Trading in parents name

[shreyasss91]

Trading is not allowed for govt. employees. My father is also an Govt. Employee who is years away from retirement. So i want to open an account in my mothers name(Homemaker, uneducated) and trade Intraday only in that account and will file ITR without fail.
Income, if at all any, will be Gifted/Loaned to me by my mom.

Can that be done? What all legal precautions have to be taken?
Does an IT officer bother about who actually does trading? (If for some unforeseen reasons, IT notice is served OR An IT officer cross examines us)(PS: My mother is uneducated)

My concern is, can IT officer take any legal action on MOM if they are convinced that profits are due to trading by someone else?(Provided no tax has been evaded)

Can they take legal action against me?

 

[canikhil]

the best way is to loan the money to your mother. Ensure that the loan transaction is properly accounted for.

It doesn't matter if you are trading or she is on her own. Knowledge of the business is not the necessary factor for being the beneficial owner of the income.

 

[marimuthu13]

Trading is not allowed for govt. employees. My father is also an Govt. Employee who is years away from retirement. So i want to open an account in my mothers name(Homemaker, uneducated) and trade Intraday only in that account and will file ITR without fail.
Income, if at all any, will be Gifted/Loaned to me by my mom.

Can that be done? What all legal precautions have to be taken?
Does an IT officer bother about who actually does trading? (If for some unforeseen reasons, IT notice is served OR An IT officer cross examines us)(PS: My mother is uneducated)

My concern is, can IT officer take any legal action on MOM if they are convinced that profits are due to trading by someone else?(Provided no tax has been evaded)

Can they take legal action against me?

You can open trading account in your mother name.. file IT return in her name as per IT laws....(ITR 4

as simple as that...

with money earned from her trading account after your proper filing of IT return/income tax payment, she can do anything as per her wish..no matter to anyone.
(loan /gift to you or anything)

 

[traderniftybull]

I want to know
Whether wife (or to say a dependent) of a govt employee is allowed to carry on a business legally (or to say any business), as per govt rules
His father is also a govt employee.

 

[cinderblock]

My concern is, can IT officer take any legal action on MOM if they are convinced that profits are due to trading by someone else?(Provided no tax has been evaded)

Can they take legal action against me?

Practically speaking, if you are making tens of lakhs you might have some explaining to do. If you are making under 5L, IT won't bother.

They have other much more important things to do than chase a guy who's trading in his mom's account

 

[Smart_trade]

If the case is opened in scrutiny and the mother fails to show the basic knowledge of trading, then can ITO consider this income as income of the person who has traded and add the same to his income and also penalise for concealment of income.?In one of my scrutinies, Dy Commissioner asked me some questions to satisfy himself of genuineness of my statements and he told my CA who was accompanying me to remain quiet so that that he wants these answers from the assessee as they pertain to assessees business and CA should not reply these questions.

Smart_trade

 

[cinderblock]

..Knowledge of the business is not the necessary factor for being the beneficial owner of the income.

Just being curious here.

But the person who's trading - can't he trade in his friend's / relative's account and conceal his own income? Is that possible unless there's an off-market cash transaction involved between the 2 parties?

 

[timepass]

I think you would need a dealer's license to trade in someone else's account.

 

[cinderblock]

Yes, but surely the OP doesn't need a dealer's license to trade in his mom's account. Or, does he?

 

[marimuthu13]

If the case is opened in scrutiny and the mother fails to show the basic knowledge of trading, then can ITO consider this income as income of the person who has traded and add the same to his income and also penalise for concealment of income.?In one of my scrutinies, Dy Commissioner asked me some questions to satisfy himself of genuineness of my statements and he told my CA who was accompanying me to remain quiet so that that he wants these answers from the assessee as they pertain to assessees business and CA should not reply these questions.

Smart_trade

I dont understand one thing here..he opens trading account in her mom account..

got profit of say 1 Cr..

she is filing ITR 4 and paying tax amount of 30 Lakhs (or something like 25 lakhs after few expenses deduction..)

where is the question of scrutiny or such cases related to IT or legal.............???