Case Law Details
Salma Ahmed Vs ITO (ITAT Chennai)
Introduction: A recent appeal case from Salma Ahmed against ITO has shed light on the importance of furnishing complete details when claiming capital gain deductions under section 54F of the Income Tax Act. The ITAT Chennai has emphasized the rights of the assessee and the principles of natural justice.
Details on the Original Order: Salma Ahmed made a late return filing for the assessment year 2016-17 on 31.03.2018, proclaiming a total income of ₹.71,09,420/- after claiming a substantial deduction under section 54F. The return was selected to examine the exemption claimed under this section, resulting in a revised assessment of her total income at ₹.2,39,48,340/-.
Denial of Exemption by Assessing Officer: The primary contention arose when the Assessing Officer recalculated the capital gains, denying Ahmed’s claim of exemption under section 54F to the tune of ₹.1,25,00,000/-. In addition, certain amounts were reassessed pertaining to undisclosed income and cost of improvement claims.
Assessee’s Appeal & Tribunal’s Verdict: After the dismissal of Ahmed’s appeal by CIT(A), the case moved to the Tribunal. The defense contended that as long as deposits related to capital gains are made on or before the due date of income return filing, the exemption should stand. Ahmed’s inability to respond adequately to notices, especially during the challenging times of the Covid-19 pandemic, further highlighted the need for a reconsideration of her case.
Tribunal’s Response: In light of the submissions, the Tribunal advocated for Ahmed’s right to natural justice. They acknowledged that she deserves another chance to substantiate her claims, especially given the extraordinary circumstances during the pandemic.
Conclusion: The ITAT Chennai, emphasizing the principles of natural justice and fairness, has set aside the appellate order. They’ve remitted the matter back to the CIT(A) for fresh examination, stressing that Ahmed must furnish all requisite details for reconsideration. This case serves as a poignant reminder of the significance of furnishing complete and accurate details in tax matters and the role of judicial bodies in ensuring justice is served.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi dated 02.05.2023 for the assessment year 2016-17.
2. Brief facts of the case are that the assessee filed her return of income belatedly for the assessment year 2016-17 on 31.03.2018 under section 139(4) of the Income Tax Act, 1961 [“Act” in short] declaring a total income of ₹.71,09,420/- after claiming deduction under section 54F of the Act to the extent of ₹.1,25,00,000/- from capital gains computed under section 45 of the Act. The return filed by the assessee was processed under section 143(1) of the Act and selected for limited under CASS for the specific purpose of examining “deduction/exemption from capital gains” claimed by the assessee under section 54F of the Act. After considering the submissions and details against statutory notices, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 26.12.2018 determining the total income of the assessee at ₹.2,39,48,340/- while recalculating capital gains on sale of property at ₹.2,35,23,462/- by denying assessee’s claim of exemption under section 54F of the Act to the extent of ₹.1,25,00,000/- and also restricting the assessee’s claim of cost of improvement of ₹.1,50,000/- and assessed a sum of ₹.4,00,000/- as undisclosed income under the head income from other sources. On appeal, deciding the issues on merits, the ld. CIT(A) dismissed the appeal of the assessee exparte after considering the submissions made by the assessee in the form of rounds of appeal and statement of facts.
3. On being aggrieved, the assessee is in appeal before the Tribunal.
4. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. During the course of hearing, the ld. Counsel for the assessee has submitted that the assessee has deposited a portion of net consideration in capital gains deposit scheme before the due date under section 139(4) of the Act. However, the Assessing Officer has disallowed the same and brought to tax, which was confirmed by the ld. CIT(A) and argued that exemption under section 54F of the Act must not be denied as long as the deposit is made on or before the due date of filing return of income either under section 139(1) or section 139(4) of the Act. It was further submission that the Assessing Officer has erroneously disallowed the commission payment as well as cost of improvement. It was further submission that due to the circumstances beyond the control, the assessee could not able to respond to the notices issued by the ld. CIT(A) during pre and post Covid-19 pandemic and to substantiate her claim of exemption and other expenses claimed by the assessee and prayed for one more opportunity of being heard to substantiate her claim before the ld. CIT(A). Considering the above pleas, we are of the considered opinion that to meet the ends of natural justices, the assessee shall be given one more opportunity of being heard. Accordingly, we set aside the appellate order and remit the matter back to the file of the ld. CIT(A) to decide the issues afresh in accordance with law after considering the explanations of the assessee. The assessee is also directed to furnish complete details with material evidences and convincing explanations before the ld. CIT(A) for consideration.
5. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 25th July, 2023 at Chennai.
