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Taxmen searches dubious firms suspected of laundering black money

After swooping on shell companies last week, the income tax department cracked down on finance companies selling ponzi schemes.

business Updated: Apr 20, 2017 19:12 IST
Raj Kumar Ray and Mahua Venkatesh

Soon after the end of the second black money disclosure scheme on March 31, the income tax department has carried out searches on 250 on dubious companies that were suspected to be used to launder unaccounted cash.

After swooping on shell companies last week, the income tax department cracked down on finance companies selling ponzi schemes.

Since April, taxmen visited at least 170 companies and individuals for alleged laundering of black money, sources in the Central Board of Direct Taxes told HT.

On Wednesday, there were searches in 80 places especially on ponzi firms in Tamil Nadu, Karnataka and Kerala.

Earlier, shell companies in Mumbai, Ahmedabad, Noida and Pune came under the scanner for providing bogus loans and purchases.

“The amount involved is over Rs 400 crore in these searches. The government has also decided to crackdown on tax evaders is set to intensify in the coming weeks with more such actions planned in all parts of the country,” an internal note of the department said.

People with black money were given one last chance to come clean under the PMGKY but now that the window is closed, we will not spare anyone who has illegal wealth,” a senior government official said, adding that the department has ample information about tax evaders.

The demonetisation drive initiated on November 8, was aimed at forcing black money hoarders by forcing them to deposit and exchange the old cash at banks so that it can later be matched with their actual income and extract taxes.

Operation Clean Money was launched on January 31 to detect slush funds deposited with banks and used for high-value purchases such as property and gold.

A major chunk of the black money amount deposited in banks are supposed to the coffers of the government as taxes and rest locked in the new bank deposit scheme under the Pradhan Mantri Garib Kalyan Yojana (PMGKY).

However, many Indians have not declared their unaccounted income until March 31, the last date to comply under the PMGKY, also called the second round of Income Disclosure Scheme (IDS-II).

Taxmen will now intensify searches and seizures against those people whose bank deposit do not match their income.

“Under Operation Clean Money, more than 60,000 persons, including 1,300 high risk persons, have been identified for investigation into claims of excessive cash sales during the demonetisation period,” the finance ministry said on Friday.

More than 2,362 search, seizure and survey actions have been conducted by the Income Tax Department (ITD) during 9th November 2016 to February 28, 2017, leading to seizure of valuables worth more than Rs 818 crore, which includes cash of Rs 622 crore, and detection of undisclosed income of more than Rs. 9,334 crore.

The Modi government rode to power three years ago partly on a promise to fight corruption and tax evasion. The government has since has tightened the noose around tax dodgers with schemes such as the enactment of a Black Money (Undisclosed Foreign Income and Assets) Act to unearth unaccounted for cash stashed abroad, launched a Income Disclosure Scheme (IDS-I) and scrapped Rs 500 and Rs 1,000 notes. It also gave tax evaders a chance to come clean under IDS-II.

Government data showed a 21.7% increase in the filing of income tax returns for 2016-17.

Gross income tax collections grew 16% in 2016-17, the highest in the last five years. Net tax collections after handing out refunds were up by 14%, which is fastest in last three years. Personal income tax receipts were up by 18%, with regular tax assessment rising 25% and self-assessment surging 22%.