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Facts
The assessee claimed a deduction of Rs. 55,15,951/- under Section 54F of the Income Tax Act for AY 2013-14 but did not file supporting documents during assessment proceedings. The Assessing Officer disallowed the claim, and the CIT(A) confirmed this disallowance.
Held
The Tribunal noted that the assessee was not afforded adequate opportunity before the CIT(A) and was willing to furnish supporting documents. Therefore, the matter was remanded to the Assessing Officer for fresh adjudication after providing the assessee an opportunity to present evidence.
Key Issues
Whether the assessee was denied a proper opportunity to present evidence for the Section 54F deduction claim, and whether penalty proceedings were prematurely initiated.
Sections Cited
54F, 271(1)(c), 144, 143(2), 142(1)
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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
This appeal by the assessee is directed against order dated 04.09.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2013-14, raising following grounds:
1. Disallowance of deduction of Rs.55,15,951/ 1. Disallowance of deduction of Rs.55,15,951/- claimed u/s claimed u/s 54F of the Income Tax Act, 1961: 54F of the Income Tax Act, 1961: On facts and in the circumstances of the case and in law, Ld. On facts and in the circumstances of the case and in law, Ld. On facts and in the circumstances of the case and in law, Ld. CIT(A) by confirming the order passed by the Ld. AO has grossly CIT(A) by confirming the order passed by the Ld. AO has grossly CIT(A) by confirming the order passed by the Ld. AO has grossly erred in disallowing the deduction cl erred in disallowing the deduction claimed u/s 54F of Rs. aimed u/s 54F of Rs. 55,15,951/-.
The Ld. AO passed order without giving reasonable 2. The Ld. AO passed order without giving reasonable 2. The Ld. AO passed order without giving reasonable opportunities: opportunities: On facts and in the circumstances of the case and in law, the Ld. On facts and in the circumstances of the case and in law, the Ld. On facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in passed Order without giving reasonable of AO has grossly erred in passed Order without giving reasonable of AO has grossly erred in passed Order without giving reasonable of opportunities and pa opportunities and passed the Assessment order without giving ssed the Assessment order without giving show cause notice to the appellant. show cause notice to the appellant.
3. Initiating penalty proceeding u/s 271(1)(c) of the Act: 3. Initiating penalty proceeding u/s 271(1)(c) of the Act: 3. Initiating penalty proceeding u/s 271(1)(c) of the Act: On facts and in the circumstances of the case and in law, the Ld. On facts and in the circumstances of the case and in law, the Ld. On facts and in the circumstances of the case and in law, the Ld. AO has grossly erred in initiating the proceedings f AO has grossly erred in initiating the proceedings f AO has grossly erred in initiating the proceedings for levy of penalty u/s. 271(1)(c) of the Act when no such penalty is leviable. penalty u/s. 271(1)(c) of the Act when no such penalty is leviable. penalty u/s. 271(1)(c) of the Act when no such penalty is leviable. The proceedings initiated by the Ld. AO should be dropped as it is The proceedings initiated by the Ld. AO should be dropped as it is The proceedings initiated by the Ld. AO should be dropped as it is wrongly initiated. wrongly initiated. 2. Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed return of income on 06.08. return of income on 06.08.2013 declaring total income at 2013 declaring total income at Rs.7,93,460/-. The return of income filed by the assessee was . The return of income filed by the assessee was . The return of income filed by the assessee was selected for scrutiny assessment and statutory notices under the selected for scrutiny assessment and statutory notices under the selected for scrutiny assessment and statutory notices under the Income-tax Act, 1961 (in short ‘the Act’) were issued and duly tax Act, 1961 (in short ‘the Act’) were issued and duly tax Act, 1961 (in short ‘the Act’) were issued and duly served upon the assessee. Subsequen served upon the assessee. Subsequent notices issued t notices issued were only partly responded. In the return of income, the assessee claimed . In the return of income, the assessee claimed . In the return of income, the assessee claimed deduction u/s 54F of the Act amounting to Rs.55,15,951/ u/s 54F of the Act amounting to Rs.55,15,951/- ,but no u/s 54F of the Act amounting to Rs.55,15,951/ supporting documents were filed before the AO supporting documents were filed before the AO during assessment during assessment proceedings. Therefore Therefore, in the assessment order passed u/s 144 of sment order passed u/s 144 of the Act i.e. best judgment dated 29.03.2016, the Assessing Officer the Act i.e. best judgment dated 29.03.2016, the Assessing Officer the Act i.e. best judgment dated 29.03.2016, the Assessing Officer disallowed the claim of deduction u/s 54F of the Act. On further disallowed the claim of deduction u/s 54F of the Act. On further disallowed the claim of deduction u/s 54F of the Act. On further appeal, the Ld. CIT(A) also upheld the disallowance observing as appeal, the Ld. CIT(A) also upheld the disallowance observing as appeal, the Ld. CIT(A) also upheld the disallowance observing as under:
5.2. Ground 2 Vide this ground, the Appellant has challenged the 5.2. Ground 2 Vide this ground, the Appellant has challenged the 5.2. Ground 2 Vide this ground, the Appellant has challenged the action of the AO in denying exemption of Rs.55,15,951/ action of the AO in denying exemption of Rs.55,15,951/ action of the AO in denying exemption of Rs.55,15,951/-claimed u/s 54F of the Act. In this regard, the Appellant has submitted u/s 54F of the Act. In this regard, the Appellant has submitted u/s 54F of the Act. In this regard, the Appellant has submitted that relevant details in support of exemption claimed u/s 54F wa that relevant details in support of exemption claimed u/s 54F wa that relevant details in support of exemption claimed u/s 54F was not submitted before the AO since the Appellant was not in receipt not submitted before the AO since the Appellant was not in receipt not submitted before the AO since the Appellant was not in receipt of any notice u/s 143(2)/142(1) and thus, was not aware of of any notice u/s 143(2)/142(1) and thus, was not aware of of any notice u/s 143(2)/142(1) and thus, was not aware of ongoing assessment proceedings. The Appellant further promised ongoing assessment proceedings. The Appellant further promised ongoing assessment proceedings. The Appellant further promised to submit relevant details in support of claim of exemption u/s 5 to submit relevant details in support of claim of exemption u/s 5 to submit relevant details in support of claim of exemption u/s 54F within two weeks from the date of submission of reply before within two weeks from the date of submission of reply before within two weeks from the date of submission of reply before CIT(A). I have considered the submissions of the Appellant. The I have considered the submissions of the Appellant. The I have considered the submissions of the Appellant. The undisputed fact is that the AO denied the claim of exemption of the undisputed fact is that the AO denied the claim of exemption of the undisputed fact is that the AO denied the claim of exemption of the Appellant made u/s 54F since the Appellant had not furnishe Appellant made u/s 54F since the Appellant had not furnishe Appellant made u/s 54F since the Appellant had not furnished any supporting documents. In this regard, it is further observed any supporting documents. In this regard, it is further observed any supporting documents. In this regard, it is further observed that the Appellant has failed to furnish such details in the course that the Appellant has failed to furnish such details in the course that the Appellant has failed to furnish such details in the course of present proceedings as well, although, the same was promised of present proceedings as well, although, the same was promised of present proceedings as well, although, the same was promised to be furnished. Therefore, in view of the same, it is co to be furnished. Therefore, in view of the same, it is co to be furnished. Therefore, in view of the same, it is concluded that the Appellant has not been able to substantiate its claim of the Appellant has not been able to substantiate its claim of the Appellant has not been able to substantiate its claim of exemption of Rs.55,15,951/ exemption of Rs.55,15,951/- made u/s 54F. Accordingly, I confirm made u/s 54F. Accordingly, I confirm the action of AO in denying the exemption of Rs.55,15,951/ the action of AO in denying the exemption of Rs.55,15,951/ the action of AO in denying the exemption of Rs.55,15,951/- claimed u/s 54F of the Act. Ground is, thus, dismissed. claimed u/s 54F of the Act. Ground is, thus, dismissed. claimed u/s 54F of the Act. Ground is, thus, dismissed.
We have considered the rival submissions of both parties and We have considered the rival submissions of both parties and We have considered the rival submissions of both parties and the relevant materials on record, including the paper book perused the relevant materials on record, including the paper book the relevant materials on record, including the paper book submitted by the learned counsel for the assessee. The learned submitted by the learned counsel for the assessee. The learned submitted by the learned counsel for the assessee. The learned counsel referred to the application for condonation of a 334-days counsel referred to the application for condonation of a 334 counsel referred to the application for condonation of a 334 delay in filing the appeal. In support of this application, the delay in filing the appeal. In support of this application, the delay in filing the appeal. In support of this application, the assessee filed an affidavit stating that he was continuously traveling assessee filed an affidavit stating that he was continuously traveling assessee filed an affidavit stating that he was continuously traveling outside Mumbai for business purposes and had relied entirely on outside Mumbai for business purposes and had relied entirely on outside Mumbai for business purposes and had relied entirely on his authorized representative, which resulted in the delay. Upon his authorized representative, which resulted in the his authorized representative, which resulted in the considering the assessee’s submission, we find that there is considering the assessee’s submission, we find that there is considering the assessee’s submission, we find that there is sufficient cause for the delay in filing the appeal. Accordingly, the sufficient cause for the delay in filing the appeal. Accordingly, the sufficient cause for the delay in filing the appeal. Accordingly, the delay is condoned, and the appeal is admitted for adjudication. delay is condoned, and the appeal is admitted for adjudication. delay is condoned, and the appeal is admitted for adjudication.
3.1 Having considered the submissions advanced by Having considered the submissions advanced by Having considered the submissions advanced by the learned counsel for the assessee counsel for the assessee and the ld Departmental representative and the ld Departmental representative , we find that the assessee was not afforded adequate opportunity that the assessee was not afforded adequate opportunity that the assessee was not afforded adequate opportunity before the Learned CIT(A) CIT(A) to furnish the necessary documents in to furnish the necessary documents in support of the deduction claimed under Section 54 support of the deduction claimed under Section 54F of the Income F of the Income Tax Act. The learned counsel has drawn our attention to the Paper Tax Act. The learned counsel has drawn our attention to the Paper Tax Act. The learned counsel has drawn our attention to the Paper Book, specifically page 72, which contains a copy of the allotment Book, specifically page 72, which contains a copy of the allotment Book, specifically page 72, which contains a copy of the allotment letter evidencing investment in the flat. Additionally, reference has letter evidencing investment in the flat. Additionally, reference has letter evidencing investment in the flat. Additionally, reference has been made to pages 69 to 70, which in been made to pages 69 to 70, which include the bank statements clude the bank statements substantiating the investment made towards the purchase of the substantiating the investment made towards the purchase of the substantiating the investment made towards the purchase of the property. The learned counsel has further submitted that the property. The learned counsel has further submitted that the property. The learned counsel has further submitted that the assessee is willing to appear before the CIT(A) and submit all assessee is willing to appear before the CIT(A) and submit all assessee is willing to appear before the CIT(A) and submit all relevant documents in support of the deduct relevant documents in support of the deduction claimed under ion claimed under Section 54F. In view of the facts and circumstances of the case, and Section 54F. In view of the facts and circumstances of the case, and Section 54F. In view of the facts and circumstances of the case, and in the interest of substantial justice, we deem it appropriate to set in the interest of substantial justice, we deem it appropriate to set in the interest of substantial justice, we deem it appropriate to set aside the order passed by the CIT(A) on the issue under dispute. aside the order passed by the CIT(A) on the issue under dispute. aside the order passed by the CIT(A) on the issue under dispute. Accordingly, the matter is remande Accordingly, the matter is remanded to the file of the Assessing d to the file of the Assessing Officer for fresh adjudication after affording the assessee due Officer for fresh adjudication after affording the assessee due Officer for fresh adjudication after affording the assessee due opportunity to present the requisite evidence. Consequently, opportunity to present the requisite evidence. Consequently, opportunity to present the requisite evidence. Consequently, Ground No. 2 of the appeal preferred by the assessee stands Ground No. 2 of the appeal preferred by the assessee stands Ground No. 2 of the appeal preferred by the assessee stands allowed.
3.2 Since we have already res Since we have already restored the matter back to the file of tored the matter back to the file of the AO, the ground No. 1 the AO, the ground No. 1 challenging merit of addition challenging merit of addition is not required to be adjudicated upon at this stage. The ground No. 3 required to be adjudicated upon at this stage. The ground No. 3 required to be adjudicated upon at this stage. The ground No. 3 challenging the initiation of the penalty proceedings is premature at challenging the initiation of the penalty proceedings is premature at challenging the initiation of the penalty proceedings is premature at this stage, hence we are not required to adjudicate upon. e not required to adjudicate upon. Accordingly the Ground Nos. 1 and 3 are dismissed as infructuous. Accordingly the Ground Nos. 1 and 3 are dismissed as infructuous. Accordingly the Ground Nos. 1 and 3 are dismissed as infructuous.
In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for In the result, the appeal of the assessee is allowed for statistical purposes.