Income Tax Department has warned societies and trusts, including religious and charitable bodies, to not accept old currency Rs 1000 and Rs 500 and furnish cash balance details as on November 8, the day the central government announced the decision to demonetise the high denomination notes.
The IT department officials termed the move as "precautionary measure", keeping in view the Government of India posturing against the black money holders.
I-T Department in its notices have invoked the Section 133(6) of the Income Tax Act, 1961, which empowers the I-T authorities to compel banks and other authorities to furnish information which could be useful in connection with any pending proceeding or enquiry.
"Submit cash balances as per your books of accounts of all institutions being run by you as on 31-03-2016 and as on close of 08-11-2016 to this office," the notice issued by I-T Department reads.
"In the backdrop of this demonetisation of old currency notes, the department is also aware of the pressure or temptation that may be there on trusts and societies to accommodate others," says the notice.
Talking to Greater Kashmir, Principal Commissioner, I-T Jammu and Kashmir, Sangeeta Gupta said that it is advisable for all such bodies that they should not deal with scrapped currency notes any further.
"Any trust, society found dealing in such notes will be dealt as per the provisions of the I-T law," she said. "The management of such institutions should not deal with Rs 1,000 and Rs 500 notes, by either accepting cash or paying in cash for any of your activities after November 8, 2016."
Sources informed that I-T Department across country has started sending such notices to trusts and societies.
As per IT department officials, there are apprehensions that people may use these trusts or society to convert their black money into white. "That's why these warning notes will be send to the management of these institutions," said an official.
I-T Department may slap 200 percent penalty on unexplained high cash deposits in banks even before annual income tax returns are filed so as to prevent black money being converted into white during the 50-day window provided for turning in the junked Rs 500/1000 notes.
IT department is also collating data on spurt in deposits in zero-balance Jan Dhan accounts and will slap a 200 percent penalty on unexplained high value cash deposits.
Under Section 12 of the Prevention of Money Laundering Act, tax department can ask for any information from any agency including the Reserve Bank of India and cooperative banks besides all scheduled banks.