Bhawarlaldarla Harish Kumar Vs DCIT (ITAT Bangalore)
Misreporting in Audit Report ≠ Real Income: LTCG Issue Restored for Verification 3CD Error Causes
Assessee filed return declaring ₹9,51,840, including rent of ₹6,96,846 under “house property”. Inadvertently, the figures of unrealized gain based on market value as on 31st March were filed in the form 3CD. CPC, relying on Form 3CD disclosures in column 16(d), treated this rent again as business income & also treated ₹2,95,131 shown as “profit on sale of shares” in 3CD as LTCG/business income, even though no shares were transferred during the year. This resulted in a total adjustment of ₹12,18,356.
CIT(A) partly allowed appeal but failed to delete the double addition of rent & upheld the LTCG addition for want of revised 3CD or auditor certificate.
Tribunal held that rental income was already taxed once under house property & CPC’s addition was purely due to a 3CD reporting mistake, amounting to unjustified double taxation. On LTCG, Tribunal noted that CIT(A) neither verified facts nor called for certificate, even though Assessee consistently stated that the figure was merely unrealised market value, not a real gain. Tribunal deleted the rent addition outright & restored the LTCG issue to AO for verification of auditor’s certificate confirming no transfer during the year.
