Section 54/54F exemption: ITAT directs AO to consider additional evidence

Hemalatha Mallapuram Vs ITO (ITAT Hyderabad)

The issue under consideration is whether the tribunal can give fresh opportunity to the assessee to submit evidence which assessee might not have been able to provide at the time of hearing?

In the present case, the assessee claimed deduction U/s. 54F of the Act. However, the Ld. AO disallowed the claim of deduction U/s. 54F of the Act by stating that she already owns one residential house other than the property sold. On appeal, the Ld. CIT (A) dismissed the appeal of the assessee and confirmed the order of the Ld.AO for denying the benefit of deduction U/s. 54F of the Act because the assessee has not furnished any cogent evidence.

ITAT states that, on examining the paper book submitted by the assessee they are of the considered view that it is quite relevant for deciding the claim of the assessee for obtaining the benefit of deduction under section 54 / 54F of the Act. ITAT also find that the assessee is not engaged in any other activities and solely dependent on her husband / family. Therefore, it is quite possible that the assessee might not have been able to provide the requisite documents before the Ld. Revenue Authorities at the time of hearing. Hence, in the interest of justice, they hereby remit the matter back to the file of Ld. AO with directions to admit the additional evidence filed before us and also any other relevant documents filed by the assessee for the first time and thereafter decide the issue afresh in accordance with merit and law after providing proper opportunity to the assessee of being heard.

FULL TEXT OF THE ITAT JUDGEMENT

This appeal is filed by the assessee aggrieved by the order of the Ld. CIT (A) in appeal No. 0237/CIT (A)-7/2017-18, dated 15/10/2018 passed U/s. 250(6) r.w.s 147 & 143(3) of the Act.

2. On perusal of the record, we find that there is a delay of 2 days in filing this appeal by the assessee. In this regard, the assessee has filed a petition seeking condonation of delay, wherein, it was, submitted that she could not get leave between the period 26/12/2018 & 27/12/2018 from her employ being the fag end of the year, due to which, the appeal was filed on 28/12/2018 i.e., with a delay of 2 days. To this effect, she also filed an affidavit affirming the said reasons which were beyond the control of the assessee. It was, therefore, prayed that the delay of two days in filing the appeal may be condoned and the appeal may be hear on merits.

2.1 As the assessee was prevented by a reasonable cause in filing the appeal with a delay of 2 days, We hereby condone the said delay in filing the appeal and proceed to hear the appeal on merits.

3. The assessee has raised several grounds in her appeal and they are reproduced herein below for reference: –

“1. The order of the Appellate Commissioner is contrary to law, facts and circumstances of the case.

2. The Appellate Commissioner ought not to have rejected the ground of jurisdiction by the A. O., for issue of notice u/s 147 of the Income-Tax Act, 1961.

3. The Appellate Commissioner ought ~. to have observed that the rejection of A.O. was u/s 54F, while the assessee claimed u/s 54 in the additional ground filed.

4. The Appellate Commissioner ought not to have rejected the claim of the assessee made ix] s 54, by observing that no investment in the property was made for claim of deduction u/s 54.

5. Any other grounds which the appellant may urge either at or before the date of hearing.”

4. The brief facts of the case are that the assessee is an individual filed her return of income on 5/6/2017 for the relevant AY 2010-11 in response to notice issued U/s. 148 of the Act by admitting NIL income. Thereafter, the assessment was completed vide order dated 29/12/2017 wherein the Ld. AO made an addition of Rs 24,84,800/- under the head LTCG with respect to the sale of her commercial property.

5. During the course of scrutiny assessment proceedings, it was revealed that the assessee had sold along with certain other three individuals a commercial property for Rs. 80 lakhs. However, as per 50C valuation, the SRO value of the property was Rs. 1,68,43,750/-. The Ld. AO adopted the SRO value of the property invoking the provisions of section 50C of the Act and after granting the benefit of indexation and cost of improvement, computed the LTCG at Rs. 99,39,240/- for the entire sale of the asset. Since the assessee’s share was only 25% of the asset sold, the LTCG in the hands of the assessee was determined at Rs.24,84,800/-(¼th of Rs.99,39,240/-). The assessee claimed deduction U/s. 54F of the Act. However, the Ld. AO disallowed the claim of deduction U/s. 54F of the Act by stating that she already owns one residential house other than the property sold. On appeal, the Ld. CIT (A) dismissed the appeal of the assessee and confirmed the order of the Ld.AO for denying the benefit of deduction U/s. 54F of the Act because the assessee has not furnished any cogent evidence.

6. At the outset, the Ld.AR furnished a paper book before us running from 1 to 86 pages wherein item No. 9 to 14 are stated to be additional evidence such as construction permission issued by the Panchayat Office dated 22/12/2009, copy of approval plan for 1st and 2nd Floor from Gram Panchayat, Housing Loan sanction, valuation report, tax receipt issued by the Gram Panchayat, copy of the challan for the payment made to Electricity Department for obtaining electricity and certain other relevant documents. The Ld. AR argued by stating that the additional evidence submitted by the assessee will establish that the assessee is entitled to the claim of deduction U/s. 54 / 54F of the Act and therefore the matter may be remitted back to the file of Ld. AO for fresh consideration. The Ld. DR on the other hand opposed to the submission of the Ld. AR and requested for confirming the order of the Ld. Revenue Authorities.

7. We have heard the rival submissions and carefully perused the materials on record. On examining the paper book submitted by the assessee we are of the considered view that it is quite relevant for deciding the claim of the assessee for obtaining the benefit of deduction U/s. 54 / 54F of the Act. We also find that the assessee is not engaged in any other activities and solely dependent on her husband / family. Therefore, it is quite possible that the assessee might not have been able to provide the requisite documents before the Ld. Revenue Authorities at the time of hearing. Hence, in the interest of justice, we hereby remit the matter back to the file of Ld. AO with directions to admit the additional evidence filed before us and also any other relevant documents filed by the assessee for the first time and thereafter decide the issue afresh in accordance with merit and law after providing proper opportunity to the assessee of being heard.

8. Before parting, it is worthwhile to mention that this order is pronounced after 90 days of hearing the appeal, which is though against the usual norms, we find it appropriate, taking into consideration of the extra-ordinary situation in the light of the lockdown due to Covid-19 pandemic. While doing so, we have relied in the decision of Mumbai Bench of the Tribunal in the case of DCIT Vs. JSW Ltd. In ITA No.6264/M/2018 and 6103/M/2018 for AY 2013-14 order dated 14th May 2020.

9. As a result, appeal of the assessee is allowed for statistical purposes as indicated herein above.

Pronounced in the open court on the 24th July, 2020.