Income Tax Department is planning to issue letters to the individuals who have done high value transactions without quoting Permanent Account Number (PAN), many individuals are likely to face scrutiny.
The Income Tax Department has identified the transactions which include cash deposits of Rs 10 lakhs and more in a bank account and sale and purchase of immovable property of Rs 30 lakhs or more over the past seven years (2009-10).
If faced with a notice, first thing that should be checked is whether the Income Tax Return has been filed for the financial year. If yes, then what was the source of income through which the bank deposit or investment has been made, and whether the tax has been duly paid on the source. So all you need to do is keep your relevant documents ready for providing the same.
The reply to the letter should be given with the relevant documents. For example, if there is a deposit of Rs 10 Lakhs and above in the bank account and this amount has been received as a loan from the family or a friend, a declaration from that family member or friend needs to be given, along with your bank statement.
If it is an undisclosed income, you can declare it under Income Disclosure Scheme (IDS), which is open till September 30th and get away with lesser penalty. Till last year the penalty was 100-300 percent of tax liability, plus the applicable interest. But if you use this window, you need to pay only 45 percent tax on the undisclosed income. But if there is proceeding against you in the Income Tax Department, the IDS will not be applicable.
For any information or query in respect of the aforesaid matter, you may speak in person with CA. Bharat Poplani on 96463-80245 or mail him at