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Business News/ Politics / Policy/  Tax department wants all hands on deck to probe irregular deposits
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Tax department wants all hands on deck to probe irregular deposits

CBDT chairman Sushil Chandra has written to income tax commissioners to officers to look into irregularities that have cropped up after demonetisation

About Rs11.55 trillion of the estimated Rs16 trillion worth of invalidated notes have been deposited in banks. Photo: Pradeep Gaur/MintPremium
About Rs11.55 trillion of the estimated Rs16 trillion worth of invalidated notes have been deposited in banks. Photo: Pradeep Gaur/Mint

Mumbai: As the government steps up its probe into irregular deposits in the wake of demonetization, the income tax department has been hit by a staff crunch.

Central Board of Direct Taxes (CBDT) chairman Sushil Chandra has written to income tax commissioners to depute inspectors and assessment officers—these officers are otherwise not authorized to handle tax evasion cases—to look into irregularities that have cropped up after the cash withdrawal. Mint has seen a copy of the letter.

“Investigation directorates have intensified enforcement actions in detecting serious irregularities, they are however, severely handicapped because of non-availability of manpower," wrote Chandra, in a letter addressed to principal chief commissioners.

About Rs11.55 trillion of the estimated Rs16 trillion worth of invalidated notes have been deposited in banks. In many instances, tax evaders have used ingenious methods ranging from colluding with jewellers for buying gold jewellery with back-dated bills to incentivizing the poor to deposit the money into their Jan Dhan bank accounts for a small commission, prompting increased scrutiny.

A CBDT spokesperson declined to comment.

Since the note ban on 8 November, the tax department has probed more than 400 cases of which it has referred 30 cases to the enforcement directorate and the Central Bureau of Investigation because they involve serious irregularities.

Mint reported on 7 December that in these investigations, the tax department has seized more than Rs130 crore in cash and jewellery while taxpayers have admitted to Rs2,000 crore of undisclosed income.

But tax officials say these are small victories and that they are impeded by lack of manpower.

A 2015 report by industry lobby, the Federation of Indian Chambers of Commerce and Industry said that the total number of officers needed in CBDT was 57,793. However, there is a shortfall of 15,002 officers.

“The number of officials has by and large remained the same," said an income tax official, on condition of anonymity as he isn’t authorized to speak to the media.

Now, these officials will also have to scrutinize the thousands of transactions where amounts in excess of Rs2.5 lakh (in cash) have been deposited in accounts after demonetization. The finance minister, in a press conference on Thursday said that simply depositing black money in the bank will not make it white.

That also presents a fresh problem for the taxman—examining cases where no returns have been filed.

“We are examining how cases of individuals who haven’t filed returns will be picked up for scrutiny," said a second income tax official. “Many in India are TDS (tax deducted at source) payers and do not feel the need to file returns," he added.

Mint reported on 8 December that although the tax department is constrained by the lack of personnel, it is aggressively using technology to keep track of suspicious transactions.

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ABOUT THE AUTHOR
Jayshree P Upadhyay
Jayshree heads a team of reporters focussing on legal, regulatory, investigative stories. She has worked for over a decade, reporting on financial scams, legal stories and the intersection of corporate and regulatory issues. She is based in Mumbai and has previously worked with Business Standard, Mint, The Morning Context and Bloomberg TV India.
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Published: 09 Dec 2016, 04:22 AM IST
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