Three years after demonetisation, IT Dept issues 17-point checklist to trace unaccounted cash 

In a bid to seize illegal cash, the Income Tax Department has issued a 17-point checklist to tax commissioners across the country to track those who deposited unaccounted cash during demonetisation.

In a directive to the Principal Chief Commissioners of Income Tax and Principal Director Generals of Income Tax, the Central Board of Direct Taxes (CBDT) said that in continuation of the handling of cases related to demonetisation, a verification checklist of cash deposits has been prepared to assist the assessing officers so that deviant cases can be taken up for further study.

The CBDT move is aimed at spreading the department's net wide and deep to catch those who deposited unaccounted cash during demonetisation.

In this latest directive to tax officers, a 17-point checklist has been created, which has to be updated on the department's server for further action. All unaccounted cash deposits made between November 9, 2016 and December 31, 2016 will be examined as part of this plan.

The checklist also says that if a taxpayer disputes the amount, the correct amount has to be mentioned after checking with the bank.

The particulars in the checklist are -- return filing compliance, total income of the taxpayer in 2016-17, gross total income (including exempt income) of the taxpayer in FY 2016-17 and percentage of cash deposit to gross total income (including exempt income).

The assessing officers will have to check on the checklist with regard to the nature of deposit on assessment of the explanation provided by the taxpayer and the quantum of unaccounted deposits as determined by the assessing officers.

On the response side, they have to file if the explanation was acceptable, partially acceptable or not acceptable. The nature of the deposit option could be sale or advance for sale of land or any other capital asset, gift, repayment of loan and cash in hand.

Some other verification check points are whether the quarterly VAT return is revised in the post demonetisation period, if small part of the cash is deposited in or withdrawn from the bank despite having huge cash in hand, if there are large changes in the purchase and sales figures between the original and the revised VAT returns and if the changes are for genuine reasons.

The assessment procedures as per the checklist are -- if the books of the accounts have been rejected, if additions have been made u/s 68 to 69D and if tax is calculated as per section 115BBE and if penalty u/s 271AAC has been levied.

The examination of monthly cash sales and cash deposits lists the period from April 2015 to November 8, 2016.

On November 8, 2016, the Government of India had announced demonetisation of all ₹500 and ₹1,000 banknotes. It also announced the issuance of new ₹500 and ₹2,000 banknotes.