Capital gains not reported in returns

Dear members need a Help,

An assesse sold a property (transferred after death of father) on Dt. 25-07-2010 (FY: 2010-2011) & invested complete proceeds in buying another property on Dt. 14-07-2011. (Before due date of filling returns for 2010-2011)

However in Returns of F.Y 2010-2011 this transaction was not mentioned, neither the exemption u/s 54 was claimed. The date of revising returns for F.Y 2010-2011 has also elapsed. This transaction has been reported in AIR & a letter seeking information on the transaction was received by the assesse, from ITO, Compliance Management Cell, New Delhi, which the assesse has replied.

Now what is the way out, in case AO claims that this transaction has been concealed in returns of F.Y 2010-2011?

Can an application to allow the exemption for Capital Gains be filed, If the AO adds the Capital Gains to income?

Can this transaction incorporated in returns of F.Y 2011-2012 (When the Capital gains were invested)?