I­T department will probe cases of spike in income under revised returns

Those who showed a sudden spike in income when filing revised tax returns after demonetisation should now prepare themselves to face scrutiny.

These cases are in addition to the 1 lakh high­risk cases already identified by the income tax department gathered information from bank on the basis of Scrutiny . “Questions need to be asked where there is a sudden spike in income and a revised return is filed,” said a senior income tax official. “We will take them up for scrutiny.”

The department is proposing to be selective and focused instead of going in for mass scrutiny to make the process more effective. It’s also trying to make the exercise non-intrusive, so the limited scrutiny will be completely online, carried out via emails.

Only about Rs 5,000 crore was deposited under the Pradhan Mantri Garib Kalyan Yojana that was launched in the wake of the note swap to give people one last chance to come clean.

With that having come in well below expectations, the income tax department is getting ready to take a look at suspect cases.

A higher revised income could indicate hidden non­tax paid incomes or unaccounted cash from previous years being disguised as a rise in sales, according to officials.

Operation Clean Money

There have been instances of individuals and businesses showing higher income or sales and then a revision in returns filed after demonetisation, apart from reports of high­-value purchases.

The various tax laws allow to filing revised returns if some income is escaped out unintentionally.

Prime Minister Narendra Modi cancelled the legal tender status of Rs 500 and Rs 1,000 notes on November 8 as part of the government’s campaign against black money. The invalid notes had to be deposited with the banks by December 31.

OPERATION CLEAN MONEY 2.0

The Central Board of Direct Taxes has rolled out the second phase of Operation Clean Money and identified lacks of persons those on high-risk by using advanced data analytics.

High-­risk categories identified include businesses claiming cash sales as the source of money deposited post demonetization, cash which is found to be excessive compared to past profiles or industry norms. Large cash deposits made by government or public sector employees and persons who have undertaken high­ value purchases have also been identified.

Persons who have used shell entities for layering of funds and in those case where the department did not received any response after towards SMSes and mails will also be subject to deeper investigation, which could include search or surveys, officials said.