India’s Income Tax Department has issued hundreds of notices in cities and towns seeking “source” of funds from individuals and firms who have deposited huge amounts of cash in banks using the scrapped 500 and 1,000 rupee notes after November 8, a Press Trust of India report said.
The move comes after banks reported to it cases of “unusual or suspicious volumes of cash deposits” in their accounts, primarily amounts over 250,000 rupees (US$3,667).
The notices cite the date and amount deposited by a company or individual in the banned notes in the bank and seek supporting documents, books of accounts and bills to explain the source of the cash deposits.
If they are assessed as income tax, they will also have to file the copy of income tax return of past two years.
After the demonetization drive announced by Prime Minister Narendra Modi on November 8, the department has stepped up monitoring of real estate players, bullion traders and suspected “hawala” operatives to check the illegal use of the scrapped currency and subsequent generation of laundered money.
It has conducted a similar check at cooperative banks. In one case in Mangalore, it found that 800 million rupees in banned notes was exchanged by five societies, which had accounts in a cooperative bank in the port city.
Hundreds of charitable and religious organizations enjoying tax exemptions have also been issued department notices on their cash balances as of Nov. 8.