IT raid on jewellers engaging in illegal transactions due to demonetisation

The Dollar Business Bureau (Source: PTI) 

Taking advantage of the confusion arising due to the sudden announcement in the recalling of the Rs 500 and Rs 1000 notes by the Govt, it was brought to the notice of the income tax department on Wednesday and Thursday, that many tax evaders were engaging in illegal transactions to dispose off their unaccounted wealth. Taking cognizance of the same, the income tax department conducted multiple surveys in Delhi, Mumbai and other major Indian cities on both the days.

That jewellery stores were messaging their customers assuring them of their services 24 hours a day, rasied many eyebrows.

Buying gold from jewellers in cash without providing a permanent account number (PAN), backdated bills for high-value purchases and money launderers accepting Rs.500 and Rs.1,000 notes for a commission and foreign exchange conversions at a premium were some of the prominent trends being reported after the government announced demonetizing the high-value bank notes with effect from midnight Tuesday.

Since the government had announced that cash deposits of more than Rs.2.5 lakh would come under the tax department’s scrutiny and high value cash deposits of more than Rs.10 lakh will attract a tax and a 200% penalty if they are not explained by the declared sources of income, this has led to widespread panic among hoarders and tax evaders.

This led tax evaders to look for ways of disposing of their cash in the past couple of days.

The notes ceased to be legal tender as part of a government crackdown on black money and terror financing through fake currency notes.

People have been given time until 30 December to deposit the notes in bank accounts; the use of these notes has been permitted for select purposes for a limited period.

The tax department has been closely watching prominent business centres after the announcement was made, said a senior income tax department official, who did not want to be identified.

Scrutiny of jewellers has also been stepped up. “The jewellers’ books for the past few days will be scrutinized. When a jeweller comes to deposit cash by 30 December, he will be asked to account for deposits. He will be asked if he has sold jewellery for Rs2 lakh in cash. He will be asked to submit PAN of buyers,” he said.

Taxmen are also keeping track of transactions where backdated bills are being generated by jewellers, the official said.

In New Delhi, the surveys were conducted in popular market places such as Karol Bagh, Dariba Kalan and Chandni Chowk, along with key trading hubs in Mumbai and Punjab.

The tax department is hoping that the surveys will discourage traders from resorting to illegal transactions and lead them to deposit cash in bank accounts and pay the corresponding tax and penalty.

Despite its aggressive drive to check tax evaders, the government has been trying to reassure genuine taxpayers that they have nothing to worry about while making cash deposits.

The government has made it clear that cash deposits of less than Rs.2.5 lakh will not attract any scrutiny from the tax department.