Preceeding last three financial years I had submitted IT Return but was in non-taxable bracket.Due to some unavoidable reasons I have to borrow heavily from moneylenders and got into a debt-trap.To get me out the debt-trap my friend who resides in Rajkot and is a gold merchant deposited Rs 15lakhs in my account in Rajkot in this financial year from september 2016 to march 2017 in installments.I reside in suburbs of kolkata and my source of income is a beauty parlour which I own. 1)whether this 15lakhs is taxable in my hand? 2)How much tax I have to pay? 3)Interest on tax as I had not paid any advsnce tax 4)Penalty if any 5)How to describe this 15lakhs deposited by my friend-As a gift from my friend? 6)Whether I have to submit any written document from my friend stating that he has gifted this amount to me? 6)whether my friend has to show this 15lakhs in his IT RETURN file? 7)what are the legal and financial implication on the part of my friend? 8)As all the money(nearly 90%of 15lakhs) is depositedin cash-in my account -whether this will attract the provisons of ITact sec 269ss?
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1) Rs 15lakhs deposited in your account should be shown as interest freeloan
2) your friend has to show loan given to you in his inomce tax retruns
3)Cash deposits of over Rs 2.5 lakh will reflect in your Form 26AS and you will be asked to explain the source of the cash,”
4)he income tax department may slap a hefty 200% penalty on unexplained big cash deposits in banks
5) Any unexplained source of income can be charged with tax and a 200% penalty on it.
ection 269SS provides that any loan or deposit shall not be taken or accepted from any other person otherwise than by an account payee cheque or account payee bank draft if, (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid and the amount or the aggregate amount remaining unpaid ; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more :
Your q-8 is answered ;
Your friend has to show this amount in his own ITR
He has to show the sources of his income to this extent which he has transferred to your account.
Since this amount is disproportionate to yor known sources of income, you may have to show the source of this huge amount as income from other sources,
You have to disclose the other source and also may hav to pay the tax as applicable.
Section 271D of Income Tax Act 1961 provides that if a loan or deposit is accepted in contravention of the provisions of section 269SS then a penalty equivalent to the amount of such loan or deposit may be levied by the Joint commissioner.
You may no be required to pay any interest on the tax amount even if you have not paid the advance tax.
You can consult your auditor about the exact amount of tax to be paid on this huge amount received by you during this AY.
Loan in cash under compelling circumstances have been held to be reasonable cause
1. you should get some clarification from your friend about his it return. if she has shown in the itr as a giving loan then you cannot show it as a gift.
2. if has shown as gift then you have to show as gift. this transaction comes under B to B transaction so matching of balance sheet is necessary.
3. in case it is gift you have to pay tax on ad valorem basis.
