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Cash deposits proposed as unexplained income

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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.

Provisions

Sec 144, Income-tax Act 1961 (now Sec 271); Sec 270A, Income-tax Act 1961 (now Sec 439)

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.

Close

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

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Connect nowPay and start: Best judgment assessment, Sec 144 (now 271), ₹4,999

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