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Income Tax Appellate Tribunal, HYDERABAD “SM-A” BENCH : HYDERABAD
Before: SHRI VIJAY PAL RAO & SHRI G. MANJUNATHA
ORDER PER G. MANJUNATHA, A.M. : This appeal filed by the assessee has been directed against the order of the Addl/JCIT(A)-9, Mumbai, dated 16.07.2024 relating to assessment year 2012-2013.
2 ITA.No.49/Hyd./2025 2. At the very outset, there is delay of 103 days in filing of the instant appeal before the Tribunal, for which, the assessee has filed condonation application along with affidavit explaining the reasons for such delay. Learned Counsel for the Assessee referring to the contents of the affidavits filed along with the condonation applications and relying on the decision of Hon’ble Supreme Court in the case of Collector, Land Acquisition vs., MST Katiji [1987] 167 ITR 471 (SC) requested the Bench to condone the delay and admit the appeals for adjudication.
Learned DR on the other hand strongly opposed condonation applications filed by the assessee.
We have heard the rival arguments made by both the sides on the issue of condonation of delay in filing of the above appeal. We find the Hon’ble Supreme Court in the case of Collector, Land Acquisition vs., MST Katiji (supra) has held that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other
3 ITA.No.49/Hyd./2025 side cannot claim to have vested right in injustice being done because of a non-deliberate delay. It has further been held that refusing to condone delay can result in a meritorious matter being thrown-out at the very threshold and cause of justice being defeated. As against this, when delay is condoned, the highest that can happen is that a cause would be decided on merits after hearing the parties. In view of the above decision of Hon’ble Supreme Court in the case of Collector, Land Acquisition vs., MST Katiji (supra) and considering the contents of the condonation application filed along with the affidavits, the delay of 103 days in filing the instant appeal is condoned and the above appeal is admitted for adjudication.
Facts of the case, in brief, are that the assessee is an individual and did not file her return of income for the impugned assessment year 2012-2013. An information was received from the ITO, Ward-3, Ananthapur that the assessee along with 22 other co-owners had entered into a Joint Development Agreement [in short “JDA”] –cum- General Power of Attorney [in short “GPA”] with GK Shelters
4 ITA.No.49/Hyd./2025 (P) Ltd., Bangalore vide document no. 3933/2011 registered on 17.01.2011 in respect of the undivided share of land admeasuring 2 acres and 5 guntas at Ananthapura village, Yelahanka, Hubli, Bangalore North Taluk, Bangalore. A sharing agreement was made vide document no. 6108 dated 16.01.2012, according to which, the assessee’s share of profit in the JDA is determined for A.Y. 2012-13. The ITO, Ward-3, Ananthapur, after obtaining the prior approval from the Competent Authority u/sec.151 of the Act, issued notice u/s.148 of the Act dated 18.05.2016 to the assessee calling her to file return of income. Since, there was no response, the Assessing Officer issued statutory notice u/s.142(1) of the Act on 14.09.2016. Once again there was no compliance. The Assessing Officer made enquiries and gathered that assessee was currently residing at Chitoor. After obtaining the current address of the assessee, the case was transferred to the ITO, Ward-2, Chitoor. Accordingly, the case of the assessee was initiated by duly taking an approval from JCIT, Anantapur and notices were issued u/sec.148 and subsequently statutory notices u/sec.142 (1)
5 ITA.No.49/Hyd./2025 and 143(2) and show cause notice u/sec.144 of the Act were also issued to the assessee. In response thereto, the assessee filed return of income on 14.12.2017 declaring income at Rs.NIL. During the course of assessment proceedings, the Authorised Representative of the Assessee submitted the requisite information and furnished all the particulars and brought to the notice of the Assessing officer that the assessee is eligible for exemption in respect of capital gains out of the JDA and, therefore, the provisions of sec.54F are invariably applicable and the amount of capital gains derived out of the transactions in respect of the JDA are to be exempted from the computation of the total income. In support of this contention, the learned AR submitted copies of the JDA and prayed the learned Assessing Officer to consider and allow the exemption u/s.54F o the I.T. Act. However, the learned Assessing Officer did not satisfy with the explanation offered by the assessee and determined the capital gains in the hands of the assessee at Rs.15,22,200/- u/sec.54F of the Act by rejecting the contention of the assessee to the effect that her
6 ITA.No.49/Hyd./2025 entire capital gains exemption of Rs.11,48,415/- should not be a residential one; the assessee should have purchased the new asset within two years of the transfer of the original asset or the assessee should have constructed a residential house within a period of three years after that date i.e., date of transfer of the original asset. In absence of above documentary evidence before him, the Assessing Officer determined the capital gains at Rs.15,22,200/- vide order passed u/sec.143(3) r.w.s.147 of the Act dated 22.12.2017.
On being aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the learned CIT(A) and the learned CIT(A) turned down the request of the assessee by observing as under :
“8.2. I am of the considered opinion that provisions of section 148 of the Act are meant for assessing the income which has escaped assessment and not for the benefit of granting benefits of fresh claims of exemption. Therefore, the exemption u/s. 54F of the Act is rightly denied by the AO, particularly when the same was 7 ITA.No.49/Hyd./2025 claimed during the reassessment proceedings u/s. 147 of the Act. Once the provisions of section 147 of the Act are invoked by the AO, it is majorly confined to the escaped income. I am therefore inclined to agree with the contentions of the AO that claim which was never raised in the original return (if any) or during reassessment proceedings without claiming the same in the return filed u/s. 148 of the Act cannot be entertained. Accordingly, the denial of exemption u/s. 54F of the Act is found to be in order. It is needless to reiterate that provisions of the Act are for the benefit of the Revenue and not for the benefit of the appellant who has failed to comply with the provisions of the law. Apart from this, the appellant has failed to furnish evidences in support of the fulfillment of all the criteria of section 54F of the Act, for e.g. purchase of more than one house, retention of second house for three years etc. Thus, on all the counts, the claim of the appellant deserves to be dismissed. The action of the AO in denying the exemption claimed u/s. 54F of the Act calls
8 ITA.No.49/Hyd./2025 for no interference and the addition is sustained. The Ground of Appeal is Dismissed.”
7. Aggrieved by the order of the learned CIT(A), the assessee carried the matter in appeal before the Tribunal.
During the course of hearing, Learned Counsel for the Assessee submitted that the authorities below failed to appreciate the fact that in response to the notice issued u/sec.148 of the Act, the assessee filed return of income declaring Rs.NIL by claiming exemption u/sec.54F of the Act which is out of the JDA entered into by the assessee along with other 22 co-owners with G.K. Shelters Pvt. Ltd., He submitted that the assessee has furnished all the information as called for by the authorities below and met a conditions for claiming deduction u/sec.54F of the Act. He, therefore, submitted that that the order of the learned CIT(A) be set aside in the interest of justice or in the alternative set aside the matter back to the file of Assessing Officer for afresh verification/examination of the documents.
9 ITA.No.49/Hyd./2025 9. The Learned DR on the other hand relied on the orders of the authorities below. He submitted that since the assessee failed to fulfil the conditions prescribed u/sec.54F of the Act, the Assessing Officer righty denied the deduction claimed by the assessee and the learned CIT(A) sustained the addition in absence of any other supportive material placed before him during the course of appellate proceedings. He accordingly submitted that the order of the learned CIT(A) be upheld.
We have heard the rival submissions of both the parties and perused the material on record. In this case, the assessee has entered into JDA cum GPA along with 22 other co-owners dated 17.01.2011 in favour of GK Shelters (P) Ltd., Bangalore for development of the land admeasuring 2 acres and 5 guntas at Ananthapura village, Yelahanka, Hubli, Bangalore North Taluk, Bangalore. Further the assessee had not admitted any capital gains on account of JDA. The Assessing Officer noted that since there is no reference to construction cost, he has taken the value at Rs.1200 per sq.ft as adopted by the ITO, Ward-3,
10 ITA.No.49/Hyd./2025 Ananthapur in the case of Shri P. Hari Prasada Reddy co- owner of the same property under JDA and computed the long term capital gains of Rs.15,22,200/-. Further the Assessing Officer denied exemption u/sec.54F of the Act on the ground that assessee has not satisfied the conditions prescribed under the Act. It is the argument of the assessee, in pursuance to the JDA cum GPA dated 17.01.2011 that she has received one fat and as per sec.54F of the Act she is entitled for exemption. We find that the assessee has not filed her return of income u/sec.139(1) of the Act. Admittedly, the assessment has been reopened u/sec.147 of the Act and as per the decision of Hon’be Supreme Court in the case of CIT vs. Sun Engineering Works P. Ltd., [1992] 198 ITR 297 (SC) in re-assessment proceedings the assessee cannot make any fresh claim of deduction or exemption. Further if the exemption or deduction pertains to income escaping assessment, in our considered view there is no restriction as to claim of deduction u/sec.54F of the Act against the long term capita gains derived in pursuance to JDA and reported in return of income filed in response to 11 ITA.No.49/Hyd./2025 notice u/sec.148 of the Act, provided other conditions as to the date of completion of construction of house property within time specified u/sec.54F of the Act is satisfied. Since the assessee has not filed any evidence to prove the condition for claiming exemption u/sec.54F of the Act, in our considered view, the matter should be go back to the file of jurisdictional Assessing Officer for re-considering the issue afresh. The Assessing Officer is directed to re-examine the claim of the assessee in light of our foregoing observation hereinabove on the basis of decision of Hon’be Supreme Court in the case of CIT vs. Sun Engineering Works P. Ltd., (supra) and decide the issue as per fact and law. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
11. In the result, appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 18.02.2025.