The I-T department has found over Rs 1,200 crore lying unaccounted in lakhs of frozen demat accounts across the country and has sought a detailed probe on the possibility of their use for illegal transaction and tax evasion.

The department has now sent the reports of such accounts to the respective Chief Commissioners of Income Tax (CCITs) in various parts of the country to check the veracity of such accounts in their regions.

More than 6.5 lakh frozen demat accounts were taken under scanner and investigated by the income tax department in December last year on the suspicion of huge evasion of taxes and ‘benami’ transactions.

According to official sources, the CCITs have been asked to serve notices to all the account holders and report unclaimed accounts so that such accounts can be seized.

All the I-T Commissioners have also been asked to prepare “detailed reports” on the transactions of these accounts.

Official sources said that distinction between claimed and unclaimed accounts will help the authorities to proceed with further probe or seizure procedures respectively, as these accounts could lead to links to further cases of tax evasions and unreported economic transactions.

The I-T department with the help of unique PAN numbers earlier had tracked down a number of shareholders of these accounts. In certain cases it was found that the account holder had died and some had changed addresses without informing the assessing officers of the department.

The probe has also found few thousand investors were receiving money in the form of allotment of shares in IPOs.

These accounts were frozen by the two depositories, National Securities Depository Ltd (NSDL) and Central Securities Depository Services Ltd (CDSL), on January 1, 2007, after investors failed to comply with the government’s directive to furnish details of their Permanent Account Number (PAN) while transacting in the financial markets.

Securities in the frozen accounts consist mostly shares from primary and secondary markets. After the 2006 IPO scam, stock market regulator Sebi had made it mandatory for depository participants, and later investors, to quote PAN for operating demat accounts.

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November 2020