'Can penalty on late ITR filing be waived off?'

Mihir Tanna, Associate Director, S K Patodia & Associates (external link), a chartered accountants firm that offers consultancy, audit and tax services, answers your tax queries.

Gulshan Singh: If I buy a property from my savings by making online payment to seller, in name of my daughter-in-law and she gives it on rent, will she or I have to show it as my income in my income tax return.

If property is taken in joint name of my daughter-in-law (who is working) and in my wife's name (who is not working and has another property), how should income tax return be filed by them or rent will have to be shown in my income tax return (50% of my wife's share by clubbing provision) or 50% by my daughter-in-law in her return or 100% by me in my income tax return? Thanking you very much

Mihir Tanna: If an individual acquires asset in the name of his/her son's wife or spouse, clubbing provisions of income tax will be applicable.

It will considered as transfer of asset for inadequate consideration and income from such asset will be clubbed with the income of the individual, who actually spent money (transferor being father-in-law/husband in our case).

Swadhin Sahoo: I am a senior citizen retired pensioner.

I had intention to sell both my properties located in one town and to invest in a property in another town where I wanted to settle in my retired life. I wanted that the sale proceeds of my two properties should be almost same as the purchase value of a single property in another town to settle there.

I had bought a property in 2015 at Rs 40 lakh in my single name and sold in Feb 2022 at Rs 52 lakh. The buyer deducted 1% TDS and filled in form 26QB and I got form 16(B) from buyer and details of TDS are seen reflected in my Form-26AS.

Thereafter, my second property that I had bought @Rs 7.3 lakh 20 years back, was attempted to dispose, but did not materialise till now.

Anyway, I bought a 5-year-old jointly owned property from a couple at Rs 80 lakh in June 2022 and deducted 1% TDS (@0.5% from each owner), filled in Form 26QB and provided form 16(B) to the sellers.  

So, I invested the sale proceeds of my first house 'within a year' of its disposal, in buying a house from Long Term Capital Gain point of view. 

My IT Return for AY 2022-23 was filed in July 2022 and it got approved. The 1% TDS deducted by buyer on my first property sale got refunded/ adjusted.  

I am still trying to sell my second property 'within one year' of buying the June, 2022 property. I want to do this to take benefit of Long Term Capital Gain Tax. 

I want to know whether I am going to get the IT benefit by selling my second property 'within one year' of purchase of my June 2022 property? 

I am more eager to know how sale of first property in financial year 2021-22 (Feb 2022), purchase of a property in FY 2022-23 (June 2022) and again sale (proposed) of second property, (all within 2 years from LTCG point of view) are shown in my next IT Return (AY2023-24)

I am eager to hear from you, Sir!

Mihir Tanna: If person wants save tax on capital gain, person should acquire another residential house within a period of three years from the date of transfer of the old house or should construct a residential house, within a period of one year before or two years after the date of transfer of old house.

But law is not clear on the matter of claiming exemption on same property against capital gain earned on two separate properties. If claim is made in ITR, it can be subject to litigation.

Thus, considering your post retirement planning, it is not advisable to claim exemption in the subsequent year.

Seshasayee Krishnan: Sir I am a sr ctzn of 77 yrs. I missed my ITR filing in July 31st for AY 2022-23 and hence I have to file belated return with penalty. As per yr statement penalty is UP TO Rs 5000. If it is up to Rs 5000 does it vary from person to person. Please clarify. Also as a sr ctzn I missed deadline on July 31, 2022 due to tech glitches. Can I request ITO to consider for waiver of penalty as the delay is not intentional. Please examine. Thank you.

Mihir Tanna: The due date for filing returns for FY 2021-22 is 31st July 2022. If you miss filing ITR by the due date, you can file the belated return by 31st December 2022. However, you are required to pay the penalty for late filing.

The maximum penalty of Rs 5,000 will be levied if you file your ITR after the due date 31st July 2022 but before 31st December 2022. 

However, there is a relief given to small taxpayers -- if their total income does not exceed Rs 5 lakh, the maximum penalty levied for delay will be Rs 1,000.

There is no provision under income tax to waive late filing fee.

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