STCG already Taxed: ITAT deletes Rs. 1.20 Crore Wrong addition [Read Order]

The Pune Bench of the Income Tax Appellate Tribunal ( ITAT ) removed the incorrect addition of Rs. 1.02 crore as Short-Term Capital Gains (STCG) after determining that the income had already been assessed.

Rimple Saxena (assessee) had not filed a return of income for the Assessment Year (AY) 2013-14. Based on the information available, the Assessing Officer (AO) found that the assessee’s name appeared as a co-owner in the sale deed of an immovable property sold for Rs. 1.02 crore. Since no return was filed and the income was undisclosed in her name, the AO issued a notice under Section 148 of the Income Tax Act, 1961, initiating reassessment proceedings.

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The assessee did not respond to the statutory notices under Sections 148 and 142(1), leading to an ex parte best judgment assessment under Section 144. The AO treated the entire sale consideration as the assessee’s income and added it as STCG.

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Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. However, the CIT(A) dismissed the assessee’s appeal due to non-prosecution. Aggrieved by the order of CIT(A), the assessee approached ITAT.

The counsel for the assessee submitted that the property in question belonged solely to the assessee’s husband. The counsel also highlighted that the assessee had no independent ownership rights.

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The counsel also submitted that the sale consideration of Rs. 1.02 crore had already been disclosed in the assessee’s husband’s return of income for AY 2013-14.

The counsel for Revenue contended that since the assessee’s name was present on the sale deed, the AO was justified in making the addition.

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The two-member bench, comprising Dr. Manish Borad (Accountant Member) and Shri Vinay Bhamore (Judicial Member), observed that the CIT(A) erred in dismissing the appeal without examining the case on its merits.

The tribunal also observed that the department had already taxed the capital gain in the hands of the rightful owner. Taxing the same transaction twice amounted to double taxation, which was not permissible under the law.

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The tribunal referred to the assessment order of the assessee’s husband, which confirmed that the transaction had been duly reported and taxed. Therefore, the tribunal ruled that the addition of Rs. 1.02 crore in the hands of the assessee was unsustainable. The tribunal directed the deletion of STCG.

Thereby, the appeal of the assessee was allowed.

To Read the full text of the Order CLICK HERE

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