Property transaction in cash


Hi, someone pls advice me on this.

 

i am an nri and purchased a property in india with 100% white money (tax fully paid in USA and no tax liability in India). The property was valued at 2cr by the sub registrar and thats the price we registered the property for. But since the market value of the property was 4cr, seller insisted on cash payment of remaining amount. We payed him in cash.

All this was documented (hand written) on a stamp paper and signed as witness by 2 relatives. Now because of family fued, that relative turned against us, stole the document from us and submitted to the income tax officer.

The bank account from which we withdrew 2cr cash was closed soon after this transaction. This bank account was never linked to PAN.

Now, based on the stamp paper, the income tax officer is behind us to provide the closed bnk account transactions.

 

Now my questions,

1. Why is the income tax officer coming after us since most things in india are digitized, can he not obtain the bank account transactions by himself ? He just has our name. He doesnt have our PAN, bank account number, branch or the bank name.

2. If I do not provide the closed bank account number, he is threatening to treat the amount as unexplained cash and levy tax on it. (he just has a stamp paper signed by 2 witnesses as proof that we payed cash ). Can he levy tax based on stamp paper? Can we go to tribunal court in such case? Can i hope for relief if i do that?

3. if i somehow manage to get the bank account number and give him transaction details and the income tax officer clears my name that source of the funds is tax paid, will I have any other trouble in any other form from him because i did a cash transaction though it was 100% white?

4. Will there be any fine/trouble from sub registrar if he finds out i paid additional cash to the seller? Sub registrar is the one who assessed the property and valued at 2cr and i registered the property for 2cr.

 
Reply   
 

i am not a lawyer, but it sounds like a case of tax evasion to me.

Are you the registered owner? have you, along with the seller and other witnesses signed on the hand written stamp paper?

 
Reply   
 



I would like to know why it sounds like a tax evasion to you? All my questions are valid and all my funds are tax paid. So, I don't know how it becomes tax evasion as a buyer? I can't speak for seller. I think seller signed on that paper.
 
Reply   
 

Sir, I am the registered buyer. Now, owner of the property. I did not sign the paper. It's beyond my understanding how and where I am at fault.ideally the IT officer should have knocked the seller's doors with the stamp paper he got
 
Reply   
 

Sir, I am the registered buyer. Now, owner of the property. I did not sign the paper. It's beyond my understanding how and where I am at fault.ideally the IT officer should have knocked the seller's doors with the stamp paper he got
 
Reply   
 
High Court Advocate and IPR Attorney

Mam ur query requires verification of material papers, If u intend to avail my service inbox me.

Regards,

Balachander Reddy Advocate

HYD, mobile # 9959850723

 
Reply   
 

Originally posted by : swetharani
Sir, I am the registered buyer. Now, owner of the property. I did not sign the paper. It's beyond my understanding how and where I am at fault.ideally the IT officer should have knocked the seller's doors with the stamp paper he got

 

Going by what you stated above, i am not sure how was the sale agreement executed without the buyer's (your) signature. 

i dont think anyone here would be able to advise you based on the limited facts posted, without looking at the actual documents. 

 

 
Reply   
 
Advocate

1. Why is the income tax officer coming after us since most things in india are digitized, can he not obtain the bank account transactions by himself ? He just has our name. He doesnt have our PAN, bank account number, branch or the bank name.

You are obliged under Income Tax Act, 1961 to provide the details required by the Income Tax Officer.  

2. If I do not provide the closed bank account number, he is threatening to treat the amount as unexplained cash and levy tax on it. (he just has a stamp paper signed by 2 witnesses as proof that we payed cash ). Can he levy tax based on stamp paper? Can we go to tribunal court in such case? Can i hope for relief if i do that?

Please note, you are bound to answer the queries of the Income Tax Officer.  Please also note, that he will not ask you to provide the details of closed bank account.  Rather he will ask you for details of bank accounts which you oprerated from ..... to ..... If you do not provide the details of closed bank account, and if he finds out (he has every means of finding out) that you will be charged with suppression of material facts and consequences will definitely follow.

No court/tribunal will come to your help at this stage.

3. if i somehow manage to get the bank account number and give him transaction details and the income tax officer clears my name that source of the funds is tax paid, will I have any other trouble in any other form from him because i did a cash transaction though it was 100% white?

It is not the question whether the money is paid out of taxed amount or not.  

Having purchased immovable property, worth more than Rs. 50 lakhs, you are obliged to effectTax Deduction at Source (TDS) from the payment made by you to the seller, and remit the said TDS into government Account.  Have you done it (both in respect of the amount paid by you by way of cheque and plus the amount paid by you by way of cash)?  If not, you are answerable to the Income Tax Department.

You should know that one is not supposed to accept in cash beyond Rs. 2 lakhs in relation to immovable property.  

4. Will there be any fine/trouble from sub registrar if he finds out i paid additional cash to the seller? Sub registrar is the one who assessed the property and valued at 2cr and i registered the property for 2cr.

YES.   (If he has assessed at Rs. 2 crore and if you had paid only Rs. 2 crores there would not have been any problem.  But you paid much more than Rs. 2 crore, but did not pay the stamp duty on it.)  Further, the seller is supposed to account for the Rs. 2 crore received by him through cash and pay the Capital Gain Tax to the Income Tax Department.  (Having received the amount in cash, do you think he would have paid the Capital Gain Tax on that portion of cash receipt?  Certainly not.  In this way, you have helped him to evade tax.)

Before knocking at the doors of the Seller, the Income Tax Officer would sensibly ascertain from you all the details.  Then with that information, he will surely knock at whatever doors that he has to.

So, instead of going on saying that everhting was white money (that is payment was made by you from tax paid money) etc. etc. which will not cut ice with the I.T. Department, better answer the queries being posed by the Department.

 


Total likes : 2 times

 
Reply   
 
Advocate

Yes, the you are required to provide the explnation as sought. By your own admission the details of the transaction has been unusual.

 
Reply   
 
senior

pl consult experienced CA person who can deal your case with the ITAx officer

 
Reply   
 

LEAVE A REPLY


    

Your are not logged in . Please login to post replies

Click here to Login / Register  



 

Search Forum:








×

  LAWyersclubindia Menu