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Income reassessment upheld, capital gains disallowance unjustified. Grounds of appeal partly allowed. The Tribunal partly allowed the appeal, holding that the re-assessment proceedings were valid as income had escaped assessment. The disallowance of Rs. ...
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Income reassessment upheld, capital gains disallowance unjustified. Grounds of appeal partly allowed.
The Tribunal partly allowed the appeal, holding that the re-assessment proceedings were valid as income had escaped assessment. The disallowance of Rs. 96,850 under "capital gains" was deemed unjustified as the expenses incurred were found genuine. Consequently, the grounds of appeal were partly allowed.
Issues: The validity of re-assessment proceedings and the disallowance of Rs. 96,850 under the head "capital gains".
Validity of Re-assessment Proceedings: The appeal was against the order of the National Faceless Appeal Centre for the assessment year 2011-12. The appellant, an individual deriving income under "salary" and "capital gains", had filed the Return of Income declaring total income of Rs. 4,89,519. The Assessing Officer completed the assessment at a total income of Rs. 5,50,170, making a disallowance of Rs. 50,650 under "capital gains". Subsequently, the Assessing Officer reopened the assessment u/s 148 of the Income Tax Act on the grounds that income had escaped assessment to the tune of Rs. 90,850. The Tribunal held that the re-assessment proceedings were valid as the information received enabled the Assessing Officer to form an opinion that income had escaped assessment to tax.
Disallowance of Rs. 96,850 under "Capital Gains": The Assessing Officer completed the assessment at a total income of Rs. 6,47,020, making a disallowance of Rs. 96,850 while computing income under "capital gains". The appellant challenged this disallowance before the Tribunal. The Tribunal found that there was no material to disbelieve that the expenses incurred on the development of the flat sold were genuine. Therefore, the Tribunal held that the Assessing Officer was not justified in making the addition of Rs. 90,850. Consequently, the grounds of appeal filed by the assessee were partly allowed.
Conclusion: The Tribunal partly allowed the appeal filed by the assessee, concluding that the re-assessment proceedings were valid in law and the disallowance of Rs. 96,850 under "capital gains" was not justified.
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