Strange tax problem

This query is : Resolved

Quick Summary

A user is seeking advice on how to explain a significant increase in their bank balance, from £15 lakh to £27 lakh, which resulted from investing in IPOs through relatives' accounts and then withdrawing the grown capital. They are concerned about potential scrutiny from the Assessing Officer (AO) regarding the source of the £22 lakh invested in liquid mutual funds. The advice suggests using bank statements and filed ITRs to justify the transactions, with a specific caution about documenting the money transferred to and from the maternal uncle as a loan, as gifts to uncles are not tax-exempt.

Shantanu Bose

Shantanu Bose (Querist)
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08 July 2025 Respected Sir,
I'd 15 lakh in my account till April 2022 accumulated through bank fd, savings interest, trading and investment in stock markets and 5 lakh given by mother since 2002. From April 2022,I started applying IPOs in my mother, brother and maternal uncle's account taken on sharing basis,I allocated 4 lakh, 5 lakh, 4 lakh, 2 lakh to myself, mother's, brother's and maternal uncle's account respectively which grew to 6 lakh, 9 lakh, 9 lakh and 3 lakh respectively including savings interest on allocated capital till November 24. In December I took back grown capital from those accounts into mine. So my 15 lakh became 27 lakh now. I purchased 22 lakh liquid mutual fund in December 24 which I redeemed in March 25. All fund transfer was done (forward and reverse) through net banking only.

My question:
If AO asks me ever source of this 22 lakh in any scrutiny or notice or assesment in future,then how to explain and represent this case to ITD to pacify them ? My money is legitimate and I didn't cause any revenue loss to government.
Please help me I'm in dire straits and quite scared,
Thanks sir

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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08 July 2025 You can justify it through bank statements and the tax paid/ income declared for each gain by filed ITRs.

Nikhil Kaushik

Nikhil Kaushik (Expert)
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08 July 2025 what is strange about this? see, the only issue is the transactions done between you and your maternal uncle. The money transferred from your account to his account needs to be shown as a loan. And the return of it should set off the loan amount. Any excess amount needs to be shown as gift or loan.

Reason - gift to uncle is not tax exempt.

Shantanu Bose

Shantanu Bose (Querist)
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09 July 2025 Thanks sir ...................,................

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