Taxation

I presume this transaction happened in FY 2003-04. First of all the entire trail of transactions is in cash so there is no record of it any where. So the same does not come to light unless the person himself, any body else involved in this transaction brings it on record or any wellwisher of any othe parties informs th department and entire chain of events is unfolded. The matter pertains to AY 2004-05 hence the cases can be reopened till 31-3-2011. The implications are: Capital gain on Rs 18 Lakhs Interest and penalty for concealment of income Penalty u/s 271D for receipt of cash loan of Rs 22 Lakhs which will be equal to the loan amount Apart from this the old owner, buyer of tenancy, seller of new tenancy and friend will also be caught in web to pay tax on their receipts or undisclosed sources of payment. If the tenant choses not to disclose this transaction, he will not be able to claim deduction for Rs 40 Lakhs paid for purchase of new tenancy if he sells the same in future. This happens when someone tries to evade tax.