Question on accumulated cash

Hello

My father aged 55, working in a private sector company(which isn't registered), has never fallen into taxable income bracket till now. He has accumulated an amount of ~ Rs. 16 lakhs from savings in last 25 years and it is currently in the form of cash.

This amount in never recorded with banks/income tax department. With the demonetization of 500 and 1000 notes, the above 16 lakhs needs to be deposited into a bank account. I'm hoping this transaction of depositing huge amount may fall into income tax scrutiny. From my understanding there is no illegal money/transaction here, what are the proofs that we need to keep when IT department asks for an explanation for this transaction ? Are we required to pay any income tax here ?

Thank you!
Asked 22 days ago in Income Tax from Hyderabad, Telangana
Hello Sir,

In your case it is a bit to difficult to prove that the amount deposited is out of your past savings unless you can satisfy the revenue with a reason of storing Rs. 16 Lacs at home rather than deposit it in a Bank Account and earn interest over it.

So you must be prepared with a rock solid reason for not depositing the funds with a Bank.

Trust this clarifies your query. 

Feel free to call / get back in case of further clarifications. 

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Rohit R Sharma
CA, Mumbai
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Dear Sir,

It is unlikely for income tax department to digest that a person who has never filed any return(means earning income in the range of 2-2.5 lacs) can have accumulated saving of 16 lacs.


Because why would a person keep that amount in cash. Further, giving loan to relatives in cash is also not allowed in income tax. 

However if it genuime, you must be having something to prove.

Please feel free to call me to understand your situation more clearly.

Thanks and Regards
CA Abhishek Dugar
caabhishekdugar@gmail.com

Abhishek Dugar
CA, Mumbai
755 Answers
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don't worry made a cash flow .See how much amount you can support . Because if you are unable to sustain your explanation AO has powers to impose penalty of 200% over and above tax Still there are some legal method available by paying taxes/interest/penalty ranging between 35 to 45 %
Anuj Agarwal
CA, Aligarh
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I think ur Question is answered by our professional Colleague. For more answers mail at modani005@gmail.com
Shyam Sunder Modani
CA, Hyderabad
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Dear Concern,

I think that your question is already answered by our professional colleague. For further clarification feel free to contact us.

Best Regards
agarwaltaxcon@gmail.com
Shiv Kumar Agarwal
CA, Delhi
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Hello Sir,

Technically as per the Income Tax provisions you cannot lend more than 20,000 in cash to a single assessee. So you cannot even declare that the amount was lent to relatives, the next question would be did you declare the interest received as income, which I assume you have not.

So it is still taking a chance.

Trust this clarifies your query. 

Feel free to call / get back in case of further clarifications. 

Thanking You. 

Regards,
Rohit R Sharma
BCOM, ACA, LLB-GEN, CERT. FAFP
Rohit R Sharma
CA, Mumbai
706 Answers
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