Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Saturday, February 11, 2017

Guidance for filing response to Cash Deposit Compliance queries for deposit during Demonetization Period- Part –II

The Income tax department has sent mails to all assesses where cash deposit compliance was required to be submitted as per information sent by banks to the income tax department. Now date for such submission has been extended to 15.02.2017. In continuation to our earlier post Now we are trying to answer other queries received and FAQs issued by the department.
·         Modification of Cash Deposit Amount
ü  If the cash deposit amount displayed is not correct mention the correct amount under A.5. Such cases may be sent to the information source for confirmation.
ü  The cash deposit includes both specified bank notes as well as other currency ( Old and New)  irrespective of the denomination.
ü  Bank account pertaining  is reported more than once on efiling portal the details for one account may be submitted and an amount of zero can be mentioned in the amount column of the repeated account and the remarks “duplicate bank account” may be entered in the remark column.
·         Explanations of Source of Cash Deposits

ü  If cash is from more than one category, the source of cash may be assigned in sequential manner as follows:
a) Cash withdrawn from bank account (Refer B.3)
b) Cash received from identifiable persons (with PAN) (Refer B.4)
c) Cash received from identifiable persons (without PAN) (Refer B.5)
d) Cash received from un-identifiable persons (Refer B.6)
e) Cash out of receipts exempt from tax (Refer B.2)
f) Cash out of earlier income or savings (Refer B.1)
g) Cash Disclosed/To be disclosed under PMGKY (Refer B.7)
Adopting other sequence may result in case being selected for verification based on risk criteria.

ü  Cash deposit is out of cash in hand as on 8th November 2016 the source of cash may be assigned under sequential manner as follows:
 a) Cash withdrawn from bank (B.3)
b) Cash received from identifiable persons (with PAN) (B.4)
c) Cash received from identifiable persons (without PAN) (B.5)
d) Cash received from un-identifiable persons (B.6)
e) Cash out of receipts exempt from tax (B.2)
f) Cash out of earlier income or savings (B.1)
g) Cash Disclosed/To be disclosed under PMGKY (B.7)
Adopting other sequence may result in case being selected for verification based on risk criteria.
ü  Cash out of earlier income or savings
a)                         For an individual having no business income, cash out of earlier income or savings means cash out of savings as on 8th November 2016.
b)                         For Business Income the cash balance as on 31.03.16 can be taken as cash out of earlier income or savings.

ü  Cash deposited out of withdrawal from bank accounts the dates and other details for withdrawal(s) from other bank accounts can be specified in the remarks column of B.3.

ü  Cash out of receipts exempt from tax is to be used for taxpayers not involved in business and cash deposited out of exempt income e.g. agricultural income.
ü  Cash deposited by entities having exempt income e.g. charitable trust can follow the sequential order for the source of cash deposits  as given hereunder:
a)      Cash withdrawn from bank account (B.3)
b)      Cash received from identifiable persons (with PAN) (B.4)
c)       Cash received from identifiable persons (without PAN) (B.5)
d)      Cash received from un-identifiable persons (B.6)
e)      Cash out of earlier income or savings (Refer B.1) – closing cash balance as on 31st March 2016
Adopting other sequence may result in case being selected for verification based on risk criteria.

ü  Cash deposited out of cash sales of business the cash may be assigned under various categories in sequential manner as follows:
a)      Cash received from identifiable persons (with PAN) (B.4)
b)      Cash received from identifiable persons (without PAN) (B.5)
c)       Cash received from un-identifiable persons (B.6)
d)      Cash out of earlier income or savings (B.1) - closing cash balance as on 31st March 2016.
 The taxpayer is advised to provide the details of identifiable person (with PAN) to reduce the chances of the case being selected for verification. Adopting other sequence may result in case being selected for verification based on risk criteria.
ü  Cash Deposit by Professionals e.g doctors having cash receipts on daily basis the cash may be assigned under various categories in sequential manner as follows
a) Cash received from identifiable persons (with PAN) (B.4)
b) Cash received from identifiable persons (without PAN) (B.5)
c) Cash received from un-identifiable persons (B.6)
 The taxpayer is advised to provide the details of identifiable person (with PAN) to reduce the chances of the case being selected for verification. In case of cash receipts of Rs. 20,000/- or more from a single person, it is expected that the details are provided either in B.4 or B.5, as the case may be.
ü  Cash from tuition fees, tailoring etc  being professional or business income in nature is to be reported as ‘cash sales’ under ‘Nature of Transaction’ and same sequence of B.4, B.5 or B.6 is to be followed.

ü  Cash deposited out of gifts received should necessarily be filled in row B.4, B.5 or B.6 in the response option form. The taxpayer is advised to provide the details of identifiable person (with PAN) to reduce the chances of the case being selected for verification. In case of cash receipts of Rs. 20,000/- or more from a single person, the details are to be provided either in B.4 or B.5.

ü  Cash salary/ advance salary  received then the name and respective details of the employer from whom salary/advance salary in cash has been received may be provided in B.4 or B.5.
ü  Cash deposited out of cash declared under Income Declaration Scheme, 2016 the cash deposited should be entered under “Cash out of earlier income or savings” (B.1) and in remarks column the particulars of such declaration filed should be mentioned.
·         Uploading data using CSV
ü  The details of identifiable persons (with or without PAN) from whom cash has been received can be provided on the online portal in a CSV format file.
ü  All the mandatory are to be provided and no blank rows in the CSV file can be uploaded.
·         Revision of Response
ü  After submission if someone wants to revise / to modify or change response or explanation provided can re-submit the response.
·         Verification of Response
ü  All cases will not be selected for verification.
ü  If selected for verification then may provide additional information.
ü  The cases selected for verification will be communicated on E mail for further information.
ü  The nature of business will be considered while assessing the response.


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