VERY CHALLENGING Gift deed Income tax

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adani adda

7 Points Joined February 2023

Hello, i am facing one tricky case from one of my client. Case is like that he has received Gift deed from one of his non-relative (plot of land of value 35lacs bought by doner in F.Y.2000-2001) in F.Y.2017-2018 which he sold in the same financial year. But not filed ITR for the same, now he received IT notice for the same notice date 08-02-2023. Here my concern is shall we challenge the notice simply by saying time barred since amount considered in my opinion is less than 50 lacs. But IT is saying it is 70 lacs considering 35lacs as capital gain as well ...My challenge here is if IT tax for the Gift deed than there will be no captial gain and if they ask for captial gain than Gift deed tax wont be there..In either case amount should be less than 50 lacs and notice should be time barred. Please provide your valuable opinions as well....

Replies (5)

Vishal Manakshe

299 Points Joined September 2020

It is my personal experience that the ITO will not allow the case merely on the legal points (time barred). The ITO will simply reject your ground by stating that he has the information of above 50lacs. You have to challenge the same before the Appellate authority.

adani adda

7 Points Joined February 2023

Thanks for your comments. But my query, Is my understanding correct even if we go to tribunal either an assesee can be charged gift tax under income from other sources or capital gain tax...which in any case is below 50 lacs and hence notice can be time barred....for argument in tribunal or with ITO also.

adani adda

7 Points Joined February 2023

Hello experts, little urgent please help here...

CA Sorav Gupta

Chartered Accountant

1005 Points Joined August 2022

The notice will not be time-barred as the act specifies the AO has the power to issue the notice when the income escaping assessment is exceeding or likely to exceed Rs. 50 lacs in a finacial year.

Since the sale value of land is Rs. 70 lacs then it can be said that income escaping assessment is likely to exceed Rs. 50 lacs.

The AO is right on his side. Instead of quashing the notice, kindly work on the case to minimize the amount of tax liability, interest, and penalty.

In case of any further queries, kindly mail me at casoravgupta @ gmail.com

Thanks & Regards
CA. Sorav Gupta
(Practicing Chartered Accountant)

adani adda

7 Points Joined February 2023

Sir really thanks for revert, but one small correction sale value of land is not 70 lacs, it is 35 lacs only but AO is adding 35 lacs from gift deed as income from other source as well....which I believe is contradictory to each other....