Representative image

NEW DELHI: The income tax department’s data analysis team in Ghaziabad has had a busy few months, scanning through a few million data points to build a case against those who are suspected to have misused the cash deposit facility during demonetisation .

Starting this week — which coincides with demonetisation anniversary — it will start dispatching notices under the I-T Act to nearly 70,000 entities that deposited over Rs 50 lakh old notes into bank accounts but have not cared to respond to data uploaded in their accounts or even file returns, something that 1.3 lakh others with similar deposits have done.

“We have been waiting for people to file their returns before sending notices,” said an officer. While individuals were to file returns by August 5, the extended deadline for those whose accounts had to be audited ended on Sunday. Of the 18 lakh cases with suspect deposits, around 12 lakh have responded to the department’s queries. The lens is on the remaining 5-6 lakh, many of whom are expected to have filed their returns.

“We want to set an example by going after the big fish. We will go after the smaller depositors later and will given them one more call to respond. If they don’t respond, then formal notices will start going from January,” explained a high-ranking officer monitoring the entire exercise. The plan is to complete the assessment of these cases in two years. Action against the “big fish” will start this week.

Also under scrutiny are around 22,000 tax returns filed by those who either did not file returns earlier or those who revised their returns after demonetisation was announced on November 8, 2016. “These are cases where we noticed erratic behaviour. In many cases the numbers are not matching,” explained the senior officer.

With over 99% of the demonetised Rs 500 and Rs 1,000 notes back in the banking system, the government is being questioned whether the entire exercise flushed out any black money at all.

Critics are questioning Prime Minister Narendra Modi ’s move arguing that it only resulted in further slowing down the economy and massive job losses in the unorganised sectors.

The government has countered the criticism saying that the move will yield results over time. The focus is now on the revenue department to detect and draw out black money . It proposes to scan the returns filed during the current financial year to match sales trends of companies and their taxable income. There is greater reliance on statement of financial transactions which deals with property and share transactions apart from cash deposits.

There are revenue officers who warn of the long haul “You have data but then you need to establish the link, build a case and then fight it in various levels. It’s not easy. Will the department retain its focus for 10 years?” said an officer in the Central Board of Direct Taxes.

Senior officers in the board, however, believe that the results are already visible with compliance on the rise. They point to a rise in the number of permanent account numbers that have been issued in recent months. In addition, they said, more returns are being filed this year.

