DeMo ghost strikes again

Vijay C Roy

Tribune News Service

Chandigarh, January 1

Thousands of jewellers across the country, including the northern region, have received income tax recovery notices over cash deposits made after the government announced demonetisation of high-value currency notes on November 8, 2016. According to sources, these jewellers deposited huge amounts of cash (beyond their average sales) in their accounts during the period. For the accounting year 2016-17, the suspected cases where large deposits were made, December 31, 2019 was the last day for assessment.

The sources said after the demonetiation was announced, gold and jewellery was allegedly sold by jewellers on backdated bills and at a premium of 30-60% compared to the market value, which was hovering around 31,000 per 10 gm of gold. Many jewellers also sold gold and jewellery for over Rs 2 lakh without maintaining any customer record or PAN details.

For instance, suppose a customer purchased gold worth Rs 8 lakh during the demonetisation period, many jewellers made backdated entries in their records and raised invoices in such a way that the name and address of the customer was not required, as any transaction beyond Rs 2 lakh required PAN and cash could not be accepted, said the sources.

Citing another example, the sources said, there was a curious case of a Chandigarh-based jeweller who showed sales of more than his bank credit limit in a single day. “A jeweller during the intervening night of November 8 and 9, 2016 sold jewellery worth Rs 12 crore as against his credit limit of Rs 11.5 crore, which is practically not possible.”

On November 8, 2016, the government announced demonetisation of Rs 500 and Rs 1,000 notes. Several jewellers accepted old currency notes even after the allowed period. According to the department, there were huge sale of jewellery on the night of November 8, 2016 and it continued for almost a month, which was not allowed and instead of depositing cash on the following day, the jewellers kept on depositing the amount for the entire month.

Suspecting illegal transactions, the Income Tax Department had conducted surveys on jewellers across Mumbai, Delhi and in parts of Punjab after the demonetization was announced. The surveys were also conducted in cities like Ludhiana, Chandigarh and Jalandhar. The officials were asked to keep a check on illegal transactions and suspicious movement of huge cash aimed at tax evasion, but still many unscrupulous jewellers were involved in the trade.

According to the World Gold Council estimates, there are approximately 4,10,000 jewellers in India. Out of this, roughly 35% are based in northern states and contribute 15% to the total gold demand.

However, it is difficult to quantify the notices but people associated with the trade said almost nine out of 10 jewellers in the region have got notices.

“The I-T notices have created a sense of fear among the jewellers. We will meet Finance Minister Nirmala Sitharaman over the issue. If there is any wrongdoing on the part of jewellers, the government can take action but sending notices merely on the assumption of wrongdoing will discourage the trade and industry,” said Praveen Khandelwal, secretary general, Confederation of All India Traders.