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Responding-to-Income-Tax-Notices-for-Unexplained-Deposits
Responding to Income Tax Notices for Unexplained Bank Deposits – Step-by-Step Guide
This guide explains why taxpayers in India may receive notices under Section 68 or Section 69 of the Income Tax Act and how to respond appropriately to avoid penalties.
1. Reason for Notice:
If your bank account shows large cash or high-value deposits that do not match your declared income, the Income Tax Department may issue a notice under Section 68 (unexplained cash credits) or Section 69 (unexplained investments).
2. Documents Required for Justification:
To support your response, collect and submit:
Income proofs (salary, business receipts)
Gift deeds or inheritance records
Loan agreements
Bank statements & transaction history
3. Responding Through the IT Portal:
Access the official Income Tax e-filing website, navigate to “e-Proceedings”, and upload a detailed explanation along with supporting documents before the deadline.
4. Ignoring the Notice Can Be Costly:
Non-compliance may result in:
Reassessment of income
Tax demand with penalty up to 60% of unexplained amount
Possible prosecution in serious cases
5. Preventive Best Practices:
✔️ Maintain accurate financial records
✔️ Report all income sources in your ITR
✔️ Avoid large unaccounted deposits
✔️ Get professional tax advice when needed
📌 This educational image post helps small business owners, freelancers, and salaried individuals understand their rights and responsibilities under Indian tax laws.
Responding-to-Income-Tax-Notices-for-Unexplained-Deposits
Responding to Income Tax Notices for Unexplained Bank Deposits – Step-by-Step Guide
This guide explains why taxpayers in India may receive notices under Section 68 or Section 69 of the Income Tax Act and how to respond appropriately to avoid penalties.
1. Reason for Notice:
If your bank account shows large cash or high-value deposits that do not match your declared income, the Income Tax Department may issue a notice under Section 68 (unexplained cash credits) or Section 69 (unexplained investments).
2. Documents Required for Justification:
To support your response, collect and submit:
Income proofs (salary, business receipts)
Gift deeds or inheritance records
Loan agreements
Bank statements & transaction history
3. Responding Through the IT Portal:
Access the official Income Tax e-filing website, navigate to “e-Proceedings”, and upload a detailed explanation along with supporting documents before the deadline.
4. Ignoring the Notice Can Be Costly:
Non-compliance may result in:
Reassessment of income
Tax demand with penalty up to 60% of unexplained amount
Possible prosecution in serious cases
5. Preventive Best Practices:
✔️ Maintain accurate financial records
✔️ Report all income sources in your ITR
✔️ Avoid large unaccounted deposits
✔️ Get professional tax advice when needed
📌 This educational image post helps small business owners, freelancers, and salaried individuals understand their rights and responsibilities under Indian tax laws.