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Facts
The assessee sold a property and claimed exemption under Section 54F of the Income Tax Act. However, the Assessing Officer found that the assessee had not fulfilled the basic condition of depositing the amount in a designated bank account and disallowed a significant portion of the claim.
Held
The Tribunal noted that the assessee had not submitted crucial documents like valuation reports, bank statements, and sale deeds before the lower authorities. In the interest of substantial justice, the appeal was restored to the Assessing Officer for a fresh assessment.
Key Issues
Whether the assessee is eligible for exemption under Section 54F when the unutilized sale proceeds were not deposited in the designated account and proper documentation was not provided to the lower authorities.
Sections Cited
54F, 143(3), 143(2), 142(1), 139(1)
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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL & HON’BLE SHRI MANU KUMAR GIRI
(िनधा�रणवष� / Assessment Year: 2017-2018) Syed Hussain Syed Asif, Vs. The Assistant Commissioner of Alpha Medicals No.74-A, 20/3, Income Tax, Bagalur Road, Circle 1, (Opp) Housing Board Entrance, Hosur. Hosur 635 109. [PAN: BWSPS 5229L] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri Badrinarayanan, Advocate ��यथ� क� ओर से /Respondent by : Ms. R. Anita, IRS, Addl. CIT. सुनवाई क� तार�ख/Date of Hearing : 03.12.2024 घोषणा क� तार�ख /Date of Pronouncement : 05.12.2024 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member)
This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in order No.ITBA/NFAC/S/250/2023-24/1058669920(1) dated 12.12.2023. The assessment was framed by the Assistant Commissioner of Income Tax, Circle 1, Hosur for the
Brief facts of the case are that assessee is an individual and running a medical shop in the name and style of M/s Alpha Medicals in Hosur. The assessee filed the return of income for the AY 2017-18 on 30.03.2018 declaring a total income of Rs.14,63,060/-. The assessee sold a property measuring 9600 Sq. ft. for a consideration of Rs.2,75,00,000/- and claimed an exemption of Rs.2,54,57,551/- under section 54F of the Act. The case was selected under CASS and notice under section 143(2) of the Act dated 31/08/2018 was served on the assessee. Notices under section 142(1) of the Act were served on the assessee on 04/01/2019 and 06/09/2019. During the course of assessment proceedings, it was found by the Assessing Officer that assessee has not fulfilled the basic condition of depositing the amount in designated bank for availing exemption u/s 54F of the Act. The assessee claimed that it has utilized Rs.1,29,35,758/- towards the construction of a new house as required u/s 54F of the Act. On the verification of the Valuation Report and the bank statements, the Assessing Officer found that Rs.60,00,000/- was paid by cheques by the assessee to HRM builders. The assessee further pleaded that Rs. 44,80,000/- was used for the construction of the house but the assessee produced only self-made vouchers. The Assessing Officer hence gave the assessee the benefit of the payments made through cheques to two parties and 50% on cash withdrawal and hence disallowed Rs. 1,71,12,551/- as assessee's claim of exemption u/s 54F of the Act. Aggrieved, assessee preferred an appeal before the ld.CIT(A).
3. The ld.CIT(A) found that the assessee has not deposited unutilized portion in the Capital Gains Account but deposited in the bank account. Before the ld. CIT(A) assessee submitted valuation report and relied upon various case laws. According to the ld.CIT(A) the Assessing Officer has clearly made out the case that the self-made vouchers have been made by the assessee for the cash withdrawals and the investment in the new property. Hence, it was not clear whether the assessee has invested the cash withdrawn from the bank into new property. So far as deposit of the proceeds in the bank account was concerned, it was accepted by the assessee that the amounts have not been deposited in the designated bank. The assessee has not produced bank statement which can throw light that this money has not been utilized for any other purposes. The assessee has relied upon various decisions of various Hon'ble High Courts, which mentioned that exemption u/s 54F could not be denied on the ground that the cash has not been deposited before the due date as prescribed u/s 139(1) of the Act. The ld.CIT(A) was of the view that this case is entirely different as the cash has been deposited in the personal account of the assessee. As per the ld. CIT(A) the purpose and the intent of section 54F of the Act was to promote the housing and the residential sectors in the country, if the assessee does not deposit the cash in the separate designated account, the intent of the legislature is defeated. Hence the ld.CIT(A) was of the view that the Assessing Officer was correct in making disallowance worth of Rs. 1,71,12,551/- as disallowance of exemption u/s 54F of the Act. Hence, he confirmed the action of the AO and dismissed the appeal of the assessee. Aggrieved, assessee preferred an appeal before the Tribunal.
4. Before us, to buttress the claim of the assessee, the ld. Authorized Representative submitted paper book-I consisting of Pages 1-72 and paper book-II consisting of Pages 1-345 pages. The ld.AR submitted valuation report for construction dated 5.11.2019 alongwith building construction plan, bank account statement of the assessee, income tax return, sale deed dated 20.6.2016 of the property sold by the assessee and sale deed dated 17.06.2016 of the property purchased by the assessee. Ld. Authorized Representative also submitted summary of amount spend on construction along with necessary invoices and vouchers and requested to remit the appeal back to the file of the ld. Assessing Officer for fresh adjudication. Per contra, ld. Departmental Representative submitted that assessee has not submitted these documents before the lower authorities in spite of giving sufficient opportunities and hence, the same may not be considered and prayed for dismissal of appeal.
We heard the rival contention and perused the material on record. It was found that assessee has not submitted valuation report for construction dated 5.11.2019 alongwith building construction plan, bank account statement, income tax return, sale deed dated 20.6.2016 of the property sold by the assessee and sale deed dated 17.06.2016 of the property purchased by the assessee before the lower authorities. We are of the considered view that in the interest of substantial justice assessee should be given an opportunity before the ld.AO to file necessary documents and prosecute his case. We are also conscious of the fact that the assessee has not filed the requisite response before the AO and the ld.CIT(A). Accordingly, the impugned order is set aside and the appeal is restored back to the Ld. AO for denovo assessment on merits after affording proper opportunity of hearing to the assessee. The assessee is directed to adduce evidence, if any, or substantiate its case forthwith without any fail, failing which Ld.AO shall be at liberty to proceed with the denovo assessment on merits as per law.
In the result, appeal filed by the assessee is allowed for statistical purpose. Order pronounced in the open court on 5th day of December, 2024