No document of agreement to sell

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 January 2014 res sirs,
Received Rs 7.5 lacs in cash as advance for agricultural land sale to a close friend on oral understanding in 2011. No agreement for sale executed. Cash deposited in bank a/c. Circle rates have increased 12 times in 2 years and my friend got registered only one forth land area due to high registration cost.My other income is below exemption limit so I didn't file my returns for 2011-12.Have received a no filers notice few days back wherein information regarding deposit of 7.5 lac has been referred to.MY QUESTION IS
AS AGR LAND IS NOT AN ASSET NO CAPITAL GAINS IS THERE.BUT RS 7.5 LAC DEPOSIT HAS TO BE EXPLAINED TO THE IT DEPT. IN VIEW OF NOTICE.BUT I DONT HAVE ANY WRITTEN SALE AGREEMENT ONLY REGISTERED SALE DEED OF PART OF LAND SOLD FOR 3 LACS IN DEED.WHAT TO DO NOW.WILL THE DEPT ACCEPT MY EXPLANATION FOR SOURCE OF INCOME? IF NOT WILL THEY LEVY 30% TAX? please advise very soon

Nikhil Kaushik

Nikhil Kaushik (Expert)
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04 January 2014 well then show it is a loan from friends or see if any relative can show it as a gift given to you.

Querist : Anonymous

Querist : Anonymous (Querist)

04 January 2014 Dear Sir,
Are cash loans accepted by the IT Dept beyond 50000/-? Cash gift of above 50000/- by non relatives is also not allowed I suppose. I will have to look for a relative who is ready to show it as gift.
Sir is it possible to show that I only deposited my cash in hand into my bank a/c ?
thanks

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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04 August 2024 Here's how you can handle cash loans and cash gifts in relation to income tax regulations:

### **1. Cash Loans Beyond ₹50,000**

Under the Income Tax Act, cash loans beyond ₹50,000 are generally not accepted for tax purposes. Here are some key points:

- **Section 269SS**: This section prohibits accepting or repaying loans or deposits in cash exceeding ₹20,000 (as per the revised limit; the limit might be higher depending on current regulations) to avoid tax evasion. Therefore, loans in cash beyond this limit would typically violate this provision.
- **Exceptions**: Certain exceptions exist for agricultural loans, loans from banks or financial institutions, and other specified circumstances.
- **Documentation**: If you receive or give a loan in cash exceeding the prescribed limit, it is advisable to document the transaction thoroughly and ensure that it falls within permissible categories.

### **2. Cash Gifts Beyond ₹50,000**

The Income Tax Act has specific rules regarding cash gifts:

- **Section 56(2)(x)**: Gifts received in cash exceeding ₹50,000 from non-relatives are taxable as income from other sources. Gifts from relatives are generally exempt from tax, but the definition of a relative is specific and includes only certain family members.
- **Relative Definition**: Under the Income Tax Act, relatives include spouse, siblings, parents, and others as defined in the Act.

### **3. Depositing Cash Into Your Bank Account**

If you have cash in hand and wish to deposit it into your bank account, here are some considerations:

- **Source of Funds**: When depositing a significant amount of cash into your bank account, be prepared to explain the source of the funds. The Income Tax Department may scrutinize large cash deposits to ensure they are not proceeds of tax evasion.
- **Cash Deposit Rules**: Banks may ask for a declaration or documentation if the deposit exceeds certain thresholds. Ensure you maintain records of where the cash came from, such as past earnings, savings, or any other legal sources.
- **Income Declaration**: If you are depositing cash that you have legitimately earned or saved, it is crucial to maintain proper documentation and be transparent about the source of funds. Ensure that any cash income is reported in your tax returns.

### **Steps to Follow**

1. **Loan or Gift Documentation**: If accepting or giving cash loans or gifts, ensure you comply with the legal limits and document the transaction properly.
2. **Bank Deposits**: For large cash deposits, maintain a clear record of how the cash was accumulated and ensure it aligns with your declared income.
3. **Consult a Tax Professional**: Given the complexities, especially with significant amounts or transactions that could attract scrutiny, it is advisable to consult a tax professional or financial advisor. They can guide you on the proper documentation and ensure compliance with tax regulations.

### **Summary**

- **Cash Loans**: Generally not accepted beyond prescribed limits, and proper documentation is required.
- **Cash Gifts**: Taxable if received from non-relatives and exceeding ₹50,000.
- **Deposits**: Ensure proper documentation and transparency regarding the source of cash.

By following these guidelines and seeking professional advice, you can ensure compliance with tax regulations and avoid potential issues with the Income Tax Department.

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