The Operation Clean Money was launched by the Income Tax Department on January 31, 2017, to verify the large cash deposit made during the period from November 9 to December 30, 2016. The aim of launching this operation was to verify the taxpayer’s cash transaction status i.e., exchange/savings of banned notes during the time of demonetisation and to enforce strict actions if these transactions don’t match the tax status.
The mission of launching Operation Clean Money is to create a tax-compliant society through fair, transparent and non-intrusive administration where every Indian takes pride in paying taxes.
The operation entered into its second phase in May 2017. Under this initiative, 18 lakh taxpayers were sent emails and SMS for submitting a response online on the e-filing response. Updates in the form of OCM status are published by the Income Tax Department accounting for the action taken on the accounts that were revealed.
First Phase of the Operation Clean Money
The 3 key areas on which the first phase focused are:
Preliminary Assessment
Here, the assessment was done for the time of demonetization where the account of the depositors was compared with their tax profile. In this process 17.92 lakh people were identified and were requested to submit an online response on transactions they had carried out. Both business and non-business entities were analysed for the distribution of large cash deposits during the preliminary assessment.
e-Verification Process
After the account holders were identified and notified on the income tax e-filing platform of ITD, they were asked to submit an online explanation. The department also added supporting documents like User Guide and FAQ to help the taxpayers in submitting the online explanation. Apart from sending Email and SMS to the taxpayers, the Income Tax Department also released advertisements to educate taxpayers about registration and submission of online response.
According to the reports released, out of the 17.92 lakh accounts, 13.33 lakh account holders responded online even without visiting the IT office. These queries were involving cash deposits of around INR 2.89 lakh crore. Additional details of 41,600 bank accounts where cash was deposited were also disclosed by the taxpayers. The department thoroughly when through the explanations given by the taxpayers. If they found it to be justified and genuine then they would close the verification process.
Targeted Enforcement Actions
In 8,239 cases survey action was undertaken and undisclosed income worth INR 6,746 crores were detected. After assessing the account holders, such high-risk cases were identified and the below-mentioned actions were undertaken:
- More than 400 cases were referred to the Enforcement Directorate/Central Bureau of Investigation
- Search action was conducted on 900 groups and asset value of INR 900 crore was seized
Second Phase of Operation Clean Money
The second phase of Operation Clean Money was launched on April 14 2017. In this phase, additional 5.56 lakh people have been identified whose tax profiles are inconsistent. The main aim of phase two is to identify high-risk people for investigation. Two specialised data analytics agencies and one business process management agency for analysing the demonetization data and to track the compliance status of taxpayers. The second phase of this operation is to undertake actions like:
- Comprehensive Risk Assessment
- Differentiated Targeted Treatment
- Enable Citizen Engagement
- Identification of New Cases for Online Verification
- Identification of High-risk Cases using Advanced Analytical Techniques
- Ensuring Complete and Accurate Reporting of Information
A framework is set up to determine cases with different levels of risk.
| Risk Category | Number of People |
| High Risk | 1 lakh |
| Medium Risk | 7.54 lakh |
| Low Risk | 5.95 lakh |
| Very Low Risk | 3.14 lakh |
Operation Clean Money Portal and its Features
The government launched the portal for Operation Clean Money with specific features:
- Enabling Transparent Tax Administration: The department shares the status of sanitized cases and also shares the explanation of verification issues. It also shares the thematic analysis reports.
- Providing Comprehensive Information: The portal is a one-stop destination as it provides a detailed guide, FAQs, quick reference guides and training toolkits related to the e-verification process.
- Enabling Citizen Engagement: OPC portal also allows citizen engagement as it provides the citizens to take pledge, contribute by educating fellow citizens, by sharing their experience and also by providing feedbacks.