Operation Clean Money notice: how to respond


The income tax department has identified about 556,000 individuals in the second phase of ‘Operation Clean Money’. These are individuals whose tax profiles were found to be inconsistent with the cash deposits made by them during the demonetization period. These names are in addition to about 1.8 million individuals identified in the first phase of the drive. Read more about that here: bit.ly/2ldQSe6. Of these people, about 1.04 lakh had not disclosed all their bank accounts during e-verification in the first phase of the drive. “If you were part of the first list, you were expected to provide all the details on the e-filing website. Now you don’t just have to clarify the transactions and amounts deposited, you also have to take account for it in your returns,” said Archit Gupta, founder and chief executive officer, ClearTax.

What should you do?

Those identified by the tax department are notified through email and SMS. If you were contacted, login into your e-filing account on https://incometaxindiaefiling.gov.in. Your username is your PAN and you can create an account using your PAN and date of birth. Now, click the ‘Cash Transactions, 2016’ option from the drop-down list under ‘Compliance’ tab. This option is also on your dashboard in the e-filing website. If you had made any deposits between 9 November and 30 December 2016—which are out of tune with your past returns—the details of those transactions would reflect in your account. You do not need to visit a tax office to give clarifications. You can respond on the website itself.

How to respond

The response can be submitted in two steps. First, acknowledge whether the transactions listed were made by you or not. For each transaction, you can choose either ‘The account relates to this PAN’ or ‘The account does not relate to this PAN’. If you select ‘The Account does not relate to this PAN,’ the tax department will send it back to the bank for verification, Gupta said. But if the transaction information belongs to you, select the option ‘The account relates to this PAN.’ After that, you will be directed to the next step where you can respond about details of the transaction.

Here, you need to confirm that the amount mentioned in the transaction is correct. If there is a mismatch between what you deposited and what is mentioned, input the correct amount you had deposited in the bank account.

Explanation of deposit 

Once you confirm the amount of money deposited by you in the bank account, the next step is to give details about the deposited amount. Based on the information provided by the individual, the tax department will take further necessary action. If the deposited amount in the bank is from more than one categories (or out of cash in hand), the details of each source and amount from it needs to be mentioned.

If you claim that the deposit was out of earlier income or savings, you may need to provide additional information which will be matched with your earlier tax returns. If this is not in line with your profile, the case may be selected for verification, based on the risk criteria.

If cash is claimed to be out of receipts exempt from tax—such as agricultural income, gift, or donation—further details are needed, such as, PAN of the person who gifted or donated. In the other three options, if you mention that the cash deposited is received from another person, you have to give a break-up of the ‘Cash received from identifiable persons (with PAN)’, ‘Cash received from identifiable persons (without PAN)’, and ‘Cash received from un-identifiable persons’. You can also mention that the deposited money is disclosed or is to be disclosed under Pradhan Mantri Garib Kalyan Yojana.

Even if you have not received any such message from the department, and had deposited some amount during demonetisation, you should log in or create an e-filing account and check the compliance section.