28 April 2017
On 20th 2014 I had paid a sum of Rs 25 lacs by cheque to my bhabi [ wife of real brother ] which she invested in property in her own name. She has received a notice from income tax department asking therein to disclose the source of receipt of the said Rs 25 Lacs and how she invested. I have not filed even a single IT Return till date. Should I give her loan confirmation or should I give her gift confirmation. Whether Gift paid or Gift Receipt is taxable or tax exempted.
28 April 2017
If you give her a loan confirmation then you will have to charge some interest on it from bhabhi and she will have to repay it to you by cheque. And if you give gift confirmation than there being relative u/s 56 of the Act there will be no tax liability in the hands of bhabhi but the problem is that you have not filed any IT return so you do not have an assessed capital. Creditworthiness will be difficult to prove here. the same problem will arise even if you show it as loan since the IT officer may ask your capacity to advance such a high amount of loan.
28 April 2017
Thank u Abshishek Sri for yr prompt response. I will draw the balance sheet of March 15 of my client showing a non-taxable income for enabling me to convince the IT authorities that the income was not taxable and therefore he has not filed IT Return of March 15 and the same balance sheet I will show a sum of Rs 25 Lacs on account of loan given under the head of loans and advances. I think that at-least this could be done just for the sake of safe-site purpose. Can I do like this Abhishek Sir ? Please advice me and oblige. Yrs tarique rizvi 982 1630 130 [ email id " trconsulttax@gmai.com }
28 April 2017
Yes but my advice is to try and prepare the balance sheet for at least 3-5 years so as to build sufficient capital out of which it could be said that the client has given loan to bhabhi. Another reason for this is that if you prepare the balance sheet for only one year and show the loan to bhabhi in that balance sheet it would seem that you have prepared the balance sheet only to justify your claim of loan to bhabhi and also the IT officer may not be convinced with just one years balance sheet since he may probably seek to know the capital build up over the years and not the accumulated capital sort of thing in just one year.
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