Four steps to net the ‘clever’ black money hoarder: SIT recommendations to Modi govt

Justice MB Shah and Justice Arijit Pasayat say more needs to be done to prevent people from holding black money in the future.

Published: 11th November 2016 10:27 PM  |   Last Updated: 11th November 2016 11:16 PM   |  A+A-


People take selfies with the new currency in Kozhikode. ( Sanesh A. | EPS)

By Online Desk

While demonetisation is the right step in curbing black money, more needs to be done to prevent those holding black money from converting it to white and to also ensure that after a few months things don’t go back to the way they were, a special investigation team on black money wrote in a letter to Union Finance Minister Arun Jaitley on Friday.

The SIT on Black Money, headed by Justice MB Shah and Justice Arijit Pasayat, both former judges of the Supreme Court, suggested some measures to be implemented.

1) Large cash deposits should be reported by banks to the tax department. The SIT recommended that the threshold not be made public so that black money hoarders do not dodge the measure by depositing amounts below the set limit.

Taxmen should corroborate the deposits with such persons’ known sources of income. If the amounts are found to be disproportionate to income earned, they should be penalised heavily and prosecuted.

2) To prevent black money hoarders from subverting the system by using poor people to deposit money and thus convert them to white, the SIT stressed that banks must also report any deposits that are not commensurate with previous transactions in such accounts.

Action then needs to be taken against both the facilitator and the beneficiary.

3) To pin down those who thought they were being clever by converting all their black money into gold the day that demonetisation was announced, the SIT recommended that cash deposits made by jewellers be checked against their sales and the corresponding PAN numbers of jewellery buyers.

The purchases made if not proportionate to known sources of income would invite penalty and prosecution against the buyer.

4) An upper limit should be imposed on cash transactions, to prevent further hoarding of black money, the SIT said. The recommendation was, in fact, made in a letter dated November 7, just a day before demonetisation was announced.

In the wake of new currency noted of a higher denomination of Rs 2,000 being introduced, such a cap on cash transactions would ensure that it does not become easy for hoarders to stack illicit savings in the higher denomination notes.


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