ABDUL SALAM,JAIPUR vs. ITO WD 1(3), JAIPUR

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, “SMC” BENCH, JAIPUR BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 1134/JPR/2025 (Assessment Year:2010-11) Mohmmad Shakir Vs. ITO C/o CA R.S. Poonia, D-82 Ward 1(1), B, Siwar Area, Krishna Jaipur Marg, Bapu Nagar, Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No:EOSPS 8166 D Appellant .. Respondent ITA No. 1136/JPR/2025 (Assessment Year: 2010-11) Abdul Salam Vs. ITO C/o CA R.S. Poonia, D-82 Ward 1(1), B, Siwar Area, Krishna Jaipur Marg, Bapu Nagar, Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No: CEHPS 8218 B Appellant .. Respondent ITA No. 1138/JPR/2025 (Assessment Year: 2010-11) Mohmmad Umar Vs. ITO C/o CA R.S. Poonia, D-82 Ward 1(1), B, Siwar Area, Krishna Jaipur Marg, Bapu Nagar, Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No: ADOPU 0832 B Appellant .. Respondent

P a g e | 2 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 ITA No. 1143/JPR/2025 (Assessment Year: 2010-11) Abdul Aziz Vs. ITO C/o CA R.S. Poonia, D-82 Ward 1(1), B, Siwar Area, Krishna Jaipur Marg, Bapu Nagar, Jaipur �थायीलेखासं./जीआइआरसं./PAN/GIR No: AQWPA 8106 D Appellant .. Respondent

Appellant by : Sh. R.S. Poonia, CA Respondent by : Sh. Gaurav Awasthi, JCIT

Date of Hearing 03.06.2026 Date of Pronouncement 30.06.2026 O R D E R The above appeals relate to different assesses and are against separate orders passed by the Office of the Commissioner of Income Tax Appeal, Addl/JCIT (A)-2, Coimbatore, Office of the Commissioner of Income Tax Appeal, Addl/JCIT (A)-2, Delhi, Office of the Commissioner of Income Tax Appeal, Addl/JCIT (A)-1, Delhi, National Faceless Appeal Centre (NFAC), Delhi respectively (hereinafter referred to as “Ld. CIT(A)”), dated 07/11/2024, 29/11/2023, 23/02/2024 & 15/05/2023 respectivelyunder Section 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).

P a g e | 3 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 2. It was a common ground that the issue involved in all the appeals was identical, therefore, all the appeals were taken up together for hearing. 3. Ld. Counsel for the assessees, at the outset itself stated that all the four assessees before me, were co-owners of a property which had been sold during the year, and all the four of them had returned capital gains earned on the same to tax in the return of income filed for the impugned year. The property being a very old property, acquired before 01.04.1981, its fair market value as on 01.04.1981 was estimated for the purpose of determining the cost of acquisition of the said property, as provided in law. Further all the assessees having undertaken construction on the said property, the cost of construction also was considered for reduction from the consideration received by the property for determining the capital gain earned on sale of the property. Both the cost of acquisition and the cost of construction/improvement were increased by the rate of indexation provided as per law. And the amounts so arrived were reduced from consideration received and the balance amount shown as capital gain earned by the assessees. All the four assessees had invested the capital gains earned, in a property purchased subsequently, and had accordingly claimed deduction u/s 54F on account of the same. 4. Ld. Counsel for the assessee pointed out that, in all the cases before me, the AO had adopted lesser value, both for the cost of acquisition and also for the cost of improvement, thus increasing the quantum of capital gain earned by the assessees, and had further denied

P a g e | 4 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 the benefit of Section 54F claimed by the assessees. Accordingly, as against NIL income returned by the assessees, the AO had assessed the incomes of the different assessees as under:- i) In the case of Mohammad Shakir in ITA No.1134/JPR/2025 the income was assessed at Rs.5,03,900/- by the AO. ii) In the case of Abdul Salam in ITA No.1136/JPR/2025 the income was assessed at Rs.5,03,900/- by the AO. iii) In the case of Mohammad Umar in ITA No.1138/JPR/2025 the income was assessed at Rs.2,76,704/- by the AO. iv) In the case of Abdul Aziz in ITA No.1143/JPR/2025 the income was assessed at Rs.5,03,900/- by the AO. 5. Before the Ld. CIT(A), ld. Counsel for the assessee contended ,that the assessee did not appear, and the Ld. CIT(A) accordingly, passed an ex parte order confirming the addition made by the AO. Accordingly, he stated that the assessees has filed appeal before me, challenging the order of Ld. CIT(A) confirming the addition made in the hands of the assessee, denying the benefit of the indexed cost of acquisition and indexed cost of improvement as also the benefit of Section 54F of the assessee. 6. Ld. Counsel for the assessees stated that he is filing revised grounds of appeal, since earlier grounds of appeal were general and did not specify the specific grievance of the assessee. 7. Ld. DR was confronted with the revised grounds filed by the assessee and he admitted that the said grounds were in order and did

P a g e | 5 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 not raise any afresh issue, not raised by the assessee earlier. Accordingly, the revised grounds were admitted for adjudication. 8. The revised grounds raised by the assessees in all of the appeals are as under:- ITA No.1134/JPR/2025 1. That under facts and circumstances of the case Ld. A.O. has taken Cost of Acquisition (F.M.V 01.04.1981) Rs. 4,375/- (after Indexation Rs. 27,650/-) instead of Cost of Acquisition claimed by appellant Rs. 6,250/- (after Indexation Rs.39,500/-) arbitrarily, without having any basis & the Ld. CIT (Appeals) has confirmed the same, resulting addition of Rs. 11,850/ on account of LTCG. Kindly direct to take Cost of Acquisition Rs. 6,250/- (Indexed Cost of Acquisition Rs. 39,500/-) as claimed by the appellant for calculation of LTCG. 2. That under facts and circumstances of the case Ld. A.O. has taken Cost of Improvement Rs. 26,250/- (after Indexation Rs. 1,10,600/-) instead of claimed by appellant Rs. 50,000/- (after Indexation Rs. 2,10,667/-) arbitrarily, without having any basis & the Ld. CIT (Appeals) has confirmed the same, resulting addition of Rs. 1,00,067/ on account of LTCG. Kindly direct to take Cost of Improvement Rs. 50,000/- (Indexed Cost of Improvement Rs. 2,10,667/-) as claimed by the appellant for calculation of LTCG. 3. That under facts and circumstances of the case Ld. A.O. has erred in denying the deduction of Section 54F treating the investment in purchase of new house is after the prescribed time u/s. 54F(4) of the Act and the same is confirmed by the CIT (Appeals). Kindly allow the deduction u/s. 54F of the Act to the appellant. 4. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.

ITA No.1136/JPR/2025 1. That under facts and circumstances of the case Ld. A.O. has taken Cost of Acquisition (F.M.V 01.04.1981) Rs. 4,375/- (after Indexation Rs. 27,650/-) instead of Cost of Acquisition claimed by appellant Rs. 6,250/- (after Indexation Rs.39,500/-) arbitrarily, without having any basis & the Ld. CIT (Appeals) has confirmed the same, resulting addition of Rs. 11,850/ on account of LTCG. Kindly direct to take Cost of Acquisition Rs. 6,250/- (Indexed Cost of Acquisition Rs. 39,500/-) as claimed by the appellant for calculation of LTCG. 2. That under facts and circumstances of the case Ld. A.O. has taken Cost of Improvement Rs. 26,250/- (after Indexation Rs. 1,10,600/-) instead of claimed by appellant Rs. 50,000/- (after Indexation Rs. 2,10,667/-) arbitrarily, without having any basis & the Ld. CIT (Appeals) has confirmed the same, resulting addition of Rs. 1,00,067/- on account of LTCG. Kindly direct to take Cost of Improvement Rs. 50,000/- (Indexed Cost of Improvement Rs. 2,10,667/-) as claimed by the appellant for calculation of LTCG.

P a g e | 6 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025

ITA No.1138/JPR/2025 1. That under facts and circumstances of the case Ld. A.O. has taken Cost of Acquisition (F.M.V 01.04.1981) Rs. 4,375/- (after Indexation Rs. 27,650/-) instead of Cost of Acquisition claimed by appellant Rs. 6,250/- (after Indexation Rs.39,500/-) arbitrarily, without having any basis & the Ld. CIT (Appeals) has confirmed the same, resulting addition of Rs. 11,850/ on account of LTCG. Kindly direct to take Cost of Acquisition Rs. 6,250/- (Indexed Cost of Acquisition Rs. 39,500/-) as claimed by the appellant for calculation of LTCG. 2. That under facts and circumstances of the case Ld. A.O. has taken Cost of Improvement Rs. 26,250/- (after Indexation Rs. 1,10,600/-) instead of claimed by appellant Rs. 50,000/- (after Indexation Rs. 2,10,667/-) arbitrarily, without having any basis & the Ld. CIT (Appeals) has confirmed the same, resulting addition of Rs. 1,00,067/- on account of LTCG. Kindly direct to take Cost of Improvement Rs. 50,000/- (Indexed Cost of Improvement Rs. 2,10,667/-) as claimed by the appellant for calculation of LTCG. 3. That under facts and circumstances of the case Ld. A.O. has erred in denying the deduction of Section 54F treating the investment in purchase of new house is after the prescribed time u/s. 54F(4) of the Act and the same is confirmed by the CIT (Appeals). Kindly allow the deduction u/s. 54F of the Act to the appellant. 4. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them.

ITA No.1143/JPR/2025 1. That under facts and circumstances of the case Ld. A.O. has taken Cost of Acquisition (F.M.V 01.04.1981) Rs. 4,375/- (after Indexation Rs. 27,650/-) instead of Cost of Acquisition claimed by appellant Rs. 6,250/- (after Indexation Rs.39,500/-) arbitrarily, without having any basis & the Ld. CIT (Appeals) has confirmed the same, resulting addition of Rs. 11,850/ on account of LTCG. Kindly direct to take Cost of Acquisition Rs. 6,250/- (Indexed Cost of Acquisition Rs. 39,500/-) as claimed by the appellant for calculation of LTCG. 2. That under facts and circumstances of the case Ld. A.O. has taken Cost of Improvement Rs. 26,250/- (after Indexation Rs. 1,10,600/-) instead of claimed by appellant Rs. 50,000/- (after Indexation Rs. 2,10,667/-) arbitrarily, without having any basis & the Ld. CIT (Appeals) has confirmed the same, resulting addition of Rs. 1,00,067/- on account of LTCG. Kindly direct to take Cost of Improvement Rs. 50,000/- (Indexed Cost of Improvement Rs. 2,10,667/-) as claimed by the appellant for calculation of LTCG.

P a g e | 7 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 3. That under facts and circumstances of the case Ld. A.O. has erred in denying the deduction of Section 54F treating the investment in purchase of new house is after the prescribed time u/s. 54F(4) of the Act and the same is confirmed by the CIT (Appeals). Kindly allow the deduction u/s. 54F of the Act to the appellant. 4. That the appellant craves permission to add to or amend to any of the above grounds of appeal or to withdraw any of them. 9. Before adjudicating the grounds raised by the assessee it was noted by me that all the appeals were delayed for filing by 195 days, 561 days, 472 days and 749 days respectively, ld. Counsel for the assessee prayed for condonation of the appeal stating that the assessee did not receive the notices for hearing of the matter issued by the Ld. CIT(A),since they were all issued on the email addresses of the assessees, which the assessees had specifically mentionedas not to be considered for communication of notices in Form No.35 of the appeal filed by the Ld. CIT(A).He pointed out the said fact to me from Form No.35 of all the assessees, and also from the Ld. CIT(A)s order. He stated therefore, that, the assessees were unaware of the proceedings conducted before the Ld. CIT(A), as also of the passing of the appellate order, and it was only when recovery proceedings were initiated on the assessees that they became aware of the passing of the appellate order and accordingly filed appeal belatedly before me. 10. Ld. DR vehemently objected to the same, though he was unable to controvert the fact that the Ld. CIT(A) had communicated all notices of hearing to the assessee and had conducted his entire proceedings on the email addresses of the assessees, which the assessees had specifically mentioned as not to be considered for the purposes of sending notices to them.

P a g e | 8 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 11. Considering the averments of the ld. Counsel for the assessees as above, I consider it a fit case for condoning the delay in filing of the present appeals. The assesses, I find, have adduced sufficient cause for the delay, having demonstrated the fact of being unaware of the passing of the appellate order since all the communications by the Ld. CIT(A) was on the wrong addresses of the assessees. The delay in filing of all the appeals before me of 195 days, 561 days, 472 days and 749 days respectively, is accordingly, condoned. 12. Taking up now the appeals for adjudication. It was a common ground that, with respect to the issue of the addition made on account of adjustment made by the AO to the cost of acquisition and cost of improvement of the asset sold, the reasoning with the AO for doing so in all the cases was the same. Drawing my attention to the facts in the case of Mohammad Shakir in ITA No.1134/JPR/2025, ld. Counsel for the assessee pointed out from the assessment order that the assessee had sold an immovable property situated at House No.3063,New Colony, M.I. Road, Jaipur, in the impugned year along with five other co- owners for Rs.43 lacs. 13. The assessee had declared his portion of capital gain on the same in the returned filed in response to notice u/s 148 of the Act amounting to Rs.1,40,180/-. The assessee had taken the cost of acquisition of the whole property at Rs.50,000/- claiming that the land was purchased without construction for Rs.50,000/- by his father, and during Financial Year 1987-88 an amount of Rs.4 lacs had been spent on the construction of the house. The assessee accordingly filed computation

P a g e | 9 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 of long term capital gain with respect to his share of the property, returning capital gain of Rs.1,40,000/- as under:-

P a g e | 10 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 24 ft) and if value is taken @ Rs.500/- per Sq Yard the estimated cost comes to Rs.35,000/- hence, assessee's 1/8th share is Rs.4375/-and construction area of both floors was nearly 1400 Sq. Feet and construction cost @150/- per Sq Feet in F.Y. 1987-88 comes to Rs.2,10,000/-. Hence, assessee's 1/8th share is Rs.26,250/- Therefore, the capital gain in this case is worked out as under:-

P a g e | 11 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 18. With respect to the issue of claim of exemption of capital gain u/s 54F of the Act on the basis of investment in house property made by the assessee, Ld. Counsel for the assessee drew my attention to the facts with regard to the same noted in the assessment order, that the said investment was made by the assessees on 20.08.2011. He pointed out that the claim of investment made in a new property on 20.08.2011 applied only to three assessees before me who had jointly purchased the property on the said dated i.e. Mr.Mohammad Shakir,Mr. Abdul Salam and Mr. Mohammad Umar.The facts in the case of Abdul Azizwere different and therefore, he contended it would be dealt with separately. 19. With respect to the three assessees, he contended that the new property was purchased on 20.08.2011, and the assessees had sold the original property on 09.09.2009. He pointed out that the assessees therefore, had purchased a new property within two years of the sale of the old property. The only case of the AO, for denying the grant of deduction was that, the assessees had utilized the amount of capital gain in purchase of a new property, which was not within time prescribed as per the provisions of Section 54F(a) of the Act, as per which he contended that the assessee was required to make the investment in the new property within the due date of filing of return of income, and if not so done, he was required to deposit the unutilized amount in a specified Capital Gain Accounts Scheme of Banks. The investment otherwise, in the purchase of a new property could be made by the assessee within two years of the sale of the original asset, but if the new asset was not purchased by the due date of filing of return of

P a g e | 12 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 income, the unutilized amount was required to be deposited in a Capital Gain Accounts Scheme of Banks to be utilized for purchase of a new asset within the time specified by law, i.e. two years from the date of sale of the original asset for claiming the benefit of exemption of capital gains u/s 54F of the Act. 20. Ld. Counsel for the assessees contended that, it is settled law now, that if the assessee had purchased the new asset within the time specified as per law, i.e. within two years from the date of sale of the original asset, then merely because the assessee did not deposit the unutilized amount in the intervening period in the specified bank account, would not disentitledhim to claim of deduction u/s 54F of the Act. That the requirement of deposit of capital gain in the Capital Gain account Scheme in Bank was held by courts to be only a procedural requirement and as long as the substantive requirement of investment being made in the new property within the time specified in law is fulfilled the assessee is entitled to claim exemption/deduction u/s 54F of the Act.My attention was drawn to the following decisions in this regard:- o CIT vs K. Rama Chandra Rao (2015) 277 CTR 522 (Kar) o Venkata Dilip Kumar vs CIT (2019) 419 ITR 298 (Mad) 21. Ld. DR however, supported the order of the Authorities below, contending that the assessee had violated the conditions of Section 54F of the Act, and therefore was not entitled to claim deduction u/s 54F of the Act. He was however, unable to draw my attention to any contrary decision to that pointed out by the ld. Counsel for the assessees either

P a g e | 13 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 of the Jurisdictional High Court or of the Hon’ble Apex Court in this regard. 22. In the light of the above, since in the facts of the present case the assessees had made the investment within period specified by law in a new property and the proposition of law in this regard is settled that as long as the assessees had made the necessary investment within time specified u/s 54F(1) of the Act ,the assessee cannot be denied exemption merely for the reason that the assessee has not followed the procedural requirement of depositing the unutilized amount in the intervening period in the specific bank account, the denial of exemption for the aforestated reason, I hold, is not in accordance with law 23. In the light of the same, I hold that in the case of three assessees ,i.e Mr.Mohammad Shakir,Mr. Abdul Salam and Mr. Mohammad Umar in appeal before me in ITA No.1134,1136 & 1138/Jpr/25 resp.,the denial of benefit of deduction/exemption u/s 54F of the Act is not in accordance with law and I hold the assessees to be entitled to claim the said deduction/exemption. 24. As for the case of Abdul Aziz in appeal before me in ITA No.1143/Jpr/25,the ld. Counsel for the assessee fairly admitted that in the facts of the case of this particular assessee the investment having been made by him beyond the period specified by law, he was not entitled to any benefit of exemption u/s 54F of the Act. 25. In view of the admission of the ld. Counsel for the assessee as above, the denial of exemption u/s 54F of the Act in the case of Abdul Aziz is accordingly confirmed.

P a g e | 14 ITA Nos. 1134, 1136, 1138 &1143/JPR/2025 26. In the light of the above, the appeal in ITA Nos. 1134, 1136 and 1138/JPR/2025 is allowed deleting the addition made on account of disallowance of cost of acquition of asset and cost of construction of asset as also the addition made by denying exemption/deduction u/s 54F of the Act, while the appeal in ITA No.1143/JPR/2025 is partly alloweddeleting the addition made on account of disallowance of cost of acquition of asset and cost of construction of asset while confirming the addition made on account of denial of exemption/deduction u/s 54F of the Act. Order pronounced in the open court on 30.06.2026.

Sd/- (Annapurna Gupta) ACCOUNTANT MEMBER Dated 30.06.2026 Mittali, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT By Order, Asst. Registrar ITAT, Jaipur