Operation Clean Money : E-filers must check account online for tax notice

If you have a Permanent Account Number, or PAN, log into your income tax e-filing account and check if there’s a notice. There are chances that due to erroneous reporting by banks, there could be a notice sent to you. This is possible even if you have not deposited demonetised notes or have deposited a small amount.

 

The income tax department has initiated Operation Clean Money to scrutinise deposits made between November 9 and December 30. Using data analytics, authorities have identified around 1.8 million cases where cash transactions do not appear to be in line with the taxpayer’s profile. Tax experts feel in an operation of this magnitude, errors would happen and, therefore, all PAN holders need to be cautious.

 

A chartered accountant (CA) with a well-known tax firm says that his client, a Haryana-based cloth merchant, received two incorrect notices. During demonetisation, the businessman deposited Rs 11 lakh in a current account. The bank added an extra zero that showed Rs 1.1 crore in his account. Next day, however, the bank rectified the mistake. But he still received a tax notice as the bank reported the wrong entry to the authorities. The same individual’s personal tax filing account is reflecting an unknown bank account that has cash deposit of Rs 48 lakh. He got certificates from banks that reflect  the correct status of his accounts.

 

Preeti Khurana, chief editor at ClearTax.com, says that even they have received queries where the taxpayers disagree with the information shown in the e-filing account.

 

“All PAN holders need to check their e-filing account to avoid unnecessary hassle later. If they have not got one, they should sign up immediately,” says Naveen Wadhwa, deputy general manager–research and development, Taxmann.com. Income tax department is only sending communication electronically under Operation Clean Money. Wadhwa says that in many cases, CAs operate e-filing accounts of assessees. Such taxpayers should ensure that they check for a notice themselves, rather than relying on the CAs. “Genuine taxpayers shouldn’t worry about getting an incorrect notice. But they should ensure that they reply to it in time and inform the authorities that the account doesn’t belong to them,” says Kuldip Kumar, partner and leader, personal tax, PwC.

 

If an individual doesn’t reply to the notice within 10 days, the authorities can initiate action against him. For those have never filed income tax returns, the assessing officer can use the “best judgement assessment” and penalise under the Pradhan Mantri Garib Kalyan Yojana. If a person files tax returns but the deposit doesn’t match his income, the tax officer can call for examining all his income records and book of accounts. “Those who earn below Rs 5 lakh and have not filed returns but have deposited higher sums (over Rs 2.5 lakh); such individuals should disclose all the correct information and file returns,” says Khurana.

 

The income tax department has released detailed instruction on how one should respond to the notice.  In the e-filing website, go to the “Compliance” tab and select “Cash Transactions 2016” from the drop-down menu to check for a notice.