But the thing here is that your passbook would show that you have "spent" 1 lakh as expenditure on something (buying bitcoin). But in the situation I explain, there is no INR involved for those 4 bitcoin. But tax is being paid.
The blockchain is your passbook.
Plus, if you had received your payment in cash, there would have been no trace.
so if there is an audit, the IT people will have to be explained about how Bitcoin works, etc. ?
You are right about cash. so how do IT people ever check for overpaid tax / declared cash?