Preface
Cashless economy or digital economy is one of the prime objectives of the present Government. Demonetisation has been the first of the bold steps taken towards making the society go cashless. As tax avoidance and money laundering have led to massive problems and have increased burden on legitimate taxpayers, the efforts for going cash less or for less cash economy would help in bringing some parity in the society. Digital economy has several benefits in terms of transperancy, security, efficiency and convenience.
In view of the benefits of digital economy, some important amendments have also been made in the Income Tax Act so as to restrict cash transactions and promote digital transactions. Sections 269ST and 271DA have been inserted with a view to restrict transactions in cash. This provision would be very useful to counter generation of black money as it is applicable to almost all assessees and in respect of all transactions with very few exceptions. As the implications of this provision are very severe, one has to be aware of its applicability under different scenarios.
The scope of disallowance under section 40A(3)/(3A) in respect of payment incurred in cash have been extended to charitable trusts and institutions as well. As we know the provision of section 40A(3) of Income Tax Act is designed to curb clandestine transactions entered into with a view to avoiding tax and ensuring that the payments in respect of which deductions are claimed by taxpayers are genuinely made and accommodation payments are not claimed as deduction.
Another measure adopted towards less cash economy is to provide reduced tax rate under section 44AD in case transactions are entered through an account payee cheque or an account payee bank draft or use is made of electronic clearing system through a bank account.
Thus in recent past our Government has introduced several measures under the Income Tax Act with the aim of curbing flow of black money in the society. It is true that when transactions are conducted electronically greater transperancy gets embedded into the system, allowing authorities to monitors better.
During assessment proceedings sometimes it is noticed that a certain sum is found credited in the books of an assessee maintained for any previous year but the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not satisfactory in the opinion of the assessing officer. The statute provides for taxability of such cash credits under section 68 of the Income Tax Act, 1961.
Apart from cash credit some other deeming provisions dealing with income from undisclosed sources, are contained in sections 69, 69A, 69B, 69B, 69C and 69D. Direct or indirect use of unaccounted cash is also involved in the transactions intended to be covered via these deeming provisions. Therefore discussion as regards treatment of income from undisclosed sources in this book is not out of place.
Unaccounted income is also brought into the books of account in the form of loans and deposits. Huge black money is also involved in immovable property related transactions. With a view to circumventing such practices sections 269SS, 269T, 271D and 271E are there in the Income Tax Act.
Certain donations and contributions are also not allowable as deduction under Chapter VI-A of the Income Tax Act where these are given in cash.
During the course of search and survey, huge unaccounted cash is generally found in the possession of the person searched or being surveyed. The powers and duties of the Department as well as the rights and precautions to be taken by the person searched or subjected to survey, as regards the cash found during such activities undertaken by the Department, have also been discussed in this book so as to make it fully useful and practical on the subject.
The present Book aims at discussing tax treatment of all sorts of cash transactions and incomes from undisclosed sources. The scheme of presentation of the subject matter is as under --
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Part I |
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Disallowance in Respect of Cash Payment Exceeding Prescribed Limit [Section 40A(3)] |
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Part II |
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Section A : Taxation and Penal Consequences of Income from Undisclosed Sources |
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Section D : Unexplained Money, Jewellery, Etc. [Section 69A] |
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Section E : Amount of Investments, Etc., Not Fully Disclosed in Books of Accounts [Section 69B] |
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Section G : Amount Borrowed or Repaid on Hundi [Section 69D] |
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Part III |
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Acceptance or Repayment of Loan/Deposit/Specified Sum or Advances in Cash [Sections 269SS, 269ST, 269T] |
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Part IV |
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The whole book has been devised with the objective of providing a thorough and analytical study of the provisions which are generally sought to be invoked by tax authorities at the time of carrying out a scrutiny assessment or while completing the assessment in pursuance of a search or survey under the Income Tax Act, 1961.
Apart from incorporation of the up-to-date post Finance Act, 2018 amended statutory provisions, the whole lot of important judicial pronouncements (over 1800 of them) available to us upto 25th April 2018 have been included in this book. We feel that this work of ours will be useful for one and all concerned with tax practice, tax administration and business, for the subject-matter covered herein is one which is of day-to-day relevance. The treatment is exhaustive enough aimed at meeting totality of the requirements in regard to cash transactions of all sorts, together with their consequential implications. Free web site support comprises Full Reports of practically all the decisions cited in the text of the book and also includes reproduction of the text of the Circulars, Notifications, etc. referred to in the text of the book.
Though we have tried to make it an error free and quality publication, however, we shall remain grateful for any valuable and constructive suggestions from our esteemed readers towards improvement of any sort.
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JODHPUR |
Dr. AVADHESH OJHA |
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1 May, 2018 |
CA. (Dr.) NISHA BHANDARI |