'Avoid Large Cash Transactions As It Can Attract Income Tax Notice,' Says Advocate In Indore

Indore (Madhya Pradesh): The Income Tax Department keeps a close watch on cash transactions done on various kinds of sales and purchases. It includes the sale of property, cash transactions related to the taxpayer found with another taxpayer, large cash withdrawals or deposits in bank account, cash sales and purchases, cash deposits or payment from debtor and creditor, undisclosed bank accounts, cash shortage in books of accounts etc.

If any discrepancy is found, there is a possibility of getting income tax notice. Senior advocate and practitioner of Income Tax Mahesh Agarwal said this while speaking as a keynote speaker in a seminar here on Friday. The seminar was organised by the Tax Practitioners Association (TPA) and Indore CA branch.

The subject of the seminar was ‘Cash Transactions and Income Tax Implication’. Advocate Agarwal said that the Income Tax Department receives report of cash transactions from banks and other institutions through ‘Suspicious Cash Transactions’ and ‘Cash Transaction Reports’ and the department matches these cash transactions on the basis of the income declared in the taxpayer's return and the nature of income.

The department issues notice on receiving suspicious transactions. He said that Income Tax Department takes action by issuing notice in case of Cross Border Wire Transfer Report (in case of international dealings), Finance Intelligence Unit (FIU) of Finance Ministry, High Risk Refund Report of Income Tax, donation to recognised and unrecognised political parties and bogus refund. If there is suspicion of criminal proceedings, money laundering etc by way of cash transactions, then ED can initiate action.

He said that in today's context, it is necessary to avoid cash transactions as much as possible. He said that even if a large sum of cash is received on the occasion of marriage, auspicious functions, birthday, etc then also Income Tax Department can also check the verification of the legal source of the donation. Advocate Agrawal said that in today's IT era, every information related to the taxpayer is available with the department.

Today PAN and Aadhar are linked, mobile numbers are linked to Aadhar. On this basis, the Income Tax Department has information about every transaction done by the taxpayer, whether it is online food orders, purchase of big brands, air travel, party in high-end restaurants or purchase of high value gadgets.

Today, almost all the financial transactions of the taxpayer are under the control of the Income Tax Department, hence it is necessary that cash transactions and expenses are minimised. On this occasion, a large number of CAs and tax practitioners including CA Shailendra Singh Solanki, CA Rakesh Mittal, CA Ajay Samaria, CA Pramod Garg, CA Kunal Agarwal, CA Deepak Maheshwari, Govind Goyal, CA Avinash Agarwal and Mrinal Agarwal were present.