SHRI DINESH NAGPAL,JAIPUR vs. INCOME TAX OFFICER (T& J), JAIPUR

PER VIJAY PAL RAO, JM : This appeal by the assessee is directed against the order dated 7th November,

2017 of ld. CIT (A)-2, Jaipur for the assessment year 2013-14. The assessee has

raised the following grounds :-

“ 1. The orders of learned AO and CIT (A) are bad in law and against facts of the case.

2 ITA No. 1017//JP/2017 Shri Dinesh Nagpal, Jaipur.

deduction under section 54F for want of filing the revised return of income. The

assessee is an individual and running a Petrol Pump in the name of M/s. Saachi HP

at Bassi Tehsil, Jaipur. The assessee filed his return of income on 29.09.2013

declaring total income of Rs. 3,86,100/-. During the course of scrutiny assessment

proceedings, the AO noted that in the computation of income the assessee has

declared loss of Rs. 1,62,808/- on account of sale of land. The AO asked the

assessee to furnish the copy of Sale Deed of the sold property on which the

assessee has claimed capital gain loss. In response, the assessee filed revised

computation of income and has shown income of Rs. 5,98,464/- from sale of land

under the head Income from Long Term Capital Gains by considering DLC rate as

full value consideration. The assessee has also submitted before the AO that the

assessee has surrendered this additional income and also paid due tax on the same

vide challan, copy of which filed before the AO. The assessee had again filed a

revised computation of income and claimed deduction under section 54F against the

house purchased by the assessee along with father and two brothers in which assessee claimed to have 1/4th share. Thus the assessee claimed a deduction under

section 54F against the capital gain earlier offered to tax. The AO rejected the claim

of the assessee on the ground that the assessee has failed to file the revised return

of income as per the provisions of section 139(5) and, therefore, the AO relied upon

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the decision of the Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT

(2006) 284 ITR 323 (SC) and held that the fresh claim cannot be allowed to the

assessee without a valid revised return. The assessee challenged the action of the

AO before the ld. CIT (A) but could not succeed.

deduction under section 54F is purely legal in nature and also in respect of the

income which was offered to tax during the course of assessment proceedings.

Therefore, it is not a fresh claim which requires any revised return of income but the

claim was against the income assessed to tax by the AO as per the revised

computation of income filed by the assessee. The ld. A/R further contended that the

ld. CIT (A) ought to have accepted the claim of the assessee instead of rejecting the

same on the ground of non filing of return of income. In support of his contention,

he has relied upon the decision of Hon’ble Jurisdictional High Court in the case of

CIT vs. Rajasthan Fasteners P. Ltd. 363 ITR 271 (Raj.) and submitted that the

Hon’ble High Court has held that there is no restriction or limitation on the powers of

the appellate authority to entertain and consider a claim without filing the revised

return of income when all the relevant facts were already available on the

assessment record. The ld. A/R has also relied upon the CBDT Circular No. 14(XL-

35) of 1955 dated 11.04.1955 and submitted that the AO is supposed to assess the

correct income and should not take the advantage of any mistake of the assessee in

not making a claim in the return of income.

3.1. On the other hand, the ld. D/R has submitted that it is not a simple case of

claim of deduction under section 54F but the assessee has initially tried to conceal

the full value consideration of the transaction of sale of property and when the AO

4 ITA No. 1017//JP/2017 Shri Dinesh Nagpal, Jaipur.

has pointed out, the assessee has surrendered the income by filing a revised

computation. The assessee then again filed a second revised computation and

claimed deduction under section 54F which shows that the assessee did not disclose

the transaction of purchase of a new property in the original return of income and

even at the time of filing the first revised computation of income. The assessee

purchased a new property on 14.8.2012 but the same was not disclosed in the

return of income filed by the assessee subsequent to that purchase. The ld. D/R has

also objected for admission of this claim under section 54F by the appellate authority

on the ground that the claim involved legal as well as factual aspects and, therefore,

it requires verification of facts for adjudication of the issue. The ld. D/R has further

contended that the decision relied upon by the assessee is not applicable in the facts

of the present case.

3.2 In re-joinder, the ld. A/R has submitted that the assessee has duly disclosed

the stamp valuation of the sale transaction as per the copy of the Sale Deed at page

36 of the paper book which clearly shows the DLC rates on which the stamp duty

was paid. Therefore, there is no concealment by the assessee of any particulars of

income or facts. In respect of this transaction, the ld. A/R has further submitted

that the assessee accepted the full value consideration as the value adopted by the

stamp valuation authority and accordingly surrendered the income and paid the due

tax. Thus the assessee has fully co-operated with the Assessing Authority and has

acted in bonafide.

record. In the original return of income filed by the assessee, the assessee has

shown the sale consideration of the property as per the sale document without

5 ITA No. 1017//JP/2017 Shri Dinesh Nagpal, Jaipur.

considering the full value consideration in terms of section 50C of the Act. During

the course of assessment proceedings when the AO asked the assessee to give the

details of the DLC rates of the property, the assessee came out with surrender of the

income on account of sale of the property in question by accepting the full value

consideration as the value adopted by the Stamp Valuation Authority. Thus the

income surrendered by the assessee during the assessment proceedings as per the

deeming provision of section 50C and it is not the case of the AO that the assessee

has received sale consideration more than the consideration shown in the Sale Deed.

The AO has also not conducted any enquiry on this point and accepted the income

surrendered by the assessee. The assessee then also claimed deduction under

section 54F on account of purchase of new property by the assessee. The Sale Deed

through which the assessee purchased the new property was also filed before the

AO. However, the AO did not entertain the claim of the assessee on technical

ground that the assessee has not filed the revised return of income. On appeal, the

ld. CIT (A) has also declined to entertain the claim of the assessee and rejected the

same on threshold as under :-

“ As regards deduction u/s 54F it is seen that no claim what so ever was filed before the AO in the original return nor a revised return was filed. No claim for deduction can be made at the appellate stage unless there are reasons which prevented the assessee from such action and no such reasons have been brought out. As regards considering the claim in appeal proceedings Honorable Supreme Court in the case of Goetze India Ltd. vs. CIT 284 ITR 323 allowed ITAT to consider such claim which was not made by way of return of income. However, Apex Court did not allow the same liberty to the CIT (A) whose powers are co terminus with the assessing officer. In view of the same the claim under section 54F is rejected.”

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Thus it is clear that neither the AO nor the ld. CIT (A) has examined the claim of the

assessee on merits but rejected the same in limini for want of filing the revised

return of income. It is pertinent to note that the claim under section 54F was not

made by the assessee against the income which was offered to tax in the return of

income so that the condition of filing the revised return can be attracted. In this case

the AO proposed to make an addition as per provisions of section 50C which was

accepted by the assessee and surrendered the income in terms of the provisions of

section 50C. Thus the income of the assessee was assessed as per the deeming

provisions of section 50C of the Act in respect of the sale of property which is long

term capital asset. Therefore, the income assessed by the AO during the scrutiny

assessment is an addition by invoking the deeming provision and hence the claim of

deduction under section 54F made by the assessee against the said

addition/surrender made during the course of assessment proceedings. Even

otherwise, when the assessee in the revised return has declared long term capital

loss then the question of claim under section 54F does not arise. Once the long

term capital gain is assessed as per the provisions of section 50C of the Act, then

the claim of deduction under section 54F is consequential to the addition made by

the AO which was not an income declared in the return of income. Hence the

approach of the authorities below rejecting the claim of the assessee by applying the

decision of Hon’ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT (supra)

is not right and proper. In any case, there is no embargo in the jurisdiction and

powers of the ld. CIT (A) to entertain a fresh claim if the relevant facts for

adjudication of the said claim are already on record. In the case in hand, there is no

denial that the assessee filed all the relevant documents when the assessee has filed

7 ITA No. 1017//JP/2017 Shri Dinesh Nagpal, Jaipur.

the revised computation of income claiming deduction under section 54F and the AO

without considering the claim on merits has rejected on technical ground.

Therefore, in the facts and circumstances of the case, we are of the considered view

that the ld. CIT (A) is not justified in rejecting the claim of the assessee.

Accordingly, we set aside this issue to the record of ld. CIT (A) for re-considering the

same on merits after verifying the facts as already available on record and to

ascertain whether all the conditions as required under section 54F are being fulfilled

by the assessee. Needless to say that the assessee be given an opportunity of

hearing before passing the fresh order.

Order is pronounced in the open court on 04/04/2018.

Sd/- Sd/- (foØe flag ;kno) (fot; iky jkWo ½ (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Jaipur Dated:- 04/04/2018. Das/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत

8 ITA No. 1017//JP/2017 Shri Dinesh Nagpal, Jaipur.