Second Phase of Operation Clean Money: 5.56 Lakh New Taxpayers Identified for Scrutiny

With a government's objective to curb black money in the country, the second phase of Operation Clean Money (OCM) aims to target high-risk individuals who have undergone high-value transactions like property purchases, sending money abroad or making massive cash deposits. During the first phase of Operation Clean Money (OCM), individuals whose cash deposits do not align with the Income Tax Department's information have been identified. Now, during the second phase, the government aims to send notices to the people who carried out high-value transactions during the period of demonetisation and who have not disclosed the high-value transaction information in their ITR. The government has identified the high-risk individuals using the Specified Financial Transaction (SFT) and advanced data analytics.

What is Operation Clean Money?

Income Tax Department launched the second phase of Operation ‘Clean Money’ on 14 April 2017 to detect the flow of black money into the banks after demonetization. During this phase, 5.56 lakh new persons have been identified whose tax profiles are inconsistent with the cash deposits made by them during demonetization period. 

The department used the information received under the statement of financial transactions (SFT) that contains the details of high-value transactions to identify these persons. Also during the first phase of Operation Clean Money(OCM), govt announced that the e-verification of large cash deposits made during 9th November to 30th December 2016 would be scrutinized. During this, 17.92 Lakh persons were identified for e-verification of large cash deposits, out of which only 9.72 lakh people had submitted an online response.

Also, another 1.04 lakh persons who did not disclose all bank accounts during e-verification in the first phase of OCM have been identified. The information in respect of these cases and accounts are available in the e-filing window of the PAN holder (after log in) at the portal https://incometaxindiaefiling.gov.in. The PAN holder can view the information using the link “Cash Transactions 2016” under “Compliance” section of the portal. The taxpayer will be able to submit online explanation without any need to visit Income Tax Office. The complete process along with screenshots are explained here. 

All identified persons are also being informed through e-mail and SMS for submitting a response online. Also post demonetization, the IT Department had made a mandatory rule to disclose the details of cash deposited in the time period from November 9 to December 31, in the bank accounts aggregating to Rs 2 lakh or more while filing the income tax return. 

The taxpayer should ensure that ITR is compliant with amount deposited in bank accounts during the period of demonetization and while computing income, the amounts so deposited are considered/taken into account while paying taxes. Cash deposits made in the above period may thus be fully and truly disclosed in the ITR.

Portal of Operation Clean Money and its Features

The government launched the Portal of Operation Clean Money (https://www.cleanmoney.gov.in) on 16th May 2017 having following features:

• Providing Comprehensive Information: at one place consisting of step- by -step guides, frequently asked questions, user guides, quick reference guides and training toolkits related to the verification process and other issues.
• Enabling Citizen Engagement: for creating a tax compliant society where every Indian takes pride in paying taxes. Citizens would be able to support the operation clean money by taking pledge, contribute by engaging and educating fellow citizens and share their experiences and provide feedback.
• Enabling Transparent Tax Administration: by sharing status reports (including sanitized cases and explanation of verification issues) and thematic analysis reports (for example – taxpayer segment analysis of cash deposit data).