SUNITA TIWARI,MATHURA vs. ITO, WARD-1(3)(1), MATHURA

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA (DB) BENCH, AGRA BEFORE: SHRI M BALAGANESH, ACCOUNTANT MEMBER AND SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER ITA No. 244/Agr/2026 Assessment Year: 2023-24 Sunita Tiwari, B-31, Guru Vs. ITO, Ward-1(3)(1), Aayakar Bhawan, Nanak Nagar, Junction Road, Mathura-281001 Mathura-281001 PAN : ABJPT3791P (Appellant) (Respondent) Assessee by Shri Anurag Sinha, Adv. Department by Shri Anil Kumar, Sr (DR)

Date of hearing 19.05.2026 Date of pronouncement 05.06.2026 ORDER

PER: SUNIL KUMAR SINGH, JM. This appeal has been preferred against the impugned order dated 30.01.2026 passed in Appeal No NFAC/2022-23/10451785 by the ld Commissioner of Income Tax, NFAC (Delhi) [hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act), for the A.Y. 2023-24, wherein ld CIT(A) has dismissed assessee’s appeal, sustaining the addition of long term capital gain of Rs. 71,27,000/- 2. (i) Brief facts of the case are that the appellant assessee filed her return of income on 02.08.2023, declaring total income of Rs. 4,73,130/-. The case was selected for scrutiny under CASS for verification of deemed capital gains. During the year under

ITA No.244/Agr/2026 consideration appellant assessee sold a commercial plot for the consideration of Rs. 3,20,00,000/-. On examination of the return and accompanying details, it was noticed that the appellant had not offered the resultant long term capital gains correctly to tax and had instead claimed deduction by invoking provisions of section 54F of the Act. During the assessment proceeding, statutory notices u/s 143(2) and 142(1) of the Act were issued and served upon the assessee, seeking assessee to explain her claim of large deduction u/s 54F of the Act for the A.Y. 2019-20, 2020-21 and 2021-22. Assessee submitted computation of total income, construction cost report, sale deed, purchase deed, fund receipt statement and bank accounts statements alongwith written statements, wherein assessee stated that no investment was made to claim deduction u/s 54F in 2019-20, 2020-21 and 2021-22. (ii) The assessee further submitted that she sold a commercial plot measuring 528.73 sq meter situated at Sudama Puri Awasiya Yojna, Navada, Mathura on 05.08.2022 for the consideration of Rs. 3,20,00,000/-. The said plot was purchased by the assessee in March 2003 from Mathura Vrinadavan Development Authority for the cost of Rs. 8,50,604/-. (iii) On analyzing assessee’s submissions, the ld assessing officer accepted assessee’s claim of deduction u/s 54F on the construction 2 | P a g e

ITA No.244/Agr/2026 cost amounting to Rs. 2,10,18,424/- on residential property situated on plot no. 4/144, Type C, Vishesh Khand, Gomati Nagar, Lucknow. However, declined to give any benefit of the cost of the plot constructed, which was purchased on 16.12.2021 for Rs. 71,27,000/- for want of documentary evidence such as registered sale deed and stamp value details and added Rs. 71,27,000/- in the income of the assessee as unreported capital gain, vide assessment order dated 18.03.2025 passed u/s 143(3) r.w.s 144B of the Act, for the year under consideration. 3. Aggrieved assessee preferred an appeal before ld CIT(A), who dismissed assessee’s appeal and sustained the assessment order. 4. Appellant assessee has preferred this second appeal on the following grounds: “1. BECAUSE, the order dated 30.01.2026 passed by the Ld. CIT(A) under section 250 is bad in law, arbitrary, perverse and contrary to facts on record and hence liable to be quashed. 2. BECAUSE, the Ld. CIT(A) grossly erred in confirming the disallowance of deduction of Rs.71,27,000/- claimed under Section 54F of the Income Tax Act, 1961, without due consideration of the facts and evidence submitted by the appellant. 3. BECAUSE, Ld. CIT(A) has erred both in law and on facts in confirming the addition of Rs.71,27,000/- by ignoring and failing to adjudicate upon the registered purchase deed dated 16.12.2021, which was duly furnished during the appellate proceedings. The said document directly addresses and removes the sole basis on which the Assessing Officer had made the addition, i.e., alleged non-furnishing of the purchase deed during assessment proceedings. The impugned finding, therefore, suffers from non-consideration of material evidence and is unsustainable in law. 4. BECAUSE, the Ld. CIT(A) erred in holding that the appellant had not acquired a qualifying residential property, without appreciating that the purchase deed 3 | P a g e

ITA No.244/Agr/2026 clearly describes the property as a residential plot and the valuation report submitted during assessment also recognizes it as residential construction, which cost of construction of Rs.2,10,18,424/- was allowed by the AO and thus was not open for review by the Ld. CIT(A). The finding is thus factually incorrect and unsustainable. 5. BECAUSE, the Ld. CIT(A) failed to appreciate that the appellant had purchased residential plot vide registered deed dated 16.12.2021, which is within one year prior to the date of sale, thereby satisfying the statutory condition prescribed under section 54F. The Ld. CIT(A) except making sweeping remarks has not been able to pin point as which specific condition under section 54F has not been fulfilled by the 'appellant. The appellant craves leave to add, alter, amend, or withdraw any of the above grounds of appeal before or during the course of hearing.”

ITA No.244/Agr/2026 AR submitted that the assessee could not furnish the registered sale deed dated 16.12.2021 in respect of new residential plot during the assessment proceedings as a very short duration of 06 days time was only granted by the assessing officer, vide show cause notice dated 05.03.2025, wherein the compliance date was fixed on 11.03.2025. Prays to allow assessee’s appeal and delete the wrong addition of Rs. 71,27,000/- as long term capital gain. 8. Ld Sr DR supports the impugned order. 9. It is pertinent to mention that the computation of long term capital gain provided by the assessee during the assessment proceedings is part of assessment order. Assessee claimed deduction u/s 54F in respect of residential plot purchased on 16.12.2021 at Lucknow amounting to Rs. 71,27,000/-, construction of Rs. 2,10,18,424/- (construction upto 31.03.2023 – Rs. 1,16,13,424/- and construction upto 31.07.2023- Rs. 94,05,000/-). The assessing officer has accepted the claim of construction of the residential house, however, did not accept the cost of residential plot only to the extent of Rs. 71,27,000/-. Ld CIT(A) has made a certain adverse observation despite assessee’s claim of construction cost was allowed by the assessing officer, the relevant part of the impugned order read as under:

“….5. In the present case, there is no dispute that the asset sold by the appellant was a commercial plot. The appellant has claimed deduction under section 54F by stating that the capital gains were invested in construction of a residential 5 | P a g e

ITA No.244/Agr/2026 house property. However, on examination of the material on record, it is evident that the appellant has claimed deduction on the construction cost without demonstrating that the investment qualifies strictly within the parameters of section 54F. The provision does not permit allowance of deduction merely on the basis of incurring construction expenditure unless the construction results in acquisition of a residential house in the manner contemplated by the Act. Further, the appellant has not demonstrated compliance with other mandatory conditions of section 54F, including ownership conditions and the manner of investment of net consideration. The claim has been made in a generalized manner without correlating the construction expenditure with statutory timelines and without establishing that the construction culminated in acquisition of a qualifying residential house property within the meaning of the Act. Deduction under section 54F is a conditional exemption and cannot be granted on the basis of intention or partial compliance. The contention of the appellant that the provisions of section 54F should be interpreted liberally does not dilute the mandatory nature of the conditions prescribed therein. It is a settled position of law that while beneficial provisions may be interpreted reasonably, the basic conditions for eligibility cannot be ignored or bypassed. In the present case, the appellant has failed to demonstrate compliance with the essential statutory requirements and has merely relied upon utilisation of funds towards construction cost, which by itself is insufficient to confer entitlement under section 54F. The procedural objections raised by the appellant regarding alleged inadequacy of opportunity are also not borne out from the record. The appellant was issued show cause notices clearly indicating the proposed disallowance of deduction and the resultant addition of Rs.71,27,000/-. The appellant filed replies during the assessment proceedings, which were duly considered. No prejudice has been demonstrated to have been caused due to the manner in which proceedings were conducted. The judicial decisions relied upon by the appellant pertain to cases where substantial compliance with section 54F was established on facts. The factual matrix of the present case is materially different. Here, the appellant has not demonstrated such compliance and therefore the reliance placed on those decisions is misplaced. Considering the totality of facts, the nature of the asset sold, the manner in which deduction under section 54F has been claimed and the failure of the appellant to establish eligibility under the statutory provisions, it is held that the claim of deduction under section 54F is not allowable. The Assessing Officer has correctly recomputed the long-term capital gains and made an addition of Rs.71,27,000/- in accordance with law. Accordingly, the addition of Rs.71,27,000/- made in the assessment order is sustained.” 10. We notice that the aforesaid observations made by ld CIT(A) in the impugned order are not relevant for the purpose of issue involved as ld CIT(A) has not intended to enhance the additions with regard to the 6 | P a g e

ITA No.244/Agr/2026 construction cost in accordance with law. Ld CIT(A) has merely sustained the assessment order by confirming the addition of Rs. 71,27,000/- only. Hence, the irrelevant and uncalled for observation made in the impugned order does not affect the claim of assessee in respect of the construction cost of Rs. 2,10,18,424/- allowed by the assessing officer.

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ITA No.244/Agr/2026 all the required conditions mentioned therein. However, the total cost of the plot purchased on 16.12.2021 comes at Rs. 71,18,000/-(consideration- Rs. 66,00,000/-, stamp – Rs. 4,52,000/-, registration fee- Rs. 66,000/-) as against the cost of Rs. 71,27,000/- shown by the assessee without breakup. Thus, the assessee’s claim to the extent of Rs. 71,18,000/- deserves to be allowed. The appeal is liable to be partly allowed accordingly. Assessing officer is directed to recompute the long term capital gain, if any, in above terms. 13. In the result, assessee’s appeal is partly allowed in above terms. Order pronounced on – 05.06.2026

Sd/- Sd/- (M BALAGANESH) (SUNIL KUMAR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER

Dated: 05.06.2026

Aamir Siddiqui, PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, Agra

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