Bitcoin rally: Income tax sleuths conduct surveys on 9 major exchanges, detect HNI entries

New Delhi: The Income Tax Department on Wednesday conducted survey operations at major bitcoin exchanges across the country on suspicion of alleged tax evasion and detected several lakh entries of high-net-worth individuals (HNIs) in their databases, official sources said.

The operations that began early morning at nine major exchanges in Delhi, Ghaziabad, Gurugram, Pune, Bengaluru, Hyderabad and Kochi were on till last reports came in.

Sources said the taxman has deployed an heavy assortment of software cloning and mirror imaging devices to drain out 'complete details' of emails, addresses and correspondence IDs of the investors and players from the computers.

They said that the sleuths detected a number of high-net-worth individuals (HNIs) and customer IDs in these databases and prima facie about 20-25 lakh such entities have been traced.

Entries of HNIs suggest that they were trading on these exchanges.

A bitcoin sign is seen during Riga Comm 2017, a business technology and innovation fair. Image: Reuters

A bitcoin sign is seen during Riga Comm 2017, a business technology and innovation fair. Image: Reuters

"Out of these, about 8-10 lakh entities would be active for transactions. However, the operations are still on and final findings will emerge later," a senior official here said.

The operations were supervised by the Bengaluru investigation wing of the department as the sleuths have worked on these cases for long and have conducted similar actions in 2013 in the Karnataka capital.

The surveys, under section 133A of the Income Tax Act, are being conducted for "gathering evidence for establishing the identity of investors and traders, transaction undertaken by them, identity of counter-parties, related bank accounts used, among others", they said.

A survey action under I-T law pertains to the tax officials making a surprise visit to the business premises of the party under action but not their residential ones.

The trigger for the action is understood to be the huge spike being registered in the value of the bitcoins and other virtual currencies in the recent past in the country.

A huge amount of black money converted into white, post-demonetisation, by using bitcoins is also under the scanner of the department.

Earlier this month, there was a spurt in the value of a bitcoin. It rose from under $10,000 at start of the year to close to $20,000, before a sharp 20 per cent plunge within hours.

The survey teams, the sources said, were armed with various financial data and inputs about the working of these exchanges and this is the first big comprehensive action against them in the country.

Bitcoin, a virtual currency, is not regulated in the country and its circulation has been a cause for concern among central bankers the world over for quite a while now.

The Reserve Bank of India has also cautioned users, holders and traders of virtual currencies, including bitcoins.

The government has also said that it does not recognise cryptocurrency as legal tender in India as of now.

In March, the Union finance ministry constituted an Inter-Disciplinary Committee to take stock of the present status of virtual currencies both in India and globally and suggest measures for dealing with such currencies.

The committee has submitted its report to the government and it is being examined.

Bitcoins were in news recently after a massive global ransomware attack WannaCry hit systems in over 100 countries.

The cyber criminals demanded a fee of about $300 in cryptocurrencies such as bitcoin for unlocking affected devices.

Firstpost is now on WhatsApp. For the latest analysis, commentary and news updates, sign up for our WhatsApp services. Just go to and hit the Subscribe button.

Updated Date: Dec 14, 2017 08:34:50 IST

Also See