Lok Sabha Question No. 4281 (UNSTARRED), answered on 2017-08-11
Subject: Assessment of Black Money before Demonetisation
Ministry: FINANCE
Asked by: V. SATHYABAMA

## Government of India Ministry of Finance Department of Revenue

## LOK SABHA

## UNSTARRED QUESTION NO. 4281

TO BE ANSWERED ON FRIDAY, AUGUST 11, 2017

SHRAVANA 20, 1939(SAKA)

## 'ASSESSMENT OF BLACK MONEY BEFORE DEMONETISATION'

## 4281. SHRIMATI V. SATHYA BAMA:

Will the Minister of Finance be pleased to State:

- (a) whether as per the assessment  made  by  revenue  intelligence agencies,funds and unaccounted  black  money  were  flowing  into  the  real  estate,  mining,  manufacturing  and entertainment sector, prior to demonetisation, if so, the details thereof;
- (b) the details of companies involved and booked in investment of such black money flowing from tax havens and organisations along with the action taken against the erring companies;
- (c) whether international financial transactions to and from foreign countries are monitored/scanned/probed,  if  so,  the  details  thereof  and  the  findings  involving  shady/illegal financial transactions during the last three years, agency-wise;
- (d) the action taken by the Government in this regard; and
- (e)  whether  India  has  entered  into  a  pact  with  other  countries  to  share  the  mutual  flow  of information pertaining to money laundering and terror funding, etc., if so, the details thereof and the outcome thereon?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SANTOSH KUMAR GANGWAR)

- (a) & (b): Analysis of seizure of valuables and admission of undisclosed income during searches conducted  by Income  Tax  Department  (ITD)  during last three financial years, prior to demonetization, indicated that the persons searched were engaged in different sectors including in real estate, finance, trading, manufacturing, educational institutes, and services. Apportionment of the undisclosed income admitted amongst specific sectors has,  however not been found feasible.

Appropriate action against tax evasion is an on-going process. Such action under direct tax laws includes searches, surveys, enquiries, assessment of income, levy of penalties and filing of prosecution complaints before criminal courts, wherever applicable.

The initial outcome of the search & survey action conducted by the Income-tax Department during last 3 financial years, prior to demonetization, is as under:

## Search:

| F.Y     |   Number groups searched |   Total assets seized (In Rs. crore) |   Undisclosed income admitted u/s 132(4) of the Income-tax Act, 1961 [in Rs. crore] |
|---------|--------------------------|--------------------------------------|-------------------------------------------------------------------------------------|
| 2013-14 |                      569 |                                  808 |                                                                               10791 |
| 2014-15 |                      545 |                                  762 |                                                                               10288 |
| 2015-16 |                      445 |                                  713 |                                                                               11066 |

## Survey:

| Financial Year   |   No. of surveys conducted |   Undisclosed income detected (in Rs. crore) |
|------------------|----------------------------|----------------------------------------------|
| 2013-14          |                       5327 |                                        90390 |
| 2014-15          |                       5035 |                                        12820 |
| 2015-16          |                       4422 |                                         9654 |

Disclosure  of  information  regarding  specific  taxpayers  is  prohibited  except  as  provided under section 138 of the Income-tax Act, 1961 (the Act).

Enforcement Directorate is also mandated with the task of enforcing provisions of Foreign Exchange  Management  Act,  1999  (FEMA)  and  Prevention  of  Money  Laundering  Act,  2002 (PMLA). The role of Directorate comes into picture as and when any contravention under FEMA and occurrence of scheduled offence under PMLA including cases under Section 51 of the Black Money (Undisclosed Foreign Income  and  Assets)  and  Imposition  of  Tax  Act,  2015  as  well  as terror funding related cases, is brought to the notice of the Directorate.

(c) & (d): The Prevention of Money Laundering Rules inter-alia obligates Reporting Entities to file reports relating to all cross border wire transfers of the value of more than five lakh rupees or its equivalent  in  foreign  currency  where  either  the  origin  or  destination  of  fund  is  in  India  to  the Financial Intelligence Unit(FIU).

Section 139 of the Act,  inter-alia,  requires  that  a  person,  being  a  resident  other  than  not ordinarily resident in India to furnish the income tax return who at any time during the previous year holds as a beneficial owner or otherwise, any asset (including any financial interest in any entity) located outside India or has signing authority in any account located outside India; or is a beneficiary of any asset (including any financial interest in any entity) located outside India.

Based on the criteria laid down by the Central Board of Direct Taxes (CBDT), certain returns of  income/transactions  are  scrutinized.  Total  income  of  the  person  is  assessed  which  may include undisclosed income detected. Further, appropriate actions as per provisions of the Act are taken in respect of evasion of income or other irregularities. Further, a comprehensive and a more stringent law in dealing with undisclosed foreign income/assets stashed abroad, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 has come into force w.e.f. 01.07.2015 which provides for separate taxation of undisclosed foreign income and assets and has more stringent provisions for concealment penalties and prosecution.

(e)  :  The  Government has entered into tax treaties  with  a  number  of  countries/jurisdictions for exchange of information for tax purposes. As on 30.06.2017, India had such treaties with 148 countries/ jurisdictions. There has been a significant increase in the number of requests made to foreign jurisdictions. A total of 4059 requests were made in the last 3 financial years (2014-2015 and 2016-2017) against 2093 made in earlier 6 years  (2008-2009 to F.Y 2013-2014).

As  a  member  of  Egmont  Group  (156  countries)  Financial  Intelligence  Unit  -  INDIA exchanges information  based  on  request  or  spontaneously  with  foreign  FIUs.  Apart  from  this, FIU-IND has signed bilateral MOU with 38 FIUs of other countries

Further, India has proactively enhanced global efforts to combat tax evasion/black money, inter-alia,  by  joining  the  Multilateral  Competent  Authority  Agreement  in  respect  of  Automatic Exchange of Information (AEOI) and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA). India has joined a group of 48 countries as early adopters  to  the  new  global  standards  and  will  be  exchanging  information  automatically  from 2017.