Taxman Seeks More Data On Suspicious Deposits In Second Phase Of Operation Clean Money

After receiving an “overwhelming response” to the first phase of its ‘Operation Clean Money’, the income tax (IT) department has, in the second phase of the scheme, sought information from banks on account holders who made deposits of over 3 lakh after the government’s demonetisation exercise, a senior Central Board of Direct Taxes (CBDT) official told BloombergQuint on Monday.

This would include movement of funds from one account to another as well as deposits of over Rs 3 lakh in a single account, the official added.

Banks have already shared data sought by the CBDT in the second phase but these accounts will now be sieved before sending formal notifications to the concerned account holders, the official said. The department is yet to work out the parameters based on which account holders will be notified, he added.

The tax department had launched ‘Operation Clean Money’ for the e-verification of large cash deposits made during the period between November 9 and December 30, 2016 after old high-value currency notes were scrapped by the government. In its first phase the department had identified 18 lakh such account holders.

Accounts which came under the scanner in the first phase largely included those which saw ‘suspicious’ deposits of more than Rs 5 lakh in a single account, as well as deposits in the range of Rs 3-5 lakh made in multiple accounts by a single depositor, the CBDT official said.

The scheme will not be restricted to just two rounds. The tax department will continue to identify more suspicious deposits made during the 50-day period, another senior finance ministry official told BloombergQuint on the condition of anonymity.

5.27 Lakh Account Holders Respond To CBDT

Of the 18 lakh taxpayers identified by the income tax department in the first phase of ‘Operation Clean Money’, 5.27 lakh taxpayers have submitted their responses on the e-filing portal as on February 12, the CBDT said in a media statement issued later in the day.

In the 50-day period between November 9 and December 30, 2016, account holders increased the cash deposits in around 90,000 accounts, and provided details of additional 25,000 accounts in which cash was deposited, according to the CBDT. The response submitted by such account holders is being analysed in the context of “nature of business and business profile” in previous returns filed by the taxpayer.

The tax department said it is keeping a close watch on 4.84 lakh account holders who have a permanent account number (PAN), but have not yet responded to the tax department. The last date for their responses has been extended to February 15.