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Operation Clean Money

by | May 10, 2024 | Income Tax, Income Tax filing | 0 comments

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Operation Clean Money

The Income Tax Department initiated Operation Clean Money on January 31, 2017, in response to the significant cash deposits made between November 9 and December 30, 2016, during the demonetization period. The primary objective was to scrutinize taxpayers’ cash transactions, including exchanges and savings of banned notes, and take necessary actions if discrepancies were found.

The mission of Operation Clean Money is to foster a tax-compliant society characterized by fair, transparent, and non-intrusive administration. The goal is to cultivate a culture where every Indian citizen takes pride in fulfilling their tax obligations.

In its second phase, which commenced in May 2017, Operation Clean Money reached out to 18 lakh taxpayers via emails and SMS, prompting them to provide responses online through the e-filing portal. The Income Tax Department regularly updates the status of Operation Clean Money, detailing the actions taken concerning the identified accounts.

First Phase of the Operation Clean Money

The 3 key areas on which the first phase focused are:

Preliminary Assessment

During the assessment phase conducted amidst the demonetization period, the Income Tax Department scrutinized the accounts of depositors and compared them with their tax profiles. This process identified 17.92 lakh individuals who were then requested to provide an online response regarding the transactions they had conducted. Both business and non-business entities were examined to analyze the distribution of large cash deposits during the initial assessment.

E-Verification Process

Once identified and notified via the income tax e-filing platform, account holders were prompted to submit an online explanation. The Income Tax Department provided supportive resources such as user guides and FAQs to aid taxpayers in this process. In addition to email and SMS notifications, the department released advertisements to inform taxpayers about the registration and submission procedures online.

Of the 17.92 lakh accounts flagged, 13.33 lakh account holders responded online without the need to visit the IT office. These responses pertained to cash deposits totaling approximately INR 2.89 lakh crore. Furthermore, taxpayers voluntarily disclosed additional details concerning 41,600 bank accounts with cash deposits. The department meticulously reviewed the explanations provided by taxpayers, closing the verification process if found to be justified and genuine.

Targeted Enforcement Actions

Following assessment, high-risk cases were identified, leading to the following actions:

  1. Survey action was undertaken in 8,239 cases, resulting in the detection of undisclosed income worth INR 6,746 crores.
  2. Over 400 cases were referred to the Enforcement Directorate/Central Bureau of Investigation for further investigation.
  3. Search action was conducted on 900 groups, resulting in the seizure of assets valued at INR 900 crore.
Second Phase of Operation Clean Money

The second phase of Operation Clean Money, initiated on April 14, 2017, targeted an additional 5.56 lakh individuals with inconsistent tax profiles. This phase aimed to identify high-risk taxpayers for further investigation. To achieve this, two specialized data analytics agencies and one business process management agency were engaged to analyze demonetization data and monitor taxpayer compliance.

Key objectives of the second phase included:
  1. Comprehensive Risk Assessment: Analyzing taxpayer data to assess the level of risk associated with each case.
  2. Differentiated Targeted Treatment: Tailoring enforcement actions based on the risk profile of each taxpayer.
  3. Enable Citizen Engagement: Facilitating communication and cooperation between taxpayers and tax authorities.
  4. Identification of New Cases for Online Verification: Identifying additional cases for online verification based on risk analysis.
  5. Identification of High-risk Cases using Advanced Analytical Techniques: Leveraging advanced analytical techniques to pinpoint high-risk cases.
  6. Ensuring Complete and Accurate Reporting of Information: Ensuring that all relevant information is accurately reported and acted upon.

A framework was established to categorize cases according to their risk levels, enabling targeted and efficient enforcement actions.

Risk CategoryNumber of People
High Risk1 lakh
Medium Risk7.54 lakh
Low Risk5.95 lakh
Very Low Risk3.14 lakh
Operation Clean Money Portal and its Features

The government introduced a dedicated portal for Operation Clean Money, equipped with several key features:

  1. Transparent Tax Administration: The portal facilitates transparent tax administration by providing updates on sanitized cases and explanations of verification issues. Additionally, thematic analysis reports are shared to enhance understanding.
  2. Comprehensive Information: Serving as a centralized resource, the portal offers detailed guides, FAQs, quick reference materials, and training toolkits related to the e-verification process. This comprehensive information ensures clarity and accessibility for taxpayers.
  3. Citizen Engagement: The OPC portal encourages citizen engagement by offering various avenues for participation. Citizens can take pledges, contribute to educating fellow citizens, share their experiences, and provide feedback. This engagement fosters collaboration and strengthens the effectiveness of Operation Clean Money.

Read More: Section 115BAC: New Tax Regime

Web Stories: Section 115BAC: New Tax Regime

Official Income Tax Return filing website: https://incometaxindia.gov.in/

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