In this article, we will be discussing the precautions to take care while entering into a real estate transaction.
Let us understand this article in the form of a short story;
There are two brothers namely Pushp Kumar Sahu and Uday Kumar Sahu who have entered into a transaction of immovable property worth 48 lacs INR in cash. (value as per Stamp valuation authority 60 lacs INR ) But being not aware of the income tax provisions, they made a transaction violating the various provisions of the income tax act, 1961. Both brothers jointly sold the said property and thereafter received the whole consideration in cash and the same is deposited in the bank account.
The first violation of income tax provision which is made by the Sahu brothers is of Section 269ST, as they have received the entire sale consideration in cash which exceeds 2,00,000/- INR. Therefore the penalty will be levied on them under section 271DA at the rate of 100% of the amount received in cash.
The second violation made by them was; they have sold the said property at a rate less than the rate as determined by stamp valuation authority [section 50C], as per this section; where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, is less than the value adopted or assessed by an authority of a state government ( stamp valuation authority) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted for the purposes of section 48, be deemed to be the full value of consideration received as a result of transfer.
The last mistake made by Sahu brothers was that they have deposited the entire cash received from such sale in a bank account. As they have deposited the cash exceeding 10 lakhs INR in a single saving account. Because of such bulk deposit, bank official filed an annual information return u/s 285BA to the income tax department. Due to such filing of AIR, the transaction has been easily tracked by the department and in order to take such transaction under income tax assessment, department issues a show cause notice to assessee that why this transaction has not been reflected in their IT returns. Originally this income has been evaded by the assessee brothers, therefore A.O. has full access to issue income escaping notice to both assessees u/s 148 and completes the assessment as provided u/s 147. Moreover, A.O. can issue notice under section 271DA for violating provisions of 269ST for levying 100% penalty or can issue notice under section 271(1)(c) for concealment of income.
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