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Facts
The assessee received Rs. 1,41,86,718/- from the sale of property, claiming deduction u/s 54F for investment in a new house. The AO treated this amount as unexplained unsecured loan and disallowed the deduction, while the CIT(A) upheld this order.
Held
The Tribunal held that the amount received was not an unexplained credit as it was received as per a sale agreement and payment schedule spread across multiple years. The claim for deduction u/s 54F was remanded for verification of compliance with all conditions.
Key Issues
Whether the amount received from property sale is an unexplained credit and if the assessee is eligible for deduction u/s 54F for reinvestment in a new house property.
Sections Cited
143(3), 54B, 54C, 54D, 54G, 54GA, 54F, 68
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘G’: NEW DELHI
(ASSESSMENT YEAR 2015-16) Simmi Batra, Income Tax Officer, C-35, Ground Floor, Ward-32(5), South Extn., Part-I, Vs. Delhi. New Delhi-110049. PAN-BBDPB3299M (Appellant) (Respondent) Assessee by Shri K. Sampath, Adv., and Shri V. Rajkumar, Adv. Department by Shri Dheeraj Kumar Jaiswal, Sr. DR Date of Hearing 01/07/2025 Date of Pronouncement 24/09/2025 O R D E R
PER MANISH AGARWAL, AM:
This appeal is filed by the assessee against the order of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 25.06.2024 in Appeal No. CIT(A), Delhi-11/10244/2017-18 arising out of the order passed u/s 143(3) of the Income Tax Act, 1961 dated 30.12.2017 for Assessment Year 2015-16.
Brief facts of the case are that the assessee is an individual and for the year under appeal, filed her return of income on 07.09.2015 declaring total income at Rs.11,44,220/-. The case of the assessee was selected for limited scrutiny under CASS for the reason “Large deduction claimed u/s 54B, 54C, 54D, 54G, 54GA of Simmi Batra vs. ITO the Act”. Statutory notices were issued and served upon the assessee. The AO observed that during the year under appeal assessee received total sum of Rs.1,41,86,718/- towards 6.25% share jointly hold with her minor son Master Kashish Batra in the property situated at A-10, MCIE, Mathura Road, New Delhi. The said property was purchased way back and was the property of the firm M/s Batra Bros & Co. where husband of the assessee was one of the partner and after his death assessee alongwith her minor son got the rights to the extent of the share of deceased partner. An agreement to sale was executed between the partners/their heirs of M/s Batra Bros & Co. and M/s Jai Pal Singh & Smt. Sunita Singh. According to the said agreement, this property was sold at a total consideration of Rs.22.70 Cr. out of which assessee alongwith her minor son had received their share in the consideration totaling to Rs.1,41,86,718/-. The assessee stated that the said consideration was invested in acquisition of new house property and accordingly claimed deduction u/s 54F of the Act. The AO by observing that agreement to sale with Sh. Jagapl Singh & Sunit Singh was not registered and further observed that no details were filed by the assessee that consideration received was kept in separate bank account under capital gains scheme as prescribed under the Act to claim deduction u/s 54F out of Long term capital gains and held the credit of Rs.1,41,87,500/- as unsecured loan and made the addition of the same and further deduction u/s 54F claimed was disallowed.
Against the said order, an appeal was filed before the Ld. CIT(A) who vide impugned order dated 25.06.20204 dismissed the appeal of the assessee, thus, the assessee is in appeal before the Tribunal by taking following grounds of appeal: “On the facts and in the circumstances of the case and in law the NFAC. [CIT(A)] Delhi erred in confirming following actions of the Assessing Officer:- i. passing order u/s 143(3) of the Act determining taxable income at Rs.1,53,172/- against returned income of Rs. 11,44,220/-.
Simmi Batra vs. ITO ii. In making an addition of Rs.1,41,87,500/- on account of disallowance of deductions claimed u/s 54/54F of the Act: The above actions being arbitrary, fallacious, unwarranted and illegal must be quashed with directions for appropriate relief.”
Since, both the grounds of appeal taken by assessee are with respect to the addition of Rs.1,48,75,800/- by holding the same as unexplained credits and further not allowing deduction u/s 54F of the Act, therefore, they are taken together for consideration.
Heard both the parties and perused the materials available on record. At the outset, it is seen the amount treated as unsecured loan by the AO was received as share in sale consideration of the property sold in terms of the agreement to sale executed between the partners of firm M/s Batra Bros. & Co. and Jai Pal Singh & Smt. Sunita Singh. The assessee along with his son is having 6.25% share in the said property on behalf of her deceased husband and as per agreement to sale, assessee has received amount of Rs.1,41,86,720/- towards their share of 6.25% in the total sale consideration.
Before us, assessee filed copy of MOU available in PB pages 17 to 24 executed between all the surviving partners and legal heirs of deceased partner of M/s Batra Bros & Co. with M/s R.S. Business Solutions Private Ltd. dated 24.09.20212. According to this MOU, for a total consideration of Rs.24.50 Cr, they agreed to sale the property owned by the partnership firm and payment schedule of sale consideration was duly described at page 4 of said MOU (pages 20 of PB). According to said payment schedule, a sum of Rs.11,48,437/- were received by the assessee on 24.09.2012 and same amount was received by her son on the same day. Both these amounts are part of the total consideration of Rs.78,75,157/- received separately by assessee and her minor son. Further, a joint declaration of receipt dated Simmi Batra vs. ITO 24.09.2012 was also filed in PB which was executed by the partners /legal heirs of M/s Batra and Bros. including assessee who also signed on behalf of her minor son, in favour of M/s R.S. Business Solution Pvt. Ltd. Thereafter, possession letter was given which is also available in paper book filed and receipt of the 20% of the consideration on various dates was also filed in the PB at pages 29-30. Assessee also filed a conveyance deed executed between DDA and partners of Batra Bros. & Co. wherein the said land was given on lease to the partners by DDA.
Regarding the claim of deduction u/s 54F, assessee filed copy of sale deed towards the purchase of new residential property for a sum of Rs.1 Cr. situated at Flat No.3, Plot No.22, Sector-2, Dwarka. It is further seen that the said property was purchased by the assessee in terms of the sale agreement executed on 07.07.2017.
In the instant case, the allegation of the Revenue is that the credit of Rs.1,41,87,500/- is unexplained, however, both the lower authorities had failed to appreciate the fact that this amount was received by assessee and her minor son on various dates falling in various assessment years, in terms of payment schedule given in MOU executed between parties which is available on PB pages 17 to 24 duly. In the said MOU, particulars of the buyers of said property were also stated and all the payments were received through payee account cheque. It is also seen that out of the total sum of Rs.1,41,86,718/-, a sum of Rs. 61,24,998/- were received in FY 2012- 13, Rs. 52,46,094/- were received in FY 2013-14 and Rs.28,15,626/- were received in FY 2014-15 i.e. the previous year relevant to year under appeal. Since only Rs. 28,15,626/- were received in the year under appeal thus the sums received in preceding years could not be held as unexplained credits of the assessee in the year under appeal. Once it is established that these amounts were received in terms of the MOU executed and no enquiry was carried out by the AO from the opposite party Simmi Batra vs. ITO who had made the payments though all the necessary details were available it cannot be said that the said amount is unexplained. Accordingly, in our considered view, no addition could be made u/s 68 of the Act even for the sum received during the year under appeal against the sale of the land.
Regarding the claim of deduction u/s 54F towards the purchases of new residential house property, it is seen that assessee has claimed deduction u/s 54F of the Act as the sale consideration was invested in acquisition of new house property. As per assessee sale consideration was deposited in the specified bank account out of which the property was purchased. The purchases was made with a period of three years from the sale of capital asset, therefore, assessee is entitled for deduction u/s 54F of the Act. From the perusal of the details available before us, we find that though the assessee had purchased new house property, however, it is not clear whether other conditions as stipulated in Section 54F for claiming the deduction are complied with by the assessee or not therefore, to this limited purpose of verification of this fact, claim of deduction u/s 54F is remand to the file of AO with the direction that if it is found that assessee has made compliance of all the conditions, deduction u/s 54F be allowed to her. With this direction, all the grounds of appeal taken by the assessee are partly allowed.
In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 24.09.2025.