Balmukund P Acharya Vs ITO (ITAT Mumbai)
The appeal arose from the order of the Commissioner of Income Tax (Appeals) passed pursuant to the Bombay High Court remanding the matter for fresh adjudication. The assessee challenged the taxation of capital gains arising from the sale of premises, contending that the property had been acquired without any monetary cost and, therefore, capital gains could not be computed under Section 45 by applying the principle laid down in ITO v. B.C. Srinivasa Shetty.
The assessee had filed the return of income for Assessment Year 1996-97 declaring capital gains of ₹1.07 crore on sale of the premises. The return was processed under Section 143(1)(a), and the Assessing Officer accepted the returned capital gains and also levied interest under Section 234C. Subsequently, the assessee appealed, asserting that the capital gains were not chargeable to tax despite having voluntarily disclosed them in the return. The CIT(A) initially dismissed the appeal as not maintainable, observing that the assessee had himself offered the income to tax. The Tribunal affirmed that view, but the Bombay High Court held that the Assessing Officer was obliged to apply the law to the facts disclosed in the return and that an assessee could challenge even the Assessing Officer’s failure to grant relief. The High Court accordingly restored the matter to the CIT(A) for decision on merits.
