Today I converted Halal 500 Saudi Riyal note with Haram 5 notes of 100 Saudi Riyal from someone, Is it permissible in Islam? As far as I know that the person has Haram source of Income..
Bank notes are not assets (maal) themselves, they are legal tender, a representation of one's own assets. When the notes change hands, they represent something different from before the changing of hands.
Thus, the bank notes themselves are not haram, but what they represent while in the possession of the person with a haram source of income are haram assets. Once the notes change hands (when they come into your possession), they represent your assets and not the other person's, and since your assets are halal, the bank notes represent halal assets.