CRYPTO INCOME TAX NOTICE

One of my community members shared this official notice from the Income Tax Department (India). Issued under Section 133(6) of the Income Tax Act. Let’s break it down

What does the notice clearly say?

The IT Department already has information that the person received:

  • 1,68,714 — Receipts from transfer of Virtual Digital Assets (Crypto)
  • 2,*8,064 — Winnings from online activities

This data is linked to PAN

Assessment Year 2024–25

AIS (Annual Information Statement)

Important point:

  • The department is NOT asking whether you earned.
  • They are asking you to explain it.

That means they already KNOW.

How did the govt get this crypto data?

If you still believe “crypto is untraceable”, you’re lying to yourself.

Data comes from:

  • Indian exchanges
  • KYC-linked platforms
  • Bank trails
  • AIS/TIS reporting
  • On-chain + off-chain matching

Once PAN is involved, privacy is over.

  • Income received
  • ITR not properly disclosed or explained
  • Mismatch between reported income and available data

Now the burden is on the taxpayer, not the department.

  • Compliance is mandatory
  • Non-compliance may attract penalty under Section 272A(2)(c) (₹500 per day of default)
  • In serious cases, it may lead to adverse inference or further proceedings

Most dangerous myth people believe

X “I didn’t withdraw to bank”

X “I used DEX / foreign exchange”

X “Govt can’t track wallets”

This notice kills all these excuses in one shot.

If it’s reflected in AIS, you are already visible.

What if someone ignores this notice?

The notice clearly mentions:

  1. penalty under Section 272A
  2. ₹500 per day till compliance

Ignoring it doesn’t make it disappear. It only increases cost and trouble.

Hard truth (no comfort talk)

If you’re earning from crypto and:

  • Not maintaining records
  • Not understanding tax rules
  • Depending on Twitter gurus for tax advice

Standard Format: Notice under Section 133(6)

OFFICE OF THE INCOME TAX OFFICER
Ward/Circle: __________
Address: ______________________

Date: __________

To,
Name: ______________________
Address: ______________________

Subject: Notice under Section 133(6) of the Income Tax Act, 1961 – Reg.

Sir/Madam,

In connection with proceedings under the Income Tax Act, 1961, you are hereby required
to furnish the following information/documents under Section 133(6) of the Act:

1. _______________________________
2. _______________________________
3. _______________________________

The above information should be furnished on or before __________ through
[Income Tax Portal / Email / Physical submission] as specified.

Please note that failure to comply with this notice may attract penal consequences
under the Income Tax Act, 1961.

This notice is issued with the approval of the competent authority, wherever applicable.

Yours faithfully,

(Signature)
Name of the Officer
Designation
PAN/TAN (if applicable)
Office Seal

How to Respond to a 133(6) Notice (Best Practices)

  • Respond within the due date
  • Submit complete and accurate information
  • Keep acknowledgement or submission proof
  • If more time is needed, seek adjournment in writing
  • Consult a tax professional if the notice involves complex issues

Important Judicial View

Courts have consistently held that:

  • Section 133(6) is a fact-finding provision
  • It does not amount to harassment if used lawfully
  • Information sought must be relevant and not fishing or roving