A colleague has received an Income Tax notice regarding a Rs. 10 lakh cash deposit into their savings account during FY 20-21. As a private employee who doesn't fall into a tax bracket, they are unsure how to respond. While proving the source of funds can be challenging, exploring business options like Section 44AE might be considered, though Section 68 could be invoked. Seeking advice from a tax consultant is recommended for careful handling of the situation.
07 April 2021
ONE OF MY COLLEAGUE NOTICE RECEIVED FROM INCOME TAX DEPARTMENT FOR CASH Rs. 10 LAKHS DURING FY 20-21 DEPOSITED INTO BANK SAVINGS ACCOUNT. WHAT REPLY HE SHOULD GIVE FOR THIS NOTICE. HE IS A PRIVATE EMPLOYEE. HE WILL NOT COME INTO TAX BRACKET. PLEASE HELPME.
08 April 2021
CA R Seetharaman ji, it is difficult to prove the source in most of the cases. Businesses within the scope of 44AE may be explored. But there is a chance of invoking the provisions of section 68 (IT Act) etc. It is better to meet a tax consultant to handle it carefully.