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Facts
The assessee sold an immovable property and claimed exemption under Section 54F, which the AO denied citing co-ownership of another property and purchase of new property prior to sale. The CIT(A) dismissed the assessee's appeal ex-parte due to non-response to notices. The assessee then filed an appeal before the Tribunal with a delay of 834 days, attributing it to being a housewife unaware of tax proceedings and misplaced documents.
Held
The Tribunal condoned the delay in filing the appeal, citing reasonable and sufficient cause. It remitted the matter back to the CIT(A) for fresh adjudication on the merits of the Section 54F claim, considering the CIT(A) notices were issued during the Covid period and the need for factual examination. The Tribunal also levied a cost of Rs. 10,000/- on the assessee to be paid to the Prime Minister Relief Fund.
Key Issues
Whether the assessee is eligible for exemption under Section 54F, considering co-ownership of another property and purchasing the new property prior to sale, and whether the CIT(A) order passed ex-parte was justified.
Sections Cited
250, 54F, 234B, 271(1)(c)
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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: JUSTICE (RETD.) C V BHADANG&
(Assessment Year: 2013-14) Yogita Bipin Kharade, Income Tax Officer, Ward- C/o CA Himanshu Gandhi, 16th Floor, 41(1)(4), D Wing, Trade World Building, Kautilya Bhavan, Vs. Kamala Mills Compound, Lower Bandra Kurla Complex, Parel, Mumbai-400013. Mumbai-400051. PAN: AQDPK9034D Appellant) : Respondent) Appellant /Assessee by : Shri Himanshu Gandhi & Shri Brijesh Vyas, AR : Shri Swapnil Choudhary, Sr. DR Revenue / Respondent by Date of Hearing : 11.08.2025 Date of Pronouncement : 28.08.2025 O R D E R
Per Padmavathy S, AM:
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [In short 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 26.12.2022 for Assessment Year (AY) 2013-14. The assessee raised the following grounds of appeal:
2 ITA 4096/Mum/2025 Yogita Bipin Kharade “1. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in passing ex-parte order and without adjudicating grounds of appeal on merit.
2. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the action of Ld AO in disallowing the deduction of Rs. 42,02,261/- under section 54F of the Income Tax Act, 1961 legally claimed by the appellant.
3. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming the action of Ld AO by treating the appellant as owner of more than one residential house on the date of transfer based on co-ownership status of the appellant in another residential house.
4. On the facts and circumstances of the case and law, the Ld CIT(A) erred in confirming the action of Ld AO in denying exemption under section 54F by assuming that appellant has made payment for purchase of new residential house upto the extent of 50% of the consideration amount till 31.03.2013 and thus the appellant is not eligible for the deduction under section 54F of the Income Tax Act, 1961.
5. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming charging of interest under section 234B of Income Tax Act, 1961.
6. On the facts and circumstances of the case and law, the Ld. CIT(A) erred in confirming initiation of Penalty proceedings under section 271(1)(c) of the Income Tax Act, 1961.”
2. The assessee is an individual and filed the return of income for AY 2013-14 on 03.08.2013 declaring a total income of Rs. 14,06,660/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. The AO during the course of assessment noticed that the assessee has sold an immovable property for a total consideration of Rs. 42,84,000/- during the year under consideration and that the assessee has claimed exemption under section 54F. The AO called on the assessee to furnish details pertaining to the claim of deduction under section 54F. After perusing the details furnished by the assessee, the AO denied the benefit of section 54F to the assessee for the reasons that 3 ITA 4096/Mum/2025 Yogita Bipin Kharade (i) The assessee jointly owns one more property other than the new property (ii) The assessee has purchased the new property prior to sale.
3. Aggrieved the assessee filed appeal before the CIT(A). The CIT(A) has issued five notices from 23.12.2020 to 13.12.2022. Since the assessee did not respond to any of the notices, the CIT(A) dismissed the appeal ex-parte confirming the addition made by the AO.
There is a delay of 834 days in filing the appeal before the Tribunal and the assessee filed an affidavit for condoning the delay along with reasons. The assessee in affidavit has stated that being a housewife she is not well aware of the income tax proceedings and is fully dependent on her brother-in-law who took care of the income tax related matters of the assessee. The assessee further submitted that the relevant documents such as Form-35, statement of facts, grounds of appeal before the CIT(A) were misplaced and was found in assessee's brother-in-law's house only in the first week of June 2025. The assessee also submitted that as soon as the papers are found with the help of CA the assessee has immediately filed the appeal before the Tribunal.
Having heard both the parties and perused the material on record, we are of the view that there is a reasonable and sufficient cause for the delay in filing the appeal before the Tribunal. Therefore following the Hon’ble Supreme Court decision in the case of Collector, Land Acquisition Vs. MST.Katiji & Ors., (167 ITR 471) (SC) we condone the delay of 834 days in filing the appeal and admit the appeal for adjudication.
4 ITA 4096/Mum/2025 Yogita Bipin Kharade 6. We heard the parties and perused the material on record. The ld. AR submitted that the assessee had manually filed the appeal before the CIT(A) and when the appellate proceedings were transferred to NFAC the notice for hearing were sent through email which the assessee was not aware of. The ld. AR further submitted that the notices issued by the CIT(A) were during the Covid period and hence the assessee could not represent the case even otherwise. On merits, the ld. AR submitted that both the reasons for refusal of deduction under section 54F by the AO are covered by the decisions of the Co-ordinate Bench. The ld AR further submitted that on the issue of co-ownership it has been held that Co-ownership cannot be considered as absolute ownership for the purpose of section 54F. With regard to purchase of property prior to sale the ld AR submitted that only payments towards purchases were made prior to sale and that the coordinate bench has held that relevant factor for grant of exemption under section 54F is the completion of construction and not payments made. Accordingly, the ld. AR argued that the assessee is having a good case on merits and prayed for one more opportunity to represent the case on merits. Considering the fact that the notices by the CIT(A) were issued during the covid period, we are inclined to give one more opportunity to the assessee to represent the case before the CIT(A). Further the claims of the assessee with regard to the impugned issue merits require factual examination. Accordingly, we remit the appeal back to the CIT(A) with a direction to examine the claim of exemption under section 54F by the assessee by calling for relevant details and allow in accordance with law keeping in mind the judicial precedence. The assessee is directed to file the required details as may be called for by the CIT(A) and co-operate with the appellate proceedings. It is ordered accordingly.
Further, we also levy a cost of Rs. 10,000/- in the appeals since considerable time and efforts have been spent by the Exchequer and for the reason that the 5 ITA 4096/Mum/2025 Yogita Bipin Kharade assessee being delinquent before the lower authorities. The assessee is directed to pay the said amount to Prime Minister Relief Fund within 30 days from the date of this order.
In result, appeal of the assessee is allowed for statistical purposes.