Case Law Details
Amrik Sokhi Vs ITO (ITAT Delhi)
Introduction: In a recent decision by the Income Tax Appellate Tribunal (ITAT) Delhi, the case of Amrik Sokhi vs. ITO for the assessment year 2015-16 has garnered attention. The primary issue revolves around the claim of capital gain deduction under Section 54 of the Income Tax Act. Specifically, the case pertains to the purchase of two adjacent and joint flats with the intention of using them as one residence unit. In a significant move, the ITAT has decided to restore the matter to the Assessing Officer (AO) for further verification.
Detailed Analysis:
1. Background and Legal Context: This appeal was filed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)] for the assessment year 2015-16. The appellant claimed deductions under Sections 54 and 54F of the Income Tax Act in relation to two properties. The CIT(A) confirmed the Assessing Officer’s (AO) decision to disallow these deductions.
2. Grounds of Appeal: The appellant’s counsel contended that the CIT(A) erred in confirming the AO’s actions regarding the disallowance of deductions. The counsel argued that the facts recorded were incorrect, and the principles of natural justice were violated. The submissions made by the appellant were allegedly not considered, even though all the necessary conditions for the deductions were met.
3. Verification of Facts: The appellant’s counsel cited the order of the ITAT Pune in a similar case, stating that when the assessee purchases two flats with the intention of using them as one residential unit, they are entitled to benefits under Sections 54 and 54F of the Income Tax Act. The counsel requested that this fact be verified and examined by the Assessing Officer.
4. Supporting Arguments: The Senior Departmental Representative (DR) supported the decisions of the authorities below. However, in the spirit of fairness, the Senior DR agreed with the appellant’s counsel’s request to restore the matter to the Assessing Officer for verification and examination of the facts concerning the purchase of two adjacent and joint flats for the purpose of creating one residential unit.
5. ITAT’s Decision: After careful consideration, the ITAT decided to restore the matter to the Assessing Officer for verification and examination of the facts presented by the appellant. The Assessing Officer is instructed to provide the appellant with due opportunity for a hearing, and the decision should be made without being influenced by the previous assessment and the first appellate order.
Conclusion: The ITAT Delhi’s decision in the case of Amrik Sokhi vs. ITO for A.Y. 2015-16 underscores the importance of thorough verification of facts in cases involving capital gain deductions under Sections 54 and 54F of the Income Tax Act. The restoration of the case to the Assessing Officer allows for a fresh examination of whether the appellant qualifies for the exemptions. This ruling ensures that the principles of natural justice are upheld and that all relevant facts are considered before making a final decision on the eligibility for tax deductions. It highlights the commitment to a fair and just assessment process.
FULL TEXT OF THE ORDER OF ITAT DELHI
This appeal has been filed against the order NFAC/CIT(A), New Delhi dated 27.05.2022 for A.Y. 2015-16.
2. The ld. counsel submitted that having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in not allowing the benefit of deduction of Rs.1,42,419/- claimed by the assessee u/s 54F and that too by recording incorrect facts and findings and in violation of principles of natural justice and not appreciating/considering the submissions furnished by the assessee and more so when all the necessary conditions have been complied with by the assessee. He further submitted that having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in not allowing the benefit of deduction of Rs.67,71,823/- claimed by the assessee u/s 54 and that too by recording incorrect facts and findings and in violation of principles of natural justice and not appreciating/considering the submissions furnished by the assessee and more so when all the necessary conditions have been complied with by the assessee. He also vehemently pointed out that in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in not allowing the aggregate deduction of Rs.69,13,842/- u/s 54 & 54F, is bad in law and against the facts and circumstances of the case.
3. The ld. counsel placing reliance on the order of ITAT Pune in the case of Ms. Anita Mahindrakumar Oberai vs. ITO in ITA No. 600/Pun/2020 order dated 01.02.2022 for AY 2015-16 submitted that when the assessee had purchased two flats for the purpose of use of the same as one residential unit then the assessee is entitle to get benefit u/s. 54/54F of the Act for second flat also. He further submitted that this fact may be verified and examined at the level of Assessing Officer.
4. Replying to the above, the ld. Senior DR supported the orders of the authorities below. However, in all fairness, he agreed to the submission of ld. counsel of assessee that the matter may be restored to the file of the Assessing Officer for verification and examination of fact as to whether the assessee has purchased two adjacent and joint flat for the purpose of using the same as one residential unit and after being satisfied to allow the benefit of exemption u/s. 54 and 54F of the Act.
5. On careful consideration of above submissions we find it appropriate to restore the matter to the file of Assessing Officer for verification and examination of above noted factual contentions of assessee after allowing due opportunity of hearing to the assessee and without being influenced with the earlier assessment and first appellate order.
6. In the result, the appeal of assessee is allowed for statistical purposes.
Order pronounced in the open court on 12.10.2023
