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Facts
The assessee, a senior citizen, sold a property and claimed exemption under section 54 of the Income Tax Act by purchasing a new residential property. The Assessing Officer denied the exemption because the purchase deed was not legible. The CIT(A) dismissed the appeal for non-prosecution.
Held
The Tribunal condoned the delay in filing the appeal. It found that the assessee had provided sufficient documentation for the purchase of the new property and the cost of construction. The Assessing Officer was incorrect in denying the deduction solely based on the illegibility of the purchase deed.
Key Issues
Whether the assessee is eligible for deduction under Section 54 of the Act when the purchase deed is not legible and whether the appeal should be restored to the Assessing Officer for fresh consideration.
Sections Cited
147, 144B, 54, 148
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH: BANGALORE
Before: SHRI PRASHANT MAHARISHI, VICE –
ORDER PER PRASHANT MAHARISHI, VICE – PRESIDENT 1.
Shri Honnappa Munivenkatareddy (the Assessee/Appellant) against the order passed by the National Faceless appeal Centre, Delhi dated 17.06.2025 wherein the Appeal filed by the Assessee against the Reassessment Order passed u/s. 147 r.w.s. 144B of the Act dated 14.03.2024 passed by the Assessment Unit of the Income Tax Department was dismissed.
The Ld. CIT(A) dismissed the Appeal of the Assessee because during the appellate proceedings the Assessee was given sufficient opportunities and therefore the Ld. CIT(A) stated that the Assessee is not effectively pursuing the Appeal and therefore he does not find any error in the addition made by the Ld. Assessing Officer of Rs. 22,04,635/- u/s. 54 of the Act.
The Assessee has preferred Appeal.
It was found that Assessee has received the order of the Ld. CIT(A) on 17.06.2025 but has filed the Appeal before us on 31.10.2025 and thereby causing a delay of 61 days. The Assessee preferred an application for condonation of delay. The claim of the Assessee is that he did not receive any E-mail id intimation or the order of the Ld. CIT (A), and no notice of hearing were also received, the order copy was also not sent to the Assessee. Therefore, the Assessee was not aware of any such order. It was stated that the Assessee is an aged person who is not conversant with income tax matters and therefore he was not aware about the order of the Ld. CIT(A). When he contacted his tax consultant, it was intimated to him that the Appellate Order had already passed and thereafter in October 2025 he filed the Appeal which has resulted in a delay of 61 days. The Assessee submits that the delay is unintentional, for sufficient cause and deserves to be condoned.
The Ld. Authorized Representative also reiterated the same thing. The Ld. Departmental Representative vehemently objected to the same.
I have carefully considered the contention and find that the delay caused by 61 days is on account of the old age of the Assessee, unawareness about the income tax, unintentional and bonafide. The delay is also because of the sufficient cause. Hence, I condone the same and admit the Appeal of the Assessee.
On the merits of the case, I have heard the rival counsels Shri Ravikiran, CA of Assessee and Shri Ganesh R Gale, Standing Counsel for the Department.
Page 3 of 6 8. Brief facts of the case show that the Assessee is a senior citizen who sold the property for a sale consideration of Rs. 50,81,388/- which was purchased by him earlier, but date of acquisition is considered as 01.01.2001 and date of sale[transfer] was 23.12.2017. The Assessee purchased the land andconstructed a buildingthereon at total consideration of Rs. 15,53,452/- in financial year 2009-10. It has resulted in a capital gain of Rs. 22,04,635/- against which the Assessee purchased the residential house property on 18.01.2018 at a total consideration of Rs. 23,55,875/- and therefore his total capital gain was nil.
The information was received by the Ld. Assessing Officer that Assessee has sold an immovable property for Rs. 50,81,338/- and Assessee is an individual and is non-filer did not file his return of income. The Ld. Assessing Officer initiated the reassessment proceedings by issuing notice u/s. 148 of the Act on 25.08.2022 which was responded to by filing a return of income at a total income of Rs. 2,73,960/-.
The Assessee is a pensioner from Karnataka State Road Transport Corporation, who has agricultural income and income from other business. During reassessment proceedings, the Assessee submitted the complete details in form of income statement, sale deed and statement of income. However, the Ld. Assessing Officer asked for the further details with respect to the cost of construction of building as well as the copy of the purchase of land and purchase deed of new property. In response to that show cause notice, the Assessee submitted the purchase deed of land for Rs. 8,000/- in financial year 2001-02. For the construction of the property, the Assessee submitted that construction was carried out in 2009. However, all the invoices and payment receipts are misplaced. The Assessee obtained the report of the authorized valuer that the cost of the construction of Page 4 of 6 the property is as per the CPWD rates wherein such valuation was of Rs. 15,53,452/-.He submitted that Assessee has claimed deduction on the same. Assessee also stated that he has invested the capital gain and reinvestment in the residential house property. The Assessee furnished a copy of the purchase deed where the cost of land is stated to be Rs. 4,80,000/- and cost of constructing the new property was Rs. 18,55,875/-. Thus, the claim of the Assessee is that no long term capital gain is chargeable to tax in the hands of the Assessee.
The Ld. Assessing Officer noted that capital gain chargeable tax worked out by the Assessee at Rs. 22,04,635/- is correct but the claim of the deduction u/s. 54 of the Act to purchase of new property is not to be granted as the purchase deed is not legible. Accordingly, such claim was denied. The Ld. Assessing Officer passed an Assessment Order on 14.03.2024 determining the total taxable income of the Assessee at Rs. 24,88,596/-.
The Assessee aggrieved preferred an Appeal before the Ld. CIT(A) who dismissed the Appeal of the Assessee for non-prosecution.
The Assessee is in appeal before us. The Assessee has submitted a paper book submitting that the Assessee deserves to be granted the benefit of purchasing new property. Complete details of the same were provided. The Assessee before us submitted that registered purchase deed of the new property, the report of the structural engineer for the cost of construction, and payment details were also provided to the Ld. Assessing Officer. The only reason that the new purchase deed of land as well as the details of the construction of new purchase deed of the land was not legible, the Ld. Assessing Officer did not grant the deduction. I find that the purchase price of the land is merely Rs. 4,80,000/- whereas the cost of construction of residential house property is Rs 18,55,875/- for which the Assessee Page 5 of 6 has provided the valuation report, the bank statement for incorporating the cost of construction. The bank statement also shows the source of the fund for purchase of land. In view of this, the Ld. Assessing Officer was not correct in not granting the Assessee the benefit of section 54 of the Act for purchase of new residential house. The Ld. CIT(A) has dismissed the Appeal of the Assessee for non- prosecution. The claim of the Assessee is that no notices are received as well as no Appellate Order is also received by him. In the order of the Ld. CIT(A) I also do not find that the Assessee was issued notices, when and were received or not.
In view of the above facts, I restore the whole issue back to the file of the Ld. Assessing Officer with a direction to Assessee to show the Ld. Assessing Officer that Assessee has purchased the land on which construction of residential house was made and therefore after verification, the Ld. Assessing Officer is directed to grant the deduction u/s. 54 of the Act, if same is in accordance with the law.
In the result Appeal filed by the Assessee is allowed for statistical purposes.
Order pronounced in the open court on 05th February, 2026.