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

Cash seizure implications: seized funds remain subject to tax assessment and separate criminal investigation despite deposit as duty. The proprietor bears the Burden of Proof to show recovered cash was lawfully earned; GST authorities will share information with the income-tax department and investigations will follow. Deposit of recovered cash as GST duty does not convert such funds from black money into lawful funds and does not preclude separate tax assessments or criminal enquiries; if no GST evasion is alleged the proprietor should defend his position rather than uncritically accepting departmental treatment as duty.