Demonetisation: People investing money in gold, foreign currency under scanner; CCTV footage of jewellery stores impounded

New Delhi: Intensifying the crackdown on laundering of illicit wealth, tax authorities on Tuesday impounded CCTV footage of a number of jewellery stores to zero in people who invested their money in gold purchases after the government's announcement of demonetisation of Rs 500 notes and Rs 1,000 notes on November 08.

The Excise Intelligence Department personnel have sought the footage from various other jewellery stores.

The Enforcement Directorate and the Directorate General of Central Excise intelligence (DGCEI) have now joined the income tax department in the crackdown.

According to news agency ANI, the Enforcement Directorate and Income Tax department are monitoring people who are investing their money in gold purchases and foreign currency.

Both the agencies are probing into accounts held by farmers in which a huge amount has been deposited suddenly, the agency quoted sources as saying.

The Income Tax department has sent around 600 notices to jewellers across 25 cities asking them to detail daily sales between November 7 and 10.

Teams of DGCEI officials are also visiting major jewellery stores and their manufacturing units to serve notices seeking these details, sources said.

Jewellers in major cities like Delhi, Mumbai, Kolkata, Chennai, Ahmedabad, Bangalore, Hyderabad, Bhopal, Vijayawada, Nashik and Lucknow are initially under the scrutiny of the DGCEI officials, they said, adding that this exercise can later be extended to other cities too.

After the government banned old Rs 500 and Rs 1,000 notes, gold and bullion are said to be favoured route for laundering of ill-gotten wealth.

Gold was sold as high as Rs 50,000 per 10 grammes last week against the market price of Rs 31,000, as gold and bullion was said to be used to convert the debunked currency.

A 20-40 percent haircut in the value of the defunct currency was also being resorted to launder black money.

"PAN is mandatory for jewellery sale of over Rs 2 lakh. We are keeping a watch on jewellers to see if they are breaking their sales into parts of less than Rs 2 lakh," CBDT chairman Sushil Chandra had told reporters on Monday.

Necessary action and penalty, he had said, would be initiated wherever violations are found.

The government is reportedly also looking at asking jewellers to deposit old high-value currency notes by a set date to prevent money laundering. Also, there are fears that jewellers could show backdated cash sales.

While jewellers and diamond traders usually show bills every week while depositing cash generated through sales, very high-value deals in cash are often split into smaller amounts or stolen PAN number is cited on bills.

Industry insiders say the modus operandi is to use unaccounted gold stock against receipt of demonetised currencies at a heavily discounted rate.

Jewellers stayed open into the early hours soon after the Tuesday night announcement by Prime Minister Narendra Modi to withdraw old 500 and 1000 rupee notes in the nation's biggest crackdown on black money, corruption and counterfeit currency.

As much as 250-kg gold was reportedly sold in Mumbai within a few hours of the announcement.

The Finance Ministry has ordered all its revenue intelligence agencies to join the crackdown on jewellers and hawala operators besides tracking the movement of demonetised currency notes.

(With PTI inputs)