Taxes not paid for rental deposit can this source of Income be shown

789 votes

An advance of rent is a capital receipt and not income per se, but would subsequently partake the character of rental income to the extent it becomes due during a financial year. If any rental which has already accrued or become due to the landlord towards rent receivable during a particular financial year and has not been declared by the landlord, he may file a belated return for the corresponding assessment year within one year after the due date for filing returns for that assessment year. If more than one year has elapsed since the income was received, a return reflecting that income can still be filed and self-assessment tax can be filed on the declared income, but such return would be invalid unless "regularised" by the income-tax department by issue of a notice for reopening of income escaping assessment. If such a notice is issued, the assessing officer will pass an assessment order and levy interest on the income so declared, in addition to the tax already paid on it. The assessing officer may also initiate penalty for concealment of income, but the penalty, if levied, can be successfully challenged in appeal on the ground that the taxpayer has voluntarily declared the income to tax, albeit belatedly.

LawRato LawRato