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Cash deposit to bank account

Vishal C (IT) (30 Points)

29 June 2012

Experts,

Please let me know the implication if High value withdrawal (say in the range of 10-15 lacks) is done from a bank account and if after 9-10 months person wants to deposit all or part of the cash back to that person's account.

Will their be any questions from Bank/IT dept? Also any implication if the original account from which the withdrawal was done has already been closed and the person wishes to deposit to another account.

Thanks

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10 Replies

ravitheja (CA Final) (77 Points)
Replied 29 June 2012

bank will ask PAN copy of the person who wants to deposit cash in the account of the another person if the transaction is more than Rs.50,000/-

And sec 269SS and 269T will be contravened in this case under Income Tax Act,1961

Vishal C (IT) (30 Points)
Replied 29 June 2012

Originally posted by : ravitheja
	bank will ask PAN copy of the person who wants to deposit cash in the account of the another person if the transaction is more than Rs.50,000/- And sec 269SS and 269T will be contravened in this case under Income Tax Act,1961

What if the withdrawer and depositer are the same person and depositing to his own account after 10 months of withdrawal from his own account.

CA.Varalakshmi.M (Manager-Finance) (482 Points)
Replied 29 June 2012

Yes,bank will ask for PAN copy of the person who wants to deposit cash in the account of the another person if the transaction is more than Rs.50,000/-

And morever,when ur return has been scrutinized ,you need to account for those withdrawals and deposits.

If u say they are loans and advances u 'll be penalized equal to the amount of such advance,because these transctions are not in the mode of A/c payee cheque or A/c payee draft

ravitheja (CA Final) (77 Points)
Replied 29 June 2012

nothing will happen but in case where accounts are scrutinised under the Income tax act then a query regarding the transaction will be asked

i.e whether it is income or advance or loan receipt and source from where he has got the amount will be asked it is better to offer it as income and pay tax on the above so that you have point to say

and if you say that this amount is a advance or loan receipt then he will ask the person who has given loan to given a confirmation and verify the same with his return whether he has the networth to give such an amount as loan.

Vishal C (IT) (30 Points)
Replied 29 June 2012

Originally posted by : ravitheja
	nothing will happen but in case where accounts are scrutinised under the Income tax act then a query regarding the transaction will be asked i.e whether it is income or advance or loan receipt and source from where he has got the amount will be asked it is better to offer it as income and pay tax on the above so that you have point to say and if you say that this amount is a advance or loan receipt then he will ask the person who has given loan to given a confirmation and verify the same with his return whether he has the networth to give such an amount as loan.

So it looks like if the source of money before withdrawal can be justified and proved to be post tax paid then it looks to be not an issue when a person deposits it back after a period of 9-10 months. Please confirm. What I am worried is about the chances of questioning on what was money utilised for during the 10 month period.

So the case is -

A person earns through legal means and pays taxes regularly over a period of time. One fine day he withdraws about 10 lacks in cash. After a few months he wants to deposit the money back to his own account. Is there any violation?

ravitheja (CA Final) (77 Points)
Replied 29 June 2012

once you prove that amount is taxed earlier then withdrawal is not an issue because he has already paid the tax on the above and he can utilise the same for his purposes

Varshit Shah (Self Employed) (676 Points)
Replied 29 June 2012

See what happens is when we deposit an amount more than 50000/- in a single day and asking for PAN by the banking authority is manadatory. Using this details they furnish a report to IT department if any transaction done in cash for the amount 50000 or more. After this they can ask you for the source & answer should be satisfactory to them. If answer is not satisfactoraly given , then it will be taxed as unexplained money.

1 Like

CA Vanamala Phani Kumar (Proprietor of M/s Vanamala and Co) (972 Points)
Replied 29 June 2012

Originally posted by : Varsh*t Shah
	See what happens is when we deposit an amount more than 50000/- in a single day and asking for PAN by the banking authority is manadatory. Using this details they furnish a report to IT department if any transaction done in cash for the amount 50000 or more. After this they can ask you for the source & answer should be satisfactory to them. If answer is not satisfactoraly given , then it will be taxed as unexplained money.

good reply

Ashok (Partner) (21 Points)
Replied 11 July 2012

What if i withdraw an amount of 10 lakhs in cash of declared income from my personal savings account and deposit it into my companies account will I have to pay tax on the transaction?

VISWANIVAS (Retired Chief Manager PSB) (92 Points)
Replied 20 August 2013

Originally posted by : Vishal C
	Originally posted by : ravitheja bank will ask PAN copy of the person who wants to deposit cash in the account of the another person if the transaction is more than Rs.50,000/- And sec 269SS and 269T will be contravened in this case under Income Tax Act,1961 What if the withdrawer and depositer are the same person and depositing to his own account after 10 months of withdrawal from his own account.