Income tax search

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

17 June 2013 Dear all ,

Please tell me that in the case of Income tax search , the search team found 1500 grams gold , and in the books of account it is declared only 750 grams , and party did not file any wealth tax return . in that case how much gold will seize the Income tax authority . and how much liabilities are liable for that.

Querist : Anonymous

Querist : Anonymous (Querist)

25 June 2013 Dear all ,

Please spare the time and reply for my query

Thanks in anticipation

Subhash Jain

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

31 July 2024 In the case of an income tax search where the search team finds 1500 grams of gold and only 750 grams are declared in the books of accounts with no wealth tax returns filed, the following steps and considerations will apply:

### Seizure of Gold

1. **Undisclosed Gold**:
- The gold not declared in the books of accounts (i.e., 750 grams) is considered undisclosed.
- The Income Tax Department is likely to seize the entire 750 grams of undisclosed gold.

2. **Declared Gold**:
- The declared 750 grams of gold should not be seized if properly accounted for in the books of accounts.

### Liabilities and Consequences

1. **Income Tax Assessment**:
- The value of the undisclosed gold (750 grams) will be treated as undisclosed income.
- The value will be added to the total income of the assessee for the relevant financial year.
- The assessee will be liable to pay tax on the undisclosed income at the applicable income tax rates.

2. **Penalty**:
- A penalty may be levied on the undisclosed income under Section 271AAB of the Income Tax Act, 1961.
- The penalty rate can range from 10% to 60% of the undisclosed income, depending on the specifics of the case and the time of disclosure.

3. **Interest**:
- Interest may be charged on the unpaid tax from the due date of filing the return to the date of payment of the tax.

4. **Wealth Tax**:
- Although wealth tax has been abolished from the assessment year 2016-17, for earlier periods, the assessee may be liable to pay wealth tax on the excess gold if it pertains to periods when wealth tax was applicable.
- The rate of wealth tax was 1% on the net wealth exceeding ₹30 lakhs.

### Additional Considerations

1. **Explanation and Proof**:
- The assessee may provide an explanation for the excess gold found, such as gifts, inheritance, etc.
- Documentary evidence supporting the claim can mitigate the penalties or reduce the undisclosed income considered.

2. **Return Filing**:
- If the wealth tax was applicable for the relevant period and returns were not filed, the assessee might need to file the returns and pay any due tax along with interest and penalties.

3. **Legal Proceedings**:
- In case of disputes, the assessee has the right to appeal against the assessment and penalties.
- Legal proceedings may be initiated if the matter is not resolved at the assessment level.

### Practical Steps for the Assessee

1. **Consultation**:
- Engage with a tax professional or a chartered accountant to navigate through the compliance and legal requirements.
- Seek legal advice if necessary to handle disputes and appeals.

2. **Documentation**:
- Gather and present all possible documentation and evidence supporting the ownership and source of the gold.

3. **Voluntary Disclosure**:
- If there are other undisclosed assets or income, consider making a voluntary disclosure to mitigate future liabilities.

By understanding these steps and consequences, the assessee can better prepare for and manage the liabilities arising from an income tax search and seizure operation.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now