A new property purchase can feel like a proud milestone — until a letter from the Income Tax Department lands in your inbox asking where your money came from. Experts say that such notices are becoming increasingly common as tax authorities use advanced data analytics to verify whether property buyers’ declared income matches their level of investment.“Land purchases above Rs 30 lakh are mandatorily reported to the Income Tax Department by the Registrar’s office under Section 285BA (Statement of Financial Transactions). Once this data is captured in the taxpayer’s Annual Information Statement (AIS), the department cross-verifies whether the buyer’s declared income supports the investment,” said Abhishek Soni, CEO and Co-founder of Tax2win, in an interview with ET.Why land purchases attract I-T scrutinyWith tighter digital surveillance and automatic reporting of property deals, every high-value land transaction now feeds into the tax department’s monitoring system. Even those using legitimate savings may receive queries seeking an explanation of their funding source.According to Soni, the tax department’s primary concern is whether an individual is living beyond their declared means — a potential indicator of tax evasion. The most common notice seeks clarification on the “source of funds” used for the property purchase.Such scrutiny often arises when funds come from sources not automatically reflected in tax records — such as savings accumulated before tax filing began, gifts from relatives, inheritance, sale of gold or shares, or loans from friends or family.An income tax notice may also be triggered if there is a mismatch between the declared purchase value and the stamp duty value (SDV), or if the transaction appears undervalued. Under Section 133(6), tax authorities can seek information for up to three years from the relevant assessment year, and up to ten years if the unreported or “escaped” income exceeds Rs 50 lakh.Soni explained to ET that if the stamp duty value exceeds the actual purchase price by more than 10 per cent (and the difference is over Rs 50,000), the excess is treated as taxable income in the hands of the buyer under “income from other sources.”How to handle a tax noticeExperts advise that the first step after receiving an income tax notice is to respond promptly and accurately. “Organise your bank statements, loan documents, gift deeds, sale receipts and any other relevant records. The clearer your documentation, the quicker the resolution,” Soni said.Most notices provide a short response window. If more time is needed, taxpayers should at least file an acknowledgment and request an extension. Ignoring the notice or providing incomplete responses could lead to penalties under Section 272A(2) — Rs 100 per day until compliance — or even a full reassessment under Section 148, where the assessing officer can estimate income and proceed on their own judgment.Urban agricultural land purchases are also reportable, Soni said, as they are treated like capital assets. “While rural agricultural land purchases are less likely to be flagged, the department may still ask for proof of income if the transaction value looks disproportionate,” he added.How to avoid getting flaggedTax professionals recommend proactive financial transparency to avoid I-T scrutiny. “Maintain a clear money trail — record every transaction and avoid large cash payments,” Soni told ET.He added that formal documentation for all sources of funds — including family loans, inheritances, and sale proceeds — is crucial. “If such income isn’t reflected in your ITR, file an updated return before making the property purchase,” he advised.For those with multiple income streams, consulting a chartered accountant before large purchases is advisable to ensure income declarations and expenditures align.Soni concluded that with the government’s digital monitoring expanding, the tax department’s systems are becoming more data-driven. “Prevention is always better than scrambling for documents after a notice arrives. Paying taxes honestly and keeping proper documentation isn’t just about compliance — it’s about long-term financial peace,” he said.

Neville Tata has been appointed by Tata Trusts to the board of Sir Dorabji Tata Trust (SDTT). Neville Tata is the son of Tata Trusts chairman Noel Tata. Group veteran Bhaskar Bhat has also been inducted.This appointment strengthens Noel Tata’s position whilst elevating Neville, aged 32, to one of the most significant roles within the Tata organisation, positioning him for a substantial future career in the family enterprise, according to an ET report.During Tuesday’s meeting, the trustees amended Venu Srinivasan’s position from lifetime to a three-year term, adhering to new Maharashtra government regulations that limit lifetime trustee appointments, directly affecting Tata Trusts’ established governance structure.

Who are Neville Tata and Bhaskar Bhat?

Following his graduation from Bayes Business School, Neville commenced his career at Trent in 2016 in the packaged foods and beverages division. Subsequently, he took charge of Zudio, a value fashion retailer that has emerged as one of India’s rapidly expanding clothing retail chains.Neville currently serves on the boards of JRD Tata Trust, Tata Social Welfare Trust and RD Tata Trust. Sources indicate he might join Sir Ratan Tata Trust (SRTT), another significant trust that, alongside SDTT, controls over 51% of shares in Tata Sons, the group’s primary holding entity.Bhat, aged 71, graduated from IIT Madras and IIM Ahmedabad, and started his professional journey in 1978 at Godrej & Boyce as a management trainee, before transitioning to the Tata Watch Project, which subsequently evolved into Titan.Throughout his tenure as managing director from 2002 to 2019, spanning 17 years, he guided Titan’s diversification from watches into multiple segments including eyewear, jewellery, fragrances, accessories and sarees. Under his leadership, the company’s market value grew to approximately $13 billion, positioning it as the second-largest listed company in the Tata Group at that time.