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2020 (7) TMI 148 - AT - Income Tax


Issues Involved:
1. Opposition to the assessment order.
2. Dispute over total income assessed.
3. Denial of indexed cost of acquisition and improvement.
4. Denial of exemption under Section 54G.
5. Levy of interest under Section 234.
6. Consideration of evidence and natural justice.

Detailed Analysis:

1. Opposition to the Assessment Order:
The appellant contended that the orders of the AO and CIT(A) were opposed to law, equity, and the weight of evidence, probabilities, facts, and circumstances of the case.

2. Dispute Over Total Income Assessed:
The appellant denied liability to be assessed to a total income of ?2,80,41,600/- as opposed to the returned income of ?74,59,410/-.

3. Denial of Indexed Cost of Acquisition and Improvement:
The appellant challenged the denial of indexed cost of acquisition and improvement amounting to ?1,41,77,065/-. The appellant claimed that the cost of improvements was based on reliable records, including audited financial statements and tax records, despite the loss of primary records due to unforeseen events like floods. The Tribunal rejected the CIT(A)'s observation that the appellant sold a vacant plot of land. The Tribunal directed the AO to verify the valuation reports and consider the cost of improvement/construction in accordance with the law, after proper inquiries regarding the construction/improvements on the plot.

4. Denial of Exemption Under Section 54G:
The appellant contested the denial of exemption under Section 54G, asserting that the statute does not require the commencement of industrial production at the new premises for exemption eligibility. The Tribunal noted that the appellant had invested the capital gains in purchasing new land outside the urban area within the specified period. The Tribunal rejected the AO's reasoning for denying the exemption and held that the appellant is eligible for exemption under Section 54G. The AO was directed to compute the capital gains and grant the benefit under Section 54G accordingly.

5. Levy of Interest Under Section 234:
The appellant denied the interest levied under Section 234, arguing that there was no liability to additional tax and that the original return was filed within the due date. The Tribunal noted that this ground was consequential in nature.

6. Consideration of Evidence and Natural Justice:
The appellant argued that the CIT(A) failed to consider corroborative and circumstantial evidence and did not provide a reasonable opportunity to be heard, thus violating the principles of natural justice. The Tribunal found that sufficient evidence was presented to prove the existence of buildings/sheds on the original plot and directed the AO to verify the reports and consider the cost of improvement/construction.

Conclusion:
The appeal was partly allowed, with directions to the AO to verify and consider the cost of improvements and to grant the benefit under Section 54G while computing the capital gains. The Tribunal emphasized the need for proper inquiries and adherence to the principles of natural justice.

 

 

 

 

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