I-T dept extends response window on deposit details to Feb 15

The I-T department today extended the date for replying to the queries on cash deposits during the demonetisation period to February 15 and asked people to declare details of cash donations or gifts of Rs 20,000 or more to reduce the chances of further scrutiny. In an FAQ to clear the doubts over replying to SMS or e-mail queries received with regard to suspicious deposits made post note ban, the tax department said assessees should give "explanations" of the source of cash.

If the cash deposited is from multiple sources or arises from cash in hand as on November 8, the assessee while replying on the e-filing portal will have to give segregated details -- cash withdrawn from bank, cash received from identifiable persons with or without PAN, cash received from unidentifiable persons and cash out of earlier income or savings. The assessee can also report how much he has deposited or will deposit under the PMGKY scheme, in which he can pay 50 per cent tax and penalty and come clean.

"The taxpayer is advised to provide the details of identifiable person (with PAN) to reduce the chances of the case being selected for verification. In case of cash receipts of Rs 20,000 or more from a single person, it is expected that the details are provided...," the I-T department said. It said cash received by people exempt from taxes like farm income can be shown under the head 'cash receipts exempt from tax', only if they are not involved in business.

"Cash out of receipts exempt from tax is expected to be used for taxpayers not involved in business who have received cash out of exempt income, for example agricultural income," the department said. In case the assessee has received advance salary, the FAQ said he will have to give the name and respective details of the employer from whom the payment in cash has been received while filing the response on the I-T portal.

On January 31, the tax department had launched 'Operation Clean Money' under which it had sent out SMS and e-mails to 18 lakh assessees in the initial phase for suspicious cash deposits of Rs 5 lakh and above made during November 9-December 30, 2016. These people had to reply to these queries by logging onto the e-filing portal within 10 days of receipt of communication. This timeline has now been extended to February 15.

The tax department said that in case the deposits have been made by unknown persons, the FAQ said the assessee should disclose such deposits with his remarks in a separate column. Providing details on answering queries by tax department in a set of 35 FAQs, it said that in case a taxpayer has deposited someone else's cash in his account, he will have to disclose the "name and respective details of the person to whom the cash belongs".

If one bank account pertaining to an assessee is reported more than once on the e-filing portal, then he has to give details for one account and an amount of zero can be mentioned in the amount column of the repeated account and the remarks 'duplicate bank account' may be entered in the remarks column. The FAQ said the cash deposit amount includes both specified bank notes as well as other currency, including new currency notes, irrespective of the denomination.

If the cash deposit amount displayed is not correct, then the assessee can mention the correct amount in the e-filing portal and such cases may be sent to the information source for confirmation, it added. The portal will also give an option to submit details of other bank accounts in which specified bank notes (SBNs) have been deposited, the tax department said as it asked assessees to use the latest version of Internet browsers to file responses.

As regards the charitable trusts, the I-T department said they should disclose source of cash receipts and donations under various heads like cash withdrawn from bank accounts, received from identifiable persons with or without PAN and also cash receipt from unidentifiable persons. With regard to professionals, it said they should give the details of cash received from identifiable persons with or without PAN and also from un-identifiable persons. Also, if the cash receipt is more than Rs 20,000 from a single person, the details should be furnished.

If the account displayed does not belong to the assessee, but belongs to another entity of which the assessee is an authorised signatory, then he can select the option 'The account does not relate to this PAN' and click on submit button. In case the cash deposited has already been disclosed under the Income Declaration Scheme, 2016, the amount should be shown under cash out of earlier income or savings with details.

With regard to the money received by petrol pumps, toll plazas and hospitals which were permitted to receive old notes beyond November 8, the FAQ said the details of cash sales of business may be provided. The nature of business will be considered while assessing the response.

The tax department said if the deposits are out of cash sales of business, the cash will have to be assigned under various categories -- cash received from identifiable persons with or without PAN; cash received from un-identifiable persons, cash out of earlier income or savings in which case closing cash balance as on March 31, 2016, will have to be provided.

"Data analytics will be used to select cases for verification, based on approved risk criteria," the I-T department said, adding that the assessee will have to provide additional information if his case is picked up for further verification.

The assessees will have the option to revise their response on the e-filing portal. On what the assessee will have to show under 'cash out of earlier income or savings', the tax department said that in case of an individual having no business income, cash out of earlier income or savings means cash out of savings as on November 8, 2016. In the case of business, the cash in hand as on March 31, 2016, can be taken as cash out of earlier income or savings.

Post demonetisation of 500 and 1,000 rupee notes on November 8, the government had asked holders of such notes to deposit them in bank accounts by December 30. The department has since garnered a large amount of data on deposits made in banks. It has also segregated the data for deposits between Rs 2 lakh and Rs 80 lakh and Rs 80 lakh and above. It has matched the cash deposit data with the profile of the assessee and in case of a mismatch, the department sent out SMS and e-mails.