Notice for ay 2011-12
This query is : Resolved
15 November 2015
Hi members,
My one of friend has received notice for AY 2011-12 for non filing of ITR of her grandmother.
AO has gathered information from AIR that Rs 10 lacs was deposited in her saving bank account during year and bank has credited interest at which TDS has been deducted.
Mr. Saurabh & other family members use to deposit cash to her account out of their saving from salary.
Smt Vimla Devi (Grandmother of Saurabh) has no other income except interest amount credited by bank at amount deposited by her son/grand son.
1. Can you please clarify whether action of AO is justified?
2. What action should be taken by Saurabh in this case?
3. If saurabh furnishes information that above deposit of cash to her grandmother' saving bank account was made by them, can AO ask for additional information like statement of other family members to trace these transactions?
My one of friend has received notice for AY 2011-12 for non filing of ITR of her grandmother.
AO has gathered information from AIR that Rs 10 lacs was deposited in her saving bank account during year and bank has credited interest at which TDS has been deducted.
Mr. Saurabh & other family members use to deposit cash to her account out of their saving from salary.
Smt Vimla Devi (Grandmother of Saurabh) has no other income except interest amount credited by bank at amount deposited by her son/grand son.
1. Can you please clarify whether action of AO is justified?
2. What action should be taken by Saurabh in this case?
3. If saurabh furnishes information that above deposit of cash to her grandmother' saving bank account was made by them, can AO ask for additional information like statement of other family members to trace these transactions?
15 November 2015
Answers to your points:
1. AO is justified in seeking information in assessing the true income of an assessee.AIR information is one way of gathering financial information of persons and to verify whether they have been correctly shown in the returns filed by assessees or not. This may bring in new assessees.
2. As the bank account as well as TDS relates to Smt Vimala Devi, she is liable to tax. The grandsons, if they have sources of funds, may establish that these amounts have been gifted to her, if the dates of drawings from their accounts correspond with the deposit dates of Smt.Vimala Devi.
3. AO may seek additional information of the family members.
In view of the above, gather information from the family and prepare a letter. If required file IT return and claim TDS after checking form 26 AS.
1. AO is justified in seeking information in assessing the true income of an assessee.AIR information is one way of gathering financial information of persons and to verify whether they have been correctly shown in the returns filed by assessees or not. This may bring in new assessees.
2. As the bank account as well as TDS relates to Smt Vimala Devi, she is liable to tax. The grandsons, if they have sources of funds, may establish that these amounts have been gifted to her, if the dates of drawings from their accounts correspond with the deposit dates of Smt.Vimala Devi.
3. AO may seek additional information of the family members.
In view of the above, gather information from the family and prepare a letter. If required file IT return and claim TDS after checking form 26 AS.
15 November 2015
Dear Shiva,
Thanks for your reply.
Family members have gifted these amounts approx Rs. 20 lacs to Ms Vimla Devi during the year.
Interest was paid by the bank at such amount. As Vimla devi has no other income so necesary tax exemption certificate i.e. Form 15G was also provided but bank deducted TDS on interest amount credited.
Due to ignorance of facts, no ITR for respective year was filed.
1. As due date of filing of return is passed, is it alternate possibility to file ITR for AY 2011-12??
2. If information of other family members are gathered & submitted to AO then what could be implications if amounts are not matching one by one with accounts of Vimla Devi??
Thanks for your reply.
Family members have gifted these amounts approx Rs. 20 lacs to Ms Vimla Devi during the year.
Interest was paid by the bank at such amount. As Vimla devi has no other income so necesary tax exemption certificate i.e. Form 15G was also provided but bank deducted TDS on interest amount credited.
Due to ignorance of facts, no ITR for respective year was filed.
1. As due date of filing of return is passed, is it alternate possibility to file ITR for AY 2011-12??
2. If information of other family members are gathered & submitted to AO then what could be implications if amounts are not matching one by one with accounts of Vimla Devi??
15 November 2015
1. Can file return ,on the strength of the notice received ,though barred by time.
2. If gift is not established with documentary evidence, naturally AO will treat those as income of Ms. Vimala devi and will be assessed accordingly.
2. If gift is not established with documentary evidence, naturally AO will treat those as income of Ms. Vimala devi and will be assessed accordingly.
15 November 2015
Accordingly tax will be @30% undersection 68 i.e. for unexplained Incomes/credit. Am i right??
04 August 2024
Given the scenario you described, let’s address each question to clarify the situation and recommend appropriate actions:
### **1. Justification of AO’s Action**
**Question:** Is the action of the Assessing Officer (AO) justified?
The AO's action is justified if there are discrepancies in the reported income or if there is a mismatch between the information available from third-party sources (like the bank) and the income reported in the tax return. The AO has noted that ₹10 lakhs was deposited in the savings bank account, and the bank has credited interest on this amount with TDS deducted. Since there is no record of the income from these deposits in the ITR, the AO has a valid reason to issue a notice for non-filing.
### **2. Action to be Taken by Saurabh**
**Question:** What action should be taken by Saurabh in this case?
Saurabh should take the following steps:
1. **File the Missing ITR:** Even though the due date for filing the return for AY 2011-12 has passed, Saurabh can still file a belated return under Section 139(4) of the Income Tax Act. It is advisable to do this as soon as possible to avoid further penalties.
2. **Provide Information:** Saurabh should prepare a detailed explanation and provide it to the AO. This should include:
- **A Written Explanation:** Detailing that the deposits were made by family members and are not income of Smt. Vimla Devi.
- **Evidence of Gifts:** Proof of gifts or transfers from family members to Smt. Vimla Devi (such as gift deeds, bank statements, and letters from family members).
3. **Submit Form 15G:** Even though it’s past the due date, submitting a Form 15G with the ITR might still be helpful to show that no tax was intended to be payable on the interest income due to total income being below the taxable limit.
### **3. AO Asking for Additional Information**
**Question:** Can AO ask for additional information like statements of other family members?
Yes, the AO can ask for additional information to verify the source of the deposits. This could include:
- Bank statements of family members who deposited money.
- Proof of source of funds for those deposits.
- Any supporting documents related to the gifts made to Smt. Vimla Devi.
If Saurabh provides statements of family members showing the source of funds and these amounts match, it should help clarify the situation. However, discrepancies or unaccounted amounts could lead to further scrutiny.
### **4. Filing ITR After Due Date**
**Question:** Is it possible to file ITR for AY 2011-12 after the due date?
Yes, it is possible to file a belated return under Section 139(4). This should be done as soon as possible. Filing the return promptly will help mitigate penalties and interest charges. Note that there might be a penalty for late filing, and interest under Section 234A might be applicable for the delay.
### **5. Implications of Mismatched Amounts**
**Question:** If information of family members is gathered and submitted to AO, what could be the implications if amounts do not match?
If the amounts reported by family members do not match with the deposits in Smt. Vimla Devi’s account, the AO might consider the unexplained deposits as unexplained income under Section 68. This could lead to the following:
- **Tax on Unexplained Income:** The unexplained amount may be treated as income and taxed at the applicable rate (typically 30% plus applicable surcharge and cess).
- **Penalties:** Additional penalties might be levied for concealment of income or failure to provide accurate information.
### **Summary**
1. **File the belated ITR:** Under Section 139(4), file the missing ITR for AY 2011-12.
2. **Provide a detailed explanation:** Include evidence of gifts and sources of deposits.
3. **Submit supporting documents:** Bank statements and gift deeds.
4. **Address discrepancies:** Be prepared for potential tax on unexplained income if the amounts do not match.
Addressing the notice promptly and providing accurate information will help in resolving the issue effectively. Consulting a tax professional for detailed guidance tailored to the specific situation is advisable.
### **1. Justification of AO’s Action**
**Question:** Is the action of the Assessing Officer (AO) justified?
The AO's action is justified if there are discrepancies in the reported income or if there is a mismatch between the information available from third-party sources (like the bank) and the income reported in the tax return. The AO has noted that ₹10 lakhs was deposited in the savings bank account, and the bank has credited interest on this amount with TDS deducted. Since there is no record of the income from these deposits in the ITR, the AO has a valid reason to issue a notice for non-filing.
### **2. Action to be Taken by Saurabh**
**Question:** What action should be taken by Saurabh in this case?
Saurabh should take the following steps:
1. **File the Missing ITR:** Even though the due date for filing the return for AY 2011-12 has passed, Saurabh can still file a belated return under Section 139(4) of the Income Tax Act. It is advisable to do this as soon as possible to avoid further penalties.
2. **Provide Information:** Saurabh should prepare a detailed explanation and provide it to the AO. This should include:
- **A Written Explanation:** Detailing that the deposits were made by family members and are not income of Smt. Vimla Devi.
- **Evidence of Gifts:** Proof of gifts or transfers from family members to Smt. Vimla Devi (such as gift deeds, bank statements, and letters from family members).
3. **Submit Form 15G:** Even though it’s past the due date, submitting a Form 15G with the ITR might still be helpful to show that no tax was intended to be payable on the interest income due to total income being below the taxable limit.
### **3. AO Asking for Additional Information**
**Question:** Can AO ask for additional information like statements of other family members?
Yes, the AO can ask for additional information to verify the source of the deposits. This could include:
- Bank statements of family members who deposited money.
- Proof of source of funds for those deposits.
- Any supporting documents related to the gifts made to Smt. Vimla Devi.
If Saurabh provides statements of family members showing the source of funds and these amounts match, it should help clarify the situation. However, discrepancies or unaccounted amounts could lead to further scrutiny.
### **4. Filing ITR After Due Date**
**Question:** Is it possible to file ITR for AY 2011-12 after the due date?
Yes, it is possible to file a belated return under Section 139(4). This should be done as soon as possible. Filing the return promptly will help mitigate penalties and interest charges. Note that there might be a penalty for late filing, and interest under Section 234A might be applicable for the delay.
### **5. Implications of Mismatched Amounts**
**Question:** If information of family members is gathered and submitted to AO, what could be the implications if amounts do not match?
If the amounts reported by family members do not match with the deposits in Smt. Vimla Devi’s account, the AO might consider the unexplained deposits as unexplained income under Section 68. This could lead to the following:
- **Tax on Unexplained Income:** The unexplained amount may be treated as income and taxed at the applicable rate (typically 30% plus applicable surcharge and cess).
- **Penalties:** Additional penalties might be levied for concealment of income or failure to provide accurate information.
### **Summary**
1. **File the belated ITR:** Under Section 139(4), file the missing ITR for AY 2011-12.
2. **Provide a detailed explanation:** Include evidence of gifts and sources of deposits.
3. **Submit supporting documents:** Bank statements and gift deeds.
4. **Address discrepancies:** Be prepared for potential tax on unexplained income if the amounts do not match.
Addressing the notice promptly and providing accurate information will help in resolving the issue effectively. Consulting a tax professional for detailed guidance tailored to the specific situation is advisable.
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