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Facts
The assessee sold properties and initially claimed deduction under Section 54F. Realizing the mistake, the assessee requested to claim deduction under Section 54 by filing a revised computation of income during the assessment proceedings. The Assessing Officer (AO) did not consider this revised claim.
Held
The Tribunal held that the assessee had modified his claim by filing a revised computation of income during the assessment proceedings, which constituted a revision of claim and not a fresh claim. Therefore, the reliance on the decision in Goetze (India) Ltd. vs CIT, which pertains to fresh claims not made through a revised return, was distinguishable.
Key Issues
Whether a revised claim for deduction made during assessment proceedings, rather than a revised return, is permissible. Whether the AO and CIT(A) erred in dismissing the claim based on the Goetze (India) Ltd. decision.
Sections Cited
143(3), 147, 148, 143(2), 142(1), 54F, 54, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 427/JP/2025
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 427/JP/2025 fu/kZkj.k o"kZ@Assessment Year : 2012-13 cuke Mishri Lal Income Tax Officer, Vs. 129 Satguru Colony, Gate No. 1, Ward-1(2), Ajmer Ajay Nagar, Ajmer LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AHOPL9005H vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Sh. Sudhir Sogani, CA jktLo dh vksj ls@ Revenue by : Sh. Gautam Singh Choudhary, JCIT lquokbZ dh rkjh[k@ Date of Hearing : 23/06/2025 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 04/07/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM
Aforesaid appeal by assessee for Assessment Year (AY) 2012-13 arise out of the order of the learned Commissioner of Income Tax (Appeals) -2, Chennai [ for short CIT(A) ] dated 11/03/2025 in the matter of an assessment order dated 28.11.2019 passed under section 143(3) r.w.s 147 of the Income Tax Act, 1961 [ for short Act ] by ITO, Ward 1(2), Ajmer [ for short AO].
That the learned CIT(Appeals) is not justified in allowing relief under section 54 of the IT Act, 1961.
Succinctly, the fact as culled out from the records is that as per information available on record it was noticed that during the year under consideration the assessee sold immovable property along with four other persons situated at AMC No. 467/23 23/647431-A/30 for consideration of Rs. 27,00,000/-. The sub Registrar adopted the value at Rs. 37,03,636/- for stamp purposes the assessee has not filed the return. Accordingly notice u/s 148 of the Act was issued on 26/03/2019 after taking appropriate approval from competent authority. The above notice was sent through speed post. In response to notice u/s 148, assessee filed return on 02/09/2019 declaring total income of Rs. 3,53,350/-. Accordingly the reasons recorded u/s 147/148 was also provided through e-mail on 02/09/2019. Notice u/s 143(2)& 142(1) along with query letter was issued online. In response to these notices the assessee filed reply. Record reveals that during the year under consideration the assessee has sold 4 properties for total consideration of Rs. 77 lacs for which the sub-registrar adopted the value at Rs. 94,34,997/-. The assessee has declared 15th share and shown capital gain of Rs. 7,02,332/. The assessee has further gain at Rs 2,92,917/-. The assessee was asked to furnish the details and evidence of the above capital gain which was furnished. After examination of details filed return income was accepted by the ld. AO.
As is evident from the record that the assessee has filed his Return of income making a claim under section 54F of the Act. On realizing that the claim was under wrong section the assessee vide letter dated 16.09.2019 and 28.11.2019 requested ld. AO to allow the claim under the correct section which was section 54 of the Act. The ld. AO did not discussed the same in the assessment order and proceeded what has been submitted by the assessee in the ITR filed.
Feeling dissatisfied with that order of assessment, the assessee preferred the present appeal raising there in solitary ground to allow the correct deduction as claimed while in the assessment proceeding. On this issue the relevant finding of the ld. CIT(A) is as under :
“4. Decision: 4.1 The Assessing officer has brought out clearly in the Assessment Order that the Appellant/ Assessee had shown taxable capital gain of Rs.7,02,332/- and further claimed deduction u/s 54F of the Act of Rs. 4,05,419/- in the Return of Income filed in response to Notice u/s 148 of the Act. The Assessment has been completed by accepting the Returned Income. 4.2 The Appellant has stated that he has made a revised claim by filing a letter during the course of assessment proceedings to consider deduction u/s 54 of the Mishri Lal vs. ITO Act but the Assessing Officer has not considered the same. There is no mention of the same in the Assessment Order, the relevant extract of which is below: During the year under consideration the assassee has sold 4 properties for total consideration of Rs. 77 lacs for which the sub-registrar adopted the value at Rs. 9434997/-. The assessee has declared 1/5th share and shown capital gain of Rs. 7,02,332/. The assessee has further claimed deduction u/s 54F of Rs. 4,09,415/-. Thereby shown taxable capital gain al Rs. 292917/-. The assessee was asked to furnish the details and evidence of above capital gain. The assessee has filed the details. After examination of details filed return income is accepted. The assessee has not filed the return earlier, therefore, penalty proceedings u/s 271(1)(c) is separately initiated for concealment of income. 4.3 Notwithstanding the same, in view of the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs CIT (2006), it is found that the Assessing Officer could not have allowed the deductions not claimed through a Revised Return Accordingly, the Ground filed by the Appellant is dismissed.
5. As a result, the Appeal is dismissed.”
Since the assessee did not find any favour in the first appeal, he preferred the present appeal. Apropos to the solitary issue the ld. AR of the assessee filed the following written submission:
The assessee appellant is in in appeal before your Honour against the order of The Learned ADDL/JCIT, (A)-7, CHENNAI dated 11.03.2025 in Appeal No. CIT(A), Ajmer/11075/2019-20 under DIN NO. ITBA/APL/S/250/2024- 25/1074348682(1). The Brief Facts of the case is as under: During the year under consideration, the assessee sold 4 properties for total consideration of Rs. 77 lacs for which the sub-registrar adopted the value of Rs. 94,34,997/-. The assessee having 1/5th share, the capital gain worked out to Rs. 7,02,332/-. The assessee invested in purchase of property an amount of Rs. 11,00,000/- and claimed deduction under section 54 of the IT Act, 1961. While filing the Return of Income the assessee erroneously claimed deduction under section 54F of the IT Act, 1961. On coming to know of the mistake, the Mishri Lal vs. ITO assessee vide letter dated November 28, 2019(Copy attached for ready reference) apprised the Learned Assessing Officer of the mistake and requested him to kindly consider this letter of his as claim being made under section 54 of the IT Act, 1961 instead of section 54F of the IT Act, 1961.
The letter dated November 28, 2019 (supra)is self-elaborative. The property sold by the assessee and co-owners is residential and as such the deduction/rebate on account of purchase of residential property qualifies for deduction under section 54 of the IT Act, 1961 and not 54F of the IT Act, 1961.
At this juncture (I) would like to draw your kind attention to section 54 & 54F which reads as under:
Section 54: ……………where, in the case of the assessee being an Individual or a Hindu Undivided Family, the Capital Gain arises from the transfer of a long term capital asset, being buildings or land appurtenant thereto, and being a residential house, the income of which is chargeable under thehead Income from house property (hereafter referred in this section as original asset) and the assessee has………….
Section 54F: ……………where, in the case of an assessee being an Individual or a Hindu Undivided Family, the capital gain arises from the transfer of any long term capital asset, not being a residential house (hereafter in this section referred to as original asset) and the assessee has……………….
It shall be apparent from a plain reading of the above two sections that subject to conditions laid down in the sections as to the time period of investment, the original asset if sold is a residential property than benefit of rebate/deduction to the assessee shall be under section 54 of the IT Act, 1961 and if the original asset sold is other than residential property provisions of section 54F will be applicable subject to the limitation of time period as to the investment.
The Learned Assessing Officer while framing assessment has presumed that the original asset sold is other than a residential property and has accordingly applied provisions of section 54F of the IT Act, 1961. In so concluding he has completely overlooked the submission made by the assessee vide his letter dated 28th November, 2019 (supra).
The property sold is Residential in nature and not Commercial is evident from the Approved Valuer’s Report submitted during the assessment Proceedings and attached here for your honours ready reference and kind perusal. From the Valuation Report it shall be observed that at the most only 45.00 Sq.yds. of total area of 609.18 Sq.Yds. can be termed as Commercial in nature being a shop in the residential property. The assesee with his letter of November 28, 2019 also uploaded the Revised Computation of Income considering the entire property sold as Residential and considering the property sold both as commercial and Mishri Lal vs. ITO residential in proportion to the nature of the property as mentioned by the Approved Valuer in his report. (Copies of Revised Computation of income uploaded in both circumstances is attached for your honours ready reference).
These Facts were brought before the Learned Commissioner of Income-Tax (Appeals) and reference was also made to the decision of HARSH KUMAR (HUF) vs. DCIT, NEW DELHI in dated 19.08.2019
We also invite your kind attention to the observations of the Honourable ITAT, Delhi Bench in the case of HARISH KUMAR (HUF) vs DCIT, NEW DELHI in dated 19.08.2019 (copy of order enclosed for ready reference) who have observed irrespective of the claim made in the Return of Income filed, if the assessee has brought before the Learned Assessing Officer during the Assessment Proceedings the mistake made in the ITR filed, then the Learned Assessing Officer has to take a note of the same and consider the same.
The Leaned CIT(A) has observed in his order that there is no mention in the Assessment Order that the assesse has made a revised claim during the assessment proceedings to consider deduction under section 54 of the IT Act, 1961 but the Assessing Officer has not considered the same. This very fact is the crux of the matter, that the Learned Assessing Officer has not considered the letter dated November 28, 2019 which was uploaded at the e filing facility of the assessee vide acknowledgement no. 28111912377818 (Copy of the letter and acknowledgement receipt is enclosed for your honours perusal, ready reference and records). The Learned CIT(A) has totally overlooked this factual position that the Learned Assessing Officer has not considered this letter of the assessee dated 28.11.2019 while passing the assessment order while observing that there is no mention of the revised claim under section 54 of the IT Act, 1961 by the assessee.
During the course of assessment proceedings, the asseeee vide letter dated 28.11.2019 requested the Learned Assessing Officer to consider his claim It is pertinent to note that the Honourable Apex Court has held that even if the assessee has not filed revised return of income, but has brought this fact to the notice of the Learned Assessing Officer during the assessment proceedings, then the same should be considered. The Honourable Apex Court has gone to the extent that the same could be considered even at the time of appeal proceedings.
It may kindly be observed that even in appeal before the First Appellate Authority or the ITAT an additional ground/fresh claim made by the assessee could be admitted when all the facts are on record. This is the observation of the Honourable Supreme Court in the cases of Jute Corporation of India Limited v/s CIT 187ITR 688 and National Thermal Power Corporation Limited v/s CIT 229 ITR 383. The facts of the case of the assessee in the instant case being all square on this aspect due consideration be given on this matter.
Mishri Lal vs. ITO We also draw your honours kind attention to the decision of Orissa High Court in the case of Principal Commissioner of Income-Tax-1, Bhubaneswar vs. KuntalaMahapatra in of 2022, wherein at para 3 of the Order the Honourable Court has observed ‘the ITAT also noted the settled position in law that if an Assessee has wrongly offered an item of income or omitted to make a claim of deduction in the return, he was entitled to correct such a mistake by making a request to the AO to that effect.’ This observation of the Honourable Orissa High Court has been afformed by the Honourable Supreme Court in Special Leave Petition (civil) diary no(s) 5269/2024 dated 04.03.2024. (Copy of both the orders are enclosed for your honours ready reference and perusal). In view of the above facts and position of law, it is humbly submitted that the assessee’s claim for deduction under section 54of the IT Act, 1961 may kindly be allowed.”
To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions:
S. No. Contents Pages 1 Written submissions 01-03 2 Copy of written submissions made before learned CIT(A) dated 04-06 26/02/2025 3 Ack. Receipt of filing letter dated 28.11.2019 before learned 07-07 Assessing Officer 4 Copy of letter dated 28.11.2019 submitted before learned 08-08 Assessing Officer 5 Valuation Report 09-15
The ld. AR of the assessee in addition to the above written submission so filed vehemently argued that the assessee during the course of assessment proceedings filed revised computation of income claiming deduction u/s 54 of the Act instead of 54F of the Act as claimed originally.
The AO did not consider this contention or prayer of the assessee. The assessee has vide his letter dated 28.11.2019 put forward that claim by acknowledgement No. 28111912377818 both this letter and acknowledgement placed on record at para nos. 7 & 8. Based on that contention the decision relied upon by the ld. CIT(A) and that of the AO the case of Goetze (India) Ltd. vs. CIT (2006) does not apply on the facts of the case whereas the same is replied as per the decision of Gujarat High Court in the case of PCIT vs. Babu Bhai Raman Bhai Patel [2017] 84 taxmann.com 32 (Gujarat).
Per contra, ld. DR relied upon the contentions recorded para 4.3 by the ld. CIT(A) and the assessee. Since he has not claimed the deduction by filing revised return in accordance with law and therefore, ld. DR heavily relied upon the decision of the Hon'ble Supreme Court in case of Goetze (India) Ltd. v. CIT [2006] 284 ITR 323/157 Taxman 1 in support of his submission that the assessee was required to submit the revised return of income and mere submitting revised computation of income was not permissible.
We have heard the rival contentions and perused the material placed on record. The solitary ground in this appeal taken by the assessee is that the assessee offered the capital gain and filed the return of income claiming that the claim was under the wrong section the assessee vide letter dated 16.09.2019 and 28.11.2019 requested ld. AO to allow the claim under the correct section which was section 54 of the Act. The ld. AO did not discuss the same in the assessment order and proceeded with what has been submitted by the assessee in the ITR filed and assessed accordingly. When the matter carried before the ld. CIT(A) he stated in his order that what the assessee is claiming was not mentioned in the assessment order and even other he relied upon the decision of the apex court in the case of Goetze (India) Ltd. vs CIT (2006), and stated that since the assessee has not claimed that deduction by filling the revised return of income and thereby the appeal of the assessee was dismissed.
As is evident from the record that the assessee made the claim by filling the revised computation of income vide online submission filed on 28.11.2019 vide acknowledgment no. 28111912377818. The said acknowledgement is appearing at page 7 of the paper book filed by the assessee. Having not disputed this acknowledgement by the revenue before us we are of the considered view that the assessee has revised the claim from 54F to 54 in the assessment proceeding and there was no new claim and therefore, the reliance on the decision of apex court in the case of assessee modified his claim and therefore, reliance on that decision will not help the revenue. Whereas in case of the assessee revenue did not dispute the capital gain and thereby the claim u/s. 54 on the merits of it and the same cannot be denied when the assessee claimed it by filling the revised computation of income. As is held in the case of PCIT-1 Vs. Babubhai Ramanbhai Patel 84 taxmann.com 32 (Gujarat) that there is clear distinction between the making a fresh claim and revision of claim and therefore, the revision of claim cannot be denied to the assessee. In the light of the discussion recorded here in above we consider the solitary ground raised by the assessee and thereby the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 04/07/2025. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 04/07/2025 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- Mishri Lal, Ajmer izR;FkhZ@ The Respondent- ITO, Ward-1(2), Ajmer 2.