said the affidavit. Cash seizure during November and December 2016 was to the tune of Rs 147.9 crore and Rs 306.897 crore respectively, and gold seizure was 69.1 kg and 234.267 kg respectively.

In Naxal-hit areas, contractors, jewellers, transporters, petrol pump owners, small businessmen, couriers, commission agents and tendu patta contractors were used for exchanging old notes, said the ministry, adding that currency was also moved across the border to Bhutan and Nepal for exchange. The CBI registered 63 cases relating to irregularities during this period, of which 10 were disposed of while the rest are still being investigated. The cases involve a total amount of Rs 395.19 crore.

According to a report from the Enforcement Directorate, the demonetised notes were traded like commodities, leading to police cases in many instances. “Based on such FIRs, the ED also registered money-laundering cases, and investigations conducted so far revealed that discounted price, varying from 25 per cent to 30 per cent, was given in exchange of new currency with old currency,” said the affidavit.

Giving details of the post-demonetisation crackdown on black money and tax evasions, the ministry said the Income Tax department conducted 1,100 raids/ surveys and issued 5,100 notices for verification of high-value cash deposits made in bank accounts, between November 9, 2016 and January 10, 2017. The raids revealed cash and valuables worth over Rs 610 crore, of which Rs 513 crore was in cash (Rs 113 crore in new currency), it said. Besides, undisclosed income of over Rs 5,400 crore was detected in the raids.

On January 31 this year, the department launched “Operation Clean Money” for e-verification of cash deposits made after November 8. More than 1.8 million persons who did not appear to be taxpayers were verified, and 0.378 million have been taken up for assessment and investigation, it said.