Recently there was a case in ITAT Chennai where a lady sold her residential flat for Rs 35.50 lakh. Out of this amount, she took Rs 2.5 lakh in cash and later sought a tax exemption under Section 54 of the Income-tax Act, 1961, by reinvesting the sale proceeds into another residential property. Additionally, she also sold some household utensils, electronic items, And more to several vendors for Rs 8.09 lakh, also in cash.
She bought the new flat from her son-in-law's Power of Attorney (POA) holder, paying Rs 35 lakh for it. However, she spent more on interior, stamp duty and other charges. Her total cost for this flat thus came to Rs 49.8 lakh. When she went to the bank to deposit the cash from the sale of her old flat (Rs 2.5 lakh), Rs 8 lakh from sale of household items) and other gifts from family members, she got into trouble with the income tax department.
