The due date of filing the return of income for the year ended 31 March 2011 was 31 July 2011. You could also have filed a belated return of income by 31 March 2013, beyond which it is not possible to voluntarily file the return of income for that year.

For claiming exemption of LTCG, one can purchase a residential house within a period of one year before or two years after the sale took place, or construct a residential house within three years of the sale. If the capital gains are not invested in the new property by the due date of filing the return of income, the amount needs to be deposited in a special account under the Capital Gains Account Scheme with any designated bank or institution. Recently, the Punjab and Haryana high court in the case of Commissioner of Income Tax vs Shri Jagtar Singh Chawla has interpreted the due date of filing the return referred to in the provisions relating to exemption of capital gains as including the extended due date or the date upto which a belated return can be filed.

In your case, such date would be 31 March 2013. Since you have already invested in the flat in March 2012, it may be possible for you to contend that you have fulfilled the condition of reinvestment and hence there is no tax liability. If the income-tax department issues a notice for non-filing of return of income, you could file your return of income in response thereof and claim the exemption of capital gains in respect of the investment made. You may need to litigate on the matter if the assessing officer does not concur with the view taken by the Punjab and Haryana high court.

There is a penalty of Rs.5,000 if the return of income is not filed within one year of the end of the financial year—on or before 31 March 2012—which may be levied at the discretion of the assessing officer. If the return of income is not filed, and the tax department issues a notice for filing the return, in addition to payment of unpaid tax and interest, there would also be a penalty on the unpaid tax.