SANJAY SHARMA, GREATER NOIDA V. ACIT, NOIDA

ITA 741/DEL/2022

AI Insights

The case involves Sanjay Sharma, the appellant, who appealed against the order of the CIT(A), National Faceless Appeal Centre, which had dismissed his earlier appeal. The primary issue was the denial of exemption under Section 54 of the Income Tax Act, 1961, which the appellant claimed was inadvertently not included in his tax return for the assessment year 2012-13. The AO had added a Long Term Capital Gain (LTCG) of Rs.12,68,000 to the appellant's income, leading to a tax demand of Rs.5,61,107. The Tribunal considered precedents where similar exemptions were granted despite non-disclosure in the original returns and decided to remand the matter back to the AO for a detailed examination of the appellant's claim.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122263 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 19-04-2022
• Other Referred Cases: Manohar Reddy Basani vs. ITO, Tupel Raja Iyengar vs. ITO, Kewal Krishan Jain vs. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return; Capital Gains
• Section: 54; 271(1)(c); 144; 54B; 54F; 264; 64

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “SMC” BENCH: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No.741/Del/2022 [Assessment Year : 2012-13] Sanjay Sharma, Flat 4063, ATS Paradiso, Sec-CHI-04, Greater Noida, Gautam Budh Nagar, Uttar Pradesh-201308. PAN-AMKPS9185L vs ACIT, Noida. APPELLANT RESPONDENT Appellant by Shri Jai Bhagwan Sharma, CA Respondent by Shri Sanjay Nargas, Sr.DR Date of Hearing 15.02.2023 Date of Pronouncement 27.02.2023 ORDER PER KUL BHARAT, JM : The present appeal filed by the assessee for the assessment year 2012-13 is directed against the order of Ld. CIT(A), National Faceless Appeal Centre (“NFAC”), Delhi dated 23.12.2021. 2. The assessee has raised following ground of appeal:- 1. “In the instant case the Appellant Assessee while submitting the Income Tax Return for the Financial Year ended on 31-03-2012 (Relevant to the Asst. Year 2012-13) inadvertently forgotten to submit the details for claiming exemption u/s. 54 of the Income Tax Act, 1961 and did not mentioned the details of sale of residential house property and utilization of Long-Term Capital Gain arising out of sale of residential house property in the purchase of another/new residential house property. Consequently, Income demand of Rs. 5,61,107/- was raised against the Appellant Assessee followed by the penalty proceedings u/s. 271(1)(c) of the Income Tax Act, 1961 Page | 2 3. Facts giving rise to the present appeal are that in this case, assessment was completed u/s 144 r.w.s 147 of the Income Tax Act, 1961 (“the Act”) vide assessment order dated 29.12.2019 at total income of Rs.37,93,894/- against the returned income of Rs.25,25,894/-. The Assessing Officer (“AO”) assessed the income at Rs.37,93,894/- against the declared income of Rs.25,25,894/-. Thereby, the AO made addition of Long Term Capital Gain (“LTCG”) of Rs.12,68,000/-. 4. Aggrieved against the order of AO, the assessee preferred appeal before Ld.CIT(A), who after considering the submissions, dismissed the appeal of the assessee. 5. Aggrieved against the order of Ld.CIT(A), the assessee preferred appeal before the Tribunal. 6. Apropos to ground of appeal, Ld. Counsel for the assessee submitted that the assessee inadvertently did not claim exemption u/s 54 of the Act. He reiterated the submissions as made in the written submission as under:- “It is to submit herewith that the Appellant Assessee while submitting the Income Tax Return for the Financial Year ended on 31.03.2012 (Relevant to the Asst. Year 2012-13) inadvertently forgotten to furnish the details of sale of residential house property and utilization of sale proceeds in the purchase of another/new residential house property and resultantly could not submit the details for claiming available exemption u/s. 54 of the Income Tax Act, 1961. Consequently. Income Tax demand of Rs.5,61,107/- on Long Term Capital Gain which is fully exempt due to the exemption u/s. 54 of the Income Tax Act, 1961 was raised against the Appellant Assessee followed by the penalty proceedings against him u/s. 271(1)(c) of the Income Tax Act,1961. (Kindly refer Assessment order of Ld. ACIT, Circ1e-3, Noida Page No. 60 To 63). Page | 3 Having, aggrieved with the Assessment order, an appeal was moved by the Appellant Assessee before the Commissioner of Income Tax (Appeals)- Noida-I (Kindly refer Form No. 35 Page No.68 to 70), which also could not yield the desired lawful relief to the Appellant Assessee, mainly due to lack of communication arisen due to the fear of Post COVID-19 PENADEMIC impact spread all over the world. Thus, the appeal was also dismissed by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (Kindly refer Appellate Order Dt. 23.12.2021, Page no. 64 to 67). Hon'ble sir, in order to explain the entire situation at a glance we would like to furnish herewith the followings for your perusal: The details regarding Sale and purchase of the Residential House Property, wherein which the Long- Term Capital Gain arisen (Kindly refer Page no.22 To 26 for Purchase of Property details and Page no. 03 to 21 for Sale of Property details). Due to the abovestated Sale and Purchase the Long-Term Capital Gain of Rs.11,98,958/- arisen and the same was duly invested by the Appellant Assessee in the Purchase of new Residential House Property at Flat 4063. ATS Paradiso, CHI-04, Greater Noida. Hence, amount of Long Term Capital gain is fully exempt u/s. 54 of the Income Tax Act, 1961. (Kindly refer Page no.27 To 46) The Grounds of Appeal furnished herewith (Kindly refer Page no.57 to Page no.58) are in itself self-explanatory and the same may kindly be reviewed in the Interest of Justice. Hon’ble sir, in the understated cases, which are similar to the Assessee's case, the due legal relief available to the assessee was allowed. May kindly refer the followings: In the matter of Manohar Reddy Basani vs. ITO (2018) (Hyd.)(Trib.) the Hon'ble ITAT has allowed the relief to the Assessee, in which the Assessee sold the property, but he neither admitted capital gains on sale of property nor claimed exemption under section 54F of Act, which was legally available to him while filing the Income Tax Return. (Kindly refer Page no.71 to 76). Page | 4 Similarly. In the matter of Tupel Raja Iyengar vs. ITO (2019)(Bang.)(Trib.) the Hon'ble ITAT has allowed the relief to the Assessee, in which the Assessee sold the residential property, but neither filed a return nor claimed exemption under section 54 of Act, which was legally available to the Assessee. (Kindly refer Page no.77 to 81). And In the matter of Kewal Krishan Jain vs. CIT(2013) the Hon'ble Punjab Haryana High Court has given relief to the Assessee who had not furnished the details of capital gain on sale of Agriculture Land in his original return and during the assessment he has filed revised return with the details of capital gain. The assessee, however, did not claim exemption u/s. 54B of the Act, whether in the original or in the revised return. (Kindly refer Page no.82 to 87) PRAY: Your Lordship be and is hereby prayed that the legally available exemption u/s.54 of the Income Tax Act, 1961 which the Appellant Assessee could not avail while filing the Income Tax Return for the Asst. Year 2012-13 needs be granted herewith in the light of legal provisions of the Income Tax Act,1961 so that the bonafide Assessee could be benefitted in the Interest of Natural Justice and as per applicable laws. Do the needful please.” 7. On the other hand, Ld. Sr. DR relied upon the orders of the authorities below and supported the assessment order. 8. I have heard Ld. Authorized Representatives of the parties and perused the material available on record. The only grievance of the assessee is that the authority below did not allow exemption u/s 54 of the Act, on the basis that the same was not claimed in the return of income. Reliance was placed upon decision of the Co-ordinate Bench of the Tribunal in the case of Sri Manohar Reddy Bansal vs ITO in ITA No.1307/Hyd/2017 [Assessment Year 2010-11] vide order dated 30.05.2018 has held as under:- Page | 5 12. “Thus we noticed a categorical direction of the Commissioner, to verify the facts and to re-do the assessment as per law, and in such an event it is a duty of the Assessing Officer to consider the issue afresh. Be that as it may, the Assessing Officer having now concluded that the assessee having neither disclosed the capital gains in the return of income nor claimed any deduction u/s 54F of the Act, the assessee is not entitled to get any deduction u/s 54F, in the same way he should not have added the capital gain to the income of the assessee since there was no disclosure of the same in the return of income. At any rate, the first appellate authority ought to have considered the issue on merits since the decision of the Supreme Court in the case of Goetze (India) Ltd (supra) would not debar the first appellate authority to consider the fresh claim, if any, so as to arrive at the correct taxable income. Hon'ble Madras High Court, in the case of CIT vs. Indian Express (Madurai) Pvt Ltd (140 lTR 705 at page 722), observed that unlike a law suit in civil appeals, in tax litigation, it cannot be treated as a "lis" between two rival parties but the job of the Assessing Officer is to arrive at the correct taxable income. Therefore, merely on account of fact that the assessee has not claimed exemption, the same could not have been denied. We therefore, set-aside the orders passed by the A.O. and direct the A.O. to allow the claim of deduction u/s 54F of the Act.” 9. Further, Ld. Counsel for the assessee placed reliance o the decision of Co- ordinate Bench of the Tribunal in the case of Smt. Tupel Raja Iyenger Shakuntala vs ITO in ITA No.64/Bang/2019 [Assessment Year 2009-10] vide order dated 10.05.2019 wherein the Co-ordinate Bench of the Tribunal has held as under:- 5.2.3. “Having held that the CIT(A) ought to have admitted the additional evidence filed by the assessee before him, u/R 46A of the Rules, it is seen that the assessee had filed the computation of capital gains before the CIT(A). As per this computation, it is seen that the assessee had computed Page | 6 the long term capital gains (LTCG) at RS.19,54,873/- on the sale proceeds of the said property at Rs. 46,65,000/-, after claiming indexed cost of acquisition. It is also seen that the assessee had purchased a residential property for a consideration of Rs.37,50,830/- on 22.05.2008, i.e., within 7 days from the sale of original property on 16.05.2008. I also find that the AO, after examination of details / documents filed by the assessee before the CIT(A); has reported in his remand report dated 30.01.2018, that the documents produced by the assessee have been examined. No adverse remarks have been made by the AO with regard to the computation of LTCG as well as the entitlement to claim exemption under section 54 of the Act. It is, therefore, clear that the AO was satisfied about the sale / purchase of the said properties and the investment benefit available to the assessee under section 54 of the Act. In the remand report, the AO has only remarked that there is a claim for exemption under section 54 of the Act and that no return of income has been filed by the assessee for Assessment Year 2009-10. In my view, this remark by the AO cannot be a factor to deny the assessee its legitimate claim for exemption under section 54 of the Act. There is no prohibition under the Act on the assessee in claiming exemption under section 54 of the Act in case it has not filed a return of income. Such a legal claim can be put forth at any stage of assessment / appellate proceedings and should be considered on merits in the light of the details / documents / corroborative evidence filed in this regard. Having considered the entire material on record on ITA No. 64/Bang/2019 this issue and taking into account the peculiar facts and circumstances of the case on hand, I am of the considered view that the assessee is entitled to exemption under section 54 of the Act and therefore the entire sale consideration of Rs.46,65,000/- assessed by the AO is hereby deleted. It is held and directed accordingly.” 10. Further, Ld. Counsel for the assessee placed reliance on the judgement of Hon’ble Punjab & Haryana High Court in the case of Kewal Krishan Jain vs CIT in Civil Writ Petition No.1818 of 1995 vide order dated 11.10.2013 has held as under:- Page | 7 “The revenue does not deny that the petitioner sold and purchased land during the previous year, relevant to assessment year and but for his error is not raising such a plea, before the Assessing Kumar Naresh N 2013.12.10 11:29 I attest to the accuracy and integrity of this document High Court Chandigarh Officer, was entitled to benefit, under Section 54-B of the Act. Thus, the only assertion put forth by the revenue is that as the petitioner did not rely upon the purchase of agricultural land, whether in his original or in revised return, the Commissioner has rightly refused to exercise power under Section 264 of the Act. As we have already held that power under Section 264 of the Act, is wide enough, to include rectification of a "bonafide" error committed by an assessee, while claiming exempt ions, under the Act, the Commissioner should have in the exercise of his revisional power under Section 264 of the Act, decided the petition, filed by the petitioner, on merits. In view of what has been recorded hereinabove, the writ petition is allowed, the impugned order is quashed and the matter is remitted to the Commissioner of Income Tax, Jalandhar, to pass a fresh order, in accordance with law. No order as to costs.” 11. Considering the above-mentioned binding precedents, I am of the considered view that the authority below ought to have considered the claim of the assessee regarding exemption u/s 54 of the Act. I therefore, set aside the impugned order and restore the issue to the file of AO to verify the correctness of the claim of the assessee and allow exemption in accordance with law. Thus, ground raised by the assessee is allowed for statistical purposes. 12. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 27 th February, 2023. Sd/- (KUL BHARAT) JUDICIAL MEMBER Page | 8 * Amit Kumar * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI