Hitesh Kumar Prithviraj Kawad Vs DCIT (ITAT Chennai)
The appeal in question concerns an individual assessee challenging the validity of reassessment proceedings and the denial of a deduction under Section 54F of the Income-tax Act, 1961, for the assessment year 2015-16. The original return of income was filed on 27 March 2016, declaring a total income of ₹99,75,750. The assessment under Section 143(3) was completed on 18 December 2017, determining income at ₹1,04,33,030. Subsequently, the Principal Commissioner of Income Tax (PCIT) issued a direction under Section 263 to revise the assessment, which led to reassessment proceedings under Section 147 initiated on 23 March 2020. The reassessment order, dated 24 September 2021, denied the assessee’s claim for deduction under Section 54F amounting to ₹2,52,01,494, on the ground that the assessee owned more than one residential house other than the new asset. Total income was determined at ₹3,55,33,110.
The assessee challenged the reassessment order before the Commissioner of Income Tax (Appeals) [CIT(A)], raising multiple grounds, notably: the reopening amounted to a “mere change of opinion”; the assessee did not own more than one residential house; the villa on co-owned land was not the assessee’s asset; the construction agreement was only to demarcate access rights; and that the proviso to Section 54F was not violated because the new house was completed after three years from the transfer of the original asset. The CIT(A) rejected all grounds, holding that the reassessment was valid and the deduction under Section 54F was correctly denied because the assessee, along with co-owners, had started constructing a new residential house within three years of transferring the original asset (shares).
