GADDAM MOHAN REDDY,NIZAMABAD vs. INCOME TAX OFFICER, WARD-2, NIZAMABAD

Facts

The assessee failed to file an income tax return for AY 2015-16. A survey revealed a development agreement, leading to the sale of two flats. The assessee's share of sale proceeds was significant, prompting the reopening of assessment. The assessee eventually filed a return declaring a specific income. The Assessing Officer (AO) recomputed the capital gains by altering the cost of acquisition of land.

Held

The Tribunal held that the AO erred in adopting a different cost of acquisition for capital gains computation as the cost had been accepted in prior assessment years without any change in facts. The principle of consistency was invoked, and the Ld.CIT(A)'s order sustaining the additions was set aside.

Key Issues

Whether the AO can alter the accepted cost of acquisition for capital gains computation in subsequent years without a change in facts, violating the principle of consistency. Whether the CIT(A) erred in sustaining such additions.