The Demonetization act which brought it an economic shock to the country way back in November 2016 is all set to bring in more trouble to people who tried to evade tax using various ways.
The revenue department has already issued notices to more than 10,000 people under the Benami Law and is seeking details related to the source of income from those individuals. The department is currently analyzing the data on deposits of cancelled notes which were deposited in banks post demonetization move.
People who have proper knowledge about the ongoings said that many others are likely to get similar notices in the coming days. "While the money may have come into the banking system, the money has come with a name," a senior official who is close to the development stated. "Not just income tax but several government departments can now use the data for future investigations."
Benami Transactions (Prohibition) Act is a stringent and infractions of the same can lead to imprisonment, notes an expert.
Amit Maheshwari, a partner with Ashok Maheshwary & Associates said that "The cash deposits that the income tax suspected to be unaccounted for have now attracted the income tax department's attention and benami notices have been issued".
The Income Tax Department in India is using advanced technology and techniques to detect the tax evasion and it includes the PAN details, credit card, tax returns, phone records, data available on social media platforms and so on.
Paras Salva, the partner of KPB & Associates said that the "Data collected via various sources leaves a pattern and analytics can raise red flags that tax officers can investigate further," said another person close to the development. The benami notices are preliminary and have been issued to those who had deposited unaccounted cash or whose cash deposits may not correspond with their income".
He further noted that in most of the cases, people even went ahead and deposited cash in those bank accounts which does not belong to them with an intention to evade tax. The notices would mean both the bank account holder and the one who deposited the amount would face benami investigations." Mr Salva added.
The tax department, in many such cases, has previously issued notices and raided properties of the alleged tax evaders. Experts believe that the rich people have been depositing cash or purchase properties in the name of their spouses, relatives and in some cases even drivers as well, notices have been issued to all the people connected with the case.
Post demonetization, several suspicious financial transactions are bought under the tax department's scrutiny after cross-referencing with previous data on cash deposits. The government is utilizing advanced tools for both structured as well as unstructured data and can easily analyze and establish relationships among different firms or people and this can go up to 16 levels deep, and based on the various information sets such as phone calls, IT returns, addresses, social media interaction, travel trends.