Income Tax Department eye on big bank transactions: In the last few years, cases of common people suddenly receiving notices from the Income Tax Department have increased. Many times, even taxpayers who follow the rules completely feel nervous when such a notice reaches them in post or by email. The biggest reason for this is the use of Artificial Intelligence (AI) by the department.
Now, AI-based monitoring systems immediately alert you to big transactions taking place in your bank account. The amount that seemed normal earlier can now also be questioned. If you do not respond to such a notice correctly, the matter can become serious, and you may have to face an investigation.
Expert opinion: How to transact in a savings account
CA C. Kamlesh Kumar, Taxation Partner, Delhi-based Ravi Rajan & Co. LLP, says that people should be careful about the flow of money in their accounts. He clarified that depositing a large amount in the account is not a crime. But if a person suddenly deposits a very large amount at once, then the Income Tax Department may notice it.
In today’s time, banks are also bound to give information to the department. Whenever the bank’s system sees a large amount in an account, its details can reach the government directly. This is the reason why the department issues a notice after that.
How do banks send your information to the department?
All banks in India have been given clear instructions to report high-value transactions. According to the current rules, if the total deposits in a savings account within a financial year exceed ₹ 10 lakh or more, then the bank informs the Income Tax Department about it.
This does not mean that every taxpayer depositing ₹ 10 lakh will come under suspicion. But frequent large transactions, which do not have any solid source, definitely raise suspicion. AI catches such patterns immediately, and the matter can reach the investigation.
Showing money without documents can become a problem
When the department sends a notice, its first question is where did the money came from. If the taxpayer is unable to provide solid proof for it—such as a salary slip, registration paper for selling the property, or gift deed of the gift received from a relative—then the amount is considered undeclared income.
For example, if a person receives ₹10 lakh as a gift from a relative and deposits it in the account, then he should have a written gift deed or a record of bank transfer. If the documents are correct, then responding to the notice is easy. But if the documents are not there, the department can also impose tax, interest, and penalty on it.
Why do repeated large transactions become a reason for suspicion?
Experts also warn that frequent deposits and withdrawals of large amounts, even if the money is real, can look suspicious to banks. This pattern sometimes looks like money laundering or cash circulation.
That is why it is advisable that if a large amount comes to you, always keep the documents confirming its legality safe. Also, keep your PAN card and KYC process completely updated, so that the bank or department can check it at any time.