Do we need to show the income where no tax

Dear distinguished members,

I am selling a plot of land that I've had with me for 5 years, and buying a house using the proceeds within a span of 3-4 months.

As the capital gain of plot sale is long term & non-taxable, I do not intend to show the property transaction in my income tax file. In case I am subject to IT scrutiny lateron, anyway I wouldn't have to pay any penalty as there wasn't any tax evasion in the first place. Is my understanding about not getting taxed upon scrutiny, correct ?


Chartered accountant

Dear Rajat,


                                     If you are liable to file return then you will have to show the details of capital gains in the return. If you leave those columns blank then the Dept may take the view that the same was deliberatly done. That action would attract penaly u/s 271(1)(c).

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Dear Mr Rajat, it appears from your query that you intend to seek benefit of exemption of long term capital gain u/s 54F. Hence, there will not be any tax liability on this account. If have nothing to hide, why do you want not to disclose this fact in your IT Return. Mind it, certain high value transactions are reported to IT Department under AIRs and if the data gaiven therein does not match with your return, it is likely to be picked up for scrutiny resulting in subsequent compliances and harassment. Technically, not disclosing full and true particulars of income is an offenec liable to be penalised u/s 271(1)(c) of the Act. However, as in your case there will not be any tax effect, the penalty amount would be zero (provided your computation of long term capital gain and exemption is correct and as per law). Still I would sugest that you disclose full particulars of income.

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Sir, your perfect response, is most appreciated and thanks a lot for it.

Best regards.




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