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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI N. V. VASUDEVAN & SHRI B. R. BASKARAN
Per B. R. Baskaran, Accountant Member
The assessee has filed this appeal challenging the revision order dated 27.07.2017 passed by learned Principal CIT, Bangalore-7, for Assessment Year 2012-13. In this appeal, the assessee is challenging the validity of revision order passed by learned Principal CIT.
The facts which led passing of impugned revision order are stated in brief. The assessee is an individual. She filed her return of income for the year under consideration declaring a total income of Rs.4,02,020/-. The same was accepted by Page 2 of 5 the AO in the order passed under section 143(3) of the Act. On examination of the record, the learned Principal CIT noticed that the assessee has sold a site located at Anjanapura and earned a capital gain thereon. The assessee has claimed deduction under section 54F of the Act in respect of capital gain referred above. The learned Pr.CIT noticed that the assessee has owned 2 residential properties and one commercial property on the date of sale of the plot (capital asset). The learned Principal CIT noticed that, in order to avail the deduction under section 54F of the Act, the assessee should not own more than one residential property on the date of sale of the capital asset. Accordingly, the learned Principal CIT took the view that the AO has allowed the deduction under section 54F of the Act without making any enquiry/verification as required under the law and the AO has completed the assessment without any application of mind. Accordingly, he held that the assessment order passed by the AO is erroneous and prejudicial to the interest of the Revenue. Accordingly, he initiated revision proceedings under section 263 of the Act.
Before the learned Pr.CIT, the assessee submitted that the residential property located at Berlie Street, Bangalore, actually belonged to her husband and her name was included in the purchase deed on sentimental reasons, i.e., in order to meet the requirements of Vaastu and also for the purpose of availing loan at concessional rates. It was clarified that the husband of the assessee has purchased the above said residential property by selling a site during the financial year 2006- 07, i.e., the entire purchase cost was financed by her husband. It was further submitted that, subsequently when the said residential property was sold during the financial year 2012-13, the capital gain arising there from was offered by her husband. Accordingly, it was contended that the residential property located at Berlie Street cannot be considered as her property. Accordingly it was pleaded that there was no violation of conditions prescribed under section 54F of the Act.
Page 3 of 5 4. The learned Principal CIT noticed that the assessee has furnished the details of property held by her during the course of assessment proceedings, which also included the property located at Berlie Street, Bangalore. It was noticed that the assessee did not mention anywhere that she was not the owner of the residential property located at Berlie Street, Bangalore. The Ld Pr. CIT further noticed that the AO has not examined the claim for deduction u/s 54F of the Act as to whether the assessee has complied with the conditions prescribed under section 54F of the Act or not. Accordingly, the Ld Pr. CIT held that there was failure on the part of the AO to make proper enquiry in respect of the claim made by the assessee. Accordingly, he held that the assessment order is erroneous and prejudicial to the interest of the Revenue. Accordingly, he set aside the assessment order on the issue of deduction under section 54F of the Act and restored the same to the file of the AO with the direction to examine it afresh in the light of observation made by him in the revision order. The assessee is aggrieved by the orders so passed by the learned Principal CIT.
We have heard the rival contentions and perused record. The learned AR appearing for the assessee submitted that the assessee cannot be considered to be the owner of the residential property located at Berlie Street, Bangalore, as she has only lent her name on sentimental reasons while purchasing the same. On the contrary, the learned DR submitted that the assessee herself had furnished the details of the properties owned by her to the AO and in that letter she has nowhere mentioned that she is not the owner of the property. Further the learned DR submitted that the AO has failed to examine the claim for deduction under section 54F of the Act during th course of assessment proceedings as required by the law. Accordingly, the learned DR submitted that the revision order passed by the learned CIT does not call for any interference.
Page 4 of 5 6. Having considered the rival submissions, we are of the view that the impugned revision order passed by the learned Principal CIT was justified as there is no dispute with regard to the fact that the AO did not examine the eligibility of the assessee to claim deduction under section 54F of the Act as per the requirement of the provisions of section 54F of the Act. Though the learned AR submitted that the assessee has furnished the details of property held by her before the AO, it is not clear as to the context in which the reply was furnished by the assessee to the AO. The learned AR submitted that the assessee has filed the reply as per the oral request made by the AO. Hence, it is not clear from the record as to whether the AO has examined the claim for deduction under section 54F and allowed the same after due application of mind.
However, we notice that the learned Principal CIT has expressed certain views with regard to the contentions of the assessee and has also directed the AO to redo the assessment in the light of observations made by him. We are of the view that the AO should be given free hand in this matter. Accordingly, we modify the order passed by the learned Principal CIT and direct the AO to examine the issue of deduction u/s 54F of the Act in accordance with the law, without being influenced by the observations made by the learned Principal CIT in the impugned revision order.
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the open court on this 15th day of February, 2019.