How to respond to income-tax mail on Cash transaction during Demonetisation

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Income Tax Department (ITD) has initiated Operation Clean Money. Initial phase of the operation involves e-verification of large cash deposits made during 9th November to 30th December 2016. Data analytics has been used for comparing the demonetisation data with information in ITD databases. In the first batch, around 18 lakh persons have been identified in whose case, cash transactions do not appear to be in line with the tax payer’s profile.

In this proceeding, ITD has started sending email or SMS for cash deposit during demonetization. If you are the one who receive it, please don’t panic. Instead, you are required to comply with it. Keep in mind that it is not a notice and for compliance of it you are not required to visit I-tax department. You are required to submit your response online.

Here are the steps to be followed

1Login to income-tax efiling site with your credential

If you are not registered user, then registered yourself (by clicking on ‘Register Yourself’ link) with your details like PAN, Date of birth or Incorporation, etc.

After login, please update your email-id and mobile number, if required, in order to receive electronic communication from the department. For this, you are required to click on ‘Profile Setting’ tab.

2Response to email or SMS

Compliance

Now, click on ‘Compliance’ tab. In the drop-down menu, click on ‘Cash Transaction 2016’ as shown in the image.

3Deposit Details

Compliance Image 3

On click, you will get details of cash deposits made in different bank account:

4Response Submit

Click ‘Submit’ button to submit response for deposit made in particular account number. Here for privacy, these details are hidden. On click, the system will ask:

  • This account relates to this PAN
  • This account does not relate to this PAN
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Choose suitable response by clicking on radio button. If you select ‘This account does not relate to this PAN’ option, then just click ‘Submit’ button after such selection. For this case, you have complied or register your response.

5Response ‘The account relates to this account

Compliance Image 3

If you opted for this option, then you are required to fill explanation of transaction.

First, you need to confirm the amount deposited into this account by you. E.g. if department is claiming, in this account ₹ 6,00,000 is deposited, but as per your records, it should be only 5,00,000. In this case, enter ₹ 5,00,000 (or your figure) in row A5 with appropriate remarks.
Now, you are required to give break up of source of such cash deposit as confirmed by you.

6Source of Cash

Compliance Image 5

You need to fill details in row B1 to B7.
B1: Cash out of earlier income or savings
B2: Cash out of receipts exempt from tax
B3: Cash withdrawn out of bank account
If this is your case, then you also need to fill details like Bank name, IFSC Code, Account Number, Amount, etc.

7Source of Cash: Received from Identifiable persons

Compliance Image 6

If you received cash from identifiable person then you need to fill details in row B4 (if such person have PAN) or B5 (if such person person don not have PAN)
In case of B4, you also need to fill details like PAN, Name, Nature of transaction (like cash sales, loan received, loan repayment, gift, donation, etc.), Amount, etc. Give suitable remarks, if it is required.

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In case of B5, you also need to fill details like Name, Address, Pincode, Nature of transaction (like cash sales, loan received, loan repayment, gift, donation, etc.), Amount, etc. Give suitable remarks, if it is required.

8Source of Cash: Received from Unidentifiable persons

Compliance Image 7

If you have received cash from unidentifiable person, then you need to fill data in row B6 with details like nature of transaction, amount.
Then last, if you want to disclose any cash deposit under PMGKY, then you need to fill that amount in row B7. Care should be taken than sum total of B1 + B2 + B3 + B4 + B5 + B6 + B7 should be equal to amount in A5 (i.e., amount of deposit confirmed by you).
Now, you click ‘Submit’ button. Thats all. Your response is submitted. It is to be noted that response should be submitted within 10 days.

9Future ahead

Data analytics will be used to select cases for verification, based on approved risk criteria. If the case is selected for verification, request for additional information and its response will also be communicated electronically. The information on the online portal will be dynamic getting updated on receipt of new information, response and data analytics.
The response of taxpayer will be assessed against available information. In case explanation of source of cash is found justified, the verification will be closed without any need to visit Income Tax Office. The verification will also be closed if the cash deposit is declared under Pradhan Mantri Garib Kalyan Yojna (PMGKY).

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