ITAT Upholds Disallowance of Loss of STCG Directs Assessee to declare Sale of Property

ITAT Upholds Disallowance of Loss of STCG Directs Assessee to declare Sale of Property

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, in the case tilted Shailaja (Appellant) v. ITO (Respondent) upheld the disallowance of loss of Short Term Capital Gain (STCG) and reiterated that the assessee must declare the sale of property either in the original return or in the revised return and pay taxes.

The ITAT Coram comprising of Accountant Member R.K. Panda and Judicial Member Suchitra Kamble stated 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.

The factual background of the case is that 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 the 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 the 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 if the original return is filed before the due date and on the discovery of any omission or wrong statement, the 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 an 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 returns 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 the assessee and even if the set-off a 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 Appellate Tribunal held 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.

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.

It concluded that the Assessing Officer has rightly made additions, as well as the CIT(A), rightly confirmed the additions.