SEEMA SRIVASTAVA,PATNA vs. ITO,DC/AC-6, PATNA, PATNA

Brief facts of the case are that the assessee is an individual and had filed the return of income for AY 2017-18 showing total income of Rs. 21,00,750/- under the head “income from other sources” and the case was selected for scrutiny through Computer Assisted Scrutiny Selection (in short 'CASS') to verify the issue on investment in immovable property, income from house property, capital gain/loss on sale of property, sales turnover/receipt and deduction/exemption from capital gains. The notice u/s 143(2) of the Act was issued and subsequently notice u/s 142(1) of the Act was also issued but there was no compliance by the assessee. The assessee had shown receipt of Rs. 2,87,77,235/- from sale of immovable property during the year under consideration and had claimed deduction u/s 48 of the Act in respect of cost of acquisition with indexation of Rs. 29,42,852/-. Further, the assessee had claimed deduction of Rs. 2,58,34,383/- u/s 54 of the Act and had shown ‘NIL’ income from long term capital gains on sale of immovable property during the year under consideration. It was also noted that the assessee had received Rs. 4,95,59,000/- from Arnyana Engycon Pvt. Ltd. and TDS of Rs. 2,47,795/- was deducted by the buyer I.T.A. No.: 715/PAT/2024 Assessment Year: 2017-18 Seema Srivastava. u/s 194-IA of the Act, and it was also observed that the assessee had received Rs. 15,00,000/- from Chitwan Blenders & Bottlers Pvt. Ltd. as rent and the tenant had deducted TDS of Rs. 1,50,000/- u/s 194-IB of the Act. The Ld. AO issued a show cause notice dated 30/11/2019 in response to which the reply was filed by the assessee. As regards the exemption u/s 54/54F of the Act, the assessee had submitted purchase deed of only the new asset against which the deduction was claimed. Therefore, the Ld. AO issued a final show cause notice. Subsequently, the total capital gain was worked out at Rs. 2,52,74,403/- which was lower than the capital gain of Rs. 2,58,34,383/- shown by the assessee in the return of income. However, the exemption u/s 54 of the Act was not allowed as the immovable property shown by the assessee was not a residential house. Further, the exemption u/s 54F of the Act was also not allowed as the assessee neither claimed any exemption u/s 54F of the Act nor had provided any details regarding all the applicable conditions deemed to be fulfilled as required u/s 54F of the Act. Accordingly, the exemption of Rs. 2,62,08,000/- claimed u/s 54 of the Act was disallowed and a sum of Rs. 2,58,34,383/- was added to the income of the assessee. No adverse view regarding the rent received was formed as the same had been shown under the head ‘income from other sources’ and the total income was accordingly assessed u/s 144 of the Act at Rs. 2,79,35,133/-. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who went through the submission of the assessee and dismissed the appeal. The relevant findings of the Ld. CIT(A) are as under: “Decision: Ground No. 1: It is submitted that the AO completed the assessment u/s 143(3) while making the addition u/s 144. The order is contradictory and bad, both in law and on facts. I.T.A. No.: 715/PAT/2024 Assessment Year: 2017-18 Seema Srivastava. It is noted that the submission of the appellant is not ground wise. The same is clear from the submission which is reproduced already. In the statement of facts also, the appellant has not specifically dealt with this ground. Further, on carefully perusing the assessment order, it is seen that the AO has mentioned "Assessed u/s 144 of the Act at a Total Income of Rs. 2,79,35,133/-" in the last para of the assessment order. However, there is no reference to the order being a best judgment order anywhere in the assessment order. The AO has considered the submissions of the assessee and has also referred to the results of enquiry made. Therefore, the mention of section 144 in last para of the assessment order appears to be an inadvertent mistake which needs to be ignored. Therefore, this ground is dismissed.

1 Ground Nos. 2 & 3 pertain to addition of Rs. 2,58,34,383/- as long term capital gain by disallowing the claim of deduction u/s 54. The details of the order of AO and basis of disallowance discussed in paras 5 to 5.4. 6.1.1 The appellant has filed a detailed submission. The first 7 pages of the submission discuss the AO's order. The submission of the appellant is to be found in pages 8 & 9 of the order which is followed by various case laws till the end of the order. The appellant has also not numbered the paragraphs in the submission. The relevant portion therefore starts just above the table on page 8 with the words "the whole assessment order was based on misappreciation of fact and total confusion of the learned Assessing Officer which can be seen from the following chart". 6.1.2 It is contended that the AO disallowed the claim of the assessee for clerical mistake of the section under which this exemption is claimed, whether it is section 54 or section 54F. The assessee submitted before the AO that the mistake was inadvertent. However, details of sale of land where the capital gain arises and purchase, cost of house property in New Delhi in which capital gain was utilized were also given. Since all details were available, it was the duty of the Taxing Authority to give all statutory allowance of exemption to the assessee, even when the assessee failed to claim that exemption. Accordingly, it is claimed that the AO's action was arbitrary, illegal and against provisions of law. She has relied on various case laws including the decision of the Supreme Court in the case of State of Kerala Vs. C. Velukutty (1966) 60 ITR 239 (SC) and Hukumchand Mills 6.1.3 I have considered the submission carefully. The AO has referred to the issue in para 7 mentioning that "the assessee did not sell a residential house, therefore, the claim of exemption u/s 54 was not correct". The AO has observed that it was sale of asset other than residential house; therefore, the provisions of section 54F would be applicable if the assessee I.T.A. No.: 715/PAT/2024 Assessment Year: 2017-18 Seema Srivastava. fulfils the other applicable conditions in section 54F. Thereafter, the AO has reproduced the parts of the section 54F which mention the conditions i.e. clause a and b. In concluding para of the order i.e. para 9, the AO has given a finding that "exemption u/s 54 of the IT Act cannot be given as the assessee has neither claimed any exemption u/s 54F nor has provided any details regarding whether she fulfills all the applicable conditions as mentioned in section 54F of the I T Act". 6.1.4 The entire submission of the appellant is based on the premise that the AO has disallowed the claim because it was not made under appropriate section in the return of income. The case laws referred in the submission also support the same contention. However, neither before the AO nor during the appellate proceedings, the appellant has submitted or discussed as to how she fulfills various conditions required for claiming the deduction u/s 54F. The AO has clearly disallowed the claim because of two reasons including the assessee not providing any details regarding whether she fulfills all the applicable conditions u/s 54F. The appellant having failed to do so even during the appellate proceedings, the claim of deduction/exemption cannot be allowed. Therefore, both the grounds are dismissed.

2 Ground No. 4 pertains to initiation of penalty proceedings u/s 270A. The ground being premature is dismissed.

3 Ground No. 5 is general in nature and does not require any adjudication.

In the result, the appeal is dismissed.” Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

Rival contentions were heard and the submissions made and the paper book filed have been examined. Before us it has been submitted vide written submission filed that before the Ld. AO, the assessee had submitted revised computation of income and the copy of deed dated 05.11.2016 in respect of newly purchased property having transaction value of Rs. 2,52,00,000/- situated at New Delhi and had also submitted the sale deed dated 26.10.2016 registered at Sub-