Stash converted into gold: Taxmen

Others opted for shell firms to route it

The income-tax (I-T) department has found that a large amount of black money was converted into gold or routed through shell companies after demonetisation to avoid depositing junked money in banks to escape notice of tax sleuths.

The I-T department has launched a country wide campaign to detect black money based on the data generated during the demonetisation after tax amnesty scheme Pradhan Mantri Garib Kalyan Yojna (PMGKY) ended in March.

The department has found that to escape tax authorities black money holders bought gold from jewellers so that they don’t have to deposit their unaccounted money in the banks after demonetisation.

In turn, the jewellers camouflaged the identities of the actual buyers and offered split bills after taking hefty commissions.

I-T officials told a news agency that the jewellers saw in demonetisation an opportunity to ramp up their sales and thought “they could get away” by showing these amounts as sales.

“Jewellers offered a platform to convert unreported cash into gold,” the official told the news agency, adding that split bills were below the value of `2 lakh, the threshold above which buyers have to provide the permanent account number (PAN) issued by the income-tax department.

“The buyers’ lists provided by the jewellers were false. After verification, it emerged that many of the buyers were financially weak and not in a position to spend such huge amounts shown in the invoices,” the official said.

In many cases where jewellers did not have required gold, demonetised currency was taken as advance booking and gold was delivered at a later date.

What raised suspicion of the I-T department is that they have found records which show as many as 90 per cent across cities — were closed at the time of the demonetisation announcement and sales at the day’s closing had been reported.

“Still, we found sales were registered in the accounting system either on November 8 or a date prior to that after the closing sales were reported. These sales were manipulated,” said I-T officials.

Shell companies also provided a strong helped to black money hoarders.

I-T department has dummy directors of these companies included a cancer patient who signed documents for a `10,000 monthly fee or charges of `200 for every signature.

Shell companies were also used as instruments to buy bullion. “We found invoices for bullion sales were generated against such companies while actual beneficiaries received the bullion,” tax officials told news agency.