Income tax department query letter regarding huge payment

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Prakash Prajapat (Querist)

18 January 2014 hi experts please help me regarding this problem facing my Client.
A and B Are two brother sells a land for a compensation RS 6500000. and there for they purchase a land in Rs 6200000 and registry of land made in the name of A and B Sons.
and payment settled in cash basis.

in this transaction income tax department issue a query letter regarding this payment.

my question is "how to handle this situation and what will do i reply to query letter.

A and B Sons Have not PAN.

Nikhil Kaushik

Nikhil Kaushik (Expert)

19 January 2014 what you mean by settled in cash??? if it has been done in cash, you anyways are a good case for scrutiny...

you need first have a look at the documents for purchase of land and see whether or not appropriate stamp duty has been paid or not and how the consideration has been reflected in the books of the buyer and seller.

Prakash Prajapat

Prakash Prajapat (Querist)

19 January 2014 Sell At 6500000
Purchase in 6200000
and This Are real registry value shown in registry.
and Selling Value Receive Via Account payee Check and My Client Made Cash Payment for Purchase Of Land

Prakash Prajapat

Prakash Prajapat (Querist)

19 January 2014 and those Land Are not included in Capital Assets,So there is no matter of Capital Gain

Nikhil Kaushik

Nikhil Kaushik (Expert)

19 January 2014 well as long as you have the registered sale deed for purchase, you should be able to defend as far as the cost...however, the problem is that you have paid in cash..so you need to prove the source of this cash to ensure that you dont hit by section 69.

Also, it doesnt matter where the asset was parked, in assets or purchase...either it would be taxed as capital gains or business income.

Nilang

Nilang (Expert)

20 January 2014 You Can defend that proceeds of sales has been gifted to sons of seller and the sons have purchased the new land.
However you would be not able to claim benefit of section 54 if any.

Nilang
Mob.09374821453

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