Civil Procedure Code (CPC)

property shown in ITR

This query is : Resolved 

18 December 2009

My father and his brother purchased one property on agreement to sell, and the GPA was registered in the name of my mother long back in 1985. In 1993 my father and his brother sold that property to my mother by taking the consideration amount. and they executed one agreement to sell in my mothers name in 1993. in 2006 my mother got that property freehold in her name. since then till the property got freehold my father kept on showing the property in his balance sheets. i.e. even after selling his share to my mother, in 1993, he kept on showing the property in his balance sheets, till the property got freehold in my mother's name. after getting the property freehold in my mother's name , my father stopped showing the property in his balance sheets.

what can the income tax department take action against my father, can they put some penalty on my father or mother? or what else they can do against my father or mother.

what is the worse action which can be taken by IT department?

adv. rajeev ( rajoo )Online (Expert)
18 December 2009

where is the sale deed of both the sale transaction?.
ONly on the basis of the agreement of sale agreement property is sold to your mother and vice versa. Only on the agreement of sale a person cannot become the owner of the property.
The act of your father, brother and mother shows that it is an only accounts adjustment entry.
In my opinion all will be penalised and criminal action will be initiated.

Raj Kumar MakkadOnline (Expert)
18 December 2009

I make correction in the opinion of Rajeev in last line. Use word can in place of will in last line thus it shall become now as follow:

.....All can be penalised and criminal action can also be initiated.

aman kumar (Expert)
18 December 2009

agree with all

A V VishalOnline (Expert)
18 December 2009

I differ on the matter, the case is barred by limitation, the department cannot re-open the same after a period of 16 years.

soumitra basu (Expert)
18 December 2009

I beg to differ on many points.
Firstly your father and his brother purchased the property on the basis of an agreement to sale they are to be treated as Deemed Owner in view of section 53A of the Transfer of Property Act. Your mother was only GPA holder and he cannot be treated as owner of the property.
Secondly there was no registered conveyance deed between your mother and your father along with his brother. On the basis of agreement to sale a property do not transfer from one to another.
Thirdly if your mother got the property freehold in 2006 in her name then it is correct to say that she is the owner only from 2006.
Fourthly I fully agree with Mr. Vishal that the department cannot take any action against your father, mother and brother since it is barred by limitation.

Vineet (Expert)
18 December 2009

No action lies against any of the parties in this transaction.

If your mother could get this property freehold in her name in 2006 on the basis of POA and agreement to sale, that she had identical rights in the property in 1993 as nothing has changed thereafter. So she had created substantial rights in the property akin to ownership way back in 1993 and continued with the same till 2006 when she got this property as freehold her name. So whatever transfer of rights in the property arose, the same happened in 1985 and 1993.

If your father and mother can prove the 1993 transaction by way of notarised or registered agreement to sale and payment by cheque, the department has no reason to doubt the genuineness of transaction and the matter gets barred by time irrespective of entries in the balance sheet of your father.

However, please mind it, if the ITO proves that the documents and evidences of 1993 transaction are not genuine or doubtful, the transaction would be deemed to happen in 2006 on the basis of entries in balance sheet of your father and in such case all the liabilities of capital gains tax, interest and penalty in his hand would arise.

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