In the months after the Centre’s announcement about demonetisation, there were numerous raids by the Income Tax department and the police on firms, banks and individuals in Pune, in an attempt to nab tax evaders.
In almost 90 per cent of such cases, Income Tax officials didn’t initiate prosecution proceedings against the evaders, who went on to give most of the money to the Pradhan Mantri Garib Kalyan Yojna (PMGKY), to get immunity from prosecution.
The seizure of old and new currency notes were common, as were search and survey operations by the Income Tax department, based on their own inputs. Money seized during the operations — over Rs 30 crore — was deposited by the department in the bank. More than 100 such operations were carried out by the department, said a senior official from the income tax department.
In the majority of such cases, said the official, the evaders had, in order to avoid being prosecuted, chosen to pay a total of 75 per cent of the unaccounted for money to the PMGKY. The scheme, launched by the central government in December, allowed confidential declaration of ‘unaccounted for income and tax evaded’, without facing any penal action. The scheme was valid till March 2017, after which action was taken against those who had violated the rules.
To ensure that the cases were watertight, the I-T department has appointed a few special prosecutors, who are going to handle appeals at various levels.
After a cash seizure, notices are served to explain the source of income, and failure to do so attracts penal action and a demand for taxes to be paid. These demands can be contested before the Commissioner of Appeals, and further at the Income Tax Appellate Tribunal by the aggrieved parties.
The income tax officials had also acted on tip-offs given by the police department about unaccounted for cash. About 50 per cent of the tip-offs given by the police turned out to be ineffective, said I-T officials.
In a case that made headlines, five policemen from Pune City Police were dismissed for underreporting the amount of old currency notes seized in Kothrud in the first week of February. As per police panchanama records, the Kothrud police team seized demonetised currency notes of Rs 500 and Rs 1,000 , amounting to Rs 20 lakh, from some businessmen on February 2 and informed the Income Tax authorities for further probe.
However, it was revealed that police had actually seized Rs 66 lakh, and allegedly underreported the amount, pocketing the difference.Pune Police Commissioner Rashmi Shukla and Additional Commissioner of Police (administration) Pradip Deshpande passed an order to dismiss them from service on March 31.
I-T officials said they had written to the DGP to complain about instances of under-reporting. The DGP’s office had subsequently issued a circular debarring the police from conduct cash seizures in the absence of I-T officials.