DCIT,C-7, JAIPUR vs. BHARAT MOHAN RATURI, JAIPUR

4 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI 2.2 On the other hand, the ld. DR objected to the condonation application filed by the assessee. 2.3 After hearing both the parties and perusing the materials available on record, the Bench noted that the reasons explained above by the assessee as to delay in filing the Cross Objection is adequate and the Bench also takes into consideration the decision of Hon’ble Supreme Court in the case of Collector, land Acquisition vs. MSt. Katiji and Others and thus condone the delay of 92 days in filing the cross objection. 3.1 Apropos Ground No. 1 and 2 of the Revenue, brief facts of the case are that the assessee is a Doctor by profession. He had filed his return of income on 28/9/2013 declaring total income of Rs 18,21,680/- along with audited Balance Sheet and Profit and loss account etc. (Copy at Paper book page no 1 to 9). In this return of income, the assessee has shown Income from Capital Gain Rs 94,28,948/- and after claiming deduction under section 54F of the same amount Net Income from Long Term Capital Gain declared by the assessee was NIL. During the course of assessment proceedings, the assessee observed some mistake in the computation of LTCG income and therefore filed a revised computation of income along with covering letter dated 28.12.2015 declaring sale consideration of plot at Rs. 1,00,00,000, Investment in new house property Rs. 1,00,37,910 and deduction u/s 54F Rs. 94,39,201 and LTCG income at Rs. Nil and total income of Rs 18,21,680/-

5 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI (Copy at Paper book page no 10 to 13). The assessment was completed under section 143(3) by the DCIT, Circle 7, Jaipur on 24/2/2016 and the returned income was accepted. (Copy of order at Paper book page no 14.) Thereafter, the assessee received one notice under section 148 dated 18/7/2017. (Copy at Paper book page no 15). In reply to this notice u/s 148 the assessee filed return of income on 9/8/2017 declaring total income of Rs 18,21,680/- after claiming deduction u/s 54 for Rs 94,39,201 (Copy at Paper book page no 16 to 18.). The assessee asked for the reasons for reopening of the case by letter dated 14.8.2017 (Copy at Paper book page no. 19). The AO supplied the reasons for reopening vide letter dated 26/9/2017 (copy enclosed at Paper book page no.20 to 21). The reasons recorded by the AO are as under: ‘‘Assessment of above individual was completed under section 143(3) on 24.02.2016 at an income of Rs 18,21,680/-. It has been noticed that the assessee had sold residential plot on 27.07.2012 at a sale consideration of Rs 1,00,00,000/-. Long Term Capital Gain on sold plot was arised of Rs 94,39,201/- (Sale consideration amount Rs 1,00,00,000/- Indexed cost of acquisition Rs 5,60,799/-) The assessee claimed and was allowed exemption u/s 54F on sold plot of Rs 94,39,201/- In instant case, the assessee owned on the date of transfer, more than one residential house. It was proved from the balance sheet of 31st March 2013; in schedule 1 of fixed assets assessee had shown two residential houses. It was also proved from annexure for investments in which the assessee shows advance for flat for purchase of new residential house on which he claims exemption u/s 54F. So, it is clear that on the date of acquiring new residential house, assessee had already held more than one residential house properties. Hence the assessee was not eligible for exemption u/s 54F. When the assessee was not eligible for exemption u/s 54F, long term capital gain arises from the sale of residential plot was to be charged accordingly.

6 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI The omission has resulted in incorrect computation of long-term capital gain and under computation of income of Rs 94,39,201/- with tax effect of Rs 26,25,015/- including interest u/s 234B of Rs 6,80,540/- Hence, I have reason to believe that this is a fit case to be reopened u/s 148 of the I.T. Act. On account of failure on the part of the assessee to disclose fully & truly all material facts necessary for his assessment. Hence, I have reason to believe that this is fit case to be reopened u/s 148 of the I.T. Act.’’ The assessee filed objections against reopening of the assessment vide letter dated 26/9/2017 (copy enclosed at Paper book page no 22 to 23). The AO disposed off the objections of the assessee vide order dated 31/10/2018 (copy enclosed at Paper book page no.24 to 28.) The AO also issued notice u/s 142(1) dated 31.10.2018 (Copy at Paper book page no.29 to 30). Replies filed by the assessee vide letters dated 13/11/18, 14/11/2018 and 29/11/2018 (copy at Paper book page no.31 to 34). The reassessment of the assessee was completed by the AO on 28/12/2018 after disallowing deduction of Rs 94,39,201/- claimed by the assessee under section 54F, in the original assessment. 3.2 Against this order of the AO, the assessee filed an appeal before ld. CIT(A) through e-filing on 9/1/2019 along with form No. 35 and Grounds of appeal. However, since there was some factual mistake in the original grounds of appeal, the revised grounds of appeal were filed before ld. CIT(A) along with written submissions dated 8.12.2021 (Copy at Paper book page no. 89 to 104) with the following request:

7 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI ‘‘In the above case, the assessee has filed the appeal through e-filing on 9/1/2019 along with form No. 35 and Grounds of appeal. However, now the assessee wants to file Revised Grounds of Appeal, which are as under and which may kindly be taken on record.’’ Thus the Original Grounds of appeal and Revised Grounds of appeal of the assessee before ld. CIT(A)/ NFAC are as under:-

Original grounds of appeal of the Revised grounds of appeal, as filed in written assessee as per Form No. 35 filed on submissions dated 8.12.2021 before NFAC 9/1/2019

1. The order of the learned AO under 1. The order of the learned AO under section section 147/143(3) of Income Tax 147/143(3) of Income Tax Act 1961 is bad in law and Act 1961 is bad in law and against against facts of the case. facts of the case.

2. The learned AO has erred in 2.The learned AO has erred in applying the reopening the case and completing the provisions of section 54F of Income Tax Act,1961 to assessment without following proper determine the claim of the assessee for deduction procedure as laid down by Hon’ble whereas the assessee had claimed deduction of Rs. Supreme Court. 94,39,201 under section 54 of Income Tax Act in return filed in response to notice u/s 148, which should have been allowed to him.

3. The learned AO has erred in 3.The learned AO has erred in reopening the case of reopening the case of the assessee on the the assessee after arbitrarily rejecting the most basis of reasons recorded by him which genuine objections of the assessee against reopening were factually incorrect. without following proper procedure as laid down by Hon’ble Supreme Court.

4. Alternatively, the learned AO has erred in not allowing deduction of Rs 94,39,201/- under section 4. The learned AO has erred in 54F of Income Tax Act in most arbitrary manner and disallowing deduction of Rs 94,39,201/- on flimsy grounds. claimed by the assessee under section 54F of Income Tax Act in most arbitrary manner and on flimsy grounds.

5. The learned AO has erred in charging tax on Long Term Capital 5. The assessee craves his right to add, alter, Gain @ 30% in place of 20% in the amend or delete any grounds of appeal at the time of computation form annexed to the hearing or earlier. assessment order and its consequent impact on surcharge and interest under section 234B & 234C.

6. The assessee craves his right to add, alter, amend or delete any grounds of appeal at the time of hearing or earlier.

3.3 The ld. CIT(A)/ NFAC passed the appeal order dated 27/9/2022, partly accepting the appeal of the assessee. 3.4 The department is in appeal before ITAT against this order of CIT(A)/ NFAC. The assessee has also filed Cross Objections in the case.

Grounds of Appeal of the Department before ITAT: 1. ‘On the facts and in the circumstances of the case, whether the Ld. CIT(A) was justified in deleting the addition of Rs 94,39,201/- made by disallowing the deduction claimed u/s 54F and considering the same u/s 54 of the IT Act even when in the original grounds of appeal the assess didn’t mentioned the change in section from section 54F to 54.’ 2. ‘The assessee revised the grounds of appeal after the remand report was submitted by the AO. On the facts and in the circumstances of the case whether the Ld. CIT(A) was justified in accepting the revised ground of appeal u/s 54 for which no opportunity was provided to the Revenue to examine the conditions stipulated u/s 54 of the Act. Therefore, additional grounds of appeal accepted by the Ld. CIT(A) was in violation of Rule 46A.’’ Submissions of the assessee on Ground No 1 of the department:

9 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI ‘On the facts and in the circumstances of the case, whether the Ld. CIT(A) was justified in deleting the addition of Rs 94,39,201/- made by disallowing the deduction claimed u/s 54F and considering the same u/s 54 of the IT Act even when in the original grounds of appeal the assess didn’t mentioned the change in section from section 54F to 54.’ On the above ground, the following is submitted:

1. It is submitted that the assessee filed the appeal before CIT(A) through efiling on 9.1.2019. The Revised Grounds of Appeal were filed before the CIT(A) along with written submission dated 8.12.2021, during the course of appellate proceedings. The CIT(A) accepted the revised grounds as per powers given to him in Sec. 250(5) of Income tax Act and the notification from CBDT dated 28.12.2021 on Faceless Appeal Scheme, 2021. CIT(A) has accepted the revised grounds and after understanding full facts of the case, passed his order. He has also reproduced the revised grounds on page 2 of his order. Therefore, filing of revised grounds of appeal before CIT(A) was as per law, which cannot be challenged or objected by the department.

Reliance is placed on the decision of Hon’ble Supreme Court : Jute Corpn. of India Ltd. v. Commissioner of Income-tax (1991) 187 ITR 688(SC) Section 251 of the Income-tax Act, 1961 - Appellate Assistant Commissioner/ Commissioner (Appeals) - Powers of - Assessment year 1974-75 - For relevant assessment year assessee did not claim deduction of its liability to pay purchase tax as assessee entertained a belief that it was not liable to pay purchase tax - But later on it was assessed to purchase tax and claimed deduction of it during pendency of appeal before AAC - Whether Tribunal was justified in holding that AAC could not admit additional ground for deduction of purchase tax liability - Held, no Even where a claim is not made in ROI, including revised ROI, although the AO is not empowered to allow such claim, the same can be raised before CIT(A) as additional grounds of appeal - -

Goetze India Ltd. v. CIT 284 ITR 323 (SC) - CIT v. Jai Parabolic Springs Ltd. 306 ITR 42 (Del.)

2. It is submitted that the assessee had sold a residential house at Plot No. 6/390 Vidhyadhar Nagar, Jaipur vide registered sale deed dated 27/7/2012(copy at Paper Book page No 35 to 40) for Rs 1,00,00,000/-. There was one residential house constructed on the plot of land is evident from the following: a. On page 6 of the Registered Sale deed (last three lines) ( Paper book page no. 38- back page) it is mentioned that the plot of 345.50 Sq Meters was sold with Roof Right, constructed area, kiwad jodian, bai barna, khidki, darvaja, upar ki chat etc. b. On page 7 of the Registered Deed, (paper book page no. 39) it is mentioned that the assessee had taken Water and Electricity connection on the said property, which were also transferred to the buyer of property. c. On page 9 of the Registered Deed, (paper book page no. 40) it is mentioned that the area of Plot sold was 345.5 sq., meter in which one room, toilet and boundary wall was constructed having covered area of 200 sq. Feet. Therefore, the property sold by the assessee was a Residential House fit for residence of a family.

3. It is submitted that the assessee relies on the decision by jurisdictional ITAT in the case of - Seema Singh Beniwal v. DCIT (2017) 88 taxmann.com 359 (ITAT –Jaipur) ( Copy at case law paper book page no. 1 to 5) - in which a 10’x20’ i.e. 201 sq. ft. (23.33 sq. yards) constructed area on plot of land of 3500 Sq ft. (388 sq. yards) was considered to be a ‘residential house’ and deduction u/s 54 was allowed to the assessee. The findings given by the ITAT are as under: ‘Held that the question whether constructed are of size 10'x20', i.e., 201 sq. Ft. can be treated as a residential house or not. It is clarified by the CBDT that purchase of plot of land is a part of residential house for claiming of deduction under section 54F. The revenue itself has admitted that it is a habitable as a servant quarter, which in other words, was habitable for human being either servant or master or any employee. There is no restriction as to what percentage of the size of flat should be used for residential purposes under the income-tax law; but there is a restriction of maximum construction by the local authorities of the respective States. Thus, deduction claimed by the assessee should be allowed.’ 4. The assessee purchased a new residential house being Flat No. 304 in building known as “Mayfair’ at Jamnalal Bajaj Marg, Jaipur for total cost of Rs. 1,00,37,910 by registered sale deed dated 17/7/2014 (Copy at Paper book Page no 41 to 54) As per purchase deed of the New Flat the assessee had made payment for the purchase of new flat of Rs 75,96,377/- before the due date of furnishing of return, i.e., 31/10/2013. The assessee further deposited a sum of Rs 23,30,000/- in Capital Gain Account (copy 11 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI at Paper book page no.55 to 57). This amount was utilized for making balance payment to the vendor for purchase of flat and other expenses.

5. Therefore, as per law the assessee was entitled to claim deduction u/s 54 in respect of his income from Long Term Capital Gains on sale of residential house as mentioned above.

6. However, due to ignorance of law, the assessee filed the original return of income on 28.9.2013 claiming deduction under section 54F for Rs 94,28,948/-. (copy at Paper Book Page No 1 to 3). The original assessment was completed by the learned AO vide order dated 24/2/2016 in which deduction under section 54F was allowed and returned income of the assessee was accepted. (copy at Paper Book Page No 14) 7. Thereafter, reassessment proceedings were initiated against the assessee by issue of notice u/s 148 dated 18/7/2017 (Copy at Paper book page no.15) to withdraw the deduction allowed to the assessee u/s 54F alleging that on the date of transfer of original asset, the assessee owned more than one residential house.

8. While filing the return of income in response to notice under section 148, the assessee filed return of income on 9.8.2017 in which he correctly claimed deduction of Rs 94,32,201/- u/s 54 of Income Tax Act (Copy at Paper book page no 16 to 18) On this return the assessment was completed u/s 143(3) and an order was passed in which the claim of the assessee was disallowed u/s 54F vide order dated 28.12.2018.

9. Provisions of section 54 and 54F, as applicable in the relevant assessment year, are reproduced below for the ease of discussions: Sec. 54: Profit on sale of property used for residence. 54. 39[(1)] 40[41[Subject to the provisions of sub-section (2), where, in the case of an assessee42 being an individual or a Hindu undivided family], the capital gain arises from the transfer of a long-term capital asset 43[***], being buildings or 44lands appurtenant thereto, and being a residential house44, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of 45[one year before or two years after the date on which the transfer took place purchased46], or has within a period of three years after that date 47[constructed, one residential house in India], 46then], instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,— 12 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI (i) if the amount of the capital gain 48[is greater than the cost of 49[the residential house] so purchased or constructed (hereafter in this section referred to as the new asset)], the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45 and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain:

[(2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised53 by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme54 which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset :

Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,— (i) the amount not so utilized shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.

Sec. 54F: [Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. 54F. (1) 59[Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a 60residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or 61[two years] after the date on which the transfer took place 60purchased, or 13 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI has within a period of three years after that date 62[constructed, one residential house in India] (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,— (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: [Provided that nothing contained in this sub-section shall apply where— (a) The assessee,— (i) owns64 more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) 65constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".] ……..

10. If we compare both the provisions of law, we can easily deduce that Sec. 54 is more assessee friendly as compared to Sec. 54F. The Proviso to Sec. 54F – which prohibit an assessee from claiming deduction – if he owns more than one residential house, other than the new asset, on the date of transfer of the original asset – is not there in Sec. 54: 11. Therefore, an assessee can claim deduction u/s 54 if he construct/ purchases a new house property within stipulated time, irrespective of any number of residential houses owned by him. In this case, the assessee has fully complied with all the conditions of Sec. 54 therefore, he is entitled to claim a deduction u/s 54. This deduction was correctly allowed to him by learned CIT(A).

12. In this case, the assessee has claimed deduction u/s 54 in return filed in response to notice u/s 148. The AO has disallowed claim u/s 54F (which was allowed to the assessee in original assessment) by alleging that the assessee was owning more than one residential house on the date of transfer of original asset. Therefore, the whole assessment order is passed on wrong understanding the facts. This mistake has arisen because of the reason that the provisions of Sec. 54 and Sec. 54F are identical in nature and many a time assessee is confused as to under which law, he should claim deduction.

1. It is submitted that in the return filed on 9/8/2017 in response to notice under section 148, (Copy at Paper book page no.16 to 18) the assessee had claimed deduction under section 54 only. Assessment in this case was completed u/s 143(3) on 28.12.2018. In this manner, the learned AO had ample and sufficient time and opportunity of more than 15 months to examine the claim of the assessee u/s 54 as the return was before him in which the assessee had made claim for deduction u/s 54. In the order so 16 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI passed by the AO, he has disallowed deduction u/s 54F without mentioning anything about the claim of the assessee for deduction u/s 54. Now before ITAT, department cannot claim that no opportunity was given to them to examine claim of the assessee for deduction u/s 54 of Income tax Act. It is like asking for a second inning to play for which there is no provision in law.

2. It is submitted that the learned AO was all the time examining the claim of the assessee u/s 54F as deduction was given to the assessee under this section in original assessment proceedings. This is evident from show cause notice u/s 142(1) dated 31/10/2018 (Copy at Paper book page no 29 and 30) and replies of the assessee dated 13.11.2018 (Copy at Paper book page no.31 and 32) and letter dated 14/11/2018 (Copy at paper book page no.33) and letter dated 29/11/2018 (Copy at Paper book page no. 34). The assessee was defending his claim under Sec. 54F as under this section only his claim in the original assessment was allowed. Finally, the AO has disallowed claim u/s 54F (which was allowed to the assessee in original assessment) by alleging that the assessee was owning more than one residential house on the date of transfer of original asset.

3. It is submitted that the assessee filed revised grounds of appeal

before the CIT(A) but no fresh claim for any deductions were made for him. The assessee had claimed deduction under section 54 only in the return filed before the AO in response to notice under section 148 and in the revised grounds of appeal also in Ground No.2, before CIT(A), the assessee claimed deduction under deduction 54 only. In alternate ground No.4 the assessee claimed deduction under section 54F of Income Tax Act. The learned CIT(A), after understanding full facts of the case, accepted Ground No. 2 and gave deduction to the assessee u/s 54.

4. It is submitted that the powers of CIT(A) are co-terminus with that of AO. Therefore, the CIT(A) can do what the AO can do. We draw your kind attention towards provisions of sub-section (4) of section 250 of Income Tax Act which deals with ‘Procedure in Appeal’. As per sub-section (4) the CIT(A) ‘may’ direct the AO to make further enquiry and report result of the same to him. The use of the word ‘may’ signify intention of the law that CIT(A) ‘may’ or ‘may not’ refer any matter to the AO to make further enquiry. ‘May’ is a word which is different from the word ‘shall’. Therefore, in this case since the assessee had claimed deduction u/s 54 in return filed in response to notice under Sec. 148, the CIT(A) was satisfied with the arguments and submissions of the assessee, therefore he allowed the appeal to the assessee without referring the matter to AO.

Reliance is placed on the decision in the case of Commissioner of Income-tax v. Ranicherra Tea Co. Ltd. [1994] 75 TAXMAN 164 (CAL.) in which Hon’ble HC has held as under: ‘Section 250(4), read with section 251, of the Income-tax Act, 1961 - Deputy Commissioner (Appeals)/Commissioner (Appeals) - Powers of - Assessment year 1982-83 - Whether, on facts stated under heading 'Best judgment assessment', Commissioner (Appeals) had power and jurisdiction for computing total income on basis of past records and audited profit and loss account, balance sheet and other relevant details accompanying return instead of remanding back case to Assessing Officer - Held, yes

5. As per sub-section (5) of section 250, the CIT(A) is empowered to allow the appellant to go into any ground of appeal

not specified in the grounds of appeal, if he is satisfied that the omission of that ground from the form of appeal was not willful or unreasonable.

6. It is submitted that Rule 46A is applicable only on filing of additional evidence before CIT(A) and not on filing of ‘revised grounds of appeal’. Therefore, there was no violation of Rule 46A as alleged in the grounds of appeal of department before the ITAT. Therefore, Ground No. 2 of the department also deserves to be rejected. It is submitted that in certain circumstances, even additional evidence filed under Rule 46A can be accepted by the CIT(A) without sending the evidence to AO for his report. In the case of Income-tax Officer v. Industrial Roadway [2008] 112 ITD 293 (Mumbai ITAT) ( Copy at Case Law paper book page 8 to 12) it was held that if additional evidence furnished by assessee before first appellate authority is in nature of a clinching evidence leaving no further room for any doubt or controversy, in such a case no useful purpose would be served by forwarding evidence/material to Assessing Officer to obtain his report and in such exceptional circumstances, said requirement may be dispensed with.

7. Attention is drawn to provisions of Rule 46A of Income Tax Rules which deals with production of additional evidence before the CIT(A). As per clause (3) of Rule 46A, CIT(A) is prohibited from taking into account any additional evidences unless the AO has been allowed reasonable opportunity to examine the same and give his comments.

18 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI 8. In this case the assessee filed application under rule 46A of Income tax Rules for acceptance of additional evidences. The learned CIT (A) after considering the remand report of the AO accepted the additional evidences. After submission of this remand report the CIT(A) did not consider any necessity of taking a fresh remand report from the AO. The learned CIT (A) has also discussed this fact in para 5 and para 6.2.2 of his order.

9. Therefore, the CIT(A) after examining all the facts and documentary evidences, has rightly allowed the appeal of the assessee by allowing him deduction under section 54. CROSS OBJECTIONS OF THE ASSESSEE The assessee has e-filed the cross objections in form no. 36A dated 22.2.2023 along with application for condonation of delay and affidavit. The same may kindly be allowed. The Cross objections of the assessee are as under:

1. ‘Alternatively, the learned AO has erred in disallowing deduction claimed by the assessee under section 54F Rs 94,39,201/- and the learned CIT(A) has erred in not deciding alternate Ground No.4 of the assessee which was before him on this issue.’

2. The learned AO has erred in reopening the case of the assessee after rejecting most genuine objections of the assessee against reopening of the case without following proper procedure as laid down by Hon’ble Supreme Court and learned CIT(A) has erred in rejecting this Ground of appeal.’ Submissions of the asssesee on Cross Objection No. 1

1. The assessee had taken the following alternate ground before CIT(A), which he has not decided as relief was given to the assessee u/s 54 ( in Ground No. 2): ‘Alternatively, the learned AO has erred in not allowing deduction of Rs 94,39,201/- under section 54F of Income Tax Act in most arbitrary manner and on flimsy grounds.’

3. It is submitted that on the date of transfer of original asset the assessee was owning only one Residential House, other than the new asset, at plot no. 161, Indira Colony, Bank Park Jaipur, which is shown as House in Schedule I of fixed assets at Rs. 5,74,405 in the balance sheet. (Copy at Paper book page no .7). This house was being used by the assessee for the purpose of his residence and there is no dispute in this matter.

5. This old old structure made of Chuna Patti, which was 43 years old, was not fit for residence of any family and for all practical purpose it was only a ‘vacant land’ and cannot be called a ‘residential House’ by any stretch of imagination. However, due to inadvertent mistake of the assessee, it was shown as House 2 in the Balance Sheet of the assessee.

8. Ledger account copy of Nagar Nigam: During the course of assessment proceedings, the assessee also filed copy of Ledger Account of Plot No. 160 Indira Colony Jaipur in the books of Nagar Nigam Jaipur on 4.6.2012 (which is a date prior to date of sale of original asset i.e. 27/7/2012) in which this property is shown as vacant land. (copy at Paper book page no. 79) Learned AO has refused to accept this evidence ( at page no. 8 of AO order) for the reason that it was not neither having signature nor any seal of the issuing department. In this regard, it is submitted that it was copy of the Ledger Account of Nagar Nigam which is the authority authorized by State Govt for maintenance of land records. If the learned AO had any doubt, he could have easily deputed Inspector of the department to make necessary enquiry 21 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI from Nagar Nigam, Jaipur. Learned AO has failed in doing so and simply brushed aside this important piece of evidence filed by the assessee.

9. Vibhajan Patra: It is further submitted that Plot No. 160, Indira Colony, Banipark, Jaipur was in the joint name of the assessee and his wife Dr Smt. Madhu Rathuri. This plot was purchased sometime in January 2001. At the time of purchase there was some small construction in the Southern Portion of the plot (kindly see Map at Paper Book Page No. 67 and 75). The assessee and his wife divided this plot of land in two portions amongst themselves by signing and executing a Vibhajan Patra on 10/6/2011 (copy at Paper Book page No. 80 to 85) in which Southern Portion was given wife of the assessee Dr Madhu Rathuri. (Kindly see the map attached to the Vibhajan Patra at Paper book page No. 85) This evidence was filed Under Rule 46A of Income Tax Rules as additional evidence before CIT(A). Therefore, the portion which was received by the assessee pursuant to this Vibhajan Patra was Northern side of piece of land on which there was not any construction at any point of time. This vacant land was being shown at cost in the Balance Sheet of the assessee as on 31/3/2013 in the name of House 2 at cost of Rs. 4,38,675, due to mistake of accountant of the assessee. Therefore, this Vibhajan Patra conclusively prove the case of the assessee that the assessee was not owning this property as Residential House and it was only a Vacant Plot of land.

15. For this ground of appeal also, reliance is placed on the Departmental Circular No. 14(XI-35) of 1955 dt. 11/4/55, as mentioned above, (Copy at Paper book page no. 58.) and decision of Hon’ble SC in the case of Bajaj Tempo Limited (196 ITR 188), as discussed above.

16. Therefore, the assessee was fully entitled for deduction under section 54F of Income tax Act. Submissions of the assessee on Cross Objection No. 2

2. The assessee had informed the learned AO vide letter dated 26.9.2017 (copy at paper book page no. 22 to 23) that the reasons recorded by him were factually incorrect and away from the facts.

24 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI 6. The assessee had filed his objections in the above matter vide letter dated 26.9.2017. Learned AO, while passing the order disposing of the objections of the assessee, has observed as under: (paper book page no. 27) ‘I have gone through the objections raised by the assessee and found the same are not acceptable for the reason that the assessee himself shown in schedule-I of Fixed Assets attached to the Balance Sheet and given details of House (Rs 574405) and House-2 (Rs 4,38,675) which clearly shows that the assessee was having two houses. The assessee did not mention any remarks against House-2 that this is a vacant plot and this vacant plot is being used as house garden. In absence of any remark of the assessee regarding House No-2, how the AO could believe that this is a vacant plot and not a residential house. The assessee himself admitted that he is residing at House-1 situated at 161, Indira Colony, Bani park, Jaipur and he has also disclosed Houise-2 in schedule of the Fixed Assets of the balance sheet.’

10. Learned CIT(A) in para 6.1 of his order has simply stated that: ‘Objections raised by the appellant were disposed by the AO by way of passing a speaking order and then only reassessment was completed u/s 143(3) r.w.s. 147 of the Act. Therefore, the AO had followed the proper procedure and 25 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI has framed the assessment u/s 143(3) r.w.s. 147 of the Act. Hence ground of appeal no. 1 and 3 are dismissed.’ Therefore, CIT(A) has also not given any clear finding on this issue.

Due to above reasons assessment order passed by the learned AO, in violation of principles as laid down by Hon’ble Supreme Court, is bad in law and deserves to be quashed. ‘’ 3.5 We have heard both the parties and perused the materials available on record and the judgemnet cited by the respective parties. For deciding the controversy in question raised by the Department by raising grounds appeal, it is necessary to deal with the facts of the case first. As per the facts of the case, the assessee is a doctor by profession and filed the return of income declaring total income at Rs.18,21,680/- alongwith audited balance sheet and profit and loss account etc; .During the course of assessment proceedings, the assessee after observing some mistake has revised the computation of income and the assessee had shown sale consideration of plot at Rs.1.00 lac and made investment in house property amounting to Rs.l,00,37,910/- and thus shown deduction u/s 54F of Rs.94,39,201/- and LTCG income at Rs. Nil. The assessment was completed u/s 143(3) of the Act and the returned income was accepted. Thereafter, the case of the assessee was reopened by issuing notice u/s 148 of the Act and in reply thereof, the assessee filed the return of income declaring total income at Rs.18,21,680/- after claiming deduction u/s 54 of the Act for Rs.94,39,201/- and in this regard the supporting documents are at page 16 to 18 of the paper book. The AO issued notice u/s 142(2)

26 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI of the Act dated 31-10-218 for which reply by the assessee was filed to the AO. Thus the reassessment of the assessee was completed by the AO on 28-01-2018 after disallowing deduction of Rs.94,39,201/- claimed by the assessee u/s 54F in the original assessment. Aggrieved by such addition, the assessee preferred appeal before the ld. CIT(A) and during the course of the appeal, the assessee filed the revised the grounds of appeal before the ld. CIT(A). Consequently, the ld. CIT(A) after hearing both the parties partly allowed the appeal of the assesee vide order dated 27-09-2022 and granted relief to the assessee u/s 54 of the Act. The relevant para 6.2.5 of the ld. CIT(A) is reproduced as under:- ‘’6.2.5 The submission and the case laws cited by the appellant are perused in the light of Section 54 of the Act. The Section provides that the capital gain arising on the sale of a capital assets being the residential house shall be exempt subject to the provision of the Act. Having gone through the facts of the case and provision of Section 54, the appellant is entitled to exemption on sale of the residential house at Vidhyadhar Nagar u/s 54 as the assessee had purchase a new flat on the sale of proceeds of the said impugned property. The addition made by the AO of Rs.94,39,201/- u/s 54F is deleted the relief is allowed u/s 54 of the Act. The ground of the appeal is allowed.’’ Aggrieved by the said relief by the ld. CIT(A), the Revenue has challenged the order of the ld. CIT(A) before us on the ground mentioned hereinabove. The first and foremost ground raised by the Revenue is challenging the order of the ld. CIT(A) in deleting the addition made by disallowing deduction claimed u/s 54F and considering the same u/s 54 of the Act. The ld. DR specifically relied upon the 27 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI order passed by the AO and reiterated the same before us. Apart from this, the ld DR also relied upon his submissions as made in pages 25 to 89 of the paper book and also AO report on cross objection of the assessee from pages 90 to 93 of the paper book. On the contrary, the ld. AR of the assessee relied upon the order of the ld. CIT(A) and also filed the written submission concerning this appeal of the Department. The Ground No. 1 raised by the assessee is reproduced as under:- ‘’1. Alternatively the AO has erred in disallowing deduction claimed by the assessee u/s 54F of Rs.94,39,201/- and the ld. CIT(A) has erred in not deciding alternate Ground No. 4 of theassesse which was before him on this issue.’’ After having gone through the facts of the present case and the documents relied upon by both the parties with regard to Ground of Appeal

No. 1 raised by the Revenue relating to deletion of addition made by the AO by disallowing deduction u/s 54F of the Act and considering the same u/s 54 of the Act, for deciding this controversy, it is necessary to evaluate the original ground as well as revised ground by the assessee before the ld. CIT(A)/ NFAC and the same are given hereunder in table form. Original grounds of appeal of the Revised grounds of appeal, as filed in written assessee as per Form No. 35 filed on submissions dated 8.12.2021 before NFAC 9/1/2019 1.The order of the learned AO under 1. The order of the learned AO under section section 147/143(3) of Income Tax Act 147/143(3) of Income Tax Act 1961 is bad in law and 1961 is bad in law and against facts of against facts of the case. the case.

2. The learned AO has erred in 2.The learned AO has erred in applying the reopening the case and completing the provisions of section 54F of Income Tax Act,1961 to 28 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI assessment without following proper determine the claim of the assessee for deduction procedure as laid down by Hon’ble whereas the assessee had claimed deduction of Rs. Supreme Court. 94,39,201 under section 54 of Income Tax Act in return filed in response to notice u/s 148, which should have been allowed to him.

3. The learned AO has erred in 3.The learned AO has erred in reopening the case of reopening the case of the assessee on the the assessee after arbitrarily rejecting the most basis of reasons recorded by him which genuine objections of the assessee against reopening were factually incorrect. without following proper procedure as laid down by Hon’ble Supreme Court. Alternatively, the learned AO has erred in not 4. The learned AO has erred in allowing deduction of Rs 94,39,201/- under section disallowing deduction of Rs 94,39,201/- 54F of Income Tax Act in most arbitrary manner and claimed by the assessee under section on flimsy grounds. 54F of Income Tax Act in most arbitrary manner and on flimsy grounds. 5.The learned AO has erred in charging 5. The assessee craves his right to add, alter, tax on Long Term Capital Gain @ 30% amend or delete any grounds of appeal at the time of in place of 20% in the computation form hearing or earlier. annexed to the assessment order and its consequent impact on surcharge and interest under section 234B & 234C.

The assessee craves his right to add, alter, amend or delete any grounds of appeal at the time of hearing or earlier.

From the above ground, it is manifestly clear that the assessee has taken the specific ground in his revised ground that the AO has erred in applying the provision of Section 54F of Income Tax Act to determine the claim of the assessee for deduction whereas the assessee had claimed deduction of Rs.94,39,201/- u/s 54 of the Income Tax Act in the return filed in response to notice u/s 148 which should have been allowed to him. Since this ground was specifically raised by the 29 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI assessee before the ld. CIT(A) and the ld. CIT(A) by exercising his power u/s 250 of the Act had accepted the revised grounds and after deliberating on the said ground, had passed the detailed order thereby allowing relief to the assessee u/s 54 of the Act. It is important to mention here that the assessee had already made specific assertion that while filing response to notice u/s 148 of the Act, the assesse had specifically claimed deduction of Rs.94,39,201/- u/s 54 of the Act and has also revised the grounds before the ld. CIT(A). Therefore, the ld. CIT(A) was well within his right to grant relief to the assessee. Apart from this very fact which are relevant for deciding this ground that the assesse had sold a residential house at Plot No. 6/390, Vidhyadhar Nagar, Jaipur vide registered sale deed dated 27-07- 2012 for Rs.1,00,00,000/- and the copy of the sale deed has been placed at PB pages 35 to 40. It was further submitted that there was one residential house constructed on the plot of land which is mentioned on page 6 of the Registered Sale Deed. It is specifically mentioned that Plot of 345.50 sq. meter was sold with Roof Right, constructed area, kiwad jodian, bai barna, Khidki, Darvaja, upar ki chat etc. It is noted from the page No. 7 of the Registered Deed (PB Page No. 39) wherein it is specifically mentioned that the assessee had taken Water and Electricity connection on the said property which were also transferred to the buyer. It is also noted on page 9 of the Registered Deed (PB Page No. 40) wherein the area of plot sold was 345.5 sq; meter in which one room, toilet and boundary 30 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI wall was constructed having covered area of 200 sq. feet. Therefore, the ld. AR submitted that the property sold by the assessee was a residential house which is fit for residence of a family. On this aspect, the ld. AR of the assessee relied upon the decision of Coordinate Bench ITAT Jaipur in the case of Seema Singh Beniwal vs DCIT (2007) 88 taxmann.com 359. The ld. AR of the assessee further submitted that the assessee purchased a new residential house being Flat No. 304 in building known as ‘’Mayfair’’ which has been narrated in the written submission as under:- ‘’2. It is submitted that the assessee had sold a residential house at Plot No. 6/390 Vidhyadhar Nagar, Jaipur vide registered sale deed dated 27/7/2012(copy at Paper Book page No 35 to 40) for Rs 1,00,00,000/-. There was one residential house constructed on the plot of land is evident from the following: a. On page 6 of the Registered Sale deed (last three lines) ( Paper book page no. 38- back page) it is mentioned that the plot of 345.50 Sq Meters was sold with Roof Right, constructed area, kiwad jodian, bai barna, khidki, darvaja, upar ki chat etc. b. On page 7 of the Registered Deed, (paper book page no. 39) it is mentioned that the assessee had taken Water and Electricity connection on the said property, which were also transferred to the buyer of property. c. On page 9 of the Registered Deed, (paper book page no. 40) it is mentioned that the area of Plot sold was 345.5 sq., meter in which one room, toilet and boundary wall was constructed having covered area of 200 sq. Feet. Therefore, the property sold by the assessee was a Residential House fit for residence of a family.

It is submitted that the assessee relies on the decision by jurisdictional ITAT in the case of - Seema Singh Beniwal v. DCIT (2017) 88 taxmann.com 359 (ITAT –Jaipur) ( Copy at case law paper book page no. 1 to 5) - in which a 10’x20’ i.e. 201 sq. ft. (23.33 sq. yards) constructed area on plot of land of 3500 Sq ft. (388 sq. yards) was considered to be a ‘residential house’ and 31 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI deduction u/s 54 was allowed to the assessee. The findings given by the ITAT are as under: ‘Held that the question whether constructed are of size 10'x20', i.e., 201 sq. Ft. can be treated as a residential house or not. It is clarified by the CBDT that purchase of plot of land is a part of residential house for claiming of deduction under section 54F. The revenue itself has admitted that it is a habitable as a servant quarter, which in other words, was habitable for human being either servant or master or any employee. There is no restriction as to what percentage of the size of flat should be used for residential purposes under the income-tax law; but there is a restriction of maximum construction by the local authorities of the respective States. Thus, deduction claimed by the assessee should be allowed.’ 4. The assessee purchased a new residential house being Flat No. 304 in building known as “Mayfair’ at Jamnalal Bajaj Marg, Jaipur for total cost of Rs. 1,00,37,910 by registered sale deed dated 17/7/2014 (Copy at Paper book Page no 41 to 54) As per purchase deed of the New Flat the assessee had made payment for the purchase of new flat of Rs 75,96,377/- before the due date of furnishing of return, i.e., 31/10/2013. The assessee further deposited a sum of Rs 23,30,000/- in Capital Gain Account (copy at Paper book page no.55 to 57). This amount was utilized for making balance payment to the vendor for purchase of flat and other expenses.

Therefore, as per the ld. AR, the assessee was entitled to claim deduction u/s 54 in respect of his income from long term capital gains on sale of residential house as mentioned above. The ld. AR also specifically mentioned that due to ignorance of law, the assessee filed the original return of income on 28-09-2013 claiming deduction u/s 54F whereas the original assessment was completed by the AO vide order dated 24-02-2016 in which deduction u/s 54F was allowed and the returned income was accepted by him. Thereafter, reassessment proceedings were initiated against the assessee for withdrawing the deduction allowed to the assessee u/s 54F alleging that on the date of transfer of original asset, the assessee owned more than one residential house. It is important to mention here that while filing in response 32 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI to notice u/s 148 of the Act, the assessee filed the return of income on 9-08-2017 in which he correctly claimed deduction of Rs.94,32,201/- u/s 54 of the Act. On this return the assessment was completed u/s 143(3) and an order was passed in which the claim of the assesse was disallowed u/s 54F vide order dated 28-12-2018 by the AO. Although, the assessee had already claimed deduction u/s 54 of the Act by filing return of income in response to the notice u/s 148 of the Act which was not considered by the AO yet the ld. CIT(A) while considering the said plea gave relief to the assessee u/s 54 of the Act. Since the Revenue has taken a specific ground that the assesee could not have been given relief u/s 54 of the Act as he had claimed deduction u/s 54F only but in this regard the submission of the ld. DR factually incorrect. It is noticed that the assessee while filing the return of income in response to notice u/s 148 of the Act in which he has specifically claimed deduction of Rs.94,23,201/- u/s 54 of the Act which at PB pages 16 to 18. Before proceeding further, we want to evaluate Section 54 and Section 54F of the Act which are reproduced below. ‘’Sec. 54: Profit on sale of property used for residence. 54. 39[(1)] 40[41[Subject to the provisions of sub-section (2), where, in the case of an assessee42 being an individual or a Hindu undivided family], the capital gain arises from the transfer of a long-term capital asset 43[***], being buildings or 44lands appurtenant thereto, and being a residential house44, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of 45[one year before or two years after the date on which the transfer took place purchased46], or has within a period of three years after that date 47[constructed, one residential house in India], 46then], instead of the capital gain being charged to income-tax as income of the 33 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,— (i) if the amount of the capital gain 48[is greater than the cost of 49[the residential house] so purchased or constructed (hereafter in this section referred to as the new asset)], the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45 and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain:

[(2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised53 by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme54 which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset :

Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,— (i) the amount not so utilized shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.

Sec. 54F: [Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. 54F. (1) 59[Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long- term capital asset, not being a 60residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or 61[two years] after the 34 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI date on which the transfer took place 60purchased, or has within a period of three years after that date 62[constructed, one residential house in India] (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,— (a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: [Provided that nothing contained in this sub-section shall apply where— (a) The assessee,— (i) owns64 more than one residential house, other than the new asset, on the date of transfer of the original asset; or (ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or (iii) 65constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and (b) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property".] ……..

After comparing both the provisions of law, we can easily infer that Section 54 is more assessee friendly as compared to Section 54F. The proviso to Section 54F which prohibits an assessee from claiming deduction, if he owns more than one residential house, other than the new asset, on the date of transfer of original asset is not there in Section 54. Therefore, in our view, the assessee can claim deduction u/s 54 of the Act if he constructs/ purchases a new house property within the stipulated time irrespective of any number of residential houses owned by him. As per facts of this case, the assesseee has fully complied with all the conditions of Section 54 of the Act, therefore, he is entitled to claim a deduction u/s 54 of the 35 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI Act as the assessee had specifically claimed deduction u/s 54 of the Act in his return filed in response to notice u/s 148 of the Act. However, the AO has disallowed claim u/s 54F by alleging that the assessee was owning more than one residential house on the date of transfer of asset. Therefore, in our view, the entire assessment passed by the AO is wrong application of facts. Even otherwise, the ld. CIT(A) was competent enough to appreciate the entire facts of the case in his order and in para 6.2.3 to 6.2.5 the ld. CIT(A) has thoroughly discussed the claim of the assessee for deduction u/s 54 of the Act and finally allowed the claim u/s 54 of the Act. Therefore, in our view the whole discussion as to whether or not the assessee was owning more than one residential houses other than new asset on the date of original asset has become redundant as the assessee in return filed in response to notice u/s 148 had specifically claimed deduction u/s 54 of Income Tax Act and thus we are of the considered view that there is no such restriction on the assessee under that section. Even otherwise, second claim of the assessee u/s 54 of the Act cannot be treated as fresh claim as at very first instance i.e. in first notice issued u/s 148 of the Act, the assessee filed return thereby specifically claimed deduction u/s 54 of the Act. On this aspect, our attention was drawn to the Coordinate Bench decision of ITAT Mumbai Bench in the case of ITO vs Armine Hamied Khan (2022) 142 taxmann.com 14 (Mum.) whose relevant para is mentioned as under:- ‘’It is submitted that in the case of Income Tax Officer v. Armine Hamied Khan [2022] 142 taxmann.com 14 (Mumbai - Trib.) ( Copy at Case law paper book 36 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI page no. 6 to 7) the Hon’ble Mumbai ITAT permitted the assessee, during the course of assessment proceedings, to claim deduction under section 54F in place of under section 54 (as claimed by the assessee while filing the return of income). It was held that it was not a fresh claim. The findings of Hon’ble ITAT are as under: ‘Whether since a claim for exemption was rightly made by assessee and only a wrong section was quoted while making said claim, same would be qualitatively different from making a fresh claim and, thus, assessee would be entitled to claim exemption under section 54F without filing revised return - Held, yes [Para 8] [In favour of assessee]’’ By considering the above decision, we also noticed that the case of the assessee is better as he has specifically claimed deduction u/s 54 of the Act only in the return filed in response to notice u/s 148 of the Act. Therefore by no stretch of imagination, the claim of the assessee could be treated as fresh claim. We are further of the view that even if the assessee had wrongly claimed deduction under section 54F in the original return of income and the same was allowed to him by the AO in the assessment completed under section 143(3). Even if there is no bar on the assessee to make correct claim for deduction under the provisions to law while filing return of income in response to notice under section 148 of Income Tax Act as if for some reason the AO wanted to withdraw the deduction given u/s 54F in the original assessment, then in that eventuality, AO should have considered the claim of the assessee for deduction u/s 54 in the return filed in response to notice u/s 148. In this regard, our attention was drawn to Department Circular NO. 14(XL-35) of 1955 dated 11-4-1955 (Copy at Paper book page no. 58) in which Central Board of Revenue has advised the Department Officers as under: “Officers of the department must not take advantage of the ignorance of an assessee as to his rights. It is one of their duties to assist a taxpayer in every reasonable way, particularly in the matter of claiming and securing reliefs and in this regard the officers should take the initiative in guiding a taxpayer where proceedings on other particulars before them indicate that some refund or relief is due to him. This attitude would, in the long run, benefit the department, for, it 37 DCIT, CIRCLE-7, JAIPUR VS BHARAT MOHAN RATURI would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assesses on whom it is imposed by law, officers should: (a) Draw their attention to a refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other. (b) Freely advise them when approached by them as to their rights and liabilities and as to procedure to be adopted for claiming refunds and reliefs.”