If a large amount is suddenly deposited in your bank account in a month, then the Income Tax Department (IT Department) may keep an eye on it. This rule is important for all taxpayers and the Income Tax Department has the right to send notices on abnormal deposits in the account.
Under Income Tax law, if an unusual or disproportionate amount is credited to a person’s account compared to his or her regular income, it may be an indication to the department that the income was not declared correctly. Due to this, Income Tax officials can ask for explanation or documents from the owner of that account.
According to experts, if there is a clear difference between your annual income and the amount deposited in your bank account, it can be a reason for notice. For example, if your annual income is Rs 5 lakh but you have Rs 20 lakh deposited in your account, it will appear unusual to the Income Tax Department.
As per Income Tax Department rules, all bank transactions are monitored, and reporting is done on large transactions. On receiving the notice, you have to clarify where the deposit amount came from and whether it is included in your declared income or not.
If you do not respond to the notice properly, the department may investigate the property, levy additional tax and penalty. However, if you submit correct documents and explanation, the notice can be vacated.
Experts also say that there is no need to panic after receiving the notice. This is a normal process and its purpose is to prevent tax evasion. On receiving the notice, the person should present his side by submitting documents online or offline.
Generally, the Income Tax Department demands bank statements, source proof and transaction records in such cases. If the deposit amount is to any gift, loan or business transaction, it is important to give clear information about it.
The objective behind this rule is to ensure that all taxpayers declare their true income and any type of hidden wealth can be exposed. Experts recommend that large deposits or irregular transactions should be tracked and recorded in advance, so that when a notice is received later, it can be easily responded to.
In short, if the amount shown in your account is more than your normal income, you may receive an income tax notice. Ignoring it can be risky. By understanding the rules and keeping the documents ready, you can easily go through this process.
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