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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI SUNIL KUMAR YADAV & SHRI S. JAYARAMAN
Per Sunil Kumar Yadav, Judicial Member
This appeal is preferred by the assessee against the order of CIT(Appeals) inter alia on the following grounds:-
“1. The order passed by the Assessing Officer u/s 144 r.w.s 147 is bad in law and liable to be squashed. 2. On the facts and circumstances of the case and under the provisions of law, the Assessing Officer erred in passing the order u/s 144 r.w.s 147 without serving a show cause notice or notice u/s 142(1) as per proviso to section 144.
3. On the facts and circumstances of the case, the CIT (Appeals) erred in upholding the order passed u/s 144 by the Assessing Officer on the ground that issue of a show cause notice or notice u/s 142(1) is not necessary since the appellant has not filed the return of income in response to a notice u/s 148.
4. On the facts and circumstances of the case, the Assessing Officer and CIT (Appeals) erred in not allowing the exemption u/s 54F in respect of owner share of constructed super built up area for multiple flats by disregarding the Jurisdictional High Court judgment. 5. For these and other reasons which may be adduced at the time of hearing, the appellant prays this Hon'ble Bench to annul the order passed by the Assessing Officer u/s 144 or to allow the exemption u/ s 54F for multiple flats. 6. The appellant craves leaves, to add, to alter, to amend and to delete any of the grounds at the time of hearing.”
During the course of hearing, our attention was invited to the fact that assessee has not filed return of income. Having noted that joint development agreement with builder, M/s. Pioneer Developers for a property bearing Sy.No.24/2 and Sy.No.53/3 situated at Puttenahalli village, Bangalore was entered upon by the assessee, whereby the assessee transferred 60% undivided share of property in favour of M/s. Pioneer Developers and in lieu of it 40% super built up area in the form of apartments/flats and similar 40% of car parking and other benefits in the constructed area along with interest free refundable deposit of Rs.20 lakhs would be received by the assessee; the AO has issued a notice u/s. 147 of the Act. But in response to this notice, the assessee has not filed return of income. He, however, replied that no capital gain has accrued in this year, therefore no income is chargeable to tax. The AO having relied upon the judgment of the Hon'ble jurisdictional High Court in the case of CIT v. T.K.
Dayalu, 202 Taxman 531, was of the view that capital gain accrued to the assessee in the year of transfer of land and he accordingly proceeded u/s. 144 of the Act and computed the capital gain and completed the assessment.
Before the CIT(Appeals), the assessee has claimed deduction u/s. 54 of the Act, besides challenging the completion of assessment u/s. 144 of the Act without issuing show cause notice to the assessee. The CIT(Appeals) confirmed the assessment framed u/s. 144 r.w.s. 147 of the Act, but did not adjudicate the claim of exemption u/s. 54 of the Act on the ground that this claim was not raised before the AO.
Aggrieved, the assessee is before us and reiterated its contentions.
Having carefully examined the orders of authorities below in the light of rival submissions, we are of the view that the claim of deduction u/s. 54/54F of the Act should have been examined, if the Revenue comes to the conclusion that capital gain is to be charged in the impugned assessment year. Since this aspect has not been examined by the lower authorities, we are of the view that the matter should go back to AO for readjudication of entire issue again. Accordingly, we set aside the order of CIT(Appeals) and restore the matter to AO with a direction to readjudicate the issue of capital gain after affording proper opportunity of being heard to the assessee and if the AO comes to the conclusion that capital gain is to be charged for the impugned assessment year, the claim of deduction u/s. 54/54F be examined in the light of provisions of the Act. Accordingly, the appeal of assessee is allowed for statistical purposes.
Pronounced in the open court on this 28th day of April, 2017.