The Income Tax Appellate Tribunal (ITAT), Delhi Bench upheld the disallowance of loss of Short Term Capital Gain (STCG) and reiterated that the assessee must declare sale of property either in the original return or in the revised return and pay taxes.
The assessee filed her original return of income declaring an income of Rs.5,71,960/- along with paying double taxes of Rs. 43,230/- including self-assessment tax of Rs. 33,230/-. In the original return of income loss against sale of property of Rs.1,12,76,573/- was not claimed by the assessee under the bonafide belief that taxes are paid against income only. The assessee is a Government School Teacher till 2017 and left the job due to her health.
The assessee did not claim TDS of Rs.52,500/- deducted against the sale of property but paid additional self assessment tax of Rs. 33,230/-. The assessee has not claimed credit of Rs. 52,500/- as she was under the belief that TDS against loss is not claimable. The Assessing Officer assessed the total income of Rs.5,35,980/- and disallowed short term capital loss of Rs.1,12,76,573/- and did not allow the same to be carried forward for set off.
The assessee submitted that that if original return is filed before the due date and on discovery of any omission or wrong statement, return can be revised under section 139(5). The assessee further submitted that the entire process created artificial loss which is set off against subsequent capital gain income of Rs. 34,73,196/- in Assessment Year 2017-18 is incorrect observation by the Assessing Officer.
The assessee was not aware of future earning at the time of loss. It was submitted that the assessee set off this loss against income by filing belated return during assessment proceedings of Assessment Year 2015-16 after verbal confirmation of allowability of loss from the Assessing Officer. It proves the bonafide belief of assessee and even if the set off loss was ignored, the assessee was eligible to claim deduction under section 54F of the Income Tax Act, 1961 resulting in ‘NIL’ taxability in the hand of the assessee.
The Coram of R.K.Panda and Suchitra Kamble said that there was a sale of property which should have been declared by the assessee either in the original return or in the revised return and should have paid taxes accordingly or at the most should have offered to tax to the Revenue. Thus, the assessee has not done the same in the present case. There was property purchase and though the assessee is entitled to claim benefit under Section 54F, but the same is determined when she satisfies all the conditions laid down in the said provisions, the same was not done by the assessee at the revised income stage also.
Hence, the ITAT held that the Assessing Officer has rightly made additions, as well as the CIT(A), rightly confirmed the additions.
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