Sarjit Ghanshyam Desai Vs ITO (ITAT Mumbai)
The appeal before the Mumbai Income Tax Appellate Tribunal (ITAT) arose from the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, for Assessment Year 2011-12. The principal issue concerned the determination of the cost of acquisition for computing capital gains arising from the sale of a shop received by the assessee as Permanent Alternate Accommodation (PAA) under a redevelopment scheme after surrendering tenancy rights.
The assessee had filed the return of income declaring total income of ₹3,30,760, which was initially processed under Section 143(1). Subsequently, the Assessing Officer (AO) noticed deposits of ₹30,51,000 in the assessee’s bank account that had not been disclosed. During reassessment proceedings, the assessee explained that the deposits represented sale proceeds of a shop situated at Punya Apartment, Girgaum, Mumbai, which had been sold for ₹38,62,000.
On examining the sale agreement, the AO found that the assessee had originally been a tenant in Room No. 6 of Mani Mansion, Girgaum. Following redevelopment of the building, the assessee received ownership of Shop No. 2 at Punya Apartment as Permanent Alternate Accommodation in exchange for surrendering tenancy rights. The assessee subsequently sold the shop but had not offered any capital gains to tax.
