I-T Dept. shocked by Tasmac’s acceptance of banned notes

Dismisses State undertaking’s explanation of law and order as reason for accepting invalid notes

15/03/2020, MOHAMED IMRANULLAH S.,CHENNAI

The I-T Department has sought tax for ₹57.29 crore in unexplained investment.

The Income Tax Department has expressed shock at the Tamil Nadu State Marketing Corporation (Tasmac) having accepted demonetised currency notes worth ₹57.29 crore from customers between November 9 and December 30, 2016, in contravention of the demonetisation announcement made by the Prime Minister on November 8, 2016.

After scrutinising the Corporation’s I-T returns for the year 2016-17, the department found that it had an opening balance of ₹84.23 crore as on November 9, 2016. Of that balance, ₹81.57 crore was in Specified Bank Notes (SBN or demonetised currency notes of ₹500 and ₹1,000) and ₹2.66 crore in other denominations.

Subsequently, Tasmac had collected ₹3,490.21 crore between November 10 and December 30, 2016, and the collections were deposited in bank accounts on a daily basis. Records showed that the Corporation had deposited about ₹140 crore in demonetised notes during the entire demonetisation period. After deducting the initial ₹81.57 crore, the balance worked out to ₹57.29 crore.

“The assessee is a government-owned State undertaking and it is beyond imagination how the State undertaking, managed by an IAS officer, would collect demonetised currency in contravention of the order of the Government of India,” the I-T department said in an Assessment Order passed on December 30, 2019, and accessed by The Hindu.

“Though assessee claimed that it accepted SBN from customers due to law and order problems, the assessee has failed to produce any evidence from Government of Tamil Nadu or the police evidencing any law and order issue that constrained [it] to sell non-essential commodity like liquor against invalid bank notes,” the I-T department order said.

Refusing to believe that illegal transactions could have been carried out by a State entity and since Tasmac did not provide branch-wise details of deposited demonetised notes, the I-T department said the transactions using demonetised notes should be treated as “unexplained investment,” for 2017-18.

Besides demanding tax for the unexplained investment of ₹57.29 crore, the department ordered proceedings against Tasmac.