Deposit of cash due to demonitization

[CA AJAY KUMAR AGRAWAL]

Dear friends,

The hot topic these days is 'Tax & Penalty on Cash deposited into Banks due to Demonitization'. I have gone through several articles on this topic. The crux is that Sec 270A is applicable on this point which talks of penalty of 50% to 200% on 'Under Reported' & 'Mis-reported Income' respectively. There are views in case one deposits the cash , shows the same in his current year's (AY 2017-18) & pays applicable tax thereon, will not face much problem.

There are other reports that Income Tax Department has already started sending notices to such persons who have deposited cash in excess of the prescribed limits i.e. ₹ 2.50 Lacs aggregating in one or more saving bank accounts. Some have views that IT Department may call for the details from assessees within Feb 2017 (when the AIR period expires on 31-0102017). Normal procedure is that one can file ITR upto July 2017 & pay applicable taxes by that date & thereafter only IT department should ask for details / assess under reporting or mis reporting cases.

Please share your valuable views on the above.

AI Summary

Implications of Cash Deposits During Demonetization: Tax Penalties Under Section 270A for 2017-18 Income Assessment The discussion revolves around the implications of cash deposits during demonetization, particularly concerning tax and penalties under Section 270A for under-reported or mis-reported income. It highlights that individuals depositing cash and declaring it in their income for the assessment year 2017-18 may avoid significant issues if they pay the applicable taxes. Notices have been issued for deposits exceeding 2.50 lakhs. The Income Tax Department may request details by February 2017, but assessments typically occur after filing returns by July 2017. A respondent suggests that the department cannot assess or pass orders prematurely and seeks further expert opinions.