Undervalued property: am I in trouble?
One party has agreed to buy my house property for Rs.67 lakhs as per sale agreement. The sale agreement was duly attested by a Notary Public/Advocate. The party has paid the agreed amount of Rs.67 lakhs by cash within 2 months in different dates before documentation. But the party has registered the property only for Rs.18 lakhs to avoid stamp duty/registration charges. He refused to register for full amount. Based on the sale agreement I have remitted entire amount of Rs.67 lakhs into my accounts by cash in various banks. If IT dept ask sources of funds, what I have to do? Pl advise me.
The Supreme Court of India has held that transfer of immovable property by way of sale can be effected only by a deed of conveyance i.e. documents like the stamp duty which have to be duly stamped and registered as required by law, no right, title or interest in an immovable property can be transferred without any such registration taking place. Such transactions have to be rightfully registered as it helps track instances of black money transactions.
This also means that due to wrongful registration under the law, technically, no transfer of property has taken place and in case of any litigation, no such transfer will be recognised under the court of law.
Thus, in essence even though it was the other party that did not register the right amount in the sale deed, it also makes you equally guilty of encourage illicit transactions if discovered. You may be punished accordingly, if these transactions are discovered under the Prevention of Money Laundering Act (2002), Income Tax Act, Indian Penal Code etc.
Thus, it is suggested that if you want to avoid punishment, please register the property and pay the stamp duty with the right amount as indicated in the sale agreement. Use that and your bank transactions as a proof and likewise re-register it.
 Suraj Lamp & Industries Pvt Ltd v State of Haryana, referred to Sections 53A and 54 of the Transfer of Property Act and its decisions in Narandas Karsondas v SA Kamtamand Rambhau and Namdeo Gajre v Narayan Bapuji Dhotra
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