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Tax Department To Launch 2nd Phase Of Bank Accounts' Scrutiny Next Month
February, 21st 2017

The I-T department is likely to launch the second phase of 'Operation Clean Money' next month to close in on unaccounted money making its way into banks but may ignore standalone deposits below Rs. 5 lakh for now. The Income Tax department will appoint two data analytics firms in next 10 days to analyse the deposits in bank accounts before and after November 8 last year -- the day the government decided to junk 86 per cent of the currency in circulation.

The exercise will attempt to link individuals with multiple accounts or PAN numbers who have deposited large sums of money, officials said.

The I-T Department has begun analysing accounts which show a pattern of deposits or have some common linkage like common address, PAN, telephone number, email address or name. "Standalone low amount of deposits is not under scrutiny,"
an official said.

"The Tax Department may ignore deposits below Rs. 5 lakh on a standalone basis for the time being," the official added. The Tax Department had launched a massive operation to catch evaders who deposited unaccounted cash in junked 500 and 1,000 rupee notes in bank accounts post demonetisation. In the first phase of the project code named 'Operation Clean Money', the department sent SMS/emails to 18 lakh people who made suspicious deposits over Rs. 5 lakh during the 50-day demonetisation period.

Over 7 lakh people have replied in e-filing portal and acknowledged to have made such deposits. The second phase of the project will begin next month after data analytics firm conduct Big Data analysis matching I-T data with the SFT report from banks, officials said.

"In next 10 days, government will get data from banks about deposits made by people before demonetisation and after demonetisation as part of statement of financial transactions (SFT) report from banks," an official said adding the I-T department will appoint two data analytics firms to analyse the same set of depositors in next 10 days.

Deposits of above Rs. 2 lakh totalling Rs. 10 lakh crore were made post-demonetisation. Of this, Rs. 4.5 lakh crore is under verification, he said adding, the remaining deposits were made by government agencies and departments like PSUs, or by such people whose deposits matched with the income and the pattern of deposits made earlier - so these are not under scrutiny.

The data analytics firm will tally the post demonetisation deposit data with the Income Tax Returns (ITRs) and previous deposits to detect any anomaly and possible tax evasion. The official said that data churning by the I-T department is likely to go on for at least two years.

"The idea is to complete the process without harassing people and reducing people-to-people interaction," he said. However, the biggest challenge the I-T Department is facing is that a large number of people are not registered on the income tax portal.

The official said that field offices have been instructed to send letters to those not registered in e-filing portal asking them to get registered.

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