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Facts
The assessee sold an immovable property for Rs. 8,00,000/-. The AO reopened the assessment for AY 2012-13, treating the jantri value of Rs. 10,04,081/- as consideration and adding it as capital gains. The assessee contended that the sale occurred on 18.08.2010, pertaining to AY 2011-12, and that the proceeds were reinvested in a new property, qualifying for exemption under Section 54F.
Held
The Tribunal held that the assessment framed for AY 2012-13 was without jurisdiction as the sale transaction clearly pertained to AY 2011-12 based on the sale deed dated 18.08.2010. The CIT(A) overlooked this crucial factual point. The additions made by the AO were therefore rendered unsustainable.
Key Issues
Whether the assessment framed under Section 147 for AY 2012-13 was valid when the sale transaction clearly pertained to AY 2011-12? Whether the assessee is eligible for exemption under Section 54F?
Sections Cited
147, 144, 50C, 142(1), 271(1)(c), 271(1)(b), 148, 54F, 48, 250
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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: MS.SUCHITRA R. KAMBLE & SHRI MAKARAND V.MAHADEOKAR
आदेश आदेश/O R D E R आदेश आदेश
PER MAKARAND V.MAHADEOKAR, AM:
This appeal by the assessee is directed against the order dated 01.02.2024 passed under section 250 of the Income-tax Act, 1961 [hereinafter referred to as “the Act”] by the Learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”], arising from the assessment framed under section 144 r.w.s. 147 by the Income Tax Officer, Ward 5(3)(4), Ahmedabad [hereinafter referred to as “Assessing Officer or AO”], vide order dated 30.11.2019, for the assessment year 2012–13.
Condonation of Delay 2.1 The Registry has noted that the present appeal is delayed by 366 days. In this regard, the assessee has filed a petition for condonation of delay along with a sworn affidavit dated 29.04.2025, explaining the reasons for such delay. It has been submitted that the assessee was under a bona fide belief that the issue pertained to A.Y. 2011–12 and not A.Y. 2012–13, which led to confusion during the consultation and filing process. This mistaken belief resulted in a misapprehension of the timeline for filing the appeal, and consequently, the appeal could not be filed within the prescribed period. Upon obtaining proper professional advice in early 2025, the assessee immediately took steps to institute the appeal before the Tribunal.
2.2 The delay, therefore, appears to have arisen due to genuine misunderstanding and inadvertent procedural lapses, rather than any deliberate inaction or negligence. The explanation furnished is supported by an affidavit, and the learned Departmental Representative has also not raised any objection to the condonation of delay.
2.3 Having regard to the totality of facts and particularly noting that the assessee himself appeared before us and put forward his own case, we are satisfied that there exists sufficient cause for the delay. Accordingly, the delay of 366 days is condoned, and the appeal is admitted for hearing on merits.
Facts of the Case 3.1 The assessee, an individual, had filed his return of income manually for the relevant assessment year on 31.07.2012, declaring total income of Rs.3,50,777/- under the head "salary". On verification of the information available with the Department, it was noticed by the Assessing Officer (AO) that the assessee had entered into a high-value transaction involving sale of immovable property for a sale consideration of Rs.8,00,000/-. However, the jantri value (i.e., the value adopted by the stamp valuation authority for stamp duty purposes) for the said transaction was Rs.10,04,081/-, resulting in a difference of Rs.2,04,081/-. 3.2 Since the assessee had not offered any capital gain on account of this transaction in his return of income, and the provisions of section 50C of the Act were found to be attracted, the AO reopened the assessment under section 147 of the Act after recording reasons and obtaining due approval. Accordingly, a notice under section 148 was issued on 15.03.2019, duly served upon the assessee. However, no return was filed in response to the said notice. The assessee was thereafter issued multiple notices under section 142(1) dated 14.06.2019, 12.09.2019, and 13.11.2019, requiring him to furnish details including copy of sale deed, purchase deed, computation of capital gains, and copies of bank statements, but the assessee did not respond or furnish any details.
3.3 A show cause notice was issued to the assessee requiring him to explain why the difference of Rs.2,04,081/- between the declared sale consideration and the jantri value should not be added under section 50C. In the absence of any response, the AO proceeded to invoke section 50C and added the differential amount of Rs. 2,04,081/- to the total income of the assessee.
3.4 Further, in view of continued non-compliance and absence of purchase cost details, the AO proceeded to determine the long-term capital gain on the entire jantri value of Rs.10,04,081/-, treating the cost of acquisition and cost of improvement as nil, and thus added the entire amount as long-term capital gain under the head “capital gains”. The AO also recorded satisfaction for concealment of income and initiated penalty proceedings under section 271(1)(c) for concealment and furnishing inaccurate particulars of income. Additionally, penalty under section 271(1)(b) was initiated for non-compliance with notices under section 142(1). The total assessed income was thus computed as under:
Particulars Amount (Rs.) Returned income 2,19,940/- Addition under section 50C 2,04,081/- Addition on account of capital gains 10,04,081/- Total Assessed Income 14,28,102/-
The assessment was completed ex parte under section 144 r.w.s. 147 on the basis of available material on record.
3.5 Aggrieved by the said assessment order, the assessee preferred an appeal before the Ld. CIT(A). In Form No. 35, the assessee contended that the impugned transaction pertained to Assessment Year 2011–12, as the sale deed was executed on 18.08.2010, and therefore the assessment made in A.Y. 2012–13 was wholly without jurisdiction. It was further submitted that the assessee had purchased a new residential property on 08.12.2010 for Rs.17,00,000/-, which being within one year from the date of sale, qualified for exemption under section 54F of the Act.
3.6 During the appellate proceedings, the assessee filed written submissions dated 22.01.2024, reiterating that the property was sold on 18.08.2010, and that the transaction had been erroneously considered in the wrong assessment year. The assessee also referred to the purchase of a new plot on 08.12.2010 as evidence of compliance with section 54F. However, the Ld. CIT(A) noted that the assessee had failed to file any documentary evidence to support the date of sale or the date and cost of new property purchase. In absence of sale deed, purchase deed, or any other corroborative document, the Ld. CIT(A) held that the AO had rightly relied upon the available information to frame the assessment. The Ld. CIT(A), therefore, rejected the assessee’s explanation and upheld both additions.
Being aggrieved, the assessee has preferred the present appeal before us raising the following grounds:
1. The Ld. CIT(A) erred in law and on facts in confirming the addition of Rs.12,08,162/-, being the alleged capital gains and deemed consideration u/s 50C of the Income Tax Act, 1961, without appreciating the correct assessment year of the transaction.
2. The Ld. CIT(A) grossly erred in sustaining the addition under section 50C despite the fact that the property was sold on 18.08.2010, which pertains to Assessment Year 2011-12, and not 2012-13, and hence the entire addition is illegal and invalid.
3. The Ld. CIT(A) erred in dismissing the exemption claim u/s 54F of the Act, even though the appellant had purchased a new residential property on 08.12.2010 for Rs. 17,00,000/- which is within the stipulated time from the date of sale. 4. The Ld. CIT(A) failed to appreciate the appellant’s submissions furnished during the appellate proceedings and rejected the same solely on the ground of insufficient documentation, which is arbitrary and unjust. 5. The assessment completed u/s 144 r.w.s. 147 is bad in law due to lack of proper opportunity and misidentification of assessment year of the transaction. The appellant craves leave to add, amend, alter, or withdraw any of the above grounds of appeal at the time of hearing.
During the course of hearing before us, the assessee appeared in person and reiterated the factual background of the case. He submitted that the property in question was sold on 18.08.2010, which clearly falls within the previous year relevant to Assessment Year 2011–12, and not A.Y. 2012– 13 as considered by the Assessing Officer. It was contended that the entire basis of reopening and framing of assessment under section 147 r.w.s. 144 for A.Y. 2012–13 is factually incorrect and suffers from lack of jurisdiction.
5.1 The assessee further submitted that the sale proceeds from the said property were duly invested in the purchase of a new residential plot on 08.12.2010 for a consideration of Rs.17,00,000/-, which is within the prescribed time limit under section 54F. Therefore, even assuming the transaction were to be considered taxable, the entire capital gain was exempt under section 54F of the Act.
5.2 The assessee also pointed out that copies of both the sale deed and purchase deed were duly submitted before the CIT(A), and both documents clearly established that:
- The sale of the original asset was executed on 18.08.2010, and - The purchase of the new residential property was completed on 08.12.2010. 5.3 Hence, it was submitted that the assessment framed for A.Y. 2012– 13 was without jurisdiction and that the claim under section 54F was fully supported by contemporaneous documentary evidence already on record.
We have carefully considered the rival submissions and perused the assessment order, the appellate order of the CIT(A), the material available on record, and the documentary evidence filed by the assessee. The limited but fundamental issue that arises in the present appeal is whether the capital gains transaction sought to be assessed in A.Y. 2012–13 actually pertains to that year, and whether the jurisdiction assumed by the Assessing Officer under section 147 is valid in law. It is not in dispute that the transaction in question relates to the sale of immovable property for a consideration of Rs. 8,00,000/-, as recorded in the registered sale deed, and that the jantri value adopted by the stamp valuation authority was Rs.10,04,081/-. The Assessing Officer invoked the provisions of section 50C and treated the jantri value as the full value of consideration, further computing the entire amount as long-term capital gain under section 48 by taking cost of acquisition and cost of improvement as nil, since no evidence had been furnished by the assessee during the assessment proceedings. The reassessment was accordingly framed under section 144 r.w.s. 147 of the Act.
6.1 Before the CIT(A), and also during the course of hearing before us, the assessee has produced copies of the sale deed and purchase deed, which clearly show that the sale transaction was executed on 18.08.2010, and the purchase of new property took place on 08.12.2010. These dates squarely fall within the previous year 2010–11, relevant to Assessment Year 2011– 12. Thus, the capital gains arising from the said transaction, if any, ought to have been assessed in A.Y. 2011–12, and not in A.Y. 2012–13. There is no rebuttal by the Revenue on this critical factual point. The CIT(A) also appears to have overlooked this aspect while mechanically confirming the additions made by the AO.
6.2 We note that the assumption of jurisdiction under section 147 must be based on tangible material indicating that income chargeable to tax has escaped assessment in the relevant assessment year. The transaction forming the basis of escapement must be pertinent to the year sought to be reopened. In the present case, the foundational premise of the reopening, namely, that the sale of immovable property occurred in F.Y. 2011–12,is factually incorrect. The documentary evidence on record irrefutably shows that the transaction took place in F.Y. 2010–11. Therefore, in our considered view, the initiation of reassessment proceedings under section 147 for A.Y. 2012–13 was without jurisdiction and liable to be quashed.
6.3 Though the issue stands concluded on jurisdictional grounds, we deem it appropriate to briefly address the merits for completeness. The assessee has submitted that the entire sale consideration was invested in the purchase of a new residential property within the time frame prescribed under section 54F. The purchase deed dated 08.12.2010 evidences that the new property was acquired well within one year from the date of sale. Had the assessment been validly initiated for the correct year, the claim under section 54F would merit examination in light of the supporting documents. It appears from the record that the capital gain, if any, may have been fully exempt under section 54F. However, since we have held that the assessment itself is without jurisdiction, we do not express any conclusive opinion on the allowability of exemption on merits.
6.4 In view of the above discussion, we are satisfied that the assessment framed under section 144 r.w.s. 147 for A.Y. 2012–13 is vitiated for want of jurisdiction, as the transaction in question did not pertain to the said assessment year. The impugned additions are therefore rendered unsustainable. The grounds on merits are rendered academic and not adjudicated.
In the result, the appeal of the assessee is allowed on the ground of lack of jurisdiction, and the assessment order is quashed.
Order pronounced in the Court on 12th August, 2025 at Ahmedabad.