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An assessee have a capital asset (plot of land)purchased in the year 1999-2000 and has not shown it in his financial statements. Now he is going to purchase a house after selling the property concerned. What would be the tax implications and what shall be done to avoid , not evade capital gain? And what penalty will be imposed for not showing the given asset in question in his return? Plz reply with a proper solution. my friend has given me this challenge. I need your help. foreign property hoti toh kuch jawab de bhi deta but in this case he said that suppose its an Indian property. kya karu..kya penalty batau aur kya tax planning ho sakti hai?

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Karthik.V.Kulkarni

Chartered Accountant

766 Points Posted on 10 January 2016

See i dont think there should be any problem in not showing capital asset in the return of income. But an issue here will be the tax authority will ask for the source of investment and if the source can be substantiated then there might be no issue apart from penalty u/s 271 (I) (c) . But here as there is no tax sought to be evaded and only the purchase of property is not disclosed then there should be no issue. As far as the selling is concerned i would suggest u show that in return of income and capital gains can be avoided by investing in modes specified u/ s 54, 54ec, 54f.