Case Law Details
Shalini Karan Kumar Vs DCIT (ITAT Mumbai)
Introduction: The recent decision by the Income Tax Appellate Tribunal (ITAT) Mumbai in the case of Shalini Karan Kumar vs. DCIT highlights the importance of complying with documentation requirements for exemption claims. The appeal was dismissed due to non-appearance and failure to submit necessary documents related to the exemption claim under section 54 of the Income Tax Act.
Detailed Analysis: Shalini Karan Kumar filed an appeal against the order dated 07/02/2023 passed by the National Faceless Appeal Centre (NFAC) Delhi / Commissioner of Income Tax (Appeal) [Ld. Commissioner] under section 250 of the Income-tax Act, 1961. The appeal was related to the assessment year 2014-15.
The Assessee had claimed a deduction of Rs.2,15,63,497 under section 54 of the Act, pertaining to capital gains. The Assessing Officer, during scrutiny, sought details supporting the deduction, specifically requesting documents related to the investment in house property and the deposit in the capital gain account scheme.
The Assessee submitted responses, but the Assessing Officer found them unacceptable, disallowing the investment of Rs.1,05,00,000 in house property under section 54. The claim for depositing Rs.1,40,00,000 in the capital gain account scheme was accepted. The Commissioner (Appeals) upheld this disallowance, emphasizing the non-fulfillment of the primary condition in section 54.
The Assessee, aggrieved by the decision, appealed to the ITAT Mumbai. However, despite notices for the hearing, the Assessee neither appeared nor filed any adjournment application. The ITAT Mumbai, observing the non-submission of supporting documents and lack of grounds against the findings, affirmed the impugned order, leading to the dismissal of the appeal.
Conclusion: The dismissal of the appeal in the Shalini Karan Kumar case underscores the significance of complying with documentation requirements, especially when claiming exemptions under section 54 of the Income Tax Act. Non-appearance and failure to submit necessary documents can lead to the denial of claims, as evident in this case. Taxpayers are reminded of the importance of thorough documentation and adherence to procedural requirements to support their claims during assessments and appeals.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal has been preferred by the Assessee against the order dated 07/02/2023 impugned herein passed by the National Faceless Appeal Centre (NFAC) Delhi / Ld. Commissioner of Income Tax (Appeal) [in short, Ld. Commissioner ] under section 250 of the Income-tax Act, 1961 (in short, the Act) for the A.Y. 2014-15.
2. In this case, the Assessee had shown its total income at Rs.55,50,890/- by filing its return of income on 29/11/2014, which was processed under section 143(1) of the Act. Subsequently, the case of the Assessee was selected for scrutiny under CASS and consequently, statutory notices have been issued, in response to which the Assessee filed its submission and the details.
2.1 The Assessing Officer on perusal of the return of income filed by the Assessee observed that the Assessee has claimed deduction of Rs.2,15,63,497/- under section 54 of the Act under the head “capital gain” by segregating the amount of Rs.1,05,00,000 invested in house property and depositing the amount of Rs.1,40,00,000/- in capital gain account scheme under section 54 of the Act. Therefore the Assessee was asked to furnish the details such as copy of documents supporting deduction claimed viz. payment details and property purchased for Rs.1,05,00,000/- and copy of bank statement and copy of bank account opening form, supporting that the sum of Rs.1,40,00,000/- was deposited in capital gain account scheme under section 54 of the Act. The Assessee in response filed its submissions which were considered by the Assessing Officer; however, not found acceptable and ultimately, the Assessing Officer though accepted the claim of the Assessee with regard to the deposit of Rs.1,40,,00,000/- in capital gain account scheme, however, disallowed the investment of Rs.1,05,00,000/- in house property under section 54 of the Act and added to the total income of the Assessee by holding as under:-
“8. The submission of the assessee has been considered and acceptable regarding amount Rs. 1,40,00,000/-deposited in Capital Gain Scheme, However, the same is found to be not acceptable regarding investment Rs.1,05,00,000/- in house property u/s. 54. As per the provisions of section 54, the assessee is entitled to get benefit of investment in one house on sale/profit from selling of a residential property. Assessee has claimed deduction u/s 54 by way of investment in two house properties which is not as per the intent of law and is not permissible as per provisions of section 54 of I.T.Act. Apart from this, as discussed in the show cause, this amount of Rs. 1,05,00,000 /- was paid for purchase of property which went in disputa. It shows that payment made by assesses contested and supposed to be return back to the assessee. Once the sellers of property are not the owners and no sale document is executed, it cannot be said that sum of Rs.1,05,00,000/- paid by assessee was payment made for purchase of house property eligible for deduction u/s 54 of the I.T. Act. Hence, the deduction u/s 54 amount 1,05,00,000/- is not allowable. In view of the same, the amount of Rs.1,05,00,000/- is disallowed and added to the total income of the assessee.”
3. The Assessee being aggrieved, challenged the said addition before the Commissioner (Appeals), who upheld the said addition by holding as under:-
“5.7 In view of the above it is clear that the assessed ‘has not fulfilled the primary condition laid down in section 54 for availing the said deduction. After selling the residential house property, the assessee has not been able to either purchase or construct a residential property within the prescribed timelines as laid down in section
54. The assessee intended to purchase a residential property but because of the dispute with the prospective seller was unable to do so. Neither was any Agreement for Sale/Sale Deed executed nor any possession was handed over. In fact eventually the impugned property was sold to a third party. Therefore, I see no infirmity in the action of the AO in denying the deduction u/s 54 to the assessee. Since, the primary condition for the purchase/construction of a new residential property has not been fulfilled resulting in disallowance of deduction u/s 54, so the question whether the benefit of section 54 is available for one house property or two house properties has been rendered academic and does not require adjudication. In view of the above, this ground of appeal is dismissed.”
4. The Assessee being aggrieved preferred the instant appeal. Inspite of sending notice for the date of hearing through R.P.A.D. as well as by e-mail, neither appeared nor filed any adjournment application. Hence, we are constrained to decide this appeal ex-parte. We observe as it appears from the orders passed by the authorities below that the Assessee though claimed the exemption of Rs.,1,05,00,000/- under section 54 of the Act qua investment in house property, however, failed to file any documents in order to substantiate its claim, therefore, the authorities below denied the claim of the Assessee. Even otherwise, we do not find any reason or material contrary to the findings of the Ld. Commissioner. Consequently, we are constrained to affirm the impugned order, accordingly the appeal of the Assessee is liable to be dismissed.
5. In the result, appeal filed by the Assessee stands dismissed.
Order pronounced in the open Court on 22/11/2023.
Author Bio
