Cash recovery

[Rajesh Kumar]

During the GST search, 50 lacs were recovered from the house of the proprietor. What implication can he face? What coercive action department can take ? What party to do ?

Department insisting to deposits the same as duty of GST. Should he agree ? In my view, Indirectly department is also converting black money to white money by adjusting same as duty amount. Is there any implication for this adjustment?

[KASTURI SETHI]

Burden of proof is cast upon the proprietor/assessee. He must be able to prove that the amount recovered from his residential premises has been earned through legal means. The matter will also be referred to Income Tax department as per GST laws. Both the departments statutorily exchange such information between themselves. This is genuine advice and not artificial.

YOUR VIEW IN THE QUERY

"In my view, Indirectly department is also converting black money to white money by adjusting same as duty amount. Is there any implication for this adjustment?"

I do not agree with your above view at all.

[Amit Agrawal]

I entirely agree with views of Shri Kasturi SethiJi!

Paying taxes using cash recovered from house does not make any black money into white. If such money is 'black', it will remain 'black' and adverse repercussions therefor - as per law including income tax - will follow.

W.r.t. part of your query (i.e. Department insisting to deposits the same as duty of GST. Should he agree ?), if proprietor has not evaded any gst, he must not agree but explain his position to Dept. officers and if needed, defend himself using judicial means.

[Alkesh Jani]

Shri

I agree with the views expressed by our both the experts.

Just to add that 'Black Money' means the money which is not accounted for.

Thanks

[KASTURI SETHI]

Sh.Amit Agrawal Ji,

"If such money is 'black', it will remain 'black' and adverse repercussions therefor - as per law including income tax - will follow."

Your above view is absolutely right. Even after payment GST and Income Tax this recovered or seized amount will not convert black into white and consequences will follow but after completion of investigation.

At this stage we cannot say the recovered money is black because investigation is in progress. However, the word, 'black' has been used by the querist himself.

AI Summary

GST Search Uncovers 50 Lakhs; Tax Department Demands Deposit, Raises Concerns Over Black Money Legitimacy During a GST search, 50 lakhs were recovered from a proprietor's residence, raising questions about potential legal implications and actions by the tax department. The department is urging the proprietor to deposit this amount as GST duty, but concerns were raised about whether this effectively converts black money to white. Experts advised that the burden of proof lies with the proprietor to demonstrate the money's legal origin. They emphasized that paying taxes with such funds does not legitimize them if they are unaccounted for, and legal consequences will follow. The matter will also be referred to the Income Tax department.