Get ready for Income Tax Notice – CBDT issues guidelines for cash deposited during demonetization

Introduction

The ghost of demonetization is not over yet and the government is now planning to give you another shock by issuing income tax notice regarding the cash deposited during the demonetization period.

The Central Board of Direct Taxes (CBDT) has issued standard operating procedure for issuing income tax notice in all cases of substantial cash deposit during demonitization period.

Hence, get yourself ready for the answer if you have deposited the cash during the demonitization period.

Let us understand the details of the notification.

Meaning of substantial cash deposited?

The notification states that the notices shall be issued to those entire people who have deposited the substantial cash during the demonitization period. However, what is called the substantial cash is nowhere has been explained and hence, it could be any amount as per the judgment of the Income tax officials.

Hence, we have to wait and watch the meaning of substantial cash deposited once notices are sent to the people.

To whom the notice will be sent?

This is a good question and the CBDT has also answered the same in their notification. The IT notice shall be issued to those persons who had deposited substantial cash in the bank account during the demonitization period and has not filed the income tax return for the same financial year.

In other words, if you have deposited the cash and filed the income tax return, then notice will not be sent to you as per this notification. However, the normal scrutiny of the transaction shall still happen and the department may issue you a notice under section 143(2) of the income tax act.

Under which section the notice will be issued?

As per the notification, the notice will be sent under section 142(1), requesting the taxpayer to file the income tax return. Notice under section 142(1) is served if the assessee has not filed the income tax return within the due time.

What if no reply is sent to the notice?

If you failed to reply to the notice under section 142(1), then income tax official shall proceed to make your assessment as per his best judgment under section 144 of the income tax act. Hence, if you have received the notice from the income tax department, then you must reply to the same and file your income tax return.

Guideline for issuing notice under section 142(1)

Here are the guidelines issued by the CBDT for issuing the notice under section 142 for income tax notice:

• The list of nonfilers of the income tax return shall be made available in a phased manner in AIIMS module.
   

• After that cases will be selected who were required to file the ITR but failed to file the same. To all those assessees, the notice under section 142 shall be served.
   
• The notice shall be generated through ITBA system only.
   
• The notice shall be sent electronically and through postal authorities. The evidence of service of notice, as well as postal remarks, should be preserved carefully.
   
• The process of serving the notice should be completed by 31^st December 2017.

Conclusion

The step of the government is very logical and nowhere harassment to the general public because the government is only requesting assessee to file the tax returns so that they can check the legitimacy of the cash deposits during demonitization. In case of any query, please email us at info@hubco.in.

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