SATISH CHAND,BAGHPAT vs. ITO, BARAUT

The sum and substance of the grievance of the assessee is that the CIT(A) erred in disallowing the claim of deduction u/s. 54 of the Act.

The assessee is an agriculturist whose return of income was selected for scrutiny assessment on the basis of AIR information in relation to the deposit of Rs.45.40 lacs in his savings bank account.

During the course of the scrutiny assessment proceedings the assessee explained that he has sold a piece of land and the sale consideration was deposited in the savings bank account. 5. Assessing Officer accepted the contention of the assessee the Assessing Officer accepted the deposits made in the savings bank account but was of the view that the assessee is liable for long term capital gains and invoking the provisions of section 50C of the Act, took the sale consideration at the value on which stamp duty was paid and accordingly computed LTCG at Rs.430327/-. 6. Assessee preferred an appeal before the CIT(A) and pointed out that the entire sale consideration was utilised towards construction of his residential house situated at Village Bali, Tehsil Baghpat and also furnished the valuation report of the Government valuer and claim deduction u/s. 54 of the Act in respect of investment made in the residential house. However, the Ld. CIT(A) dismissed the claim of the assessee stating that assesee has not made any claim before the AO. 7. Before me the counsel for the assessee stated that being an agriculturist the assessee was not in the knowledge of the claim of statutory deduction u/s. 54 of the Act but when he was advised by the counsel he made the claim before the CIT(A). 8. The counsel prayed for claim of deduction u/s. 54 of the Act. 9. The DR strongly supported the findings of the CIT(A).

I have given a thoughtful consideration to the orders of the authorities below. No doubt the assessee did not make any claim of deduction u/s.54 of the Act during the assessment proceedings. It is true that the claim of deduction was made for the first time before the CIT(A) alongwith supporting evidence. In my considered opinion this statutory deduction should not have been denied by the CIT(A) without looking into merits of the claim supported by documentary evidences.

I, therefore, in the interest of justice and fair play restore this issue to the file of the AO. The AO is directed to examine the claim of deduction u/s.54 of the Act as per the provisions of law and decide the issue afresh. 12. In the result, the appeal filed by the assessee is allowed for statistical purpose.