Contents
Black money has been reported to be growing at a faster rate, which has a direct impact on the Indian economy. To gain control over black money, verification of cash deposits in bank is required. Following demonetization, there is a limitation on depositing large sums of cash in the bank. The Internal Revenue Service has made measures for the verification of monetary deposits. If someone exceeds the cash deposit limit prescribed by the Reserve Bank of India’s guidelines, the income tax department has the authority to verify the cash deposit.
Cash deposit is the act of depositing money into a bank or savings account via money transfer, ATM, or bank teller (an employee of the bank). Cash deposit, in general, refers to the act of depositing money with a financial institution for safekeeping. A person can withdraw cash after the transaction is completed.
The monetary deposit must be verified in order for the government’s records to be accurate. It has been discovered that certain persons in India do not pay income tax to the government. In general, some people never declare the amount that is intended for tax purposes on their bank account or in their tax return.
Black money is defined as money on which the required tax has not been paid to the government. People used to make a large number of cash deposits in the bank without revealing their source of income, but this is now illegal. Because the concept of black money is becoming more prevalent in India, it is vital to verify cash deposits in order to remove it.
The Indian government has made provisions for cash deposit verification. The Assessing Officer has the authority to request information related to the verification of cash deposits under “Operation clean money” under section 133(6) of the Income Tax Act, 1961.
The Central Board of Direct Taxes (CBDT) released “Standard Operating Procedure” on February 21, 2017, and each Assessing Officer is required to follow it for cash deposit verification: Every Assessing Officer/AO has been empowered by the CBDT to issue a notice u/s.133(6) of the Income Tax Act for online verification of cash deposits.
On the 31st of January 2017, the Income Tax Department initiated “Operation Clean Money” to investigate tax evaders and conduct e-verification of big cash deposits made between November 9 and December 31, 2016. The primary goal of this operation is to check the taxpayers’ cash transaction status during the Demonetization period.
It also attempts to take appropriate legal action if cash transactions do not match the taxpayers’ income tax statements. During the first round, 18 lakh people were identified as having cash transactions and cash deposits that did not match their profile.
Following demonetization, the Indian government ruled that no one can make multiple cash deposits in bank accounts without first updating his or her PAN card with the bank. Prior to November 9, 2016, the cash deposit limit was Rs 50,000 without a PAN card update. The government issued a circular stating that if a person’s cash deposit surpassed Rs.25 lakh between November 9 and December 30, 2016, the person’s PAN card must be checked.
Because of the rapid advancement of technology, the Indian government has developed provisions for online verification of cash deposits. Tax authorities and taxpayers both benefit from online verification because it saves time. Verification over the internet. Demonetization data is compared to information in the Income Tax Department database using online verification. It is relatively easy to identify taxpayers whose cash deposits and cash transactions do not appear to match the taxpayer’s profile using online verification. The taxpayer must first register with the e-filing system in order to verify the cash deposit.
The PAN holder would be able to see information on cash deposits in the e-filing portal.
The information on cash transactions can be viewed in the following ways by a taxpayer:
The taxpayer must verify that the bank account is linked to his or her PAN. If the taxpayer certifies that the bank account belongs to him or her, he or she must offer more information. The taxpayer must provide detailed information about the cash source.
Some instances will be chosen for verification based on risk criteria. If the case is chosen for verification, additional information will be requested, and the response will be sent to the taxpayer electronically. When fresh information, responses, and data analyses are received, the information on the online portal will be updated.
In the event of noncompliance, the Assessing Officer can access the PAN holders’ ITS profiles, exercise powers under Section 133(6) with the prescribing authority’s agreement, take survey action under Section 133A, and more. The AO, on the other hand, has the option of filing a criminal complaint under section 269SS or section 269T of the Act.
Assessing officials have the authority to close a person’s records following proper verification and approval from the relevant authorities. For transactions under Rs.10 lakh in tier-1 cities, the applicable authority is the Additional/Joint CIT. The AO should consult the Pr. CIT for other cities.
Taxpayers, as well as those who wish to make a cash deposit in a bank, must have complete information about the cash source. If a cash transaction exceeds the amount prescribed by the Reserve Bank of India, it is important to verify the cash deposit. Verification of cash deposits is necessary to eradicate black money from Indian society. No one can escape a single tax if suitable guidelines for cash deposit verification are established.