I-T depatement tightens noose around abnormal deposits & property buys

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The government has on Wednesday asked all banks and post offices to report to the Income Tax Department of all deposits above Rs 2.5 lakh in savings accounts, as well as deposits exceeding  Rs 12.5 lakh in current accounts, made during the 50-day window till December the 30th  for depositing demonetised high-value notes. Banks and post offices now have to file a relevant statement of financial transaction on or before January 31, 2017. The decision comes in the wake of the demonetisation decision taken by the government on the 8th of November. 

The Reserve Bank of India has further asked all banks to ensure that customers submit a copy of their PAN card for any cash deposit exceeding Rs 50,000 to ensure tax rule compliance. Also, PAN is required if combined deposits exceed Rs. 2.5 lakhs before December the 30th. The previous limit for cash deposits without PAN was Rs 50,000 per transaction. A lot of people were depositing less than Rs 50,000 per day to escape the PAN provision. Tuesday’s circular ensures that  deposits made between 9 Nov and 30 Dec 2016 will require a PAN if the combined sum exceeds Rs 2.5 lakh. Upon implementation,incidences of abnormal deposits will come down.In keeping with the war on black money, the government has been keeping a close watch on all deposits in cash over the limit of Rs. 2.5 lakhs. The Ministry of Finance has notified the amended Rule for a filing of Annual Information Return (AIR) report by a banking company, cooperative bank and post offices on account of aggregate cash deposits in one or more current account of a person.

Furthermore, The Central Board of Direct Taxes (CBDT) has  amended rules in the Income Tax Act and asked all banks to furnish a statement of financial transaction in one or more current accounts of a person for cash deposits of Rs 12.5 lakh and above between November 9 and December 30.The CBDT’s notification on November 15 also stated that for all accounts except current accounts, banks would have to submit details of persons depositing Rs 2.5 lakh and above.

Major tax raids in the offing

The Income Tax department is known to be preparing to serve notices on all those now depositing money in banks that is disproportionate to their known source/s of income. Sources say the department will start serving the notices just after December 30, which is the deadline set by the central government to deposit and exchange the demonetised Rs 500 and 1,000 notes. These big denomination notes comprised around 86% of all of India’s cash liquidity. Sources state that The Income Tax department started preparing the notices from November 10 when banks opened across the country after a day’s closure following the big demonetisation announcement. Interestingly, the notices will  also go to those who have deposited or received cash in their accounts more than double their incomes. Cash dealings and property purchases by suspicious account holders will be under the scanner too. Sale or purchase of immovable property valued at Rs 30 lakh or more will also be under scrutiny.


Religious and charitable trusts have been issued dozens of I-T notices asking them to furnish details of ‘cash balances’ as on November 8, following the demonetisation of Rs 500 and Rs 1,000 currency notes. The notice went on to add that trusts and societies have been asked to submit cash balances as per their books of accounts as on 31 March up to 8 November to the I-T department. 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 transaction after November 8, 2016.

Informed sources also stated that the Income Tax department on Wednesday surveyed some real estate players in the National Capital Region (NCR) to check reports of alleged profiteering and tax evasion by these entities while converting the recently demonetised currency notes. Officials said the department conducted the exercise on at least four such entities in the Delhi-NCR region and visited over half-a-dozen premises. They said the tax sleuths made an inventory of cash and sale documents at these locations and checked sale documents.The department, since last week, has detected unexplained cash and sales worth Rs 100 crore in a similar crackdown on traders, jewellers and other operators while converting demonetised high-value currency notes.

Jewellers are in the spotlight too; raids in cities like Karnataka, Kolkata, Goa and Mumbai made significant recoveries. In the past week over 600 jewellers and 100 money exchangers were sent notices by tax authorities to check illegal use of old currency.In one incident, a jeweller from Panaji, Goa was caught with Rs. 90 lakh in cash and jewellery stocks. The Mumbai jeweller had  sold jewellery worth Rs. 45 lakh to a client in Goa. Over 4 crores were found during raids in Bengal over the last week too.

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