The Income Tax Department has, in the second phase of Operation Clean Money (OCM), identified 5.56 lakh people, whose deposits during the demo- netisation window do not match their income profile.
“These are persons whose tax profiles were found to be inconsistent with the cash deposits made by them during the demonetisation period,” the official statement said.
“Another 1.04 lakh persons who did not disclose all bank accounts during e-verification in the first phase of OCM have also been identified. In the first phase, 17.92 lakh persons had been identified for e-verification of large cash deposits, of which 9.72 lakh people had submitted online responses.”
The statement added that all taxpayers so identified would be informed via email or SMS and that they can view the relevant information on the e-filing portal https://incometaxindiaefiling.gov.in.
"The taxpayer will be able to submit online explanation without any need to visit Income Tax office. All identified persons are being informed through Email and SMS for submitting response online," the statement added.
“There are two types of scrutiny methods employed by the Income Tax Department,” SP Singh, Senior Director of Tax at Deloitte explained. “One is Computer Scrutiny Selection (CSS), and the other one is manual selection. For CSS, there are some built in processes and the computer selects the cases for scrutiny based on whatever parameters the Department applies. The Department can limit these parameters in such a way that the cases do not exceed what the officers can handle.”
“The manual selection process can also be called the risk-based approach to assessment,” Mr Singh added. “The Department wants to select those cases where the risk of tax avoidance is higher. These 5 lakh assessees selected would be in the category.”
The Department added the taxpayers would have to also provide details of deposits of more than Rs 2 lakh in their Income Tax Returns, which would then be matched with the information with the Income Tax Department.
"The taxpayer should ensure that ITR is compliant with amount deposited in bank accounts during the period of demonetisation and while computing income, the amounts so deposited are considered/ taken into account while paying taxes," the Department said. "Cash deposits made in the above period may thus be fully and truly disclosed in the ITR."
The government had in March informed Parliament that the first phase of Operation Clean Money had yielded 17.92 taxpayers whose demonetisation-related deposits did not match their income profiles. Of these, the Income Tax Department had said at the time that it had received 12 lakh responses from 8.38 lakh distinct PAN numbers.
“Appropriate action in non-compliant cases is taken as per law, which includes searches, surveys, assessment of income, levy of taxes, penalties, etc. and filing of prosecution complaints in criminal courts, wherever applicable,” Santosh Kumar Gangwar, Minister of State for Finance had said in the Lok Sabha at the time.
Operation Clean Money was launched on January 31, 2017.
