SANJAY GOPALDAS BAJAJ,MUMBAI vs. ITO WARD-12(1)(1), MUMBAI

4. On the facts and circumstances of the case and in law, the 4. On the facts and circumstances of the case and in law, the 4. On the facts and circumstances of the case and in law, the Assessing Officer erred in calculating the tax on LTCG at 30% Assessing Officer erred in calculating the tax on L Assessing Officer erred in calculating the tax on L instead of the applicable rate of 20%. The NFAC (A) did not address instead of the applicable rate of 20%. The NFAC (A) did not address instead of the applicable rate of 20%. The NFAC (A) did not address this error made by the AO, which has this error made by the AO, which has resulted in an incorrect tax resulted in an incorrect tax demand. The correct rate of 20% in respect of LTCG on capital gains demand. The correct rate of 20% in respect of LTCG on capital gains demand. The correct rate of 20% in respect of LTCG on capital gains should be granted. should be granted.

5. On the facts and cir 5. On the facts and circumstances of the case and in law the NFAC cumstances of the case and in law the NFAC (appeals) erred in concluding that the appellant attempted to evade (appeals) erred in concluding that the appellant attempted to evade (appeals) erred in concluding that the appellant attempted to evade taxes on rental income. The appellant had correctly shown the rental taxes on rental income. The appellant had correctly shown the rental taxes on rental income. The appellant had correctly shown the rental incomes of the two co owned properties in the return of income filed incomes of the two co owned properties in the return of income filed incomes of the two co owned properties in the return of income filed by him and had correctly claimed credit for TDS in respect of his co and had correctly claimed credit for TDS in respect of his co and had correctly claimed credit for TDS in respect of his co- owned share. The AO incorrectly made an observation in respect of owned share. The AO incorrectly made an observation in respect of owned share. The AO incorrectly made an observation in respect of making an addition of Rs. 4,14,649/. The Appellant also produced making an addition of Rs. 4,14,649/. The Appellant also produced making an addition of Rs. 4,14,649/. The Appellant also produced additional evidences with reference to the rental incomes before the additional evidences with reference to the rental incomes befor additional evidences with reference to the rental incomes befor before the NFAC (appeals) which have been ignored to by the first before the NFAC (appeals) which have been ignored to by the first before the NFAC (appeals) which have been ignored to by the first appellate authority which is against the principles of natural justice. appellate authority which is against the principles of natural justice. appellate authority which is against the principles of natural justice.

6. On the facts and circumstances of the case and in law the 6. On the facts and circumstances of the case and in law the 6. On the facts and circumstances of the case and in law the appellant contends that the Assessing Officer did not provide appellant contends that the Assessing Officer did appellant contends that the Assessing Officer did adequate opportunity of being heard during the assessment adequate opportunity of being heard during the assessment adequate opportunity of being heard during the assessment proceedings, as the notices issued were not sufficient to address all proceedings, as the notices issued were not sufficient to address all proceedings, as the notices issued were not sufficient to address all concerns raised by the appellant. The action of the AO vitiates the concerns raised by the appellant. The action of the AO vitiates the concerns raised by the appellant. The action of the AO vitiates the principles of natural justice. principles of natural justice.

2.1 During the reassessment proceedings, the Assessing Officer During the reassessment proceedings, the Assessing Officer During the reassessment proceedings, the Assessing Officer noticed that the salary income of ₹60,95,500/- was duly declared in noticed that the salary income of was duly declared in the return filed in response to the notice under section 148 and, the return filed in response to the notice under section 148 and, the return filed in response to the notice under section 148 and, therefore, no separate addition was made on that count. With therefore, no separate addition was made on that count. W therefore, no separate addition was made on that count. W regard to rental income of ₹12,00,000/-, it was observed that the regard to rental income of , it was observed that the assessee had declared only 50% thereof, contending that the assessee had declared only 50% thereof, contending that the assessee had declared only 50% thereof, contending that the remaining 50% belonged to his mother, Smt. Saroj Bajaj. Though remaining 50% belonged to his mother, Smt. Saroj Bajaj. Though remaining 50% belonged to his mother, Smt. Saroj Bajaj. Though the Assessing Officer noted that the assessee had claimed credit for the Assessing Officer noted that the assessee had claimed credi the Assessing Officer noted that the assessee had claimed credi the entire tax deducted at source of ₹1,20,000/ the entire tax deducted at source of 1,20,000/-, no separate addition was ultimately made on this issue. addition was ultimately made on this issue.

2.2 The Assessing Officer further noticed that the assessee had The Assessing Officer further noticed that the assessee had The Assessing Officer further noticed that the assessee had term capital gain of ₹67,91,537/- arising from the declared long-term capital gain of arising from the sale of a residential property. While the computation of long ential property. While the computation of long ential property. While the computation of long-term capital gain was accepted, the Assessing Officer rejected the capital gain was accepted, the Assessing Officer rejected the capital gain was accepted, the Assessing Officer rejected the assessee’s claim of deduction under section 54 of the Act assessee’s claim of deduction under section 54 of the Act assessee’s claim of deduction under section 54 of the Act amounting to ₹67,91,537/ 67,91,537/-. The sole reason for denial of deduction . The sole reason for denial of deduction was that the assessee had not filed a return of income under ssee had not filed a return of income under ssee had not filed a return of income under section 139(1) of the Act and, therefore, according to the Assessing section 139(1) of the Act and, therefore, according to the Assessing section 139(1) of the Act and, therefore, according to the Assessing Officer, the claim under section 54 could not be entertained in the Officer, the claim under section 54 could not be entertained in the Officer, the claim under section 54 could not be entertained in the return filed in response to notice under section 148 of the Act. return filed in response to notice under section 148 of the Act. return filed in response to notice under section 148 of the Act.

Sanjay Gopladas Bajaj Consequently, by order dated 19.03.2022 passed under section 147 ly, by order dated 19.03.2022 passed under section 147 ly, by order dated 19.03.2022 passed under section 147 read with section 144B of the Act, the long read with section 144B of the Act, the long-term capital gain was term capital gain was brought to tax in full. The learned Commissioner of Income-tax brought to tax in full. The learned Commissioner of Income brought to tax in full. The learned Commissioner of Income (Appeals) affirmed the action of the Assessing Officer. (Appeals) affirmed the action of the Assessing Officer. (Appeals) affirmed the action of the Assessing Officer.

3. In grounds Nos. 1 to 4, the assessee has assailed the Nos. 1 to 4, the assessee has assailed the Nos. 1 to 4, the assessee has assailed the disallowance of deduction claimed under section 54 of the Act. The disallowance of deduction claimed under section 54 of the Act. The disallowance of deduction claimed under section 54 of the Act. The limited issue for our consideration is whether the assessee is limited issue for our consideration is whether the assessee is limited issue for our consideration is whether the assessee is entitled to claim deduction under section 54 of the Act in the return entitled to claim deduction under section 54 of the Act in the return entitled to claim deduction under section 54 of the Act in the return of income filed in response to notice under section 148, despite not ed in response to notice under section 148, despite not ed in response to notice under section 148, despite not having filed the original return under section 139(1) of the Act. having filed the original return under section 139(1) of the Act. having filed the original return under section 139(1) of the Act.

Sanjay Gopladas Bajaj The assessee contended that though The assessee contended that though return of income was not of income was not filed in terms of section 139(1) of the Act due to of section 139(1) of the Act due to of section 139(1) of the Act due to sudden disappearance of the accountant of the accountant, but taxes were duly paid but taxes were duly paid in the relevant year itself. It was further claimed that in return t was further claimed that in return t was further claimed that in return of income filed response to notice u/s 148 filed response to notice u/s 148, the assessee duly included the the assessee duly included the Long Term Capital Gain from the sale of the residential property Long Term Capital Gain from the sale of the residential property Long Term Capital Gain from the sale of the residential property and which was further invested in the another residential property further invested in the another residential property further invested in the another residential property within the time frame as specified within the time frame as specified under section 54 of the A n 54 of the Act.

4.2 The claim of the assessee was rejected by the lower authorities The claim of the assessee was rejected by the lower authorities The claim of the assessee was rejected by the lower authorities solely on the ground that such deduction was not claimed in the solely on the ground that such deduction was not claimed in the solely on the ground that such deduction was not claimed in the original return, which admittedly was never filed. The learned original return, which admittedly was never filed. The learned original return, which admittedly was never filed. The learned Commissioner of Income Commissioner of Income-tax (Appeals) placed reliance on the d reliance on the decision of the Hon’ble Supreme Court in decision of the Hon’ble Supreme Court in CIT v. Sun Engineering CIT v. Sun Engineering Works (P.) Ltd. (198 ITR 297) to hold that a claim not made in the (198 ITR 297) to hold that a claim not made in the (198 ITR 297) to hold that a claim not made in the original original original proceedings proceedings proceedings cannot cannot cannot be be be permitted permitted permitted in in in reassessment reassessment reassessment proceedings. The relevant findings of the Ld. CIT( relevant findings of the Ld. CIT(A) is reproduced as A) is reproduced as under: “7.4 It is seen that the appellant has not offered the above discussed 7.4 It is seen that the appellant has not offered the above discussed 7.4 It is seen that the appellant has not offered the above discussed income in the regular ITR as no return had been filed voluntarily income in the regular ITR as no return had been filed voluntarily income in the regular ITR as no return had been filed voluntarily thereby willfully attempting to evade tax. It was only after the re thereby willfully attempting to evade tax. It was only after the re thereby willfully attempting to evade tax. It was only after the re assessment proceedings i assessment proceedings initiated against the appellant, filed its ITR nitiated against the appellant, filed its ITR and claimed the deductions u/s 54 of the Act. Reliance is placed on and claimed the deductions u/s 54 of the Act. Reliance is placed on and claimed the deductions u/s 54 of the Act. Reliance is placed on the Supreme Court judgment in 198 ITR 0297, (1992) CIT vs SUN the Supreme Court judgment in 198 ITR 0297, (1992) CIT vs SUN the Supreme Court judgment in 198 ITR 0297, (1992) CIT vs SUN ENGINEERING WORKS (P) LTD, where in the apex court held that ENGINEERING WORKS (P) LTD, where in the apex court held that ENGINEERING WORKS (P) LTD, where in the apex court held that the object and purp the object and purpose of the proceedings under Section 147 of the ose of the proceedings under Section 147 of the Act is for the benefit of the revenue and not for the benefit of the Act is for the benefit of the revenue and not for the benefit of the Act is for the benefit of the revenue and not for the benefit of the assessee and, therefore, in the reassessment proceedings, the assessee and, therefore, in the reassessment proceedings, the assessee and, therefore, in the reassessment proceedings, the assessee cannot be permitted to convert the reassessment assessee cannot be permitted to convert the reassessment assessee cannot be permitted to convert the reassessment proceedings as his a proceedings as his appeal or revision in disguise and seek relief in ppeal or revision in disguise and seek relief in Sanjay Gopladas Bajaj respect of items earlier rejected or claim relief in respect of items not respect of items earlier rejected or claim relief in respect of items not respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to claimed in the original assessment proceedings, unless relatable to claimed in the original assessment proceedings, unless relatable to 'escaped income', and reagitate the concluded matters. Even in 'escaped income', and reagitate the concluded matters. Even in 'escaped income', and reagitate the concluded matters. Even in cases where the claims of the assessee during the course of ses where the claims of the assessee during the course of ses where the claims of the assessee during the course of reassessment proceedings related to the escaped assessment are reassessment proceedings related to the escaped assessment are reassessment proceedings related to the escaped assessment are accepted, still the allowance of such claims has to be limited to the accepted, still the allowance of such claims has to be limited to the accepted, still the allowance of such claims has to be limited to the extent to which they reduce the income to that originally assessed. extent to which they reduce the income to that originally assesse extent to which they reduce the income to that originally assesse The income for purposes of 'reassessment' cannot be reduced The income for purposes of 'reassessment' cannot be reduced The income for purposes of 'reassessment' cannot be reduced beyond the income originally assessed.” beyond the income originally assessed.” 4.3 In our considered view, the reliance placed by the learned In our considered view, the reliance placed by the learned In our considered view, the reliance placed by the learned Commissioner of Income Commissioner of Income-tax (Appeals) on the aforesaid decision is tax (Appeals) on the aforesaid decision is misplaced and founded on an incomplete appreciation of the ratio misplaced and founded on an incomplete appreciation of the ratio misplaced and founded on an incomplete appreciation of the ratio laid down by the Hon’ble Supreme Court. A careful reading of the laid down by the Hon’ble Supreme Court. A careful reading of the laid down by the Hon’ble Supreme Court. A careful reading of the judgment in Sun Engineering Works (P.) Ltd. Sun Engineering Works (P.) Ltd.(supra) (supra) makes it abundantly clear that while reassessment proceedings cannot be abundantly clear that while reassessment proceedings cannot be abundantly clear that while reassessment proceedings cannot be converted into a forum for reopening concluded matters unrelated converted into a forum for reopening concluded matters unrelated converted into a forum for reopening concluded matters unrelated to escaped income, the assessee is not precluded from raising to escaped income, the assessee is not precluded from raising to escaped income, the assessee is not precluded from raising claims which are directly relatable to the income that has escaped which are directly relatable to the income that has escaped which are directly relatable to the income that has escaped assessment. The Supreme Court has categorically observed that, in assessment. The Supreme Court has categorically observed that, in assessment. The Supreme Court has categorically observed that, in reassessment proceedings, it is open to the assessee to put forth reassessment proceedings, it is open to the assessee to put forth reassessment proceedings, it is open to the assessee to put forth claims for deduction or non claims for deduction or non-taxability in respect of such escape taxability in respect of such escaped income. The relevant observation of the Hon’ble Supreme Court in The relevant observation of the Hon’ble Supreme Court in The relevant observation of the Hon’ble Supreme Court in the reproduced as under: the reproduced as under:

“39. As a result of the aforesaid discussion we find that in proceedings 9. As a result of the aforesaid discussion we find that in proceedings 9. As a result of the aforesaid discussion we find that in proceedings under section 147 the ITO may bring to under section 147 the ITO may bring to charge items of income which charge items of income which had escaped assessment had escaped assessment other than or in addition to that item or items other than or in addition to that item or items which have led to the issuance of notice under section 148 and where which have led to the issuance of notice under section 148 and where which have led to the issuance of notice under section 148 and where reassessment is made under section 147 in respect of income which has reassessment is made under section 147 in respect of income which has reassessment is made under section 147 in respect of income which has escaped tax, the ITO's jurisdiction is confined to only such income which escaped tax, the ITO's jurisdiction is confined to only such income w escaped tax, the ITO's jurisdiction is confined to only such income w has escaped tax or has been under has escaped tax or has been under-assessed and does not extend to assessed and does not extend to revising, reopening or reconsidering the whole assessment or permitting revising, reopening or reconsidering the whole assessment or permitting revising, reopening or reconsidering the whole assessment or permitting

Sanjay Gopladas Bajaj the assessee to reagitate questions which had been decided in the the assessee to reagitate questions which had been decided in the the assessee to reagitate questions which had been decided in the original assessment proceedings. It is only the original assessment proceedings. It is only the under-assessment which assessment which is set aside and not the entire assessment when reassessment is set aside and not the entire assessment when reassessment is set aside and not the entire assessment when reassessment proceedings are initiated. The ITO cannot make an order of proceedings are initiated. The ITO cannot make an order of proceedings are initiated. The ITO cannot make an order of reassessment inconsistent with the original order of assessment in reassessment inconsistent with the original order of assessment in reassessment inconsistent with the original order of assessment in respect of matters which are not the subject respect of matters which are not the subject matter of proceedings under matter of proceedings under section 147. An assessee cannot resist validly initiated reassessment section 147. An assessee cannot resist validly initiated reassessment section 147. An assessee cannot resist validly initiated reassessment proceedings under this section merely by showing that other income proceedings under this section merely by showing that other income proceedings under this section merely by showing that other income which had been assessed originally was at too high a figure except in which had been assessed originally was at too high a figure except in which had been assessed originally was at too high a figure except in cases under section 1 cases under section 152(2). The words 'such income' in section 147 52(2). The words 'such income' in section 147 clearly refer to the Income which is chargeable to tax but has 'escaped clearly refer to the Income which is chargeable to tax but has 'escaped clearly refer to the Income which is chargeable to tax but has 'escaped assessment and the ITO's jurisdiction under the section is confined only assessment and the ITO's jurisdiction under the section is confined only assessment and the ITO's jurisdiction under the section is confined only to such income which has escaped assessment. It does not extend to to such income which has escaped assessment. It does not extend t to such income which has escaped assessment. It does not extend t reconsidering generally the concluded earlier assessment. Claims which reconsidering generally the concluded earlier assessment. Claims which reconsidering generally the concluded earlier assessment. Claims which have been disallowed in the original assessment proceeding cannot be have been disallowed in the original assessment proceeding cannot be have been disallowed in the original assessment proceeding cannot be permitted to be reagitated on the assessment being reopened for permitted to be reagitated on the assessment being reopened for permitted to be reagitated on the assessment being reopened for bringing to tax certain income which had escaped a bringing to tax certain income which had escaped assessment because ssessment because the controversy on reassessment is confined to matters which are the controversy on reassessment is confined to matters which are the controversy on reassessment is confined to matters which are relevant only in respect of the income which had not been brought to tax relevant only in respect of the income which had not been brought to tax relevant only in respect of the income which had not been brought to tax during the course of the original assessment, A matter not agitated in during the course of the original assessment, A matter not agitated in during the course of the original assessment, A matter not agitated in the concluded original assess the concluded original assessment proceedings also cannot be permitted ment proceedings also cannot be permitted to be agitated in the reassessment proceedings unless relatable to the to be agitated in the reassessment proceedings unless relatable to the to be agitated in the reassessment proceedings unless relatable to the item sought to be taxed as 'escaped income, Indeed, in the item sought to be taxed as 'escaped income, Indeed, in the item sought to be taxed as 'escaped income, Indeed, in the reassessment proceedings for bringing to tax items which had escaped reassessment proceedings for bringing to tax items which had escaped reassessment proceedings for bringing to tax items which had escaped assessment, It would be open to an assessee to put forward claims for would be open to an assessee to put forward claims for would be open to an assessee to put forward claims for deduction of any expenditure in respect of that income or the non- deduction of any expenditure in respect of that income or the non deduction of any expenditure in respect of that income or the non taxability of the items at all. Keeping in view the object and purpose of taxability of the items at all. Keeping in view the object and purpose of taxability of the items at all. Keeping in view the object and purpose of the proceedings under section 147 which are for the benefit of the the proceedings under section 147 which are for the benefit o the proceedings under section 147 which are for the benefit o revenue and not an assessee, an assessee cannot be permitted to revenue and not an assessee, an assessee cannot be permitted to revenue and not an assessee, an assessee cannot be permitted to convert the reassessment proceedings as his appeal or revision, in convert the reassessment proceedings as his appeal or revision, in convert the reassessment proceedings as his appeal or revision, in disguise, and seek relief in respect of items earlier rejected or seek relief in respect of items earlier rejected or seek relief in respect of items earlier rejected or claim relief in respect of items not claimed in the original claim relief in respect of items not claimed in the o claim relief in respect of items not claimed in the o assessment proceeding, unless relatable to 'escaped income and assessment proceeding, unless relatable to 'escaped income assessment proceeding, unless relatable to 'escaped income reagitate the concluded matters. reagitate the concluded matters. Even in cases where the claims of the Even in cases where the claims of the assessee during the course of reassesament proceedings related to the assessee during the course of reassesament proceedings related to the assessee during the course of reassesament proceedings related to the escaped assessment are accepted, still the escaped assessment are accepted, still the allowance of such claims allowance of such claims has to be limited to the extent to which they reduce the income to that has to be limited to the extent to which they reduce the income to that has to be limited to the extent to which they reduce the income to that originally assessed. The income for purposes of 'reassessment' cannot originally assessed. The income for purposes of 'reassessment' cannot originally assessed. The income for purposes of 'reassessment' cannot be reduced beyond the income originally assessed.” be reduced beyond the income originally assessed.” ( emphasis supplied externally) ( emphasis supplied externally)

Sanjay Gopladas Bajaj In the present case, the escaped income is the long In the present case, the escaped income is the long In the present case, the escaped income is the long-term capital gain arising from sale of a residential property. The capital gain arising from sale of a residential property. The capital gain arising from sale of a residential property. The deduction claimed under section 54 is intrinsically and directly deduction claimed under section 54 is intrinsically and directly deduction claimed under section 54 is intrinsically and directly connected with such capital gain. Therefore, the claim is not connected with such capital gain. Therefore, the claim is not connected with such capital gain. Therefore, the claim is not extraneous or unrelated to the subject matter of reassessment but or unrelated to the subject matter of reassessment but or unrelated to the subject matter of reassessment but goes to the computation of the very income brought to tax in the goes to the computation of the very income brought to tax in the goes to the computation of the very income brought to tax in the reassessment proceedings. We also find support for this view from reassessment proceedings. We also find support for this view from reassessment proceedings. We also find support for this view from the decision of the Coordinate Bench in Smt. Amina Ismil Rangari Smt. Amina Ismil Rangari the decision of the Coordinate Bench in V/s. Income Tax Officer wd . Income Tax Officer wd-17 (2)(4) [2017] 86 taxmann.com 17 (2)(4) [2017] 86 taxmann.com 160 (Mumbai-Trib.), Trib.), wherein it has been held that the provisions wherein it has been held that the provisions of section 54F do not prescribe filing of a return within the time of section 54F do not prescribe filing of a return within the time of section 54F do not prescribe filing of a return within the time stipulated under section 139 as a condition precedent for claiming stipulated under section 139 as a condition precedent for claiming stipulated under section 139 as a condition precedent for claiming the exemption, and that a claim raised in a return filed in response the exemption, and that a claim raised in a return filed in response the exemption, and that a claim raised in a return filed in response to notice under section 148 cannot be rejected merely on the to notice under section 148 cannot be rejected merely on the to notice under section 148 cannot be rejected merely on the ground of delay in filing the return. ground of delay in filing the return. The relevant The relevant finding of the coordinate Bench is reproduced as under: reproduced as under:

“9. We now in the We now in the backdrop of our aforesaid observations that the backdrop of our aforesaid observations that the 'return of income filed by the assesse of income filed by the assesse after the expiry of the time after the expiry of the time period specified in the notice as 148 continues t period specified in the notice as 148 continues to be a 'return of o be a 'return of income filed u/ income filed u/s 148, though involving some delay, would now s 148, though involving some delay, would now deliberate upon the validity of the claim of the assesse pon the validity of the claim of the assessee raised u/s pon the validity of the claim of the assesse 54F. We have perused the statutory provision contemplated u/s 54F 54F. We have perused the statutory provision contemplated u/s 54F 54F. We have perused the statutory provision contemplated u/s 54F and are of the considered view that the same does not cast any and are of the considered view that the same does not cast any and are of the considered view that the same does not cast any statutory obligation on the part of assessee to file his return of statutory obligation on the part of assessee to file his return of statutory obligation on the part of assessee to file his return of income within the stipulated time period contemplated u/s 139 or ome within the stipulated time period contemplated u/s 139 or ome within the stipulated time period contemplated u/s 139 or 148 of the 'Act', as a precondition for enti 148 of the 'Act', as a precondition for entitling him to claim exemption ing him to claim exemption under the said statutory provision. We are of the considered view under the said statutory provision. We are of the considered view under the said statutory provision. We are of the considered view that the reference to the term dues date' for furnishing of return of that the reference to the term dues date' for furnishin that the reference to the term dues date' for furnishin income u/s. 139 as contemplated in section 54F(4) is in context of me u/s. 139 as contemplated in section 54F(4) is in context of me u/s. 139 as contemplated in section 54F(4) is in context of the time limit within which the amount which had not been the time limit within which the amount which had not been the time limit within which the amount which had not been Sanjay Gopladas Bajaj appropriated by the assessee towards making of investment in the appropriated by the assessee towards making of investment in the appropriated by the assessee towards making of investment in the purchase and/or construction of the new residential house is purchase and/or construction of the new residential purchase and/or construction of the new residential permitted to be deposited in the Capital Gains Account Scheme, permitted to be deposited in the Capital Gains Account Scheme, permitted to be deposited in the Capital Gains Account Scheme, 1998, which thereafter is to be withdrawn and utilized as per the 1998, which thereafter is to be withdrawn and utilized as per the 1998, which thereafter is to be withdrawn and utilized as per the terms contemplated in the said statutory provision. We are of the terms contemplated in the said statutory provision. We are of the terms contemplated in the said statutory provision. We are of the considered view that Section 54F, neither provides as a pre- considered view that Section 54F, neither provides considered view that Section 54F, neither provides condition the requirement of filing of the 'return of income by the condition the requirement of filing of the 'return of income by the condition the requirement of filing of the 'return of income by the assessee within the stipulated time period, nor places any embargo assessee within the stipulated time period, nor places any embargo assessee within the stipulated time period, nor places any embargo as regards claim of such exemption in as regards claim of such exemption in a case the return of income a case the return of income filed by the assessee involves some delay. We ed by the assessee involves some delay. We thus in the backdrop thus in the backdrop of our aforesaid observations are of the considered view that now of our aforesaid observations are of the considered view that now of our aforesaid observations are of the considered view that now when the assessee had raised the claim u/s 54F in the 'return of when the assessee had raised the claim u/s 54F in the 'return of when the assessee had raised the claim u/s 54F in the 'return of income' filed by her in compliance to notice u income' filed by her in compliance to notice u/s 148, therefore, it was s 148, therefore, it was obligatory on the part of the A. obligatory on the part of the A.O to have deliberated on the O to have deliberated on the entitlement of the assessee towards claim of exemption u/s 54F, on entitlement of the assessee towards claim of exemption u/s 54F, on entitlement of the assessee towards claim of exemption u/s 54F, on merits. We do not find ourselves to be in agreement with the merits. We do not find ourselves to be in agreement with the merits. We do not find ourselves to be in agreement with the observations of the A.O that the claim towards exemption u/s 54F observations of the A.O that the claim towards exemption u/s 54F observations of the A.O that the claim towards exemption u/s 54F raised by the assessee in her 'ret raised by the assessee in her 'return of income' was liable to be urn of income' was liable to be scrapped solely for the reason that the filing of such 'return of scrapped solely for the reason that the filing of such 'return of scrapped solely for the reason that the filing of such 'return of income involved some delay. We thus in light of our aforesaid income involved some delay. We thus in light of our aforesaid income involved some delay. We thus in light of our aforesaid observations set aside the order of the CIT (A), who we find had observations set aside the order of the CIT (A), who we find had observations set aside the order of the CIT (A), who we find had concurred with the view taken b concurred with the view taken by the A.O that the assessee was not y the A.O that the assessee was not entitled towards claim of exemption u/s 54F. We however not being entitled towards claim of exemption u/s 54F. We however not being entitled towards claim of exemption u/s 54F. We however not being oblivious of the fact that due to dismissal of the claim of exemption in oblivious of the fact that due to dismissal of the claim of exemption in oblivious of the fact that due to dismissal of the claim of exemption in limine by the A.O, there had been no occasion for the lower limine by the A.O, there had been no occasion for the lower limine by the A.O, there had been no occasion for the lower authorities to have d authorities to have deliberated upon the satisfaction of the requisite eliberated upon the satisfaction of the requisite conditions contemplated u/s 54F by the assessee, therefore, in all conditions contemplated u/s 54F by the assessee, therefore, in all conditions contemplated u/s 54F by the assessee, therefore, in all fairness restore the matter to the file of A.O for making the fairness restore the matter to the file of A.O for making the fairness restore the matter to the file of A.O for making the necessary verifications. We may however observe that as the necessary verifications. We may however observe that as the necessary verifications. We may however observe that as the assessee had duri assessee had during the course of the hearing of the appeal ng the course of the hearing of the appeal submitted complete details as regards his entitlement towards claim submitted complete details as regards his entitlement towards claim submitted complete details as regards his entitlement towards claim of exemption u/s 54F, which we find had been reproduced by the of exemption u/s 54F, which we find had been reproduced by the of exemption u/s 54F, which we find had been reproduced by the CIT (A) in his order dated. 29.03.2013, therefore, the A.O is directed CIT (A) in his order dated. 29.03.2013, therefore, the A.O is directed CIT (A) in his order dated. 29.03.2013, therefore, the A.O is directed to verify the genuineness and veracity of the claim of the assessee in he genuineness and veracity of the claim of the assessee in he genuineness and veracity of the claim of the assessee in the backdrop of the said facts and figures provided by the assessee. the backdrop of the said facts and figures provided by the assessee. the backdrop of the said facts and figures provided by the assessee. That in case the facts and figures provided by the assessee are That in case the facts and figures provided by the assessee are That in case the facts and figures provided by the assessee are found to be in order, then claim of exemption u/s 54F, as raised by found to be in order, then claim of exemption u/s 54F, as raise found to be in order, then claim of exemption u/s 54F, as raise the assessee shall be allowed. Needless to say, the A.O shall during the assessee shall be allowed. Needless to say, the A.O shall during the assessee shall be allowed. Needless to say, the A.O shall during the course of the set aside proceedings afford an opportunity of the course of the set aside proceedings afford an opportunity of the course of the set aside proceedings afford an opportunity of being heard to the assessee to substantiate his aforesaid claim. The being heard to the assessee to substantiate his aforesaid claim. The being heard to the assessee to substantiate his aforesaid claim. The Ground of appeal no. 1 raised by the assessee is allowed for Ground of appeal no. 1 raised by the assessee is Ground of appeal no. 1 raised by the assessee is statistical purposes.” statistical purposes.”

Sanjay Gopladas Bajaj Further, it has been brought to our notice that in the case of Further, it has been brought to our notice that in the case of Further, it has been brought to our notice that in the case of the assessee’s wife, Smt. Ritu Bajaj, arising out of similar facts, the the assessee’s wife, Smt. Ritu Bajaj, arising out of similar facts, the the assessee’s wife, Smt. Ritu Bajaj, arising out of similar facts, the Assessing Officer has accepted the claim of deduction under section Assessing Officer has accepted the claim of deduction under section Assessing Officer has accepted the claim of deduction under section 54 made for the remaining 50% part of the investment in new 54 made for the remaining 50% part of the investment 54 made for the remaining 50% part of the investment residential property in the return filed pursuant to notice under residential property in the return filed pursuant to notice under residential property in the return filed pursuant to notice under section 148. This also lends support to the assessee’s contention section 148. This also lends support to the assessee’s contention section 148. This also lends support to the assessee’s contention that the claim cannot be rejected in that the claim cannot be rejected in limine.

4.6 In view of the foregoing discussion, we hold that the assessee In view of the foregoing discussion, we hold that the assessee In view of the foregoing discussion, we hold that the assessee is entitled, in law, to claim deduction under section 54 of the Act in titled, in law, to claim deduction under section 54 of the Act in titled, in law, to claim deduction under section 54 of the Act in the return of income filed in response to notice under section 148, the return of income filed in response to notice under section 148, the return of income filed in response to notice under section 148, provided the substantive conditions prescribed under the said provided the substantive conditions prescribed under the said provided the substantive conditions prescribed under the said section are duly satisfied. The lower authorities were, therefore, not section are duly satisfied. The lower authorities were, ther section are duly satisfied. The lower authorities were, ther justified in rejecting the claim solely on the ground that no original justified in rejecting the claim solely on the ground that no original justified in rejecting the claim solely on the ground that no original return under section 139(1) was filed. return under section 139(1) was filed.

4.7 Accordingly, we set aside the orders of the lower authorities on Accordingly, we set aside the orders of the lower authorities on Accordingly, we set aside the orders of the lower authorities on this issue and restore the matter to the file of the Assessing Officer this issue and restore the matter to the file of the Assessing Off this issue and restore the matter to the file of the Assessing Off for the limited purpose of verifying whether the assessee has for the limited purpose of verifying whether the assessee has for the limited purpose of verifying whether the assessee has fulfilled the conditions stipulated under section 54 of the Act. If the fulfilled the conditions stipulated under section 54 of the Act. If the fulfilled the conditions stipulated under section 54 of the Act. If the conditions are found to be satisfied, the deduction shall be allowed conditions are found to be satisfied, the deduction shall be allowed conditions are found to be satisfied, the deduction shall be allowed in accordance with law. in accordance with law.

4.8 In view of the above In view of the above direction, the ground relating to direction, the ground relating to application of tax rate of 30% as against 20% on long-term capital application of tax rate of 30% as against 20% on long application of tax rate of 30% as against 20% on long gain becomes infructuous. The Assessing Officer shall apply the gain becomes infructuous. The Assessing Officer shall apply the gain becomes infructuous. The Assessing Officer shall apply the Sanjay Gopladas Bajaj appropriate rate of tax only if, upon verification, the assessee is appropriate rate of tax only if, upon verification, the assessee is appropriate rate of tax only if, upon verification, the assessee is found not entitled to found not entitled to deduction under section 54.

4.9 The ground No. 1 to 4 of the assessee are allowed accordingly ground No. 1 to 4 of the assessee are allowed accordingly ground No. 1 to 4 of the assessee are allowed accordingly for statistical purposes. for statistical purposes.