VILAS SADASHIV NALAWADE, MUMBAI V. ITO 25(3)(5), MUMBAI

ITA 336/MUM/2020

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 8900 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 12-01-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Reassessment proceedings
• Section: 147; 139; 54F

Judgement Text

ITA No.336/Mum/2020 Assessment Year: 2007-08 Page 1 of 3 INCOME TAX APPELLATE TRIBUNAL MUMBAI ‘SMC’ BENCH, MUMBAI [Coram: Pramod Kumar (Vice President)] ITA No.336/Mum/2020 Assessment Year: 2007-08 Vilas Sadashiv Nalawade .......................... Appellant Jai Bhavani Chawl, Nanda Patkar Road, Vile Parle (E), Mumbai 400057 [PAN: AFTPN5057J] Vs. Income Tax Officer, 25(3)(5) Mumbai ......................Respondent Appearances: Neha Paranje for the appellant Milind Chavan for the respondent Date of concluding the hearing : March 11, 2022 Date of pronouncement the order : June 09, 2022 O R D E R Per Pramod Kumar, VP: 1. By way of this appeal, the assessee applicant has challenged correctness of the order dated 9 th June 2017 passed by the learned CIT(A) in the matter of assessment under section 147 of the Income Tax Act 1961 for the assessment year 2007-08. 2. Grievances raised by the appellant are as follows:- 1. The Ld. Commissioner of Income Tax (Appeals) - 39, Mumbai [hereinafter referred to as the "Ld. CIT(A)"] erred in confirming the disallowance of the claim of an exemption of Rs.815,678/- u/s 54F of the Act without appreciating that the Appellant has satisfied all the conditions precedent to claim an exemption u/s 54F of the Act. Thus, the same may be allowed. 2. The L.CIT(A) erred in denying the claim of an exemption u/s 54F of the Act by observing that the Appellant has not filed the return of income u/s 139 of the Act and no such claim of ITA No.336/Mum/2020 Assessment Year: 2007-08 Page 2 of 3 exemption u/s 54F was made by way of valid return of income without appreciating that the Hon'ble Bombay High Court in the case of CIT vs. Prithvi Brokers & Shareholders 349 IT 336 (Bom) has held that the Appellant can raise additional claim before the Appellate authority though the same has not be raised/claimed in the return of income filed u/s 139 of the Act. 3. The Ld.CIT(A) erred in denying the claim of an exemption u/s 54F of the Act by observing that Appellant did not offer any income under the head Capital Gain in the return filed in response to notice u/s. 147 of the IT Act ignoring the fact that Appellant had offered Income under the head Capital gain at Rs. 2,24,383/- in the said return filed in response to notice under section 147 of the Act. 3. The appeal is time barred by 878 days, but the assessee has moved a petition, duly supported by an affidavit of the assessee and undertaking given by his tax consultant, seeking condonation of this delay. The assessee is an auto rikshaw driver and the issue in dispute is on account of capital gain arising out of sale of his ancestral property. It is only for this year that the assessee has filed his tax return. It has been explained that he was under the bonafide belief that upon CIT(A)’s passing the order his tax dispute stands resolved because on the same set of facts and similar directions, his co-owners were granted the relief. It was much later, after the order giving effect to CIT(A)’s direction was passed and came to his notice, he realized that he will have to file further appeal to get requisite relief. His socio economic condition, his limited education upto 7 th standard, and other hardships were highlighted. The learned Departmental Representative, on the other hand, submitted that this justification cannot be legally valid reason enough for condoning delay of 878 days. He, however, leaves it for the bench to take appropriate call. Having take note of these contentions, and having perused the material on record, I am of the considered view that this is a fit case for condoning the delay, in filing of appeal, particularly having regard to the background of the appellant and his inability to understand the nuances of tax laws and implication there of more so keeping in mind his educational and socio economic background delay condoned. 4. On merits, the short point of dispute is with respect to exemption of Rs. 8,15,678/- under section 54F. The assessee had sold a property and he was one of the ten co-owners of this property. On this sale transaction the assessee received Rs. 20 lakhs. It was in this backdrop that the case of the assessee was reopened, and in the reopened assessment proceedings the said capital gain was also taxed. The claim of 54F was declined. The learned CIT(A) has also declined the deduction on the ground that reassessment proceedings cannot be allowed to benefit the assessee, as these are meant for the benefit of the revenue. Reliance is placed on Hon’ble Supreme Court’s judgment in the case of CIT vs Sun Engineers Works Pvt. Ltd., [(1992) 198 ITR 297 (SC)]. The assessee is aggrieved and is in appeal before us. 5. Having heard the rival contentions and having perused the material on record, I am inclined to uphold the plea of the assessee. The claim under section 54F is an integral part of the ITA No.336/Mum/2020 Assessment Year: 2007-08 Page 3 of 3 computation of capital gains under chapter IV E and it’s application thus cannot be excluded while computing capital gains escaping assessment. The learned CIT(A)’s observation that section 147 cannot be so construed as to benefit the assessee, on the facts of this case, is incorrect inasmuch while, in the reassessment proceedings, it is indeed “not open to the assessee to seek review of items unconnected with the escapement of income for the purpose of computation of the income escaping assessment”, as was held in Sun Engineers Works (supra), the claim of exemption under section 54F is not hit by this proposition inasmuch as it is an essential part of computation of capital gains which were sought to brought to tax. I, therefore, see no legally sustainable merits in the objection raised by the learned CIT(A). 6. In view of the above discussions, as also bearing in mind entirety of the case, I uphold the grievance of the assessee. The Assessing Officer is directed to grant the exemption u/s. 54F, as prayed. Ordered, accordingly. 7. In the result, the appeal is allowed in the terms indicated above. Pronounced in the open court today on the 09 th day of June 2022. Sd/- Pramod Kumar (Vice President) Mumbai, dated the 09 th day of June 2022. Copies to: (1) The Appellant (2) The respondent (3) CIT (4) CIT(A) (5) DR (6) Guard File By order True Copy Assistant Registrar/Sr.PS Income Tax Appellate Tribunal Mumbai benches, Mumbai