Verification of cash deposits during demonetisation period CBDT issues detailed Checklist

Verification Cash deposits during demonetisation period to undergo sharp scanner during scrutiny assessment. CBDT issues detailed instructions/checklist for help of AOs. 

The demonetisation period falls in the FY 2016-17 (i.e. AY 2017-18) and the deadline for completion of the scrutiny assessment of the same is 31^st December, 2019.

Verification of cash deposits during demonetisation period 

CBDT has issued detailed instructions/guidelines for the help of AOs for Verification of Operation Clean Money and assessment in demonetisation related cases.

CBDT in past also have issued following instructions/SOP/ Internal Guidance for handling of cases related to demonetisation.

(a) Instruction No. 3/2017 dated 21.02.2017
(b) Instruction No. 4/2017 dated 03.03.2017
(c) SOP dated  15.11.2018 
(d) SOP dated 03.03.2019
(e) Internal Guidance Note dated 13.06.2019 

The latest verification checklist for cash deposits between 9th Nov t0 31^st Dec 2016 shall be used for further study of the deviant cases.

The Assessing Officer (AO) is required to fill the checklist separately for business cases and non business cases and analyse it in terms of various criterion.

In non business cases, apart from overall assessment of cash deposits, they have been matched against the sales for the demonetisation period and also the corresponding period in the Financial Year 2015-16.

Further, cash deposits made in a financial year have been segmented into three parts, i.e. pre demonetisation period, post demonetisation period and total in the financial year 016-17 and corresponding period in FY 2015-16. AO has to subject these data to analytics and work out the percentage increase in cash deposits against all the three combinations to derive the meaningful inferences. Similar exercise has also to be done for cash deposits and cash sales.

Further, analysis of month wise cash sales and deposits for demonetisation period and also the corresponding period in the Financial Year 2015-16 is to be undertaken.

Specific attention has been paid to the cash in hand till 08.11.2016, particularly where such balance was substantial. Cash withdrawals made  from the bank despite large cash balance in hand shall also receive due attention.

AO is required to obtain reasons where VAT returns had been revised in post demonetisation period, particularly with large changes in sales and purchase figures.

Rejection of books of accounts, additions made towards unexplained credits etc., levy of tax u/s 115BBE and penalty u/s 271AAc in a completed Assessment shall also be the grey areas.

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addition u/s 68 ca misconduct cash deposit in bank cbdt circular CBDT Instruction cbdt notification cbdt order cbdt press release cgst circular cgst notification cit revision 263 concealment penalty covid-19 custom circular demonetisation due date extension e-way bill faq GST circular GST Council Meeting gst faq gstn advisory gstr-1 GSTR-3B GST rates IBBI ibc icai announcement itat mca circular MCA notification order u/s 119 penalty 271(1)(c) penalty u/s 271(1)(c) Press Release reasons recorded reopening 148 Reopening us 147 Search & Seizure sebi circular sebi regulations transfer and postings unexplained cash credits validity of notice u/s 148 Withdrawal of 2000 500 Bank Notes