closure of capital gain account with SBI

[Rupesh Gupta]

i have  capital gain account  ( 31 lacs) with SBI under RBI capital gain scheme 1988. It was opened in May 2008 for the capital gain i had by sale of a resedential plot, and was supposed to be closed in May 2011 after expiry of 3 years. Somehow i was not able to use any money from this account to purchase / construct any new property.

I had paid the taxes on the intrest accrued every year based on TDS deducted and intrest statement given by bank to me. I have money both in account A ( 5.7 lacs) and 33 acs( in account B, SDR and TDR).

I had approached my assessing officer at ITO for his clearance on form G, but he did not sign saying that i had to clear my taxes first. As taxes are tune of 4 lacs , i am not in position to arrange this amount. I had requested SBI to deduct money from my capital gan account, but they refuse. Also, my request to transfer the intrest accrued in this account is not being considered. What is the law on this? How i am supposed to pay the taxes. It is very strange that i am not able to utilise even the intrest accrued on which i had already paid the taxes? Also , problem is that bank officers and assessing officer are not quite aware what to do and are playing safe. Suggest a way out??

AI Summary

Capital gains account taxation: unutilised funds after the three-year window are treated as taxable income; seek senior AO instruction.
Unutilised deposits in a Capital Gains Account under the RBI Capital Gains Scheme become taxable as the taxpayer's income when the three year utilisation period lapses; where the AO withholds Form G pending tax clearance and the bank refuses withdrawal, the recommended administrative remedy is to seek a senior assessing officer's instruction directing the AO to allow account release while instructing the bank to retain and remit tax dues from the account balance.