Hanchipura Channaiah Nandakishore Vs ITO (ITAT Bangalore)
The assessee appealed before the Income Tax Appellate Tribunal, Bangalore, against the reassessment order passed under section 147 read with section 144 of the Income Tax Act for the assessment year 2018-19. The reopening was conducted after issuing notice under section 148, and although the assessee did not file a return in response, a computation of income was furnished during assessment. The computation declared income from house property of ₹59,535, bank interest of ₹60,557, NIL capital gains after indexation and deduction under section 54, and a claim under section 80TTA, resulting in total income of ₹1,10,090.
During scrutiny, the Assessing Officer (AO) noted from the sale deed dated 15 December 2017 that the assessee had sold an immovable property for ₹60 lakh. The cost of acquisition of ₹12,16,500 as on 1 April 2001, as per the assessee’s valuation report, was accepted. After indexation, long-term capital gain (LTCG) of ₹26,91,120 computed by the assessee was also accepted. However, the AO disallowed the assessee’s claim for exemption under section 54 amounting to ₹26,91,120 and treated the LTCG as taxable. The final assessed income was ₹28,01,210, including LTCG and the income declared by the assessee.
The AO’s disallowance was based on several grounds: (1) the vacant land was purchased in the name of the assessee’s wife and not in the assessee’s own name; (2) the investment was made after the due date of filing return under section 139(1); (3) the assessee purchased only a vacant site; (4) no deposit was made in the Capital Gain Account Scheme (CGAS) despite the mandate of section 54(2); and (5) construction was not completed within the prescribed three-year period, i.e., 31 July 2018.
