Notice received under cib-321

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AMAR GANDHI (Querist)
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25 October 2013 Hi, my wife has received a notice under CIB-321 stating that their has been share transactions of Rs. 20,000 or more for FY 2009-10.

I had a demat account in my wife's name. I used to transfer funds from my salary account to her savings account linked to that demat account for trading purpose. I had done share transactions in cash segment and FnO segment. But it was A loss in both segments. So had not filed the return.

Please advice me as to what answer should I submit in the proforma given. Their are three options 1) Return under preparation 2) Business has been closed 3) No taxable income

Thanks,
Amar Gandhi

Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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25 October 2013 The first point to note is what was the volume of transaction. If the volume is large, it is advisable to file a tax return. The amounts transferred by you can be shown as a loan amount to your wife - with or without interest. That way the clubbing provisions can be avoided.

Secondly, is the demat account still active/inactive or closed. If the account is still active then the option "Business Closed" may not be justified.

Since your wife has no other source of income, the logical answer seems to be "No Taxable Income", but this answer may result in further notices asking you to file a return by the assessing officer of your address.

I am sure your wife has a PAN and hence the address submitted to the authorities would be the assessing officer from whom you would receive a notice.

Consider the total volume of transactions, and if required consult a local CA or Tax Practitioner before submitting the final reply -BUT MY OPINION IS THE SAFEST ANSWER WOULD BE 'NO TAXABLE INCOME'.

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