No bar in claiming deduction u/s 54F in reopening proceedings u/s 147. ITAT direct Assessing Officer to decide exemption afresh
ABCAUS Case Law Citation:
ABCAUS 3324 (2020) (06) ITAT
In the instant case, the appeal of the assessee was directed against the ex parte order passed by the CIT(A) without providing adequate opportunity of hearing to the assessee and not deciding the ground of appeal on merits.
The appellant assessee was a farmer and more than 70 years old. There was a capital gain arising from sale of capital asset. However, the assessee utilized the sale consideration in construction of new residential house and therefore, was eligible for deduction u/s 54F of the Income Tax Act, 1961 (the Act).
The assessee however, did not file any return of income u/s 139 of the Act. Since it was a case of non-filing of return of income, the Assessing Officer (AO) issued notice u/s 148 of the Act for assessing the capital gain in the hands of the assessee.
Since the assessee did not appear before the AO, taxed the capital gain.
Aggrieved by the order of the AO, the assessee filed appeal before the CIT(A) and specifically raised issue of claiming exemption u/s 54F of the Act and claimed that the sale consideration had been used for construction of new residential house which was eligible for deduction u/s 54F of the Act.
However, the the assessee did not appear before the CIT(A) or submitted any submissions in support of his claim, the CIT(A) dismissed the appeal of the assessee by passing the ex parte order.
Before the Tribunal, the assessee contended that since the assessee did not appear before the authorities below and therefore, the relevant documentary evidence in support of the claim of deduction u/s 54F of the Act could not be produced, in the interest of justice, one more opportunity of hearing be given to present his case and to produce the evidence in support of claim of deduction u/s 54F of the Act.
On the other hand, the Revenue objected to the remand of the matter and giving one more opportunity to the assessee and contended that the assessee had not filed any return of income u/s 139 of the Act, therefore, the claim of deduction u/s 54F of the Act was not allowable.
No bar in claiming deduction u/s 54F in reopening proceedings
The Tribunal noted that the details of the capital asset sold by the assessee was not in dispute and the issue was raised before the CIT(A), also the assessee was a farmer and a senior citizen. Therefore, claim of deduction u/s 54F of the Act could not be denied without verification of the fact of utilization of the sale consideration for construction of the house.
The Tribunal opined that it was a case of non-filing of return of income where the AO had issued notice u/s 148 of the Act for assessing the capital gain in the hands of the assessee, therefore, there was no bar in claiming the deduction u/s 54F of the Act against the capital gain proposed to be taxed by the AO in the proceedings u/s 147 of the Act
Accordingly, the Tribunal set aside the matter back to the record of the AO for deciding the same afresh.
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