The Benami amount (Black Money) in the bank account deposited post de-monetisation will be seized and confiscated.
New Delhi: Warning people against depositing their Uncounted old Currency (Black Money) in someone else’s bank account, the tax department has determined to slap charges under the newly enforced Benami Transactions Act against persons who violate that carries a penalty, prosecution and rigorous jail term of a maximum 7 years.
In a related development, official sources stated that the tax department has noticed over Rs 200 crore in unrevealed income after it conducted over 80 surveys and about 30 searches in cases of doubtful usage of the scrapped currency. About Rs 50 crore has also been seized in these operations since November 8, they stated, across various states.
The sources stated the taxman has introduced a country-wide operation to identify suspect bank accounts where massive cash deposits have been made post-November 8 when government demonetized the Rs 500 and Rs 1000 currency notes.
Such instances where the suspicion is found to be true will be accused under the Benami Property Transactions Act, 1988, applicable to both movable and immovable property that has been enforced from November 1 this year.
They stated the Act empowers the taxman to confiscate and prosecute both the depositor and the person whose Black money he or she has “adjusted” in their account.
“The Central Board of Direct Taxes has asked the IT department to closely monitor all such transactions where people are using bank accounts of other persons for hiding and converting their black money into white using the old currency notes of Rs 500 and Rs 1000.
“Earlier some instances have been reported in this regard and the department is set to issue notices under the Benami Act,” the sources told PTI.
Primarily, they said, the notices will be issued in cases of huge cash deposits beyond of Rs 2.5 lakh but in cases where a suspicious report is received from the bank or the Financial Intelligence Unit below this point will also be investigated.
“Such an arrangement where a person deposits old currency of Rs 500 and Rs 1000 in the bank account of another person with an considerate that the account holder shall return his money in new currency, the transaction shall be regarded as Benami transaction under the stated Act.
“The person who deposits old currency in the own bank account shall be considered as beneficial owner and the person in whose bank account the old currency has been deposited shall be categorized under this law as a benamidar,” a senior official clarified.
The Benami Act, the official stated, provides that the benamidar, the beneficial owner and any other person who abets or induces the Benami transaction, shall be punishable with severe imprisonment for a period ranging from 1-7 years.
“The Benami amount in the bank account deposited post de-monetization will be seized and confiscated and the accused will also be liable to fine which extends up to 25 % of the fair market value of the Benami property,” the official stated.
The Income Tax department has stepped up its action to check black money transactions, money laundering, and tax dodging in the wake of the de-monetization and has issued hundreds of notices of inquiry to charitable and religious trusts to show their account balances and to those who have deposited huge cash in their bank accounts.