Indian Income Tax Department Keeping Watch on NRIs, Others to Track Property Fraud

The Income Tax Department of India has served notices to Non-Resident Indians (NRI) who have sold their properties in the last few years, wives of high net-worth individuals (HNIs) who don’t file income tax returns, and nominees in mutual funds in order to catch benami property holders, the Economic Times reported.

The notice has also been issued to those who had deposited more than Rs 1 lakh during demonetization, the ET report said citing officials who know about the matter.

The Benami Transactions Amendment Act 2016 states that one of the criteria of a benami transaction is where a property is transferred to or is held by a person while the payment has been made by another person. Another criterion is when a transaction or an arrangement regarding a property is conducted or made in a fictitious name.

Although the exact number of notices could not be determined, the number could be around 50,000, a senior income tax official said, according to the report . However, not all of these notices are prosecution notices, the official added. A prosecution notice implies that the person accused may have to face more stringent penalties and it is not possible for them to escape just by payment of a fine.

“We have been trying to figure out about benami transactions. So wherever red flags are raised, we have issued notices,” a tax officer was quoted as saying in the report. These notices are coming due to data mining by the department, the official added.

The notices have not been issued on a random basis, an official said. The tax department has observed a particular pattern after which it became alert and inspected the transaction.

According to another official, the tax department is assessing a lot of information, like phone records, credit card and PAN details and tax returns, as per the report. The data on social media platforms is also being checked.

In March, Minister of State for Finance Shiv Pratap Shukla said in a written reply to the Rajya Sabha that the tax department had identified more than 1,600 benami transactions till the end of February. It has also tentatively attached benami properties of over Rs 3,900 crore in more than 1,200 cases, Shukla stated, according to Hindustan Times.

“Show cause notices for provisional attachment of benami properties were issued in over 1,500 cases and provisional attachment has been made in over 1,200 cases. The value of properties under attachment is over Rs 3,900 crore,” Shukla said.