Income tax sleuths eye Rs 200-crore bonanza

HYDERABAD: Income tax officials are salivating at the prospect of earning Rs 200 crore for the government from people who have applied for liquor licences. Tax officials estimate that Rs 2,000 crore of unaccounted money is now locked up in these liquor licence bids, and they hope to realise a substantial part of this as tax rightfully owed to the government.Soon after the government's new excise policy generated a frenzy of bidding by liquor licence aspirants, the income tax department entered the fray and began to ask uncomfortable questions of the applicants. Each of the thousands of applicants furnished Rs 5,000 as application fee and one-third of the licence fee, which ranges from a few lakh rupees to Rs 13 lakh. The state government earned Rs 80 crore from the application fee alone. The feeding frenzy at the excise department's application windows attracted the tax sleuths' notice, as did the flurry of large bank transactions during this process. Some people deposited Rs 2 crore in their accounts and took out demand drafts in different names. The tax officials ran a check on the applicants and found that 90 per cent of them were not even tax assessees although they were mobilising lakhs of rupees. A majority of them did not have proper income tax records and a large number of them did not even have Personal Account Numbers (PAN). When the new excise policy was struck down in the High Court and the state had to return the licencees' demand drafts, the tax authorities stepped in and asked banks not to let the bidders encash the DD unless the latter proved the money was kosher. They invoked some extraordinary provisions from the statute book and imposed a stipulation that demand drafts above Rs 10 lakh would not be allowed to be encashed until the applicants opened their accounts and proved the origin of their money. Breaking out in a cold sweat, the bidders, most of the influential businessmen and politicians themselvers, are reportedly bring pressure on the IT department to back off. "If everything goes as per our plan and there is no extraordinary pressure from the powers-that-be, we will get about Rs 200 crore," a top tax official told The Times of India.