Post-demonetisation, IT department issues 87 notices, freezes bank accounts

New Delhi, Delhi, IndiaUpdated: Jan 30, 2017, 02:55 PM IST

The Benami Transactions Act empowers the taxman to confiscate and prosecute both the depositor and the person whose illegal money he or she has 'adjusted' in their account. Photograph:(Reuters)

Initiating a stringent action against black money holders post notes ban, India's Income Tax department said it has issued 87 notices and has frozen bank deposits worth crores in 42 cases nationwide under the newly enforced Benami Transactions Act which attracts a heavy penalty and rigorous jail term of a maximum seven years.

Post the demonetisation order of the government on November 8 last year, the department had carried out public advertisements and had warned people against depositing their unaccounted old currency in someone else's bank account saying such an act would attract criminal charges under the Benami Property Transactions Act, 1988, applicable on both movable and immovable property, that has been enforced from November 1, 2016.

"After in-depth investigations, the I-T department has issued 87 notices under section 24 of the said Act (notice and attachment of property involved in benami transaction). A total of 42 properties, largely money worth crores in bank accounts and an immovable property of benamidars have been attached," officials said citing an analysis report.

The I-T department is the nodal department to enforce the said act in India. They said the taxman has issued numerous summons under the Benami Transactions Act and is in the process of issuing more.

The decision, they said, to slap the stringent provisions of the Benami Transactions Act was taken after analysing serious cases where the illegalities were blatant and suspect cash was deposited in either benami accounts or Jan Dhan or dormant accounts.

The taxman had initiated a nationwide operation to identify suspect bank accounts where huge cash deposits have been made post-November 8 when the government demonetised the Rs 500 and Rs 1000 currency notes.

Officials said the act empowers the taxman to confiscate and prosecute both the depositor and the person whose illegal money he or she has "adjusted" in their account.

"Such an arrangement where a person deposits old currency of Rs 500 and Rs 1000 in the bank account of another person with an understanding that the account holder shall return his money in new currency, the transaction shall be regarded as benami transaction under the said act.

"The person who deposits old currency in the bank account shall be treated as beneficial owner and the person in whose bank account the old currency has been deposited shall be categorised under this law as a benamidar," a senior official had explained earlier.