Demonetization – 7 years Punishment for persons using Other’s Bank Account to legalize Black Money; says IT Department

Currency Loss -ITAT -Taxscan

The Income Tax Department to levy penalty of 7 years imprisonment for persons depositing money in other’s account during the 50 day window period. Sources reveals that the Department has decided to impose charges under the newly enforced Benami Transactions Act against bank violators that carries a penalty, prosecution and rigorous jail term of a maximum seven years.

Reportedly, the Department has conducted about 80 surveys and 30 searches, as result of which almost 200 crores have been seized as undisclosed income. further, the Department has initiated a country-wide operation to identify suspect bank accounts where huge cash deposits have been made post ban of Rs. 1000 and 500 currency notes.

In cases where the suspicion is found to be true, both the depositor and the actual owner of the money will be prosecuted under the Benami Property Transactions Act, 1988. The act is applicable on both movable and immovable property, that has been enforced from November 1 this year.

“The CBDT has asked the Income Tax department to closely monitor all such transactions where people are using bank accounts of other persons for hiding and converting into white their black money using the old currency notes of Rs 500 and Rs 1000.

The Department has already been asked to issue notices in cases of huge cash deposits beyond the threshold of Rs 2.5 lakh. However, investigation can be initiated in cases where a suspicious report is received from the bank or the Financial Intelligence Unit below this threshold.

“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 explained.

“The benami amount in the bank account deposited post de-monetisation will be seized and confiscated and the accused will also be liable to fine which extends upto 25 per cent of the fair market value of the benami property,” he added.