Tightening the screws on black-money hoarders, the Income-Tax Department has begun sending notices to those who deposited substantial sums into their bank accounts during demonetisation, but did not file tax returns this year.

The move is the next step in the government’s Operation Clean Money, which was launched in January, soon after ₹500 and ₹1,000 notes were demonetised last November.

“There are thousands of such names. A list has been prepared and forwarded to the respective field offices,” said a person familiar with the development.

The old notes were deposited and exchanged in banks during the window between November 9, 2016 and December 30.

“...a list of assessees who had deposited substantial cash in bank accounts during the demonetisation period but have not yet filed income-tax return for assessment year 2017-2018 till date has been generated for further follow-up action,” said the Central Board of Direct Taxes in a recent circular.

It has now asked officers in each jurisdiction to verify the list and issue tax notices under Section 142 (1) of the Income-Tax Act to file their returns. The process will be completed by December 31, the circular said.

In the first phase of Operation Clean Money, the tax department had identified around 18 lakh persons whose cash transactions did not appear to be in line with their tax profile. Each person had to respond and verify their deposits.

Post demonetisation, 56 lakh new individual taxpayers filed returns by August 5 this year, as compared to 22 lakh last year. Similarly, self-assessment tax paid by non-corporate taxpayers rose 34.25 per cent between April 1 and August 5.

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