Husband in love with a gift of 6.75 crores to his wife in love, but the Income Tax Department gave notice, know if you are not making this mistake?

“I have done this house in your name.” – This is probably a dream for every husband, a beautiful way to express love and security. But what happens when the gift of love becomes a great problem and the notice of the Income Tax Department? One such shocking case has come to light, where a husband gifted his wife by purchasing expensive property worth Rs 6.75 crore, and in return the wife got the notice of the Income Tax Department.

This case is a big learning for all those who buy big property in the name of their wife or any relative without thinking. It is a good thing to show love, but if financial and legal rules are ignored, then this love may be expensive. Let us understand this whole matter and know how you can escape from such mistake.

What is the whole matter and why not notice?

The case is of a person who bought a immovable property worth Rs 6.75 crore in the name of his wife. On paper, the property mistress of the property was a wife. When this such big transaction came under the sight of the Income Tax Department, he sent a notice directly to the wife. In the notice, Rs 6.75 crore used to buy this property from them ‘Source of Income’ That is, the details of the source of income were sought.

Now the problem was that the wife was a homemaker and had no regular income that could justify the purchase of such a large property. When she replied that this property was gifted by her husband, the Income Tax Department investigated and deepened the matter.

Income tax rules that you should know

In this case, the Income Tax Department had sent a notice under several important rules, which are necessary for everyone to know:

1. Source of Income Most important: The first rule of the Income Tax Act is that whenever you make a big purchase or invest, you have to tell its source. That is, you have to prove where that money came from. In the case of the wife, he had no source of income.
2. Benami Property Suspicion: When a person buys property in someone else’s name from his earnings and the real beneficiary of that property himself is considered as ‘benami property’. In this case, even though the husband has given a gift in love, if the wife is unable to prove the source of money, the law can see it with the suspicion of benami transactions.
3. Clubbing of Income Provisions: Under Section 64 of the Income Tax Act, 1961, if a person transfers any property to his wife without any proper reward (without taking money), any income (eg rent) of the future from that property will be added to the husband’s income and the husband will have to pay tax on her.

How to avoid such mistake? What is the right way to give a gift to a wife?

If you want to gift your wife an expensive property or any other property, then keep these things in mind to avoid legal mess:

• Make gift deed (gift deed): This is the most important step. Whenever you gift a real estate, make a legal ‘gift deed’ and register it in the sub-registrar office. This is a sure evidence that the property is gifted.
• Do transactions from banking channel: Always pay the property through check, draft or online transfer from your bank account. Always avoid cash transactions. This gives you a strong money trail.
• Show income in your ITR: The husband has to ensure that his declared income in itr is so much that he can give such expensive gifts. Your earnings and your given gifts should be coordinated.
• Show gifts in wife’s ITR: The wife should also show this gift in her income tax return as a ‘tax-exempt income’. The gifts received from relatives do not tax, but it is necessary to report it in ITR.

In short, there is no harm in expressing love and feelings, but when it comes to millions of financial transactions, it is paramount to follow the law. A little awareness can protect you from great problems of the future.