DALJIT SINGH,MOHALI vs. INCOME TAX OFFICER, MOHALI

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ITA 221/CHANDI/2026Status: DisposedITAT Chandigarh20 July 2026AY 2009-104 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the reinvestment in the grandson's name was a productive use of sale consideration and eligible for deduction under Section 54B. Therefore, no capital gains were to be assessed in the hands of the assessee.

What were the facts?

The assessee, as a legal heir, was required to explain the source of cash deposited in his grandfather's account. The grandfather had sold agricultural land and the sale consideration was reinvested in a new property in the assessee's name. The Assessing Officer denied deduction under Section 54B as the investment was not in the grandfather's name.

What were the issues?

Whether the deduction under Section 54B for reinvestment of sale consideration in a new property can be denied solely because the property was purchased in the name of the grandson and not the original owner. Whether the consequential penalty under Section 271(1)(c) survives if the quantum appeal is allowed.

Which sections of the Income-tax Act were involved?

Section 54B,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH, CHANDIGARH

Heard together (2 matters)

ITA No.209/CHANDI/2026
ITA No.221/CHANDI/2026

Read from the judgment's own cause title. This page is filed under one of them.

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, CHANDIGARH VIRTUAL HEARING HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM 1. आयकरअपीलसं./ ITA No.209/CHANDI/2026 (िनधा�रणवष� / Assessment Year: 2009-10) & 2. आयकरअपीलसं./ ITA No.221/CHANDI/2026 (िनधा�रणवष� / Assessment Year: 2009-10) Shri Daljit Singh ITO बनाम/ Vs. Village Jhunghian, Kharar, Mohali Ward 6 (1), Mohali Haryana – 140301 Punjab – 140301 �ायीलेखासं./जीआइआरसं./PAN/GIR No. FALPS-2451-H (अपीलाथ�/Appellant) (��थ� / Respondent) : अपीलाथ�कीओरसे/ Appellant by : Smt. Komal Thakur (Advocate) – Ld. AR ��थ�कीओरसे/Respondent by : Sh. Vivek Vardhan (Addl. CIT) - Ld. Sr. DR सुनवाईकीतारीख/Date of Hearing : 14-07-2026 घोषणाकीतारीख /Date of Pronouncement 20-07-2026 : आदेश / O R D E R 1. The assessee’s appeal ITA No.209/Chandi/2026 for Assessment Year (AY) 2009-10 is quantum appeal which arises out of an order of learned Commissioner of Income Tax (Appeals), NFAC [CIT(A)] dated 17.12.2025 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s 143(3) r.w.s. 254 r.w.s. 144B of the Act on 13.09.2021. Having heard rival submissions, the appeal is disposed-off as under.

2.

The assessee is legal heir of his grandfather Shri Ajmer Singh who was found deposited cash of Rs.37.50 Lacs in his SB account as maintained with PSB, Kharar. The case was reopened and the assessee, as a legal heir, was required to explain the source of the same. It transpired that Shri Ajmer Singh sold agricultural land at Village Jhungian on 04.03.2009 to M/s Bajwa Developers Ltd. for Rs.10 Lacs. Shri Ajmer Singh left for heavenly abode on 17.06.2010.The said amount was reinvested in new property in the name of the assessee and deduction u/s 54B was claimed. However, since the investment was not made in the name of Shri Ajmer Singh, Ld. AO denied deduction u/s 54B and assessed capital gains of Rs.9,53,440/-. No addition of cash deposit was made. The matter reached up-to Tribunal wherein by order dated 24.02.2020, the matter was restored back to Ld. AO considering the plea of the assessee that it was General Power of Attorney (GPA) holder Shri Sukhwinder Singh who had transferred the land to M/s Bajwa Developers Ltd. 3. During second round, it emerged that Shri Ajmer Singh and Shri Karnail Singh had given Power of Attorney to Shri Sukhwinder Singh who ultimately sold the land for Rs.10 Lacs on 04.03.2009. The Ld. AO held that the date of transfer was to be considered to compute capital gains. The deduction u/s 54B was not to be allowed since the new property was purchased in the name of grandson i.e. Shri Dalit Singh. The assessee also contended that Shri Ajmer Singh was 50% owner of the property. However, this argument was also rejected and the capital gains were again assessed at Rs.9,53,440/- and the

assessment was framed. The Ld. CIT(A) endorsed the view of Ld. AO against which the assessee is in further appeal before Tribunal. 3. The undisputed facts that emerges is that assessee’s grandfather Shri Ajmer Singh and Shri Karnail Singh had executed GPA in favor of Shri Sukhwinder Singh who sold the land for Rs.10 Lacs vide deed dated 04.03.2009. In my considered opinion, the GPA holder derives power of sale from the registered owner only and do various acts at the instance of the registered owner only. It could also not be accepted that no consideration has flown from GPA holder to the registered owner. Therefore, to say that the capital gains could not be assessed in the hands of Shri Ajmer Singh is not correct proposition. However, another undisputed fact is that the sale consideration has been invested by Shri Ajmer Singh in the name of his grand son i.e., Shri Daljit Singh at the fag-end of his life. The same is evident from the fact that Shri Ajmer Singh left for heavenly abode within short interval on 17.06.2010. When the sale proceeds stood invested and the only reason to deny deduction u/s 54B is the reasoning that the new property was not purchased in the name of Shri Ajmer Singh but in the name of his grandson, the said reasoning could not be accepted to deny deduction u/s 54B considering the facts of the case. The object of beneficial provisions of Sec.54B is that the sale consideration should continue to be invested in a productive asset which has duly been done in the present case. Therefore, I would hold that the assessee would be eligible for deduction u/s 54B on the assessed capital gains and accordingly, no capital gains were

to be assessed in the hands of the assessee. I order so. The appeal stands partly allowed. 4. ITA No.221/Chandi/2026 assails consequential penalty u/s 271(1)(c) for Rs.2,22,716/-. Since quantum appeal has been allowed, the consequential penalty would not survive. I order so. This appeal stand allowed. 5. ITA No.209/Chandi/2026 stand partly allowed. ITA No.221/Chandi/2026 stand allowed. Order pronounced on 20th July, 2026.

-Sd- (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER AS Dated: 20/07/2026 आदेश की �ितिलिप अ�ेिषत /Copy of the Order forwarded to : 1. अपीलाथ�/Appellant 2. ��थ�/Respondent 3. आयकरआयु�/CIT 4. िवभागीय�ितिनिध/DR 5. गाड�फाईल/GF

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