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Facts
The assessee filed an appeal against the order of the CIT(A) which dismissed the appeal against the AO's order. The appeal was delayed by 670 days due to alleged communication error with the previous counsel and lack of technical knowledge of the assessee. The assessee claimed exemption under Section 54F for long-term capital gains, but the AO disallowed it due to non-submission of required documents.
Held
The Tribunal condoned the delay in filing the appeal due to the circumstances presented by the assessee, a senior citizen. However, the Tribunal noted the assessee's non-compliance throughout the proceedings. To provide an opportunity, the matter was restored to the AO for fresh consideration after the assessee furnishes all necessary documents to justify the claim under Section 54F.
Key Issues
Whether the delay in filing the appeal can be condoned due to the assessee's circumstances, and whether the claim for exemption under Section 54F can be considered afresh by the AO upon submission of necessary documents.
Sections Cited
143(3), 54F, 54B, 54C, 54D, 54E, 54G, 54GA, 80JJA, 54(2)(6)(G)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW ‘A’ BENCH, LUCKNOW
A.Y. 2016-17 Ayyub Jafri, vs. Dy. Commissioner of 370/10 KHA, Hata Noor Beg, Income Tax-6, Lucknow- Shahadatganj, Chowk, Lucknow-226003 New PAN: AFKPJ7326K (Appellant) (Respondent) Assessee by: None Revenue by: Sh. Amit Kumar, DR Date of hearing: 23.09.2025 Date of pronouncement: 26.09.2025 O R D E R PER NIKHIL CHOUDHARY, A.M.: [ This is an appeal filed by the assessee against the orders of the ld. CIT(A), NFAC, dismissing the appeals of the assessee against the orders of the ld. AO passed under section 143(3) of the Income Tax Act, 1961 on 7.12.2018. The grounds of appeal are as under:-
1. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law and deserves to be quashed being illegal.
2. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law as the AO not allowing benefit of exemption under Section 54F claimed in respect of long term capital gain and having fulfilled all prescribed conditions and investment made in construction of residential house amounting to Rs.12033877.00/- in the present case during March 2015 F.Y. 2015-16 as well as till 31st July 2016 which is within prescribed period of sometime before and three years from the date of sale.
3. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law as the AO in not accepting valuation report of approved valuer relating to investment in construction of residential house amounting to Rs.1,60,37,517.00 made upto 20th February 2017 out to which appellant has claimed Deduction of Rs. 12033877.00/- u/s. 54F of IT Act 1961.
4. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law in not allowing deduction of Rs.15,04,028.00/-representing cost of improvement of land viz. Land Filling and Levelling incurred from time to time from Sale Consideration for Ayyub Jafri A.Y. 2016-17 determining Capita Gain on the ground of alleged non production of documents in support thereof.
5. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law in not allowing deduction of Rs. 30,32,824/- u/s 80JJA in the revised ITR filed by the assessee.
Because on the facts and in the circumstance of the case, the order of Assessment has been passed in absolute violation of the principles of Natural Justice, without providing adequate opportunity of being heard and therefore deserves to be declared a nullity.
The appellant craves for leave to add, modify, amend or delete any other and further grounds of appeal with permission.”
2. It is seen that the appeal is delayed by 670 days. The assessee has filed a condonation petition in which it has been submitted that the impugned order of the ld. CIT(A) dated 8.02.2023, was received by the previous counsel of the assessee on 8.02.2023, but the assessee was not aware of the said orders because he was 60 years old and lacked technical knowledge to access emails on computer. For the above reason, the email address of the previous counsel had been mentioned in the Income Tax Portal instead of that of the assessee and due to a communication error by the previous counsel, the assessee was not intimated about the order passed by the ld. CIT(A). It was further submitted that the assessee only came to know about the passing of the order of the ld. CIT(A) on 25.11.2024, when the demand notice was served physically upon the assessee. After the service of the demand notice, the assessee consulted another counsel to avail legal remedies and thereafter, when the portal was locked into, only then the assessee became aware of the order of the ld. CIT(A) dated 8.02.2023. The assessee could provide the documents to the new counsel for preparation of the appeal only thereafter and this is what caused the delay of 670 days. It was prayed that the circumstances were not in the assessee’s control and therefore, it was prayed that the delay may be condoned and the appeal may kindly be taken up on merits because the assessee did not stand to have any benefit from being negligent and not preferring the appeal. Rather the failure to grant deduction under section 54F seriously prejudiced the assessee and therefore, the assessee prayed that he may be given a chance to get the case represented on merits.
Ayyub Jafri A.Y. 2016-17 3. On the other hand, Sh. Amit Kumar, Sr. DR (hereinafter referred to as the ld. DR) opposed the admission of the assessee’s case, he submitted that the assessee had been non-compliant before the ld. CIT(A) also and therefore, the case should be dismissed.
We have duly considered the facts as placed before us. It is seen from a perusal of the Form 35 that the email address that is given in the said Form 35 is slmandhyan@gmail.com, which is not the email address of the assessee as given presently namely aminjafri786@gmail.com. In the circumstances, there appears to be merit in the submission of the assessee that the notices that were served upon the ld. counsel were not complied with by the counsel and the ld. counsel neglected to inform the assessee about the passing of the appeal order, which was the cause of the delay in the filing of the appeal. The Hon’ble Supreme Court in the case of Collector of Land Acquisition vs. MST. Katiji (1987) 167 ITR 471 (SC) has considered the cases of delay and pointed out that ordinarily a litigant does not stand to gain from delay. Rather he runs a serious risk of his appeal being dismissed on this account. Therefore, there is no reason to presume that the delay was occasioned on account of negligence or was deliberate. Unless malafide is writ on the face of it, the courts should adopt a liberal view in dealing with condonation petitions because the worst that can happen is that a case would be decided on it's merits rather than being dismissed on technical grounds. Thus, keeping in mind the aforesaid decision of the Hon’ble Supreme Court and the circumstances as pointed out by the assessee, which are not uncommon to senior citizens who are not well- versed with online representation, we condone the delay in the filing of the appeal and admit the appeal for adjudication.
The facts of the case are that the assessee filed a return of income for the assessment year 2016-17 declaring total income of Rs. 15,85,100/-. The case was selected for limited scrutiny through CASS with the following reasons; Ayyub Jafri A.Y. 2016-17 i. Cash deposit for demonetization period (9th November to 30th December) as reported as per SFT reporting ii. Large deduction claimed under section 54B/54C/54D/54E/54F/54G/54GA (Schedule – CG of ITR).
6. The ld. AO records that several notices were issued to the assessee to make compliance with regard to the reasons for the selection for scrutiny but except for a part response to one of the notices, the assessee did not make compliance. Therefore, the ld. AO proceeded to take up the matter on the basis of the material on record. From the ITR, the ld. AO considered the calculation of deduction under section 54F, claimed at Rs. 1,20,33,877/- and noted that the assessee had only submitted a valuation report in support of his claim for exemption under section 54F. The ld. AO pointed out to the assessee that additional documents were required to examine the claim such as sale / purchase deeds, documents in support of claimed costs of improvement, evidence of deposit of sale consideration into capital gain accounts, bills and vouchers pertaining to cost of house constructed by you, details of parties to whom payments were made regarding construction work and how many residential houses were owned by the assessee. The ld. AO recorded that the assessee did not submit any information in this regard, therefore, he added back a sum of Rs. 1,20,33,877/- on this account. He also disallowed a sum of Rs. 15,04,028/- claimed towards cost of improvement, in the absence of any supporting documents. With regard to the deposit of cash, the assessee replied that the information regarding cash deposited during the demonetization period was not relevant to the financial year under scrutiny. The ld. AO seems to have not made any further addition on this account.
7. Aggrieved with the said order, the assessee went in appeal to the NFAC. The Hon’ble CIT(A) records that he issued as many as eleven notices to the assessee to submit details in support of grounds of appeal but the assessee did not respond to any of them. He, therefore, proceeded to decide the matter on the basis of the Ayyub Jafri A.Y. 2016-17 materials on record. He observed that the assessee had filed a statement of facts in form no. 35 wherein he had claimed long term capital gain on sale of plots of amount that had been inherited from his ancestors prior to 1.04.2001 and which were situated at 370/10 KHA, Hata Noor Beg, Shahadatganj, Chowk, Lucknow and he had incurred expenses on improvements of plots by doing land filling and levelling aggregating to Rs. 1,04,038/- during F.Y. 2015-16. The given land was inherited by the assessee on 25.12.2003, for which he had adopted land rate as deemed cost of Rs. 1,73,635/- as on 1.04.1981 under section 54(2)(6)(G) of the Income Tax Act. It was submitted that while filing the return of income, the Advocate included the entire sum of Rs. 15,04,028/- as investment made during F.Y. 2015-16. No indexing benefit was claimed by the assessee as a result of which long term capital gain offered to tax was more than what had actually accrued on the sale of plots made from time to time. It was prayed that once indexed cost of acquisition was allowed to the assessee, the long-term capital gain would work out to only Rs. 1,36,18,978/- and against the same, the assessee had made investment in construction of residential house of Rs. 1,20,33,877/-. Long term capital gain tax had been offered on Rs. 15,85,101/-. The assessee had filed a valuation report during the course of assessment but the same had not been accepted by the ld. DCIT. The assessee fulfilled all the conditions in that the said house was constructed within the prescribed period of three years from the date of sale of plots and therefore, the assessee was not required to keep the unutilized money in the capital gain scheme. It was, therefore, prayed that the addition may be dismissed. However, the ld. CIT(A) held that in the absence of documents, the claims of the assessee could not be adjudicated upon and therefore, he saw no reason to interfere with the orders of the ld. AO and dismiss the appeal.
Ayyub Jafri A.Y. 2016-17 8. Aggrieved with these orders, the assessee is in appeal before us. On the appointed date of hearing, nobody appeared on behalf of the assessee. Considering the history of non-compliance by the assessee throughout the assessment and appeal proceedings, we do not feel it necessary to keep this case pending since this is the third opportunity granted to the assessee to which compliance has not been made. Sh. Amit Kumar, ld. Sr. DR assisted the Bench during the course of proceedings. It was submitted by him that the assessee had not made any compliances and not furnished any documents in support of its claim therefore, the authorities below were justified in rejecting the claim of the assessee.
We have duly considered the facts of the case. It is absolutely clear that unless the assessee furnishes the requisite documents before the ld. AO relating to the sale of old land, the construction of the new property and the other documents as called for by the AO, the ld. AO would not be in a position to judge the veracity of the claims under section 54F on the basis of just a valuation report. In the circumstances, we instruct the assessee to furnish all available documents before the ld. AO to justify his claim for the deduction under section 54F and thereafter the ld. AO may consider the matter afresh and take the appropriate decision, as per law. As the matter is being restored to the file of the ld. AO in the interest of justice, the appeal of the assessee is held to be allowed for statistical purposes.