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Income Tax department sends warning note to trusts, societies

Sources said more such notices will be sent in the coming days.

Written by Maneesh Chhibber | New Delhi |
November 16, 2016 1:26:22 am
Income Tax department sends warning note to trusts, societies Income Tax Department Building. (Express photo by Vasant Prabhu)

THE INCOME-Tax department has started sending notices to societies and trusts, including religious and charitable trusts, asking them to inform it about cash balances as on November 8, the day the government announced the decision to demonetise Rs 500 and Rs 1,000 notes.

Sources said more such notices will be sent in the coming days. While the move is being dubbed as a “preventive measure”, sources in the I-T department said the government has decided to take “strictest possible action” against those who are found to have violated the law.

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The notices are being sent under Section 133(6) of the Income Tax Act, 1961, which empowers the I-T authorities to compel banks and other authorities to furnish information which could be useful in connection with any pending proceeding or enquiry.

“Submit cash balances as per your books of accounts of all institutions being run by you as on 31-03-2016 and as on close of 08-11-2016 to this office,” says a notice accessed by The Indian Express.

The reason for seeking the information is mentioned in the notice itself. “In the backdrop of this demonetisation of old currency notes, the department is also aware of the pressure or temptation that may be there on trusts and societies to accommodate others,” says the notice.

Stating that all deposits made in banks after November 8 “shall be part of scrutiny by the department after 30th December, 2016”, the notice also advises the management of such institutions not to deal with Rs 1,000 and Rs 500 notes, “by either accepting cash or paying in cash for any of your activities after November 8, 2016”.

“There are indications that some persons and/ or organisations have prevailed upon managements of some trusts and societies to accept their currency notes of high denomination and show the same as cash in hand. This is a much abused way to turn black money into white.

We have some specific instances also that we are following up on. However, these notices are only to ensure that such illegal acts are stopped. Failure of the persons to whom we have sent notices to furnish the information sought by us by November 18 will result in penal proceedings under the Act,” said a senior I-T officer.

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