Nalwad Prabhu Somashekharappa Vs ITO (ITAT Bangalore)
Section 54F Claim Revived – ITAT Allows Fresh Chance to Prove Construction with Additional Evidence
The ITAT Bangalore restored the issue of Section 54F deduction to the Assessing Officer, holding that the assessee should be given an opportunity to substantiate the claim with comprehensive documentary evidence.
In this case, the assessee claimed deduction of about ₹11.61 lakhs under Section 54F on capital gains arising from sale of property, stating that the amount was invested in construction of a residential house jointly with his brother. However, during assessment proceedings, the assessee failed to furnish basic supporting evidence such as bills, vouchers, property details, and proof of construction. Consequently, the AO disallowed the claim, and the CIT(A) upheld the same.
Before the Tribunal, the assessee produced a detailed paper book (noted on pages 4–5) containing:
- Approved building plans,
- Municipal approvals,
- Construction bills and payment receipts,
- Ledger accounts and photographs, and
- Evidence of co-ownership and investment.
The assessee explained that earlier non-submission was due to medical issues and technical difficulties with portal compliance.
The Tribunal observed that:
- The assessee appears to possess substantial evidence supporting the claim,
- The failure to produce documents earlier was due to reasonable cause, and
- Substantive claim should be examined rather than rejected on technical grounds.
Accordingly, the ITAT:
