‘Black money not completely weeded out from India’

Cuttack: Vice Chairman of SIT on Black Money, Justice Arijit Pasayat today said the black money is not completely weeded out from India.

“It is the lookout of the Enforcement Directorate and the Income Tax officials to trace out the people who have invested their black money either in real estate or in the purchase of land or gold,” Pasayat told media persons here.

Stating that Centre has taken a right decision, he, however, said the common man has faced difficulties due to demonetisation of Rs 500 and Rs 1000 currency notes. “In fact most of the people who have no black money are now having difficulties due to the step taken by the Centre. I think steps should be taken to sort out their difficulties at the earliest possible,” he pointed out.

The former Supreme Court Justice said he and Chairman of SIT on Black Money and former Supreme Court Justice MB Shah, in their interim report to the Supreme Court had given a proposal for demonetisation of Rs 500 and Rs 1000 currency notes to substantially bring down the volume of black money in the country after taking note of the seizure of these currencies from the house of corrupt people.

The SIT has also suggested the Centre to ensure that no person can have a cash of Rs 15 lakh in his/her house.

Asked whether SIT is taking steps to trace out black money stashed in foreign banks, Pasayat said “We are making efforts in this regard and the process is on. But our first priority is to weed out black money from our country,” he noted.

Notably, in a jointly written letter to the Union Finance Minister Arun Jaitley, both the former Judges of the Supreme Court had stated that while it is a step in the right direction, a few steps would need to be taken to not only ensure that people holding black money in cash are not able to convert it into white but also to ensure that after a few months, a similar situation where the unscrupulous people are again able to store their illicit income in form of cash, does not arise.

To ensure the above the two former judges of the Apex Court had also recommended the Union minister to direct the banks to report to the Central Board of Direct Taxes (CBDT) or Financial Intelligence Unit (FIU) on deposit of large cash in any account above a particular threshold. The threshold need not be made public or it shall encourage people who deposit black money to do so below the threshold prescribed. All such deposits be analyzed in reference to known sources of income of the person and heavy penalty and prosecution should follow in case the deposit is beyond the known sources of income of the person.

Since there are possibilities that people holding black money may also use poorer people to convert their money into white by parking the money in their bank accounts, the banks should be instructed to report any deposits not commensurate with the average transactions in those accounts. Wide publicity needs to be given the in case such cases are detected action shall be taken against both, the person holding black money as well as the facilitator.

As per media reports, a large number of people are reported to have bought jewellery in cash on the day demonetization was announced. Cash deposits made by jewellers should be correlated with their sales and PAN number of the buyers of jewellery. The same should then be analyzed against known sources of income of PAN holders and action taken accordingly.

On putting a limit of cash holding and cash transaction, both the former Supreme Court Judges had also mentioned that the cleansing which is achieved through this demonetization measure is likely to be short lived in case systemic steps are not taken to ensure that people do not start hoarding black money in cash again.

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They said the SIT in its previous reports had recommended putting a limit on cash transactions and also having an upper threshold on cash holding. They had reiterated that both these recommendations, if implemented, shall go a long way in ensuring that cash is not used as a medium of storing black money in the future.

"The recommendation relating to putting a limit on cash holding is specially important in this regard since with the introduction of Rs 2,000 notes, it shall be even more easier to store large amounts of money in cash. If no limit to cash holding is imposed, we may lose the benefits of demonetization quite soon," they had pointed out.