SATISH DANI, RAIPUR,RAIPUR vs. ACIT-4(1), RAIPUR, RAIPUR

The sole issue raised vide eight grounds of appeal revolves around the denial of claim of deduction of Rs.1,36,82,952/- under section 54F of the Act by the Ld. Assessing Officer (‘AO’).

The relevant facts required for adjudication of this case are that the assessee filed his Income Tax Return (‘ITR’) of the relevant year on 30.03.2018 declaring income of Rs.16,56,980/-. The case was picked up for scrutiny. During the course of assessment proceedings, the Ld. AO show-caused the assessee vide notice under section 142(1) of the Act dated 09.07.2019 to submit the proof of investment made in the new immoveable property for claiming exemption under section 54F of the Act after the sale of old immoveable property. However, no compliance was made by the assessee. Thereafter, the Ld. AO also provided opportunities of being heard to the assessee vide notices dated 12.09.2019 and 28.09.2019 issued under section 142(1) of the Act for submitting the proof of investment made in the immoveable property. But compliance to the satisfaction of the Ld. AO was not made; therefore, the Ld. AO based on the following reasoning disallowed the claim of deduction of Rs.1,36,85,952/- under section 54F of the Act: “On going through the materials available on record, it is found the assessee is not eligible for claiming deduction u/s 54F of the Act due to following reasons: -

Aggrieved, the assessee filed appeal before the Ld. CIT(A), who dismissed the appeal observing as under: “I have carefully considered the assessment order, the appellant's submissions, the statement of facts, and the case laws cited. Section 54F grants exemption from long-term capital gains if the net consideration from transfer of a long-term capital asset (not being a residential house) is invested in the purchase or construction of a residential house within the prescribed period, subject to strict conditions: the assessee must not own more than one residential house (other than the new asset) on the date of transfer; the investment must be in the name of the assessee; and the construction must be completed within three years from the date of transfer. The Supreme Court in CIT v. Dilip Kumar & Co. [2018] 95 taxmann.com 327 has laid down that exemption provisions must be interpreted strictly and the burden to prove eligibility lies entirely on the assessee.

At the outset, Shri Prafull Pendse, CA, Ld. Authorized Representative (‘AR’) of the assessee drew our attention to the assessee’s application filed under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 on 27.05.2026. The Ld. AR submitted that the assessee had failed to file source of investment in the said immoveable property on which the claim of the deduction under section 54F of the Act had been made. It was specifically submitted that the source of investment in the new immoveable property was sourced from assessee’s fund; therefore, the assessee was entitled to claim deduction under section 54F of the Act, even if the new immoveable property had been bought in the joint name. It was also further submitted that the name of the wife of the assessee was mentioned as co-owner for ease in inheritance/mutation purposes in the case of eventuality. He prayed for admission of the additional evidence which were necessary for deciding the core issue in dispute.

Shri Ch. Rajeswara Reddy, Ld. Sr. DR defended the case. But on our specific query, he did not raise any objection for admission of additional evidences submitted vide Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963. 7. We have heard both parties at length and have perused the material available on the record. The issue in dispute here is that whether the assessee has fulfilled all the conditions to claim the deduction under section 54F of the Act. The Contentions/arguments/submission of the Ld. AR that the investment in new immovable property sourced from the assessee’s fund cannot be brushed aside without proper verification. The assessee, vide his application filed under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963, has made an effort to explain the source of investment in new immovable property. Since the same goes to the root of the matter; therefore, the same is admitted for adjudication of this case. Since this additional evidence has been filed for the first time before us; therefore, we are of the considered view that it is better that this evidence should be examined on merit by the Ld. CIT(A). Keeping in view the facts of the case, application filed under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 and above observations/discussions, we without offering any comment on merit of the case, find impugned order deem fit to set aside and remand the matter back to the file of the Ld. CIT(A) for deciding the case afresh/denovo, in accordance with the law. We therefore, order accordingly. Needless to say that the appellant assessee has to cooperate in remitted appellate proceedings in these cases.

In the result, the appeal of assessee is allowed for statistical purposes as above.

""थ"/ The Respondent

The Pr. CIT, Raipur (C.G.) 4. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur 5. गाड" फाईल / Guard file.