How To Respond To Income Tax Department?


(Last Updated On: June 1, 2017)

Did you just get a Mail/SMS from Income Tax Department to explain the cash deposits?

Don’t Worry!

In this blog, we will discuss everything you need to do when you get such a communication from the Income Tax Department.

You must be wondering why The Income Tax Department selected only ‘’me“ to explain the cash deposited in bank account?

Well, to answer that you are amongst approx 18 lakh persons, who have done suspicious cash deposits over Rs. 5 lakhs between 9th Nov to 30th Dec, 2016. These persons have been selected after analyzing the data of over 1 crore accounts as a part of “Operation Clean India” launched by government to curb black money.

How to Respond to this?

You can respond to Income Tax Department in 3 simple steps-

Step 1: Login to your Account:

First log -in to your account on the Income Tax Department website https://incometaxindiaefiling.gov.in. This can be done by entering your PAN card (User ID) and password.

In case, you are not registered on the portal yet, then simply register as you do on other e-commerce sites. Just click on the ‘Register Yourself’ link.

In case, you are already registered person, then verify and update your email address and mobile number on the e-filing portal. You will get an OTP(one-time password). By entering OTP in the required field, you will get connected to Income Tax Department with the updated contact details.

Step 2: Click on compliance section:

Log in to e-filing portal and your dashboard will be open. On the dashboard an option of compliance has been given upfront. Under compliance section click Cash Transaction, 2016.

The details regarding suspicious cash deposits during 9th Nov to 30th Dec will be displayed.

Step 3: Submission of response:

There are two steps for the submission of response.

Response 1, the account does not relate to this PAN: If you select this response, than your feedback will be sent to the information source for confirmation. On clicking the submit button, the success message along with the transaction ID will be displayed on the screen.

Response 2, the account relates to this PAN: If you select this, then the screen showing transaction details will be displayed to the user.

Here you can change the value of cash deposit in case it is different from the displayed value. In addition, you will be required to explain the sources of cash deposited online. You don’t have to go Income tax office for the same.

Explanation of Transactions (Cash Deposits) can be understood from the following table and screen .

The various categories for providing the explanation will be displayed.

  • Cash out of earlier income or savings
  • Cash out of receipts exempt from tax
  • Cash withdrawn from bank account
  • Cash you received from an identifiable persons (with PAN)
  • Cash you received from an identifiable persons (without PAN)
  • Cash you received from unidentifiable persons
  • Cash disclosed/to be disclosed under PMGKY

Following points should be considered while providing the response:

  • If you claim that the cash belongs to more than one category , then the source of income may be assigned to various categories.
  • You can also upload CSV (Common Separated Values) a specific template for submitting response in the following categories
    • Cash withdrawn out of bank account.
    • Cash received from identifiable persons (with PAN) .
    • Cash received from identifiable persons (without PAN) .
    • Cash received from un-identifiable persons.
  • In case the cash is withdrawn from the bank, proper details should be provided.
  • The sum of all sources of cash deposits should match with the confirmed cash deposit amount.

Once you submit your response, your submission will be assessed and compared with available information.

In case explanation regarding source of cash is found justified, the verification will be closed without any visit to IT department.

Alternatively, the verification will also be closed where you have declared income under Pradhan Mantri Garib Kalyan Yojna (PMGKY).

Important Note– If the explanation or the information is found false by the Income Tax Department, there is high possibility that your case gets selected for verification based on risk criteria. The department will verify the source of income and in case it is proved from undisclosed income, tax and penalty will be levied.

Have query or need expert’s opinion before filing information? Connect with the CA Now!

View and revise the submitted response:

A person can easily view the response submitted. If a person wants to make changes, he can easily update response and submit the same.

  • First under ‘Cash transaction 2016’, click on view button against respective bank account.
  • Second: Click on Transaction No. to view /download the response submitted.

Revision of bank account details (other than one displayed):

    • If a person is required to submit details of other bank accounts in which specified bank notes (SBN) has been deposited, click on the hyperlink below the list of bank accounts.
    • Provide proper explanation of cash deposits as per the list mentioned above.
    • On successful validation, a message along with Transaction ID will be displayed on the Screen.

Have query or need expert’s opinion? Connect with the CA Now!

Sources

CA Abhishek Soni

Abhishek Soni is a Chartered Accountant by profession & entrepreneur by passion. He is the co-founder & CEO of Tax2Win.in. Tax2win is amongst the top 25 emerging startups of Asia and authorized ERI by the Income Tax Department. In the past, he worked in EY and comes with wide industry experience from telecom, retail to manufacturing to entertainment where he has handled various national and international assignments.