Sanjeev Garg Vs ACIT (ITAT Delhi)
Delay Beyond Assessee’s Control Not Fatal- Property Reinvestment Delay Excused — Section 54 Relief Upheld by Delhi ITAT Reopening Sustained but Relief Restored
Assessee sold his 1/3rd share in an inherited property at Ghaziabad, during FY 2011-12. AO reopened the assessment u/s 147, disallowed indexed cost of improvement (₹8.87 lakh) & exemption u/s 54 (₹38.62 lakh), & computed total income at ₹80.68 lakh. The assessee challenged the reassessment as invalid & contrary to law.
Key Grounds
1. Invalid reopening: No proper “reasons to believe,” non-supply of reasons, mechanical approval u/s 151, & absence of notice u/s 143(2).
2. Denial of deduction: Disallowance of cost of improvement & exemption u/s 54 for reinvestment in YEIDA plot delayed due to external factors.
Tribunal’s Findings
- AO’s reference that “no return was filed” was a typographical error since reasons elsewhere recorded the return.
- PCIT’s approval stating “I am satisfied that it is a fit case for issue of notice” was held valid—supported by Experion Developers (Del HC) & Venky Steels (Patna HC, affirmed by SC).
- No procedural defect—notice u/s 143(2) was duly issued (DIN not mandatory before Oct 2019).
On merits, ITAT noted Assessee & co-owners’ LTCG computation was accepted in other cases. Following Surat Trade & Mercantile Ltd. (Guj HC), it held indexed cost of improvement allowable without further proof since accepted for co-owners.
