Hundreds of companies and individuals are under the government's scanner for making cash deposits of more than Rs 10 lakh in bank accounts since April 2016.
The government is also scrutinising thousands of accounts through which demand drafts and payment orders for values below Rs. 50,000 were made after November 8, later cancelled and payments taken in cash.
Instances of more than 3.6 million (36.06 lakh) cash deposits of more than Rs 10 lakh been made in banks during April 1, 2016 to July 14, 2017 have been identified for scrutiny.
These will be matched the account holders' declared income source as disclosed in their tax returns, an official, who did not wish to be identified, told Moneycontrol.
This implies that the government has been scrutinising suspicious bank transactions from even seven months before Prime Minister Narendra Modi announced demonetisation on November 8, 2016, outlawing Rs 500 and Rs 1,000 notes as part of a broader strategy to clamp down on corruption and black money.
Officials said that data mined after November 8 has thrown up several tax evasion methods that the government will now crack down on.
Also read: GST, demonetisation to make cash dealings difficult: Arun Jaitley
In some instances, account holders were found to be indulging in discounting of demand drafts of small amounts for a commission in collusion with bank officials.
Small amounts of cash was being withdrawn by the same people using demand drafts.
Discounting is a system through which banks can offer cash withdrawal against a draft upto to a certain limit, and also make drafts by depositing cash upto a certain limit.
The government had amended Rule 114E of the Income-tax Rules, 1962, effective from April 1, 2016. According to the new rule, a bank is required to report cash deposits above Rs 10 lakh in a financial year in one or more accounts (other than a current and fixed deposit account).
In addition, banks have also been reporting cash payments above Rs.1 lakh in a financial year in one or more credit card bills of the same person.
As of July 14, 2017, the total number of cash deposits exceeding Rs 10 lakhs in a financial year in one or more accounts is 36, 06,269.
Of these, cumulative cash deposits of more than Rs 25 lakh were made in about of 4.62 lakh accounts during November 8 to December 30, 2016.
Cash deposits of more than Rs 5 lakh were made in 23.87 lakh accounts during these 50 days.
Banks have also reported accounts that show "unusual activity compared with past transactions," sudden activity in dormant accounts, and fund movement in accounts that are inconsistent, with what would be expected from declared business.
Last month, the government deregistered and shuttered more than 1 lakh companies with doctored accounts, sending a stern message that the government will come down heavily on tax dodgers who refuse to come clean despite repeated warnings.
More than three lakh companies have been identified so far, based on data mined after demonetisation, whose books haves been found to be suspicious.
More than 37,000 shell or paper companies have also been found to be funneling black money through obscure routes such as hawala.
“Data mining is going on in banks of about how funds have moved after November 8,” Prime Minister Modi had said on July 1.
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