The rush to deposit cash in bank accounts has resulted in the tax department working towards reining in any black money that may be deposited. Cash deposits in banks and post offices above certain limits between November 9 and December 30, 2016, will be reported to the income tax department.
As per Section 285BA of the Income Tax Act, 1961 (as substituted by Finance Act, 2014 w.e.f 01-04-2015), specified entities (filers) are required to furnish a statement of financial transaction or reportable account (statement) in respect of specified financial transactions or any reportable account registered or recorded or maintained by them during the financial year to the income-tax authority or such other prescribed authority. The list of high value transactions is mentioned in rule 114E of the act.
With change in rules each passing day, there has been an addition to the rule 114E list, which was amended with effect from November 15 to the effect that 'cash deposits during the period November 9, to December 30, 2016, aggregating to Rs 2.5 lakh or more, in one or more accounts (other than a current account) of a person, shall be reported by a bank and post office.
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What should you do?
Taxpayers who can account for higher cash deposits need not worry, as any aggregated deposit over Rs 50,000 in this demonetisation phase will need to be furnished with PAN details. For those without PAN, the new amendment will be a cause of concern if they are unable provide any details.
Some may receive a notice asking to explain the transaction for scrutiny assessment under section 143 (2) of the Act-to be present on a certain date himself or through a professional-for verification of records and seeking clarifications and opportunity to present this case. In case you are unable to clarify the source of the deposits, the tax department can levy tax along with interest and penalty on under-reported income if it could be established that such income pertains to previous years (prior to financial year 2016-17) and was not reported by the depositor while filing the tax return.
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