After demonetization, the IT department issued notices via email and SMS to 18 lakh people who deposited amounts over Rs.5 lakh into various accounts during the initial weeks of demonetization. This was done under the ‘Operation Clean Money’ initiative, but tax and legal experts suggest that no one really had to offer any explanation, as notices sent by email and SMS have no legal backing. If clarification is sought, then the IT department should ideally (and legally) send out formal tax notices.
However, 40% (7.3 lakh) of the 18 lakh people who deposited amounts over Rs.5 lakh during demonetization have come forth and offered their explanations online as to where the money came from and why it was kept in the form of cash.
A senior official from the IT department has stated that “The department will now decide the next course of action for the 10.7 lakh people who have not responded.” But the department may be overstepping its bounds, as the previous email notices were not formal tax notices to which people are legally compelled to respond.
Currently, the explanation and proofs submitted by the 7.3 lakh respondents are being analysed and scrutinized by IT sleuths and income tax officials. The IT department has also hired the services of outside experts to ensure the best data interpretation and to also ensure that suspicious deposits are investigated.
For the remaining 10.7 lakh people who have not offered any explanation, the IT department may soon send out official formal tax notices.