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Taxes on a property sold which has not been shown in books

Started by hitendra_bhatia, August 09, 2011, 06:00:47 PM

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hi i have query regarding the taxation of a property not shown in the books which is pointed below:

A person who has purchased some land from govt in 1986 and had constructed house on it in 1988 but that person has not shown the same property in his books what he has submitted to the income tax deptt. since 1986, assume land was purcased in 15,000 Rs ( he is having the receipt or other document for land purchase) and construction cost was 2,50,000 Rs ( does not have any invoice or bills for construction made on it) assume that person is having income from business & profession.

now he want to sell this property of which the stamp duty value is around 25,00,000. (take this rate for sale consideration)

please let me know whether he can get the benfits of indexation and also please let me know how much amount would be taxable on him under capital gain ?

Advocate Anumita

If the purchase of the flat has not been shown/disclosed in the IT Return, then it will be treated as your undisclosed income.


Quote from: taxaholic on August 10, 2011, 09:41:58 PM
If the purchase of the flat has not been shown/disclosed in the IT Return, then it will be treated as your undisclosed income.

If the source of investment could be explained as from his known sources, though one did not show in his books, the sale proceeds cannot be taxed as his income from undisclosed sources.  A residential flat being a personal asset need not reflect in his books of accounts.


Mear not disclosing of assets purchased in the IT return cannot be treated as undisclosed income. An asset would have been purchased from the drawings from the business which are purely personal in nature. take the example of Gold or some deposits made with bank. Only thing is that it should have been purchased from the tax suffered income or from the borrowed funds. If it is purely a personal venture not connected to business the present sale is elegible for all claimes as provided in the ACT


Apart from what is stated in the above replies, if it is proved beyond doubt that the asset was purchased 6 years back it need not be proved once again whether it is with accounted sources or unaccounted sources because IT department can tax only the unaccounted income earned for the last six years. Therefore, if the asset is purchased with unaccounted income more than 6 years back the person will get indexation benefit.


agreed with Satyanshi reply, which is complete and in aggremet with I.T.Act,1961


If investment in property  found out by department, same can be consider as undisclosed investment in the year in which it is found out.Further if it is proved that investment is made prior to 6 previous years (which is the situation in this case ) their is no need to show book entry. If person offer sales proceed for tax on his own he is eligible for all provisions under IT Act.