It is possible to receive an income tax notice for transactions made in a current account. The Income Tax Department may view such transactions as taxable income if they exceed a certain threshold.

In India, banks report all cash deposits and withdrawals above a specific limit (currently Rs. 10 lakhs in a financial year) in a current account to the Income Tax Department as part of their compliance with the Prevention of Money Laundering Act (PMLA) rules. If the Income Tax Department finds any discrepancies or inconsistencies in the reported transactions, it may issue a notice seeking clarification or demanding payment of taxes on the transactions.

It is important to maintain accurate records of all transactions in a current account and to declare all taxable income to avoid receiving an income tax notice.

How dept know current account transactions?

The Income Tax Department in India is aware of current account transactions made by individuals and entities through the information provided by banks. Banks are required to report all cash deposits and withdrawals above a specific limit (currently Rs. 10 lakhs in a financial year) in a current account to the Income Tax Department as part of their compliance with the Prevention of Money Laundering Act (PMLA) rules.

This information is then analyzed by the Income Tax Department using PAN data analytics and other tools to identify any discrepancies or inconsistencies in the transactions. If the department finds any such transactions, it may issue a notice seeking clarification or demanding payment of taxes on the transactions.

In this way, the Income Tax Department is able to track and monitor current account transactions and take appropriate action in cases where taxable income has been generated.