A News Report of real estate transaction in Bangalore Mirror on 13-07-2016
Woman entered into a deal to sell her property, but faced trouble when buyer refused to pay the ‘remainder’
The High Court of Karnataka has allowed a 75-year-old property owner to initiate a cheating case against the buyers of her property who allegedly refused to pay her the amount that was negotiated for. The property was registered for a lesser amount than what was mutually agreed, as is the norm with most property registrations. But in this case, the purchaser allegedly refused to pay the ‘remaining’ amount while paying her only the amount mentioned in the sale deed.
An US national came to Bengaluru to sell her property in 2013 and entered into an agreement to sell with for a consideration of Rs 2 crore. However, this transaction did not fructify. Later, an agent got her a deal to sell the property to one XXXXXXXXXXXXfor Rs 6,58,20,000. However, the sale deed for registration was prepared only for Rs 4,32,20,000.
The Landlady alleges that she was not paid the difference amount and hence she refused to give up possession of her property.
She complained to the police that she was being forced to give up possession of the property without the balance amount being paid to her. The police did not register an FIR but gave her an ‘endorsement’ that it was a civil dispute and hence she should approach the court.
Thereupon, she approached a civil court, which refused to give an injunction against the property purchasers and she claimed that she was forcibly thrown out of the property and then approached the HC for justice.
The HC noted that there was “some semblance of criminal intention on their part.” of the buyers, It also castigated the police for not filing an FIR. “This court is unable to understand as to how the police could refuse to register the complaint and issue such an endorsement.” The court said the case was unnecessarily being pursued in the civil court.
Relegating the case to the magistrate court and directing the seller “to file appropriate complaint and seek appropriate direction to the jurisdictional police for investigation and registration of the complaint for the offences alleged against the defendants”, the court also allowed her to proceed against the purchasers to recover the amount due to her.
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REMARKS-
UNDERVALUING THE PROPERTY – STAMP DUTY EVASION – INCOME TAX IRREGULARITY – CAPITAL GAINS – PENAL PROCEEDINGS – REPATRIATION OF FUNDS ABROAD
Income Tax Department might step in along with the Department of Stamps and Registration to conduct an enquiry into the TAX – for the difference amount. Amount negotiated and the Amount shown in the Sale Deed. The difference of stamp duty + 10 times the penalty and the Income Tax + Capital Gains + Penal proceedings from the IT Investigation Wing.
If the property is bought for X price and registered it for Y price, to evade stamp duty and Income tax, both the departments will have conduct enquiry and the amount `Y` has to be assessed to tax.
The liability towards the stamp duty is the DUTY NOT PAID OR EVADED on the OTHER amount Plus 10 times the penalty and the income tax (TDS) + recovery proceedings by the IT department.
There are many financial institutions provide home loans and some of them by-pass the RBI directives and assist the buyer and seller to EVADE stamp duty. This is not very difficult to investigate. The actual sale agreement is for Rs.1,00,000/- and the loan sanctioned is also on the basis of the sale agreement and 75% or 80% of the value shown in the Sale Agreement.
But, the SALE DEED registered is for Rs.50,000/- by undervaluing the property and EVADE STAMP DUTY.
The penal proceedings:
STAMP DUTY HAS TO BE PAID FOR THE DIFFERENCE AMOUNT OR TAX EVADED AMOUNT OF Rs.50,000/- at the prevailing applicable rates and 10 times the penalty of the TAX EVADED AMOUNT.
If this discrepancy or illegality is brought to the notice of the RBI, the RBI might be compelled to initiate appropriate proceedings against the bank or financial institution and direct the BANK to proceed with the immediate recovery of the amount LENT to the borrower.