The Pune bench of the Income Tax Appellate Tribunal (ITAT) sustained the addition and held that the failure of the assessee to offer income on the sale of the residential house neither in the original Income Tax Return (ITR) nor the return filed in response to notice under Section 148 of the Income Tax Act, 1961.
The assessee did not file her return of income in relation to the assessment year under consideration. The Assessing Officer (AO) got some information about the assessee having suppressed Long-term capital gains on the sale of property. Notice under Section 148 of the Income Tax Act was issued. The assessee did not disclose any Long-term capital gain on the transfer of the property in the return filed in response to notice under Section 148 of the Income Tax Act.
The assessee took a stand that the property was transferred by her husband and she had nothing to do with its ownership. During the course of assessment proceedings, the AO observed from the registered agreement for sale that the assessee was the absolute owner of a 50% share. The assessee agreed to the addition towards Long-term capital gains subject to the benefit of the cost of indexation.
The AO took one-half of the sale consideration treating the same as her share and after reducing the indexed cost of acquisition, worked out the Long-term capital gain of Rs.3,78,420/-.
The Authorized Representative contented that the husband included the entire amount in his return of income again does not support the point of view. The return so claimed by the assessee’s husband was filed on 12.12.2014, which is admittedly an invalid return. This invalid return has to be presumed as never filed.
If this return is excluded, the fact remains that the assessee was the one-half owner of the property transferred; the transfer took place in the year under consideration; the assessee had not offered income from the transfer of such property either in the original return or in the return filed in response to notice under Section 148 of the Income Tax Act.
The Single member bench comprising of R.S. Syal (Vice-President) held that the addition had been rightly made and sustained and therefore, the appeal of the assessee was dismissed.
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