SHRI SIMERDEEP SINGH,JALANDHAR vs. DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-1, JALANDHAR

Facts

The assessee, following a search u/s 132 and notice u/s 153A, re-computed a long-term capital loss. An original agreement for sale of a plot for Rs.155 Lacs was seized, but the buyer denied it, stating the actual purchase was Rs.90 Lacs via registered deed. The assessee claimed the Rs.155 Lacs agreement was fabricated to inflate property value for bank loans. The AO and CIT(A) adopted Rs.155 Lacs as sale consideration and denied carry forward of capital loss due to belated original return.

Held

The tribunal held that the agreement for Rs.155 Lacs was a 'dumb document' without corroborative evidence, and directed the AO to adopt the actual sale consideration of Rs.90 Lacs. For carry forward of capital losses, citing Special Bench and High Court decisions, the tribunal ruled that claims made in returns filed in response to a Section 153A notice within the allowed time, in abated assessments, must be allowed.

Key Issues

Whether the actual sale consideration for capital gains computation should be based on a seized inflated agreement or the registered sale deed; and whether long-term capital losses can be carried forward when the original return was belated but a revised return in response to a Section 153A notice was filed within time.