Operation Clean Money-High risk issues from taxpayers response-. Comprehensive risk assessment as High, Medium, Low, and Very Low -Status Report of ITD
The Income Tax Department on the occasion of launch of Operation Clean Money Portal by Finance Minister placed Operation Clean Money (OCM) Status Report of May, 2017.
As per the Status Report (OCM), the ITD has launched Operation Clean Money-Phase II from May, 2017 onwards. The Status Report describes the Risk assessment and set of activities employed in Phase II of Operation Clean Money as under:
ITD on-boarded two specialized data analytics agencies and a business process management agency to augment departmental capability in analyzing large volume of cash deposit data, track the compliance status of taxpayers and reporting entities.
Phase II of Operation Clean Money includes following set of activities:
Comprehensive Risk Assessment
A comprehensive risk assessment (rule based) framework has been developed to identify cases with different levels of risk’ (High, Medium, Low, and Very Low). The number of persons of the 1st batch (including response as well as no response cases) under each risk category is as under:
| Risk Category | Description | Persons |
| High Risk | High risk issue with high Value at Risk (VaR) | 1.00 lakh |
| Medium Risk | High risk issue with low Value at Risk (VaR) | 7.54 lakh |
| Low Risk | No issue flagged | 5.95 lakh |
| Very Low Risk | Very low risk case | 3.41 lakh |
The framework also identifies specific risk issues for the flagged cases. The description of some high
High Risk Issues flagged during Response Assessment
A large number of taxpayers claimed their cash deposits to be out of Cash Sales to unidentified Persons (CSUP).High risk cases were identified as under:
High risk issues under this category are as follows:
High value cash deposit claimed to be out of cash sales to unidentifiable persons and no return has been filed since AY 2014-15 (HR1A)
| Description | The issue is flagged in cases where no return of income has been filed by the taxpayer since AY 2014-15 and the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of cash sales to unidentifiable persons. |
| Remarks | The taxpayer may provide details (preferably PAN) of the party to whom sales has been made or provide further explanation by revising the response. |
High value cash deposit claimed to be out of cash sales to unidentifiable persons and no business has been shown in the last return filed (HR1 B)
| Description | The issue is flagged in cases where no business income has been shown by the taxpayer in last return of income and the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of cash sales to unidentifiable persons. |
| Remarks | The taxpayer may provide details (preferably PAN) of the party to whom sales has been made or provide further explanation by revising the response. |
High value cash deposit claimed to be out of cash sales to unidentifiable persons and no turnover has been shown in the last return filed (HR1 C)
| Description | The issue is flagged in cases where nil turnover has been reported by the taxpayer in last return of income and the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of cash sales to unidentifiable persons. |
| Remarks | The taxpayer may provide details (preferably PAN) of the party to whom sales has been made or provide further explanation by revising the response. |
High value cash deposit claimed to be out of cash sales to unidentifiable persons is very high as compared to the turnover shown in the earlier return and other cases engaged in the similar business (HR1 D)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of cash sales to unidentifiable persons(CSUP), and the value of CSUP is relatively higher when compared with the turnover of taxpayer as shown in his last return of income and is also higher than the segment cut off for other cases in similar business segment. |
| Remarks | The taxpayer may provide details (preferably PAN) of the party to whom sales has been made or provide further explanation by revising the response. |
High value cash deposit claimed to be out of cash sales to unidentifiable persons is very high as compared to other cases engaged in the similar business (HR1 E)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of cash sales to unidentifiable persons(CSUP), and the value of CSUP is higher than the segment cut off for other cases in similar business segment. |
| Remarks | The taxpayer may provide details (preferably PAN) of the party to whom sales has been made or provide further explanation by revising the response. |
High value cash deposit claimed to be out of cash sales to unidentifiable persons is very high as compared to the turnover shown in the earlier return (HR1 F)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of cash sales to unidentifiable persons(CSUP), and the value of CSUP is relatively higher when compared with the turnover of taxpayer as shown in his last return of income. |
| Remarks | The taxpayer may provide details (preferably PAN) of the party to whom sales has been made or provide further explanation by revising the response. |
A large number of taxpayers had claimed that the deposited cash was received from other person in the form of loan, loan repayment, gift, donation and other cash receipt. High risk issues under this category are as follows:
High value cash deposit claimed to be out of loan received from unidentifiable persons (HR2A)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of loan received from unidentifiable persons. |
| Remarks | The taxpayer may provide details (preferably PAN) of the person(s) who have given the loan or provide further explanation by revising the response. |
High value cash deposit claimed to be out of loan repayment from unidentifiable persons (HR2B)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of loan repayment received from unidentifiable persons. |
| Remarks | The taxpayer may provide details (preferably PAN) of the person(s) who have paid the loan back or provide further explanation by revising the response. |
High value cash deposit claimed to be out of gift received from unidentifiable persons (HR2C)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of gift received from unidentifiable persons. |
| Remarks | The taxpayer may provide details (preferably PAN) of the person(s) from whom the gift is received or provide further explanation by revising the response. |
High value cash deposit claimed to be out of donation received from unidentifiable persons (HR2D)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of donation received from unidentifiable persons. |
| Remarks | The taxpayer may provide details (preferably PAN) of the person(s) who have given the donation or provide further explanation by revising the response. |
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of other cash receipts received from unidentifiable persons |
| Remarks | The taxpayer may provide details (preferably PAN) of the party from whom other cash is received or provide further explanation by revising the response. |
Under this category, those responses are assessed where the taxpayer has claimed that cash is received from identifiable persons without providing PAN. High risk issues under this category are as follows:
Cash deposit claimed to be out of cash sales to identifiable persons (without PAN) includes persons with large value transactions (HR3A)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of cash sales to identifiable persons |
| (without PAN) which includes persons with large value cash transactions. |
|
| Remarks | The taxpayer may provide details (preferably PAN) of the party to whom sales has been made or provide further explanation by revising the response. |
Cash deposit claimed to be out of loan received in cash from identifiable persons (without PAN) includes persons with large value transactions (HR3B)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that the cash deposit in the bank account(s) during the demonetization period is out of loan received in cash from identifiable persons (without PAN) which includes persons with large value cash transactions. |
| Remarks | The taxpayer may provide details (preferably PAN) of the person(s) with large loan transaction value or provide further explanation by revising the response. |
Cash deposit claimed to be out of loan repayment in cash from identifiable persons (without PAN) includes persons with large value transactions (HR3C)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of loan repayment received in cash from identifiable person(s) (without PAN) which includes persons with large value cash transactions. |
| Remarks | The taxpayer may provide details (preferably PAN) of the person(s) with large loan repayment value or provide further explanation by revising the response. |
Cash deposit claimed to be out of gift received in cash from identifiable persons (without PAN) includes persons with large value transactions (HR3D)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of gift received in cash from identifiable person(s) (without PAN) which includes persons with large value cash transactions. |
| Remarks | The taxpayer may provide details (preferably PAN) of the person(s) from whom large cash gifts are received or provide further explanation by revising the response. |
Cash deposit claimed to be out of donation received in cash from identifiable persons (without PAN) includes persons with large value transactions (HR3E)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of donation received in cash from identifiable person(s) (without PAN) which includes persons with large value cash transactions. |
| Remarks | The taxpayer may provide details (preferably PAN) of the person(s) from whom large cash donations are received or provide further explanation by revising the response. |
Cash deposit claimed to be out of other cash receipts from identifiable persons (without PAN) includes persons with large value transactions (HR3F)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of other cash receipts from identifiable person(s) (without PAN) which includes persons with large value cash transactions. |
| Remarks | The taxpayer may provide details (preferably PAN) of the person(s) with large value transactions or provide further explanation by revising the response. |
Under this heading, those responses are assessed where the cash is claimed to be out of earlier income or savings by the taxpayer. High risk issues under this category are as follows:
Cash claimed to be out of earlier income or savings is high and no return has been filed since AY 2014-15 (HR4A)
| Description | The issue is flagged in cases where no return of income has been filed by the taxpayer since AY 2014-15 and the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of earlier income or savings |
| Remarks | The taxpayer may provide further explanation by revising the response. |
Cash claimed to be out of earlier income or savings is high and no business has been shown in the last return filed (HR4B)
| Description | The issue is flagged in cases where no business income has been shown by the taxpayer in last return of income and the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of earlier income or savings |
| Remarks | The taxpayer may provide further explanation by revising the response. |
Cash claimed to be out of earlier income or savings is high as compared to the closing cash balance as 31.3.2016 in the return (HR4C)
| Description | The issue is flagged in cases where taxpayer has mentioned in the online response that the cash deposit in the bank account(s) during the demonetization period is out of earlier income or savings which is high as compared to closing cash balance as on 31.03.2016 in the ITR |
| Remarks | The taxpayer may provide further explanation by revising the response. |
Cash claimed to be out of earlier income or savings is high as compared to the closing cash balance in the latest return (HR4D)
| Description | The issue is flagged in cases where taxpayer has mentioned in the online response that the cash deposit in the bank account(s) during the demonetization period is out of earlier income or savings which is high as compared to closing cash balance as per latest return |
| Remarks | The taxpayer may provide further explanation by revising the response. |
Many taxpayers have claimed cash to be out of receipts exempt from tax.
High value cash deposit claimed to be out of cash out of receipts exempt from tax (HR5A)
| Description | The issue is flagged in cases where the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of cash receipts exempt from tax. |
| Remarks | The explanation requires verification. |
Many taxpayer have claimed cash to be withdrawn out of the bank account,
High value cash deposit claimed to be out of cash withdrawn out of bank account (HR6A)
| Description | The issue is flagged in cases where the cash withdrawn out of bank account is high and the taxpayer has mentioned in the online response that cash deposit in the bank account(s) during the demonetization period is out of cash withdrawn out of bank account(s). |
| Remarks | The explanation requires verification. |
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