The income-tax department has issued notices seeking ‘sources of income’ of hundreds of individuals and firms who have deposited huge amounts of cash in banks after the government’s announcement to scrap Rs 500 and Rs 1,000 notes on November 8.
Officials said the department has initiated a country-wide enquiry under Section 133 (6) of the Income Tax Act (power to call for information). The notices were issued after banks reported ‘unusual or suspicious volumes of cash deposits’, most of them beyond Rs 2.5 lakh.
Cash deposits above Rs 2.5 lakh could attract tax and penalty and authorities might take away 90% of the money if there is an income mismatch, according to a government decision.
“The notices are being issued where the department feels the cash deposits made in the demonetised currency is suspect. This is part of the vigil that the taxman has deployed to check instances of tax evasion, money laundering and black money in the wake of the demonetisation of the two high denomination currencies...,” an official said.
The notices cite the date and amount deposited by an entity in old currency. It goes on to seek “supporting documents, books of accounts and bills to explain the said cash deposits” from them.
“If you are assessed to Income Tax, then you shall also file the copy of Income Tax Return of last two years,” a notice said.
The department has also stepped up survey operations against real estate players, bullion traders and suspected hawala operatives to check the illegal use of scrapped currency and the subsequent generation of black money.
The department is closely watching cooperative banks after it found out that old currency worth Rs 8 crore was exchanged by five societies, which had accounts in a cooperative bank in Mangalore.
It has also issued notices to hundreds of charitable and religious organisations to check on possible accommodation of black money through donations to these organisations. Charitable and religious organisations have been asked to report their cash balances.