Regarding tax on sale of house property

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 April 2017 DEAR SIR,
I WANNA KNOW THAT IF ONE PERSON SALE ONE HOUSE AT RS.35,00,000 ON APRIL 2016, BUT ACCEPT RS 1750000 BY CHEQUE AND BALANCE IN CASH (AND KEEP CASH AT HOME) AND SIGNED ON SALE AGREEMENT MADE FOR RS.1750000 ONLY WHICH IS EQUAL TO VALUE AS PER STAMP DUTY VALUATION, AND NOW IF HE THINK THAT HE SHOWS IN HIS TAX RETURN, SALE CONSIDERATION OF RS.35,00,000 AND READY TO PAY TAX @20% AFTER INDEXING (INDEXED COST OF HOUSE IS ABOUT RS.1100000) THEN WHAT PROBLEMS HE MAY FACE IN FUTURE ? SINCE HE HAS LEGAL DOCUMENT(WRITTEN PROOF) OF RS.1750000 ONLY. HE IS THINKING TO DO SO BECAUSE (1) IN THIS WAY HIS FULL MONEY RS.35 LACS WILL BECOME WHITE MONEY AND (2) HE SOLD HIS HOUSE IN APRIL 2016 AND CASH AMOUNT RS.1750000 WHICH WAS HIS HOME IS NOT BLACK MONEY AS HE SAID, BECAUSE MONEY WILL BE CALLED BLACK IF NOT SHOWN IN RETURN, WHILE THIS IS HIS FIRST RETURN AND HE HAS OPTION TO SHOW IT INTO RETURN, BECAUSE HOUSE WAS SOLD IN PREVIOUS YEAR 2016-17 AND HE MAY FILE RETURN TILL NOW. SHOULD HE GO FOR IT OR SHOULD SHOW SALE VALUE AS PER DOCUMENT i.e. RS.1750000 BECAUSE IF NOTICE WILL COME THEN HOW HE WILL PROVE THAT HOUSE WAS SOLD AT 3550000 AND NOT MORE THAN THIS AMOUNT ??

Expert : Anonymous

Expert : Anonymous (Expert)

19 April 2017 not advisable to show income as per your whims when u dont have document to prrove the same , ito may say it is 50 lacs then how u will proove and the buyer also will be in great trouble as he also has to pay tax on same amount.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

20 July 2025 Hey! This is a pretty common but tricky issue in property transactions. Here’s a detailed take on your situation:

Situation Recap:
Actual sale price: Rs. 35L
Sale agreement & cheque recorded: Rs. 17.50L (matching stamp duty valuation)
Balance Rs. 17.50L received in cash (kept at home, no proof)
Wants to declare full Rs. 35L sale consideration in income tax return
Willing to pay 20% tax on indexed long-term capital gains (LTCG)
What are the risks if he shows Rs. 35 Lakh sale consideration but agreement shows only Rs. 17.5 Lakh?
Discrepancy in sale consideration:
The Income Tax Department compares declared sale consideration with the sale deed, agreement, and stamp duty value. Since the agreement shows Rs. 17.5 Lakh, but the return shows Rs. 35 Lakh, this mismatch can invite scrutiny or notice.
Proof of actual sale price:
To justify Rs. 35 Lakh, the assessee must provide convincing evidence such as:
Bank statements showing receipt of entire amount by cheque or electronic transfer
Buyers’ statements, affidavits, or other documentary evidence of the transaction value
Valuation reports, if available
Since Rs. 17.5 Lakh was paid by cheque and the balance Rs. 17.5 Lakh was cash kept at home (no bank deposit or transaction trail), proving receipt of full Rs. 35 Lakh may be very difficult.
Cash component issue:
The cash part can raise questions:
Where did the cash come from? Is it legitimate?
Why was the cash not deposited in the bank?
Why was the sale agreement undervalued?
Penalties and Notices:
If the Department suspects suppression of income or undervaluation, it may:
Issue notices for explanation
Demand additional tax, interest, and penalties
Possibly launch penalty proceedings under sections 271(1)(c), 270A, or initiate reassessment
Stamp Duty and Registration:
Stamp duty authorities may also raise questions about undervaluation of property in sale deed, possibly resulting in penalties and demands for differential stamp duty.
Recommendations:
Best practice: Report sale consideration as per the sale deed/agreement (Rs. 17.5 Lakh), which is the legally recognized document.
If cash was received legitimately: Deposit cash in the bank first, maintain proof, then explain income source, but this can still raise flags.
Avoid discrepancy: Showing a higher value than documented can lead to complicated legal and tax hassles unless backed by solid evidence.
Consult a CA or tax expert: They can help in handling this situation, including if reassessment or notice comes.
Summary:
You can show the full Rs. 35 Lakh, but lack of documentary proof (only Rs. 17.5 Lakh on record) may invite trouble.
The safer option is to show the documented Rs. 17.5 Lakh sale consideration to avoid legal complications.
The cash portion may be scrutinized for genuineness and source.

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