c. He further referred to the sanction given by the joint Commissioner on the reasons recorded by the AO stating that yes he is satisfied and it is a fit case of issue of notice under section 148 of the income tax act. The learned CIT A rejected the above explanations holding that the certificate is merely a photocopy and mentions that the land is approximately 5.5 km away from Samalkha. 4888500/-. If the amount of cash paid to you is less than the amount you recorded as the cost of the land, there is a loss on the sale, and you record it as a debit. 5 Lakh received in cash on 01/04/20) 75,00,000: 90,00,000: 90,00,000: 20,00,000: Amount received in cash on date of . do i pay tax on it? Well, they sure should report proceeds at least as great as the 1099-S! HE HAS PAID FULL STAMP DUTY. So, if the reference is made to the Valuation officer then it may be possible that the stamp duty value may decrease but it cannot be increased on the basis of the valuation officer, As per Section 56(2)(x), if any person receives an immovable property for a consideration which is less than stamp duty value of the property and such excess is more than:-. Do I have to pay taxes on that $24,333.73?". Unless the buyer pays you exactly what you paid for the land, there will also be a gain or loss on sale of the land. The learned CIT A also held that there is a difference in signature on the first page and on the next page; it does not bear the stamp of the tehsildar on second page. As such, the assessee failed to declare the source of cash deposit made in his bank account before the Department. SDV on date of agreement can be considered, if full or part consideration received / paid upto date of agreement in, Any mode of electronic clearing system or any other mode as may be prescribed, Any mode of ECS or any other mode as may be prescribed, (iii)Use of Electronic Clearing System through a bank account, or, (iv)Other Electronic mode as may be prescribed*# on or before the date of the agreement for transfer (Second Proviso), (ii) Account Payee Bank draft, or (iii)Use of Electronic Clearing System through a bank account, or, (iv)Other Electronic mode as may be prescribed*#, on or before the date of the agreement. 4559910/- . They challenge the assumption of jurisdiction of ld AO to reopen the case of assessee as well as sanction of the approving authority. a. whether the provisions of section 147 (a) or 147 (b)/147 (C) are applicable. It is not only perceived but an open secret in India that sale transactions of immovable properties are undervalued leading to leakage of tax revenue causing losses to the Government and unaccounted money is not good for the health of the society in general. It is apparent that all these grounds raised by the assessee praying for admission as an additional ground are legal ground and goes to the root of the matter. You must avoid accepting cash for sale of land as there is a penalty of 100% if you accept such consideration. The assessee also submitted that the capital gain earned is Nil. Replied 26 June 2021, Prabhat Pandey 80,000. Unless the buyer pays you exactly what you paid for the land, there will also be a gain or loss on sale of the land. Its quick, easy, and anonymous! Whether the proviso specifying the date of agreement to be taken for stamp duty valuation can be applied retrospectively? to coxdtYour FMV should be determined by comparable sales. Accepting cash more than Rs. All Rights Reserved. Meaning of Residential unit An independent housing unit with separate facilities for living, cooking and sanitary requirement, distinctly separated from other residential units within the building, which is directly accessible from an outer door or through an interior door in a shared hallway and not by walking through the living space of another household. He also submitted that there are seal of his office etc. The learned CIT A further held that statement signifying the distances on an approximate basis cannot be relied upon. The learned joint Commissioner of income tax has stated that yes satisfied, it is a fit case for issue of notice under section 148. Therefore, in case of transfer of rural agricultural land, there is no applicability of section 50C. Get tax answers from top-rated CAs. Therefore, in absence of any other detail, the AO recorded the reason that the case of the assessee is reopened as income chargeable to tax because of cash deposit with the bank has escaped the assessment. We have carefully considered the rival contentions and perused the orders of the lower authorities. 800,000. Cash Received Sale of Land. Ans. It appears that the Court in such case may take a liberal view and hold that. 1. my mother died, we sold her house, and received 48,667.46 (cash to seller). Acct 301 -- Multiple choice chapter 12. The assessee claimed exemption under section 54B of the income tax act as assessee has purchased agricultural land for Rs. In our opinion such insertion of proviso are curative in nature and hence be deemed to have come into effect from the date of introduction of section 50C. Khi Minh Land khng nh v th l Nh Pht trin v Mi gii bt ng sn hng u ti th trng pha Nam ni ring v c nc ni chung. The receiver reports nothing. BECAUSE BUYER IS NOT READY TO CONFIRM THAT HE MADE CASH PAYMENT FOR PURCHASING LAND. Where do I enter my estimated tax payments? During the course of assessment proceedings the learned assessing officer noted that assessee has sold property jointly owned by the assessee along with his four brothers to Shri Sureshkumar and by one document and Sri Jagpal by three documents for 4888500/- admeasuring 21865 yd2. WHETHER SECTION 50C IS APPLICABLE IN CASE OF TRANSFER OF PROPERTY BY WAY OF GIFT, WILL, MERGER OR ANY OTHER SUCH MODE? We do not find any infirmity in the action of the learned assessing officer when the source of the cash deposit in the bank account is found to be the sale of land, which was not offered for capital gain. acceptance of Loan, deposits etc; 3. During the year, Jones Industries also paid dividends of $60,000. The assessee also submitted that assessee can raise a legal additional ground or fresh legal plea at any stage of the proceedings relying upon the decision of the honourable Supreme Court in case of Cit Versus Varas International P Ltd reported in 284 ITR 80 and National Thermal Power Co Ltd versus CIT reported in 229 ITR 383. Any unusual cash transactions from a bank account will immediately put you under the scrutiny of income tax department. The original consideration paid for the transfer shall not be considered for the purpose of capital gain in the hands of the seller. there is no reason to presume that as the distance is certifying in approximation it is definitely within 5 Km of Municipal limits. In hands of A: Difference between SDV and consideration is more than 50,000& SDV is more than 110% of consideration so difference between SDV and consideration of 25 Lakhs taxable u/s 56(2)(x). 28 february 2019 my client received cash as on money in fy 11-12 for sale of agricultural land which is situated in rural area but this cash money is not included in sale agreement. (iii) However, in case of transfer of urban agricultural land, section 50C would be applicable. He thus submitted that assessee has earned capital gain, even if, it is in the hands of in his HUF and not in his individual capacity. (Rs. Replied 26 June 2021, Vasudevan C P In the impugned case before us, cash deposit and consequent assessment of sale of agricultural land through which cash has been generated by the assessee is not an independent and unconnected issue. The assessee challenged the same before the ld CIT (A) who dismissed the appeal of the assessee. The assessee submitted that it was a joint family property, which was sold, and new property of agricultural land was purchased. The case of the assessee is reopened for the reason that there is an escapement of Rs. The assessee is an agriculturist. The second ground of argument of the learned authorised representative is that the learned assessing officer has reopened the case of the assessee for the purpose of verification of the cash deposited in the savings bank account as income escaped. Therefore, for any transfer of immovable property, cash of only Rs. f. He further referred to the certificate issued by the tehsildar clarifying that the land was situated at 5.5 km from Municipality which has been discarded by the learned CIT A. Replied 03 July 2021, ajeet singh The AO questioned about the taxability of the long-term capital gain on the same. The sale of such land will not make any capital gain liable to be taxed in the hands of the assessee. He further claimed an exemption u/s 54B of the Act for purchase of agricultural land of Rs. shall apply only in a case where the amount of consideration, or a part thereof, has been received: shall apply only in a case where the amount of consideration, or a part thereof, has been received: (i)Account Payee cheque, or, Where the SDV does not exceed 110% of the consideration received or accruing, the consideration so received or accruing shall be deemed to be the FVC. IT IS NOT POSSIBLE. On the ground of sanction is invalid, reliance was placed on the decision of Sonia Gandhi versus a CIT 407 ITR 594 and Principal Commissioner Of Income Tax Versus Meenakshi Overseas Private Limited inn ITA Number 651/del/2015 dated 11/1/2016. 2021-22) has amended the applicability of Section 43CA only in those cases where the stamp duty value exceeds one hundred and ten percent (earlier 105%) of the consideration so received or accrued for the transfer of an asset (other than a capital asset), being land or building or both. Honourable Delhi High Court in RANBAXY LABORATORIES LTD. Therefore, it is not mandatory for assessee to adopt stamp duty value as on date of agreement even if payment is by specified mode. For the purpose of section 49(4) 2.15 Cr is treated as COA of A. Q. X Purchases a newly constructed residential unit of 4,500 sq.ft (under first allotment) from DEF Builders Ltd. He submitted the detailed chart how assessee came in to possession of the above property from his great grandfather. then sold it a month later. However, the learned assessing officer has not done anything and assessed the property in the hands of the assessee in his individual capacity and therefore the assessment order passed by the AO is bad in law. Looking at this aspect of the argument, it is apparent that assessee has deposited cash in the savings bank account. These are the two appeals filed by two brothers involving same issue arising out of single transaction of sale of land those are argued together and therefore, are disposed of by this common order. Hand off your taxes, get expert help, or do it yourself. Therefore, where the consideration on or before date of agreement is received by book adjustment, the benefit of adoption of stamp duty value on date of agreement cannot be availed. The second ground of argument of the learned authorised representative is that the learned assessing officer has reopened the case of the assessee for the purpose of verification of the cash deposited in the savings bank account as income escaped. Get a hint. The reason recorded are as under:-. 4. Is the money received from the sale of inherited property taxable??? Receiving cash for sale of immovable property is illegal. The AO wanted to examine the source of this cash deposited in the bank account. The assessee has placed before us the notification number (SO 9447) (File number 164/3/87 ITA.I) dated 6-1-1994 which shows that in the state of Haryana at serial number 9- 53, Samalkha ( dist Panipat) is mentioned and the details of the areas falling outside the local limits of municipality it is mentioned that areas up to a distance of 5 kms from the municipal limits in all directions are covered into the definition of a capital asset, thereby it means that if the property is situated beyond 5 km from the municipal limits of that particular municipality then the impugned land cannot be considered as a capital asset. (3301 Points) Being free from tax doesn't mean they won't charge registration fee as one is state tax and another is central tax. satisfied with the explanation of e assessee, he did not make any addition on that account. b. 13. Cash received from the issue of common stock. Cash Flow from Investing Activities is the section of a company's cash flow statement that displays how much money has been used in (or generated from) making investments during a specific time period. Q. Is it a gift tax or capitol gains if you inherit a family home when parent dies? HE WAS DEPOSITED THE RECEIVED CASH IN BANK AROUND 40 LAKHS. But you show the sales proceeds as the amount on the 1099-S and the cost basis as that same amount, so no taxable gain. (tax consultant) (1390 Points) Before the learned CIT A assessee challenged by raising a new issue that the impugned land which was sold by the assessee was not a capital asset as it was situated beyond 5.5 Kms from municipal limits of samalkha . Hence SDV on date of transfer applicable. Was this a UTMA thing? (13097 Points) 19,999 will lead to penalty u/s 271D. The amendment made in the scheme of section 50C(1) of the Act by inserting third proviso thereto and by enhancing tolerance band for variations between stated sale consideration vis--vis stamp duty valuation from 5 per cent to 10 per cent are effective from date on which section 50C, itself was introduced, i.e 01-04-2003 Maria Fernandes Cheryl v. ITO, International Taxation [(2021) 123 taxmann.com 252 (Mumbai Trib.)]. When you sell land, debit the Cash account for the amount of payment received from the buyer, and credit the Land account to remove the amount of land from the general ledger. (GST Consultant) Real experts - to help or even do your taxes for you. Nghia said many people were afraid that land prices were being inflated above their actual value. Transactions of nature referred to in section 269SS - i.e. He held that land admeasuring 21865 sq yards was sold by the assessee along with his brothers for Rs. 700,000. However, the learned assessing officer has made an altogether different addition of the long term capital gain chargeable to tax on sale of an agricultural land of the assessee. Possibly the assessee may have to explain the reason for receiving the amount by cash. Please login to post replies 17. The assessee wanted to admit the following additional grounds of appeal:-. Q. Therefore, doubting the veracity of the certificate was not proper by the learned CIT Appeal. This means that of the total sales of $3,250,000, a net $250,000 went uncollected. Received through Cheque: Rs. 1,500,000. A penalty will be applicable on Seller.An action can be taken against buyer also. The income tax act restricts accepting cash in excess of Rs. So he did not make any addition on cash deposit as sources were explained. We have carefully considered the rival contentions and perused the application made by the assessee and grounds raised by the assessee in the additional ground. He referred to the observation of the learned assessing officer that the assessee has not filed any return of income for impugned year. Purchase of land by issuing common stock to the seller. LIVE GST Certification Course by CA Arun Chhajer begins 26th May. Join our newsletter to stay updated on Taxation and Corporate Law. Answer: Option (c) is correct. Therefore for this reason rejection of the above certificate is devoid of any merit. Did the information on this page answer your question? The assessee also submitted circle rate for FY 1995-96 should be adopted for the purpose of the computation of capital gain, if any. That in the facts and circumstances of the case and in law the order passed by Ld AO dated 29 12 2017and further order passed by Ld. Would the basis be the fmv at the time the property was deeded to us or will it be $0 because we did not pay for the property? If following conditions are satisfied then allowed tolerance band 20% allowed instead of 10%:-. Veera Veera (253 Points) 26 June 2021. d. Purchase of land using cash proceeds from issuance of common stock. You should have received a 1099-S from the closing company and that needs to be reported. As such notice under section 148 of The Income Tax Act, 1961 is issued in case of the assessee for the assessment year 2010 11.. During the course of assessment proceedings the AO came to know that source of cash deposit in the bank account of the assessee is arising out of the sale of an agricultural land. Yes, the correct amount should be declared in registration. The payment by book adjustment or journal entry is not as per the specified modes. In order to submit a comment to this post, please write this code along with your comment: bc90484bd8c4cfa2cc9e5f81abad095f. In case stamp duty value as on date of registration has decreased from the stamp duty value as on date of agreement, it would be beneficial to the assessee to adopt the stamp duty value as on date of registration. In the result both the appeals of Mr. Surat Singh and Mr. sultan Singh in ITA number 8211/del/2018 and ITA number 8212 del 2018 for assessment year 2010 11 are partly allowed. the amount equal to ten percent (earlier 5%) of the consideration, on the occasion of the marriage of the individual; or. On the facts and under the circumstances of the case the assumption of jurisdiction is bad in law as there is no live link between the reasons recorded and belief entertained escapement of income, as is evident that finally the AO has assessed other income which does not form part of the reasons recorded. A penalty of 100% of the amount is levied for such cash transactions. We also inherited a house 5 years ago that was sold in 2014. The second reason why the certificate is rejected is that the signature on the first page and on the second page are not similar as held by the learned CIT Appeal. ), wherein the tolerance limit of 5% (i.e., prior to the amendment) was held to be applicable from 01-04-2003. The case of the assessee is reopened for the reason that there is an escapement of Rs. ABC Company buys a parcel of land for $400,000, and sells it two years later for $450,000. The sale consideration was received for the sale of agricultural land in a cheque as well as in cash. The answer given by the assessing officer is 147 (a) of the Therefore, if the AO has not made any addition because of cash deposited in reopened assessment, according to the learned authorised representative, it is not open for the AO to make any addition in absence of that addition. 135485/-. 19 Lakhs. Therefore after examining the facts of the case, ld AO made addition on account of chargeability of long term capital gain on sale of that assets. Thus, it was nil. (398 Points) AO and further Ld. The learned assessing officer has not made any addition on the account of cash deposited in the bank account. He did not file his return of income. And I would go with the forms they got. There is a gain of $50,000 on the sale, and the journal entry looks like this: If ABC had instead sold the land for only $375,000, there would be a loss, and the journal entry would be. b. That in the facts and circumstances of the case and in law the Ld. INC), AJL and YI to tax the assessee under Section 56(2)(vii) (c)(ii) of the Act, the sum of Rs. Then it's not an inheritance. The learned departmental representative vehemently objected to the fact and argument of the learned authorized representative as under :-. Generally, you inherit property from someone who was deceased at the time of inheritance. Looking at this aspect of the argument, it is apparent that assessee has deposited cash in the savings bank account. c. Cash received from the sale of land for less than its cost. The provisions of sec 50C and sec 43CA clearly provide that if an assessee intends to adopt stamp duty value as on date of agreement, amount of consideration should be received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, on or before the date of the agreement. Member Strength 2. Otherwise, that authority would not have certified so. The learned assessing officer has made the addition based on the long-term capital gain earned by the assessee, which is not one of the reasons for which the reopening of the assessment has been initiated. Therefore the authenticity of the said evidences is suspect and hence cannot be accepted. The following information is available, Stamp duty value on the date of registration. O d. cash received from sale of land, $200,000 Add back noncash expenses, such as depreciation, amortization, and depletion. NV transfer a unit to A as a first-time allotment. (Fourth Proviso). We first take up the appeal in ITA No. Is the Tolerance Limit of 10% retrospective? In view of above facts, it was submitted that, a. the reopening of the assessment is bad in law, as it is a borrowed satisfaction, b. the sanction granted by the approving authority of the reopening of the assessment is bad in law. We'll help you get started or pick up where you left off. However, if the asset is sold by the beneficiary recipient, then you must establish the FMV of that property on the date the original owner passed, *NOT* the date you inherited it. I want to go legally with all these transactions. 43CA &, Stamp duty value on the date of agreement (as a part of consideration is paid through, NEFT on the before the date of agreement Whether stamp duty value exceeds 120%/110% of sale consideration, Full value of consideration in the hands of DEF Ltd. under section 43CA, Taxable Income in case of buyer u/s 56(2)(x), SDV > 110% of consideration and amount received by A/c Payee cheque on date of Registration, Amount received by A/c Payee cheque on date of Registration and SDV on date of registration<110% of consideration, 70,00,000 (Rs. 9. The assessee also claimed that in fact the land does not belong to the assessee as an individual but in the hands of his Hindu Undivided family. Therefore, assessee is in appeal before us. The ratio of both the aforecited cases was that upon the issuance of notice under s. 148(2), when proceedings were initiated by the AO on issues in respect of which he had formed a reason to believe that income had escaped assessment, it was not open to the AO to carry out an assessment or reassessment in respect of other issues which were totally unconnected with the proceedings that were already initiated. In view of this we do not find any infirmity in the action of the Ao in reopening of the case as well as the action of approving authority in granting approval u/s 151 (1) of the act. We do not find any infirmity in the action of the learned assessing officer when the source of the cash deposit in the bank account is found to be the sale of land, which was not offered for capital gain. Disclaimer: Not a tax professional. He submitted that there is no addition made by the learned assessing officer on that account. However, if the asset is sold by the beneficiary recipient, then you must establish the FMV of that property on the date the original owner passed, *NOT* the date you inherited it. The word used in this section 43CA, 50C and 56(2)(x) is may. Now coming to the issues on merit, the first issue that arises is whether the agricultural land sold by the assessee or his HUF is a capital asset . Yes, you should make sure that correct amount is mentioned during registration. Such a situation has actually arisen in many places in the country, such as in Gurgaon, New Delhi and even in Dehradun and some other places. me and my sister both received a check for $24,333.73. I would HIGHLY SUGGEST you NOT USE TURBOTAX this year, and instead, pay a CPA to sort this out for you, since your mother has passed. First we decide whether the sanction of reopening given by the learned approving authority is proper or not. 5. 19,999 can be received. 9,85,000 by cheque under the same agreement. The learned assessing officer considered the explanation of the assessee that cash was generated out of sale of agricultural land by the assessee as well as his four brothers jointly. Am I suppose to claim this on my taxes?? He submitted that such satisfaction is not a valid satisfaction as there is no application of mind by the sanctioning authority. Second Proviso to Sec 50C(1) and Sub-section (4) of section 43CA state that the option to adopt stamp duty value on date of agreement shall apply only when the consideration or part thereof has been received by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed on or before the date of agreement for transfer of asset. The total is obtained by multiplying the quantities sold by the selling price per unit. Suppose in above question date of transfer is 10/12/21 instead of 14/04/21. Also, note that all the cash transactions are being monitored. 3 Lakh Penalty for Failure to Appoint Internal Auditor, Transfer at less than the value adopted or assessed or assessable by any authority of a State Government (hereinafter referred to as SVA), Profits and Gains from Business or Profession, SDV on the date of agreement may be taken for the purposes of computing full value of consideration. In hands of NV: As per section 43CA since SDV is not more than 120% of consideration so consideration of 1.9 Cr treated as FVOC for PGBP. Therefore there is a live, direct and solid connection nexus between the reasons for which the case of the assessee is reopened and the addition made by the ld AO . LIVE GST Certification Course by CA Arun Chhajer begins 26th May. It is further proposed to provide that this provision shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account, on or before the date of the agreement for the transfer of such immovable property. he has having income from agricultural produce. Coming to the ITA number 8212/Del/2018 in case of Mr. Sultan Singh, who is also one of the sellers of the impugned property and also the brother of Mr. Surat Singh, the identical transaction was questioned by the revenue and the addition was made. Whether section 50C is applicable in case of transfer of rural agricultural land? The assessee has also relied upon several binding judicial precedents before us for admission of the above grounds. The price of high-end properties built on land that costs VND2.4 billion per square meter would surge to dozens of billions of VND for . From that it passed on to Mr. Dayaram who is the only son of Kedara. Thus, all the grounds of the assessee on the reopening of the assessment are dismissed, however, on the merits of the addition, reversing the orders of the lower authorities, the AO is directed to delete the addition. Ask questions and learn more about your taxes and finances. Cash paid for dividends. The assessee has also given reasons for not raising these grounds earlier. Though the sale of rural agricultural land is taxfree still this penalty can be levied for the cash transactions. It is therefore possible that, at first sight, first proviso to Section 50C may seem to work to the disadvantage of the assessee in certain situation in the event of the word `may being construed as mandatory in application, but then one cannot be oblivious to the fact that this proviso states that the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer (emphasis supplied) making it clearly optional to the assessee and that in any event, what has been brought by the lawmakers as a measure of relief to the taxpayers cannot be construed as resulting in a higher tax burden on the tax payers.
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cash received from sale of land
