Income Tax Department Has Expressed Shock Over Tasmac’s Acceptance Of Demonetised Notes Worth ₹ 57.29 Crore

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

After scrutinising Tasmac’s I-T returns for the year 2016-17 through the Computer Aided Scrutiny Selection System (CASS), the department found that Tasmac had an opening balance of ₹84.23 crore as on November 9, 2016, which was declared a bank holiday. 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 cash collections were deposited in its bank accounts on a daily basis. Records showed that the corporation had deposited about ₹140 crore in demonetised notes in bank accounts during the entire demonetisation period. After deducting ₹81.57 crore available as on November 9, 2016, the balance worked out to ₹57.29 crore. “The assessee is a government-owned State undertaking and it is beyond imagination as to how the State undertaking managed by an IAS officer would collect demonetised currency in contravention of the order of the Government of India… It is beyond probability to think that the assessee company and its outlet shops will exchange the valuable goods purchased by company legally, by transferring valid consideration, in exchange for invalid bank notes (illegal tender).

“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 Honourable Governor of Tamil Nadu or the police evidencing any law and order issue that constrained the assessee to sell non essential commodity like liquor against invalid bank notes,” the I-T department said in an Assessment Order passed on December 30, 2019 and accessed by the news agency.

Refusing to believe that such illegal transactions could have been carried out by a State entity and after applying the principle of preponderance of probability, especially because Tasmac did not provide branch-wise details regarding deposit of demonetised notes, the I-T department concluded that the transactions done by the corporation using demonetised notes should be treated as “unexplained investment,” under Section 69 of the Income Tax Act of 1961, for the year 2017-18.