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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI SAKTIJIT DEY & SHRI PRADIP KUMAR KEDIA
PER SAKTIJIT DEY, JUDICIAL MEMBER:
This is an appeal by the Revenue against order dated 26.11.2018 of learned Commissioner of Income-Tax(Appeals)-10, New Delhi pertaining to assessment year 2015-16.
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Grounds raised by the Revenue are as under: i. On the facts and circumstances of the case, whether the Ld. CIT(A) was justified in accepting the claim made by Assessee towards deduction u/s 54F when the assessee failed to justify the fact that the construction of residential property had taken place within the stipulated time period of 3 years from the date of transfer.
II, On the facts and circumstances of the case, whether the Ld. CIT(A) was justified in accepting the additional evidences when there was no sufficient cause available with the assessee which prevented him from making the same available before the AO during assessment proceedings.
III. On the facts and circumstances of the case, whether the Ld. CIT(A) was justified in relying upon the Remand Report of the AO (which had failed to properly examine the additional evidences submitted during appellate proceedings) without any independent examination of the additional evidences and giving relief to the assessee.
IV. On the facts and circumstances of the case, whether the Ld. CIT(A) was justified in accepting the updated photograph of the residential property submitted by the assessee during the appellate proceedings as justification towards completion of construction within the stipulated time period, whereas the AO had also asked for the same during the Assessment proceedings & the Assessee failed to provide the same.
V. On the facts and circumstances of the case, whether the Ld. CIT(A) was justified in accepting the land records of Patwari to be the proof that property was constructed within the stipulated time period of 3 years, whereas the same provides only for justification towards the claim of agricultural land.
VI. On the facts and circumstances of the case, whether the Ld. CIT(A) was justified in accepting the electricity bills for the month of June, 2018 on the name of some other person, to be documentary evidences towards justification of the fact that property was constructed within the stipulated time period, which was 18.6.2017
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(for the purpose of claim of Section 54F of the Income-Tax Act, 1961.
VII. The appellant craves leave to add, alter or amend any of the grounds of appeal before or during the course of hearing of the appeal.
As could be seen from the grounds raised, the only grievance of the
Revenue is against allowance of assessee’s claim of deduction under Section
54F of the Income-Tax Act, 1961.
Briefly, the facts are, assessee is a resident individual. During the year
under consideration, assessee had derived long term capital gain of
Rs.4,35,99,347 from sale of shares. As against the capital gain so derived,
assessee claimed deduction of Rs.4,28,01,110 under Section 54F of the Act
towards investment made in a new residential house. In course of assessment
proceedings, Assessing Officer called upon the assessee to furnish details of
investments made in the residential house and justify its claim of deduction.
Upon examining the details furnished by assessee, Assessing Officer noticed
that assessee had purchased an agricultural land at Village Jonapur, Tehsil
Mehrauli, New Delhi for a consideration of Rs.4,00,00,000 and stamp duty of
Rs.24,00,000. As observed by the Assessing Officer, when the assessee was
called upon to furnish proof of construction of residential house on the land
purchased, assessee stated that the house shall be constructed within a period of
thee years from the date of purchase. Not being satisfied with the submissions of
the assessee, Assessing Officer issued a show-cause-notice to the assessee to
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justify the claim of deduction under Section 54F of the Act by furnishing the
following documents:
a) Completion certificate of the residential house; b) Bills/vouchers of purchase of material for construction of the said residential house; c) Proof of funds paid for the expenditure; & d) Photo proof of construction.
In response to the show-cause-notice, assessee furnished further details.
Though, from the submissions made by assessee, Assessing Officer found that
assessee claimed to have constructed a house over 900 sq. fts. area by investing
a sum of Rs.17,78,600, however, he was not convinced. The reason being,
assessee could not produce the completion certificate, bills/vouchers for
purchase for material for house building, photographs of house construction etc.
Further, he observed that the electricity bills are not in the name of the assessee.
Thus, ultimately, he concluded that since assessee had not invested the capital
gain in construction of a new house within a period of three years from the date
of sale of the property, he cannot claim the deduction. Accordingly, he
disallowed assessee’s claim of deduction under Section 54F of the Act.
Contesting the aforesaid disallowance made by the Assessing Officer,
assessee preferred an appeal before learned Commissioner (Appeals). In course
of proceedings before the first appellate authority, assessee furnished additional
evidences to justify its claim of deduction under Section 54F of the Act. The
additional evidences furnished by the assessee were forwarded to the Assessing
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Officer for verification and submitting a remand report. After considering the
remand report of the Assessing Officer and facts and material available on
record, learned Commissioner (Appeals) was convinced that the assessee,
indeed, had invested the capital gain within the specified time period provided
under Section 54F of the Act for construction of a new residential house.
Accordingly, he allowed assessee’s claim of deduction under Section 54F of the
Act.
We have considered rival submissions and perused the material available
on record.
A reading of the assessment order makes it abundantly clear that the only
reason on which the Assessing Officer disallowed assessee’s claim of deduction
under Section 54F of the Act is, the capital gain was not invested in
purchase/construction of new residential house within the specified period of
three years. Even, the grounds raised by the Revenue are also on the very same
reasoning. On the contrary, it is the claim of the assessee that investment in
purchase of land and construction of the house property was made within the
stipulated period of three years. It is observed in addition to the evidences
furnished before the Assessing Officer, assessee had furnished additional
evidences before learned Commissioner (Appeals) to demonstrate that
investment in purchase/construction of a new house was made within the
stipulated period of three years. Based on the evidences furnished by the
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assessee, a remand report was called for from the Assessing Officer. In the
remand report, the substantive part of which has been reproduced in paragraph
6.1.2 of the first appellate order, reads as under:
“3.2.3. During the appellate proceedings, the assessee submitted that the construction of new residential house has been made well within the stipulated time in support of his claim the assessee produced the photographs of the property before your goodself as additional evidence and in the office of the undersigned as well. Further the assessee produced the revenue records of Mehrauli Tehsil wherein it has been mentioned that during the period 2016-17 the construction/building was in existence in the form of house (Revenue Records i.e. Patwari Report). Though the claim of the assessee appears to be genuine but the additional evidence furnished during the appellate proceedings is not acceptable.
It is respectfully submitted that the assessee failed to produce/furnish the details/documents before the Assessing Officer during the assessment proceedings and now is submitting before your good self as additional evidence which is not acceptable and opposed strongly under sub clause of Rule 46A as stated above. Therefore, it is requested that the appeal of the assessee may be decided keeping in view the findings of the Assessing Officer and request your kind office to upheld the order and dismiss the assessee’s appeal and as per law.”
Though, in the assessment order, the Assessing Officer has observed that
the assessee did not furnish any supporting evidence to demonstrate that the
house property was constructed within the stipulated period of three years as
provided under Section 54F of the Act, however, in the remand report, a part of
which has been reproduced above, the Assessing Officer after verifying the
additional evidences has categorically observed that assessee’s claim of
construction of new house property appears to be genuine. The only objection of
the Assessing Officer is, since the additional evidences were not produced in
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course of the assessment proceedings, they should not be accepted. Thus, from
the aforesaid fact, emerging on record, it is very much clear that though, at the
time of assessment proceedings, Assessing Officer was doubtful regarding
assessee’s claim of investment in the construction of a new house property
within the stipulated period of three years, however, after examining the
additional evidences filed by the assessee, such doubts have been removed and
assessee’s claim of construction of new residential house was accepted as
genuine. Thus, when the Assessing Officer has accepted assessee’s claim of
construction of new residential house to be genuine, in such circumstances,
deduction claimed under Section 54F of the Act has to be allowed.
In view of the aforesaid, we do not find any infirmity in the decision of
the learned Commissioner (Appeals) in allowing assessee’s claim of deduction
under Section 54F of the Act. Accordingly, grounds raised are dismissed.
In the result, appeal is dismissed.
Order pronounced in the open court on 30th May, 2022.
Sd/- Sd/- ( PRADIP KUMAR KEDIA ) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 30th May, 2022. Mohan Lal Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR
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Asst. Registrar, ITAT, New Delhi
Sl. No. Particulars Date 1. Date of dictation (Order drafted through Dragon software): 20.05.2022 2. Date on which the draft of order is placed before the Dictating Member: 23.05.2022 3. Date on which the draft of order is placed before the other Member: 4. Date on which the approved draft of order comes to 27.05.2022 the Sr. PS/PS: 5. Date of which the fair order is placed before the 30.05.2022 Dictating Member for pronouncement: 6. Date on which the final order received after having 30.05.2022 been singed/pronounced by the Members: 7. Date on which the final order is uploaded on the 30.05.2022 website of ITAT: 8. Date on which the file goes to the Bench Clerk 30.05.2022 9. Date on which files goes to the Head Clerk: 10. Date on which file goes to the Assistant Registrar for signature on the order: 11. Date of dispatch of order: