Adhi Kumara Guru Vs DCIT (ITAT Chennai)
The appeal before the Income Tax Appellate Tribunal, Chennai Bench, concerned the validity of reassessment proceedings initiated for Assessment Year 2014–15. The assessee challenged the order of the Commissioner of Income Tax (Appeals) which had upheld a reassessment order passed under section 143(3) read with section 147 of the Income-tax Act, 1961.
The assessee had filed the return of income on 19.02.2015, declaring long-term capital gains arising from the sale of immovable properties. During the year, the assessee derived long-term capital gains of ₹82,46,084 and also offered to tax an earlier exemption of ₹20,08,500 claimed in Assessment Year 2013–14, as the newly acquired property was sold within three years. Consequently, total long-term capital gains amounted to ₹1,02,54,584. Against this, exemption under section 54F was claimed for a property proposed to be constructed.
The return was selected for limited scrutiny to verify large deductions claimed under sections 54B, 54C, 54D, 54G, and 54GA. A scrutiny assessment under section 143(3) was completed on 28.11.2016, assessing total income at ₹61,77,060 after disallowing ₹15,00,000 claimed as cost of improvement.
Subsequently, the assessment was reopened for the first time through a notice dated 27.03.2018 under section 148, specifically to examine the allowability of exemption under section 54F. The Assessing Officer recorded reasons stating that the assessee owned more than one residential property on the date of transfer, making the exemption allegedly inadmissible. After reassessment proceedings, an order dated 12.12.2018 was passed, wherein no addition was made and the income remained unchanged, indicating acceptance of the exemption claim.
