Why Did a Panipuri Seller Get an Income Tax Notice? Full Story & What You Can Learn

Why Did a Panipuri Seller Get an Income Tax Notice? Full Story & What You Can Learn

Imagine you’re enjoying a plate of spicy, tangy panipuri from your favourite roadside vendor. He’s been there for years – smiling, serving, and running his humble stall. But suddenly, he receives an Income Tax Notice!

Sounds surprising? It happened.

Let’s understand why a Panipuri seller received an Income Tax notice, what it means, and what all small business owners and cash earners should learn from this incident.

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🌶️ The Story—What Happened?

In 2024, in one of India’s tier-2 cities, a street food vendor selling panipuri was issued a notice from the Income Tax Department.

The reason?

💼 His bank deposits, UPI transactions, and lifestyle didn’t match what he had declared as income.

While he claimed he made around ₹2–3 lakhs annually, his bank deposits and UPI collections showed more than ₹40 lakhs in a year!

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📲 How Was He Tracked?

This wasn’t a random notice. The Income Tax Department uses AI-based data analytics and cash flow monitoring.

They track:

• High-value bank deposits

• Large UPI/POS collections

• Property purchases

• Luxury expenses

• PAN-linked bank accounts

If something doesn’t match your Income Tax Returns (ITR), you can get flagged.

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💡 Why It Matters – The Core Issue

The panipuri seller wasn’t running a scam. He simply:

• Never filed an ITR

• Didn’t maintain any books of account

• Collected thousands of rupees daily in cash + UPI

• Didn’t realise digital payments are traceable

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🔍 Example: Let’s Break It Down

Assume:

• He sells panipuri at ₹30 per plate

• On average, he sells 400 plates/day

• That’s ₹12,000 per day

• In 300 working days, he earns ₹36 lakhs annually!

Even if we subtract expenses, his net profit may cross ₹10–15 lakhs.
But he didn’t report this to the Income Tax Department.

Result: Mismatch → Suspicion → Notice

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🧾 What is an Income Tax Notice?

It’s a legal document sent by the department when:

• Your income seems under-reported

• There's suspicious banking activity

• You're not filing ITR, despite earning taxable income

• You're making large cash or UPI transactions

In this case, he likely got a Notice under Section 148 (income escaping assessment) or Section 133(6) (information request).

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🧠 What Small Vendors & Businesses Must Learn

This case teaches us some important tax lessons:

1. Digital Payments = Digital Footprint

Even if you’re not in a shop or office, if you take UPI, PhonePe, Paytm, etc., your income can be tracked.

2. Cash Business? Keep Records

Even if most of your sales are in cash, maintain daily sales registers, expense notes, etc.

3. File Income Tax Returns (ITR)

If your income exceeds ₹2.5 lakhs/year, you MUST file ITR. For small businesses, the presumptive tax scheme



 under Sec 44ADA/44AD is ideal.

4. PAN & Aadhaar Are Everywhere

Your PAN is linked to:

• Bank accounts

• UPI apps

• Demat accounts

• Credit cards

So don’t assume you're under the radar.

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✅ What He Could Have Done Instead?

• Used Section 44AD (Presumptive taxation) to declare 8% of turnover as income

• Filed a simple ITR-4

• Paid tax on presumptive income (which could be just ₹30,000–₹50,000)

• Avoided penalty, scrutiny, and mental stress

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⚖️ What Happens After a Notice?

The seller has to:

• Respond to the notice within time

• Submit proof of income and expenses

• File pending ITRs

• Pay tax + interest + possible penalty

If ignored, it may lead to:

• Tax assessment with higher income estimates

• Penalties up to 200% of tax evaded

• Legal action in extreme cases

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📢 Final Words—Don’t Let Simplicity Fool You

Just because your business is small or informal doesn’t mean you’re invisible. The Income Tax Department now uses technology, AI, and banking data to monitor all kinds of transactions.

Even if you’re a:

• Chaiwala

• Panipuri seller

• Kirana shop owner

• Freelancer

• Tuition teacher

If you make decent money, file your ITR, stay honest, and maintain basic records.

✍️ Paying tax is not a punishment – it’s protection.

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🧾 Need Help Filing Returns or Responding to a Notice?

If you or someone you know received a tax notice or want help with filing ITR the right way, feel free to connect with us at +91-6033526962 or Email us at 1finsolutions4u@gmail.com

We make tax simple for everyone—even panipuri sellers!