DEMONETIZATION - 2016

I-T-Raids

BENAMI PROPERTY

BHARATH

“Black Money is the aggregate of incomes which are

taxable but not reported to authorities.”

• 2015: ‘The Black Money (Undisclosed Foreign Income and

Assets) and Imposition of Tax Act, 2015’ has become

functional.

• Black money is a serious problem, which needs strict

handling of laundering black or untaxed money.

• It needs to be brought into the economic mainstream.

• Stringent penalties are applicable under money laundering

legislations globally.

DEMONETIZATION NOTIFICATION

To curb financing of terrorism through the proceeds of Fake

Indian Currency Notes (FICN) and use of such funds for

subversive activities such as espionage, smuggling of arms,

drugs etc., into India, and for eliminating Black Money which

is a shadow of parallel economy on our real economy, it is

decided to cancel the legal tender character of the High

Denomination bank notes of Rs.500 and Rs.1000

denominations issued by RBI till now. This will take effect from

the expiry of the 8th November, 2016.

CASH VS DIGITAL

• Fake currency possible when cash is used for day to day

transactions and banking transaction is avoided.

• Informal savings are made formal by demonetization

as banks channel these for productive purposes.

• Modes of digital payments are: Unstructured

Supplementary Service Data (USSD), Aadhaar enabled

Payment System (AEPS), Unified Payments Interface

(UPI) and RuPay Cards.

CONDUCTING INCOME-TAX RAIDS

• Tax noncompliance is a range of activities that are

unfavorable to a state's tax system.

• This may include tax avoidance, which is tax reduction by

legal means, and tax evasion which is the criminal non-

payment of tax liabilities.

• The use of the term 'noncompliance' is used differently by

different authors. Its most general use describes non-

compliant behaviors with respect to different institutional

rules resulting in unobserved economies.

POST DEMONETIZATION I-TAX RAIDS

• Income tax and police raids across the country have caught

everybody's attention with the authorities seizing large stashes

of new Rs. 2,000 notes.

• Given that the new banknote is being carefully rationed, the

raids have raised some serious questions about how these

people have managed to get hold of so much of the new

currency.

• Within days of the announcement of the note ban, two people

were arrested with Rs 3.5 crore in New Delhi.

RAIDS OF I-T DEPT. - SINCE DEMONETIZATION

• Over 13 crores seized in New Delhi: Income Tax officials

and Delhi Police on December 10 raided the office of a law

firm T&T in southern part of the national capital and found

over Rs. 13 crore in cash, of which Rs. 2.5 crore was in

new currency notes.

• The Crime branch team found 7 crores in old Rs 1,000

rupee notes, 3 crores in Rs. 100 denominations, and the

rest a mix of old and new notes.

Chennai: Around 166 crore currency seized. On December

10, the I- Tax department seized 24 crore rupees cash in new

notes in Chennai. This comes after a haul of cash and gold

post demonetization in the city, in which over Rs 142 crore

unaccounted assets were recovered.

Hyderabad: In Hyderabad, CBI busted a note exchange

racket by recovering 65 lakh rupees of new 2000

denomination notes from the Senior Superintendent of Post

Offices.

Challakere, Karnataka: In another development, on December

10, the Income Tax department zeroed in on 5.7 crore rupees

cash in new notes. Besides 32 kgs of Bullion (gold biscuits)

and old notes worth 90 lakh rupees was stashed inside

bathroom tiles of a Hawala operator in Challakere town in

Karnataka.

The department officials laid their hands on the stash on the

basis of searches that began against casino and bullion

traders in Hubballi and Chitradurga districts on December 9.

Vellore, Tamil Nadu: On December 9, a seizure took place

in Vellore where Rs 24 crore in cash was recovered. Rs

2,000 currency notes, kept in 12 boxes, were seized from a

car.

Poll bound states of UP and Punjab: In Punjab, fake

currency with face value of 4.15 lakh rupees was seized in

Sangrur. In Uttar Pradesh, Enforcement Directorate

reportedly found huge amount of cash in a raid at the ruling

Samajwadi Party MLC Santosh Yadav's house.

Bhilwara, Rajasthan: In yet another raid on December 10,

Income Tax Department seized Rs 7, 20, 000 in new Rs

2,000 currency notes from Bhilwara, Rajasthan.

Surat, Gujarat: In Surat, on December 9, Income Tax

officials raided different locations in the city and found Rs

1.57 crore in the form of new currency notes issued by

the government after demonetization.

Goa: The CBI and local police arrested eight persons and

confiscated Rs 1.5 crore worth of new currency in Goa on

Dec. 7.

• Raid at former BJP leader's house in West Bengal: On

December 6, former BJP leader Mahesh Sharma from

West Bengal was arrested by the special task force. Rs 33

Lakh in form of Rs 2,000 notes was confiscated from him.

• Four bank officers were accused by the police of

converting black money after Rs. 5.7 crore cash was

seized from a hawala operator.

• While there is less than adequate number of Rs. 500 and

2,000 notes, crores in new cash has been found in raids

across the country over the past few weeks.

CRACKDOWN ON BLACK MONEY- CHENNAI

• I-T raid at Tamil Nadu Chief Secretary Rammohan Rao's

son's office; 33 crore in new currency seized.

• According to India Today report, during the search

operations which had commenced yesterday (21-12-2016),

around Rs 30 lakh and 5 kg gold were recovered from

Rao's residence.

• Significantly, along with the cash and bullion, 40 valuable

documents were also seized.

AXIS BANK - OVER RS 60 CRORE DEPOSITED

IN ACCOUNTS OF 20 FAKE COMPANIES

• The Income Tax department on Thursday (22/12) raided

an Axis bank branch in Noida sector 51 and reportedly

found out accounts belonging to 20 fake companies.

• According to a report, over Rs 60 crore was deposited in

those accounts. This came days after raid was conducted

at an Axis Bank branch in Delhi's Chandni Chowk.

AXIS BANK AND OTHER FAKE ACCOUNTS

• According to reports, I-T officials had said that about Rs 100

crore in old notes had been deposited in the accounts since

November 8, the date of the announcement of demonetization

by Prime Minister Narendra Modi with an objective to curb

down the flow of black money in the country.

• The officials told NDTV that these 44 fake accounts had been

created by the usage of forged documents. they said that the

investigators suspected that the money might have been routed

to buy gold.

• This is the second such raid to have been reported at a branch of

Axis Bank. Earlier last month, I-T officials had nabbed two people

with Rs 3.5 crores of cash in new currency notes while they tried

to come out of the Kashmere Gate branch in Central Delhi.

• The government had said that any deposit that amounted more

than Rs 2.5 lakh would come under the scrutiny of the Income Tax

department.

• The centre had also given the people with the outlawed and

untaxed notes one last opportunity and asked them to deposit the

amount in their accounts and pay half the taxes and penalty

CASH CRUNCH HITS RURAL INDIA HARDER

• New Delhi: The withdrawal of the high value currency notes

has hit rural India harder than the rest of the country.

• The about 25 crore accounts in the regional rural banks

received just Rs. 8000 crore in fresh currency from Nov. 10

to Nov. 30.

• This works out to be a little less than Rs. 350 per account

holder. Rural bankers persuade customers to seek only as

much cash as they immediately need.

IN THE LONG TERM, IT BENEFITS PEOPLE

• The finance Minister said that ‘Demoni’ benefits would be felt in the long run due to its good effect on the economy although it carries the pain in the transition.

• There would be better GDP, cleaner ethics and cleaner economy.

• The F M admitted that there was a shortage of cash and that was what made the parallel shift to electronic transactions so important. India will move digital. There will be increased money in the banking system, increasing abilities of banks to support the economy.

Terming demonetization a "monumental tragedy" and an "anti-

poor" measure, former F M, P Chidambaram today said. "I

don't think demonetisation is a reform. It is a monumental

tragedy which is anti-poor and has put millions in misery and

hardships," he said.

All cash is not black money; Agricultural income is not subject

to taxation, income of charities is exempted, as is the income

of religious trusts. Also, the people of Northeastern states do

not have to pay income tax and they have cash in hand, he

said.

BENAMI- PROPERTY WHICH LACKS THE OFFICIAL

OWNER'S NAME

• Parliament had passed the Benami Transactions

(Prohibition) Act, and the rules and provisions of the

Benami Transactions (Prohibition) Act came into

force on November 1, 2016.

• The existing Benami Transactions (Prohibition) Act,

1988, was renamed as the "Prohibition of Benami

Property Transactions Act, 1988".

• Benami Property Transactions Act, 1988 has been

amended by the Benami Transactions (Prohibition)

Amendment Act, 2016 (BTP Amendment Act).

• The rules and all the provisions of the BTP Amendment Act

shall come into force on 1st November, 2016.

• After coming into effect of the BTP Amendment Act, the

existing Benami Transactions (Prohibition) Act, 1988 shall

be renamed as Prohibition of Benami Property

Transactions Act, 1988 (PBPT Act).

• The PBPT Act defines benami transactions, prohibits them

and further provides that violation of the PBPT Act is

punishable with imprisonment and fine.

• The PBPT Act prohibits recovery of the property held

benami from benamidar by the real owner.

• Properties held benami are liable for confiscation by the

Government without payment of compensation.