subhashri (senior accountant) (50 Points)
16 December 2015My friend has deposited the cash of 13 lakhs in two different dates in his mother's account where he is also the joint holder.
This has been done in the FY 2013-14. How can he escape from the tax burden. He has not shown this transaction in IT return for FY 2013-14. How can he give explanation in the time of scrutiny.
Please advise.
thanks
Stranger
(.)
(5531 Points)
Replied 17 December 2015
I hope its a kind of gift received in cash from any relative or on occassion of your's friends' marriage.. If not so, the assessee may be in trouble as it may be difficult to prove it as non-taxable..In such a situation, I think either you can advise your friend (i) to revise his / her ITR by including it as it is or by claiming some expenditures , if possible, under appropriate "head of income "or by showing it as income from some "eligible business" as per sec-44AD & declaring 8% of turnover / gross receipts as "income" (if all the provisions of Sec-44AD applicable) & pay taxes accordingly, provided he / she has filed his/ her ITR by due date in A.Y. 2014-15 or (ii) by using some possible unfair means, which I would neither discuss nor like to advise you in this paltform.
Besides, as far as the interest on Rs.13 lakhs is concerned, it will be taxable either in the hands of "first account holder" or "that individual's account" who has higher interest income (provided both the joint holder has individual savings account), if it cannot be proved that the specific amount actually belongs to the specific jointholder, as then only it will be possible to tax interest incomes proportionately.
Requesting experts of CCI to give their valuable suggestions on this issue...
subhashri
(senior accountant)
(50 Points)
Replied 17 December 2015
Thanks so much for the response. He has filed the returns on time.The primaly account holder is his mother who is a senior citizen.
The cash depostied wasbalance amount from sale of his property. Rest of the cash he invested in buying a property. He deposited the cash in his mother's account as she is a senior citizen. Though he has filed ITR 1 for the interest on TDS, still the query lies in where the cash is from and how it is deposited in the same account in two portions.
Please suggest how to take it forward.
thanks
regards
subhashri
(senior accountant)
(50 Points)
Replied 17 December 2015
Thanks so much for the response. He has filed the returns on time.The primaly account holder is his mother who is a senior citizen. The cash depostied wasbalance amount from sale of his property. Rest of the cash he invested in buying a property. He deposited the cash in his mother's account as she is a senior citizen. Though he has filed ITR 1 for the interest on TDS, still the query lies in where the cash is from and how it is deposited in the same account in two portions. Please suggest how to take it forward. thanks regards
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Nikhil Kaushik
(Fellow CA)
(85743 Points)
Replied 17 December 2015
well, in that case you can barely do anything. in absence of any source of this cash, better be prepared to pay tax on it as undisclosed income. Alternatively, to avoid penalties, revise the return ASAP in ITR4S and do as suggested by stranger.
Stranger
(.)
(5531 Points)
Replied 17 December 2015
It means that the the part balance which your friend has invested in buying a property (i) has already been claimed as exemption u/s-54 from the long term capital gain on sale of a property, if it's a long term capital asset or (ii) paid taxes on such part too if it's a short term capital asset. While as far as the other part, i.e., Rs.13 lakhs is concerned, if it's already mentioned in the Sale Deed then there will be no problem, provided your friend have already paid taxes (i) on such LTCG by not claiming it u/s-54 from capital gain if it's long term capital asset as it is neither invested in construction or acquisition of any property nor deposited to Capital Gains Deposit Account Scheme or (ii) on STCG, if it's a short term capital asset, However, if Rs.13 lakhs is not mentioned in Sale Deed (i.e., taken as black money in cash, being the general practice & also seems to be in your case, as beneficial to both buyer & seller because then there will be less capital gain tax for seller due to reduced "sales consideration" & also less "stamp duty" to be paid by buyer on registration of property) then there will be no other alternatives other than the ones as already suggested by me & Nikhil Ji...
Hope ur doubt is cleared now...
subhashri
(senior accountant)
(50 Points)
Replied 17 December 2015
how much tax we are supposed to pay Nikhil
S. Shiroor
(Others)
(1207 Points)
Replied 17 December 2015
If the Source of cash is from sales proceeds of a House and partly the funds are used for buying new house then the cash can deposited in the Capital gains saving account. When 54Ec bonds come purchase those bonds and tax will fully exempted. This is provided that the total funds are shown in agreement for sale.
If the Source of funds is from sale proceeds of a House and not shown in agreement for sale then you will be guilty of under paying the Stamp Duty and registration charges as well as concealing the Income where hefty punishment is also likely. You should get hold of good CA who will settle and clear the matter amicably.
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