CHANDRASHEKHAR BAGADE,PUNE vs. ITO WARD 5(1), PUNE

I came to know of the order only when I started getting the calls from Income Tax Dept for the payment of penalty. This I came to know in February 2025.

Whatever stated above is true and correct to the best of my knowledge and belief.”

The Ld. DR on the other hand strongly objected to the arguments advanced by the Ld. Counsel for the assessee for condonation of delay.

After hearing both sides and considering the contents of the condonation application filed along with the affidavit, we are satisfied that there was a reasonable cause on the part of the assessee for the said delay in filing of the appeal. We, therefore, condone the delay and the appeal is admitted for adjudication.

Facts of the case, in brief, are that the assessee filed his return of income on 28.06.2013 declaring total income of Rs.5,96,090/-. The Assessing Officer completed the assessment u/s 143(3) of the Act on 10.02.2016 by making the addition on account of long term capital gain at Rs.92,58,014/-. In appeal, the Ld. CIT(A) confirmed the order of the Assessing Officer in making the addition on account of long term capital gain of Rs.92,58,014/-. In this case, the assessee had transferred the land and row houses thereon giving rise to capital gain. The assessee had purchased a plot of land in the year 2001 on which two row houses were constructed in March, 2012. The assessee transferred the row houses on 14.08.2012 giving rise to long term capital gain qua the land and short term capital gain in respect of construction i.e. row houses superstructure. The assessee claimed exemption u/s 54F of the Act in respect of long term capital gain. The Assessing Officer completed the assessment u/s 143(3) of the Act on 10.02.2016 accepting the long term capital gain qua the land. However, he rejected the claim of exemption u/s 54F of the Act as the new residential property was not complete within three years from the date of transfer. The assessee filed an appeal before the CIT(A) who treated the entire capital gain arising from row houses as short term capital gain only. He, therefore, did not allow the claim of exemption u/s 54F of the Act.

Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal.

We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that the penalty was levied by the Assessing Officer on account of rejection of long term capital gain on sale of land and denial of exemption u/s 54F of the Act. However, a perusal of the order of the Tribunal shows that the Tribunal vide order dated 29.06.2018 in copy of which is placed at pages 4 to 12 of the paper book has allowed the assessee’s appeal holding that the capital gain arising from the sale of land is long term capital gain. However, the Tribunal restored the issue of alloowability of exemption u/s 54F of the Act to the file of the CIT(A) and the CIT(A) vide order dated 08.07.2019, copy of which is placed at 13 to 21 of the paper book, has allowed the exemption u/s 54F of the Act. Thus, there is nothing left for levy of penalty u/s 271(1)(c) of the Act since the addition has already been deleted by the order of the Tribunal and subsequently by the CIT(A). We, therefore, set aside the order of the Ld. CIT(A) / NFAC and direct the Assessing Officer to cancel the penalty. The grounds raised by the assessee are accordingly allowed.

In the result, the appeal filed by the assessee is allowed.