Cash Compliance 2016 | How to deal?

Appx 18 Lakhs of notices has been issued in last 2 days regarding Cash Compliance to those who have deposited old currency notes during demonetization period. We have already came with an article on how to deal with the notice and how to give explanation of it – Explanation for Cash Deposit notice by Income tax | Cash Compliance 2016

One step ahead, What one should reply?

  • First of all, If you are keeping complete books of accounts and you were having cash in hand balance as per your books, It is very simple. Just go through credit side of your cashbook just before the day on which you deposited cash. You may find credits which reflects Cash Withdrawals from Bank, Gifts from relatives, Business Income (either exempt or taxable). You can post this to related option while giving reply of notice online.
  • For those, who do not maintain books of accounts but having cash those days and hence deposited, First of all check out Cash withdrawals from bank just before you deposited cash during demonetization period. You may holding those cash which you have to deposit due to discontinuance of old currency notes. After that if you can judge any receipt from Identifiable or Non Identifiable, you can give those details to department. After this filter amount left is either your past income accruals or exempt income earned during that period.

It is advisable to give the reply carefully as whatever is acknowledged by assessee in this reply can be the reason for further inquiry.