Hi 

Income tax department has been proactively pursuing crypto investors recently and  if your reply to their 148 notice is  not found satisfactory, a detailed inquiry will be conducted under section 148 and the amount of tax evaded will be levied at  77% along with a 10% penalty and additional interest.

Also, Income tax has taken either of the following stand :  

1) If the taxpayer has transferred the initial amount invested in the crypto wallet from the bank and has paid tax on the amount in the bank, then the investment will not be taxed again.

or

2) If there is a profit from the purchase and sale of crypto currency, then it will have to be taxed at 30% and if there is a loss, then this loss will not be set off.

3) If the crypto currency is sold after holding it for three years, then it will be taxed at 20% and it will be considered as capital gains.

4) So, in your case, since you have your bank statement reflecting non realisation of profits by you and whereas  IT department is claiming that you have derived 1.22 crore profit, it is recommended that you either approach a good chartered accountant or a lawyer and use their good offices to contest the claim of IT Department. 

Hope this information is useful. 

You must consult a local CA and reply to notice 

you are entitled to produce documentary evidence that you have sold crypto currency of Rs 1.32 cr 

In your reply enclose bank statements which refer to total transactions done by you 

The principle best available proof is applicable here. As the website is closed you can produce any data. In the circumstances bank statement of accounts is best proof. File an appeal  to Commissioner and thereafter to the appellate tribunal with proof of  closure of websites.

If you have received the notice demanding show cause to the allegations leveled against you in the notice, you can issue a reply notice denying their allegations and attach supporting documents to support your denial.

You may consult your auditor and prepare the documentary evidences to prove the loss and also the reason for not filing ITR on that assessment year.

Reply to notice and counter the same by taking legal steps

you are entitled to the insider data of the IT on basis of which the department claims that you sold crypto and made profits

if the department does not accede to your request then you can appeal to the higher officer and ultimately approach the HC by filing a writ petition

the IT department must obviously show to the assessee on what basis they have laid their claim

just by saying that they have certain insider data they cannot hold the assessee to ransom and charge him to tax

Hire a good CA and let him handle it right now. 

Dear Client,

In India, there are no specific guidelines on the taxation of cryptocurrency in the Income-Tax Act, 1961. But taxpayers need to report transactions if they have invested in cryptocurrencies and gained from those investments and as per the facts provided by you, you have not made any gain so you will not have to pay but as per the new guidelines now the TDS is deducted upon the entire crypto transaction value even if one makes a loss. 

Thank You