Capital gain and rectification of it return

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VANEET (Querist)
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17 May 2019 Hi All,

Request your suggestion for the following

In order to claim capital gain exemption u/s 54, assessee has purchased new property. However, by mistake, exemption for wrong property which was also eligible was taken. Later on this new property on which exemption has been claimed is sold in 2.5 years i.e before 3 years lock in period under section 54.
Suggestion required- Should the assessee rectify the earlier return and claim exemption for correct new house property or wait for any notice, if any received, post filing of income tax return showing details of sale of new property sold within 3 years.

Thanks in advance

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 May 2019 1 You can't rectify earlier year return for this purpose.
2 Don't wait for notice pay capital gains tax for sale within 3 years and file the return.

VANEET

VANEET (Querist)
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18 May 2019 Thanks sir for your revert.i just want to add exact date into the transaction.
Sale of property on which capital gain arise - 12.04.2016.
Purchase of property(wrongly taken) for claiming exemption - 12.01.2017
Purchase of property ( which actually had to be taken) for claiming exemption - 27.04.2015 .i.e within 1 year prior to sale .i.e 12.04.2016
Now property taken ( wrongly taken) as exemption has been sold on 12.05.2019 i.e within 03 years of sale of purchase.
Since return for AY 2017-18 has already been filed and assessement done where in mistakenly wrong property ( now sold in 3 years ) has been taken.
However,now currently assessee is already having an option of rectifying return under section 154 for AY 2017-18 is available till 31.03.2022.
Suggestion,
1.Should rectification return for AY 2017-18 be filed now or
2.Filing of normal return for AY 2020-21 be filed as usual and wait for any deptt notice, also currently no exemption for section 54 has to be taken for sale of this new property.

Thanks in advance

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CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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19 May 2019 1 Exemption is available for purchase of property within 2 years after sale so you can't rectify the return.
2 If you wait for notice without disclosing the sale in the return penal proceedings will be attracted. Disclose and avoid penalty. Registration office sends return on sale of property exceeding 30 lacs you can't escape from notice. Higher penalty payable on undisclosed income.