ITO Vs Vinod Gugnani (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT), Delhi Bench, has dismissed an appeal filed by the Revenue against Vinod Gugnani for the assessment year 2016-17, affirming the deletion of an addition amounting to Rs. 5,70,95,075/- under Section 54 of the Income-tax Act, 1961. The Tribunal’s decision reinforces the principle that the substantive compliance of investing capital gains in a new residential property within the stipulated period takes precedence over a procedural delay in depositing the funds into the Capital Gains Account Scheme (CGAS).
The case stemmed from the assessment year 2016-17, during which Vinod Gugnani filed his return declaring a business loss and claiming a refund. Subsequent scrutiny led to an assessment order on December 22, 2018, where the Assessing Officer (AO) disallowed a deduction of Rs. 5,70,95,075/-. The AO’s contention was that the assessee failed to deposit the sale consideration into the CGAS before the due date for filing the income tax return under Section 139(1) of the Act. This amount was then added back to Gugnani’s total income as Long Term Capital Gain.
Aggrieved by the AO’s order, Gugnani appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who, in an order dated January 19, 2019, allowed the assessee’s appeal, deleting the addition. The Revenue subsequently challenged this decision before the ITAT.
