NAMITHA DEENADAYALU NAIDU ,BENGALURU V. INCOME TAX OFFICER, WARD-6(3)(1), BENGALURU

ITA 1572/BANG/2024

AI Insights

This case involves an appeal by Namitha Deenadayalu Naidu against the order of the CIT(A)/NFAC, which had dismissed her earlier appeal regarding the disallowance of a deduction under section 54 of the Income Tax Act. The deduction was claimed against capital gains from the sale of a residential property, which the Assessing Officer (AO) found ineligible as the new property was not registered in the assessee's name. The CIT(A) upheld the AO's decision, leading to this appeal. The Tribunal, considering the assessee's circumstances as a homemaker and her lack of response to previous notices, decided to remit the case back to the CIT(A) for a fresh evaluation, emphasizing the need for a fair opportunity for the assessee to present her case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34086 (ITAT-BANGALORE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V. PARITHIVEL
• Assessee Lawyers: SUDHEER PRADHU
• Keywords: Opportunity of being heard; Capital Gains
• Section: 143(3); 142(1); 143(2); 250; 143(1); 54

Judgement Text

"ITA No.1572/Bang/2024 Namitha Deenadayalu Naidu, Bangalore IN THE INCOME TAX APPELLATE TRIBUNAL “C’’ BENCH: BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI KESHAV DUBEY, JUDICIAL MEMBER ITA No.1572/Bang/2024 Assessment Year: 2016-17 Namitha Deenadayalu Naidu #2/4, 2nd E Cross, Hanumanthappa Layout, Sultanpalya Bengaluru 560 032 Karnataka PAN NO : AFRPN3548L Vs. ITO Ward-6(3)(1) Bangalore APPELLANT RESPONDENT Appellant by : Sri Sudheer Pradhu, A.R. Respondent by : Shri V. Parithivel, D.R. Date of Hearing : 15.10.2024 Date of Pronouncement : 09.01.2025 O R D E R PER KESHAV DUBEY, JUDICIAL MEMBER: This appeal at the instance of the assessee is directed against the order of ld. CIT(A)/NFAC dated 24.6.2024 vide DIN & Order No.ITBA/NFAC/S/250/2024-25/1065987811(1) passed u/s 250 of the Income Tax Act (“in short”) for the assessment year 2016-17. 2. The assessee has raised following grounds of appeal: ITA No.1572/Bang/2024 Namitha Deenadayalu Naidu, Bangalore Page 2 of 6 3. The brief facts of the case are that the assessee being an individual and home maker filed her return of income for the assessment year 2016-17 by declaring total income of Rs.14,35,170/-. The return was processed u/s 143(1) of the Act. Thereafter the case was selected for limited scrutiny under CASS for the reason “whether deduction from capital gains has been claimed correctly”. Accordingly, notices u/s 143(2) as well as 142(1) of the Act were issued calling for the details in connection with the return of income filed. The assessee has derived income from salaries, house property, profit & gains of business or profession and income from other sources. During the course of assessment proceedings, the assessee has filed the copy of return along with computation of income, statement of bank accounts, sale deed and other relevant ITA No.1572/Bang/2024 Namitha Deenadayalu Naidu, Bangalore Page 3 of 6 details. The AO during the course of assessment proceedings found that as per the sale deed dated 29.7.2015, the residential property was sold for Rs.9,24,00,000/- and the share of capital gain income of Rs.4,62,00,000/- received out of sale consideration of 50% as shown in the statement of income. An amount spent/invested in purchase of new ready built house property of Rs.2,64,37,500/- (Rs.2,48,00,000/-+Rs.16,37,500/-) on 21.1.2016. The AO noticed that the purchase of new residential property was not registered in the name of the assessee and the document of sale deed dated 20.1.2016 is in the name of third person. Therefore, the AO of the view that exemption claimed u/s 54 of the Act against the capital gain of Rs.3,44,98,532/- is not eligible and accordingly capital gain of Rs.4,30,81,672/- received on sale consideration and claim of deduction u/s 54 of the Act is disallowed and brought to tax under the head capital gains. 3.1 Further, on second residential unit, which was constructed on the vacant land adjacent to the new residential property, the AO found that the assessee filed a purchase deed in which purchaser is Sri Kumar N.B. On raising the query, the assessee submitted that she is the wife of assessee. As it is in the name of third person, the AO was of the view that exemption u/s 54 of the Act is allowable only if the assessee has purchased the property in his/her name. As in the present case, the assessee is also not the joint owner and accordingly exemption u/s 54 of the Act is denied. Without prejudice, the assessee has claimed construction expenditure of Rs.1,30,00,000/- (Rs.90,00,000/- on 28.1.2016 and Rs.40,00,000/- on 1.6.2016) u/s 54 of the Act. The AO has also not allowed the claim of additional expenses on the same vacant land on the ground that section 54 of the Act provides exemption for the purchase or construction and not for both at the same time. Aggrieved by the assessment completed u/s 143(3) of the Act dated 28.12.2018, the ITA No.1572/Bang/2024 Namitha Deenadayalu Naidu, Bangalore Page 4 of 6 assessee has filed the appeal before the ld. CIT(A)/NFAC. The ld. CIT(A)/NFAC dismissed the appeal by observing that even after 5 years of filing this appeal, the assessee could not make any submission in the right earnest to pursue its appeal. The assessee had also not responded to the assessment proceedings as well giving the impression that assessee does not care about the statutory proceedings. In view of the above, the ld. CIT(A)/NFAC was of the considered view that assessee has no interest in pursuing its appeal and proceed to dispose of their appeal based on material available on record. Further, ld. CIT(A) considering the fact that assessee had not made any investment (purchase/construction) in her name and the purchase of property and the construction of another property in the vacant site adjoining the newly acquired property constitute a violation of the condition specified u/s 54 of the Act and accordingly find no infirmity in the order of AO. 3.2 Aggrieved by the order of ld. CIT(A)/NFAC the assessee has filed the present appeal before this Tribunal. 3.3 The assessee has filed paper book comprising of 80 pages consisting therein the various case laws relied upon by the assessee along with order of ld. CIT(A) and order of AO. 3.4 Before us, ld. A.R. of the assessee vehemently submitted that the assessee in the present case is a home maker and in general do not have any specific source of income. The assessee had received a portion of ancestral residential property by way of inheritance from her father which was sold during the assessment year under consideration. The Ld. A.R. of the assessee also submitted that since the assessee is a home maker and also not a very computer savvy and therefore notices issued by ld. CIT(A)/NFAC gone unnoticed and accordingly prayed to afford one more opportunity to represent the ITA No.1572/Bang/2024 Namitha Deenadayalu Naidu, Bangalore Page 5 of 6 case before the ld. CIT(A)/NFAC and also undertake to comply with the same without fail. 4. The ld. D.R. on the other hand supported the order of the authorities below. 5. We have heard the rival submissions and perused the materials available on record. On going through the order of ld. CIT(A)/NFAC, we find that assessee even after 5 years of filing her appeal could not make any submission to pursue her appeal. Before us, ld. A.R. requested to provide one more opportunity to substantiate her claim before the ld. CIT(A) and also undertake to comply with the same. Being so, in the interest of justice, and fair play and as requested by ld. A.R. of the assessee, we are of the considered opinion that one more opportunity may be granted to the assessee to substantiate her claim and accordingly, we remit the issue in dispute to the file of ld. CIT(A)/NFAC for de-novo consideration in accordance with law. Needless to say, a reasonable opportunity of being heard must be granted to the assessee. The assessee is also directed to submit all the relevant documents/information/evidences as undertaken before us to substantiate her claim. Further, assessee is also directed to update her e-mail ID, phone number and address on the income tax web portal. It is ordered accordingly. 6. In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 9th Jan, 2025 Sd/- (Waseem Ahmed) Accountant Member Sd/- (Keshav Dubey) Judicial Member Bangalore, Dated 9th Jan, 2025. VG/SPS ITA No.1572/Bang/2024 Namitha Deenadayalu Naidu, Bangalore Page 6 of 6 Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order Asst. Registrar, ITAT, Bangalore. "