Answer

1. F

   Facts

   Cash deposits reported in AIS are often proposed as income when the source is not explained. You must show where the cash came from, with documents.

2. P

   Provisions and law

   • Sec 144, Income-tax Act 1961 (now Sec 271)If you do not file a return or do not comply with notices under Sec 142(1) or 143(2), the officer can assess to the best of judgment after a show-cause notice giving you a date to be heard.
   • Sec 270A, Income-tax Act 1961 (now Sec 439)Penalty of 50% of tax on under-reported income, and 200% for misreporting.
3. A

   Analysis

   Common sources are earlier withdrawals from the same or another account, sale of an asset, gifts from relatives, or business receipts already in your return. If you withdrew ₹4,00,000 in March and redeposited it in May, show both entries. Gifts need a gift letter and the donor's bank trail. Unexplained income can attract a high tax rate and penalty, so explain every rupee you can.

4. C

   Conclusion

   1. 1List each cash deposit and date.
   2. 2Match each to a source with documents.
   3. 3Get gift letters and donor bank statements if relevant.
   4. 4Submit the reconciliation in your reply.
   5. 5Keep originals ready for the hearing.

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.