Frequent large cash deposits, withdrawals can lead to tax scrutiny

Tax experts say frequent cash transactions usually raise red flags with the department. It's not uncommon for them to send a notice in such cases, and ask for a detailed explanation

Frequent deposits and withdrawals of large amounts can lead to an income-tax (I-T) notice during assessment of return. Recently, when a tax official scrutinised the details of a taxpayer, he found the taxpayer had frequent deposits of large amounts — ranging from Rs 2.11 lakh to Rs 98 lakh. The total cash deposited in different banks totalled Rs 1.35 crore. Despite all the required documents to prove the genuineness of the transactions, the official was not satisfied. He treated the deposits as unaccounted sources of money, and added it to the income of the taxpayer under the head — income