I-T dept to initiate probes to verify cash deposits of over Rs 5 lakh



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The IT department further decided to go easy on

22-FEB-2017

Posted By : Sanjay Arora

The Income tax department is all set to crack the whip on those who fail to verify the cash deposits of Rs 5 lakh or more during the demonitisation drive.

The IT department further decided to go easy on "low-risk cases" and asked its officers to act against those who have offered or repaid loans in cash, which attract 100% penalty.


As per law, no loans can be advanced in cash, even to friends, and cannot be repaid in cash. This has been done to avoid a situation where cash is shown as a loan or repayment, something that has been avoided in recent years.

During the demonetisation drive about 18 lakh people had deposited more than Rs 5 lakh cash into their bank accounts. Failing to electronically verify the funds, the tax department has been forced to push the cases to its field officers with a clear message that the entire process should be electronic and non-intrusive.

The IT department further insisted on various steps to ensure that the tax payers are not harassed and the entire process of verification is transparent and complete within a time span of five days.

At the same time, the tax department wants its field officers to clearly state if the data submitted by those under the lens is "acceptable" or "non-acceptable". The officer has to escalate the "non-acceptable" response for "possible tax evasion".

However, the real focus lies on those who have failed to verify the deposits on e-filing portal. In case the person under verification does not respond within the prescribed time span, it might lead to a possible inference that the cash deposit under verification is undisclosed.

The assessing officer is required to treat such cases under the non-acceptable category with relevant remarks keeping in mind various other factors such as family size, financial status and the person's background while forming a view on the quantum of undisclosed income.

Those who fail to comply with the verification requirements will see their profile scrutinised including the tax deducted at source and the information available under the Annual Information Return that captures high-value transactions.

In case the transaction being loan received/repaid in cash above the permissible threshold comes to notice, the AO may consider initiation of penal proceedings under the relevant provisions separately.


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