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Sep 23, 2020
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With Covid restrictions gone, demonetisation cash deposits back under the Income Tax scanner
The taxman is back knocking on the door. In the past one month several individuals have been summoned by the investigation wing of the income tax (I-T) department for depositing large amounts of cash with banks immediately after demonetisation was announced on November 8, 2016.
Chances are amid a dip in tax collection there could be more I-T notices in the coming days. Indeed, on September 18, in a communique to senior I-T officials, the apex body Central Board of Direct Taxes (CBDT) removed the restrictions - introduced in the wake of Covid-19 - on issuing adverse communication to assessees.
Tax assessments for 2016-17 were completed by December 31, 2019 when it became time-barred. But in cases where tax returns were not picked up for scrutiny, or where new evidence has emerged, the persons concerned are being told to produce documents to show the source of cash that was held in banned Rs 500 and Rs 1,000 bills.
People in the know said the recent notices are based on suspicious transaction reports (STRs) received by the department from banks and financial intermediaries.
"The tax department can invoke the provisions of reassessment under Section 148 of I-T Act within a period of 6 years if they have information which could lead to a belief that income chargeable to tax has escaped assessment," said senior chartered accountant Dilip Lakhani.
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