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The Rationale Behind The Income Tax Notices For High- Value Transactions
Written by Gagandeep Arora - Printed on - Date - 3rd Nov 2022
Linking Aadhaar with PAN is a very good and tactical move by the government of India. Mentioning of PAN or Aadhar in all financial transactions by a common man is captured and updated with the Department of Income Tax which is keeping a track of all financial transactions with them. If an individual makes high-value transactions it must be reported to the income tax department, failure to do so will lead to an Income Tax Notice. If you have received an Income Tax notice stating that there has been identified certain high-value information which is not in line with your Income Tax return filed for Assessment Year 2021-22 by the Income Tax Department, then it is very important to take action. The main purpose of these notices is to check any discrepancy between the details provided by you and the details available with the department.
How To Comply With High-Value Transaction Notice?
Once you have filed the Income Tax Return, the Income Tax Department tracks all the high-value transactions through various sources. The motive behind this move is to pull out the tax evaders and to ensure compliance with correct and accurate reporting by the taxpayers. In June 2020, the Income Tax Department had revised Form 26AS which shows such high-value transactions known as ‘Specified Financial Transactions’. But from August 2020, the department has widened the scope of this form and a lot of transactions beyond a certain limit need to be disclosed. It is the first time that an annual information system that is AIS and pre-filled forms were introduced so there are chances of non-reconciliation with Form 26AS which will lead to a mismatch with the information at the Income Tax Department. Some of them are as stated below-
- Immovable property-This form needs to be filed by registrars or sub-registrars for all the parties involved in the transfer of immovable property exceeding Rs. 30 lakhs.
- Cash Deposit In Saving Bank Account- Banks need to file the form if the aggregate cash deposit by an individual exceeds Rs. 10 lakh in a financial year.
- Cash Deposit In The Current AccountCash deposits or withdrawals exceeding Rs. 50 lakhs need to be reported by the bank. Even cash payments exceeding Rs. 10 lakhs for bank draft need to be reported.
- Repayment Of Credit Card-If a payment of more than Rs. 1 lakh in cash or more than Rs. 10 lakh through NEFT/ cheques is done then that needs to be filed.
- Investments-Any purchase or sale of bonds or debentures, stocks or mutual funds more than Rs.10 lakh needs to be reported by the financial institution.
- Sale Of Foreign Currency-Receipts exceeding Rs, 10 lakh need to be reported by the authorised dealer, money changer, off-shore banking unit or anyone else dealing in foreign exchange or securities.
Action To Be Taken
It is important to comply and reply to these notices which can be done online. If you are registered on the online tax portal then you can view the notice on your profile. Log in to the portal and find the’ Compliance tab’, there you can read the non-filers information. You can post a reply in the ‘ View and Submit Compliance’. In this section, you can mention the details related to the queries raised by the Income Tax Department based on the information received from the third parties. After answering in the correct format required you can see the reply you have posted in the section ‘ View My Submission’ If the department is satisfied with the reply then the case is closed, and the status of the case can be checked in the e-filing portal. It is important to reply to these notices within 30 days. At the moment of replying do attach a copy of the documents which will help you clear the charges. Invariably for this year most of the assessees have been issued these notices as it was a part of the Income Tax Department’s e-campaign. The main purpose of the campaign is to promote willingly compliance of the assessee to avoid the notice and the scrutiny process of the taxpayers. All in all the major reason behind these high-value transactions is that more and more individuals link their PAN details with the Adhar card. In case it is missed by them anywhere it is highlighted in this manner. So, the Income Tax Department works more efficiently.
