2006 (4) TMI 357 - AT - Income Tax

Denial of benefit of section 54 - Capital gains - Appellate Tribunal - time-barred by 7 years and 192 days - HELD THAT - The expression sufficient cause within the meaning of section 5 of the Limitation Act as well as similar other provisions the ambit of exercise of powers thereunder have been subject-matter of consideration before the Hon ble Supreme Court on various occasions. In the case of State of West Bengal v. Administrator 1971 (12) TMI 106 - SUPREME COURT Howrah Municipality 1971 (12) TMI 106 - SUPREME COURT the Hon ble Supreme Court while considering the scope of expression sufficient cause for condonation of delay has held that the said expression should receive a liberal construction so as to advance the substantial justice when no negligence or inaction or want of bona fide is imputable to party. From the documents placed before us we are satisfied that assessee had made investment in the purchase of new flat i.e. in May 1993 itself which indicate that such investment has been made within one year of the sale of old flat. The documents i.e. the order of State Redressal Commissioner coupled with the sale agreement duly reflect that new flat was purchased by the assessee well within the time. Such sale agreement has been executed in pursuance of the State Redressal Commissioner s order therefore its authenticity cannot be doubted. The dispute relates to assessment year 1993-94 assessee has already undertaken two rounds of litigation up to the Tribunal as well as in different forums. Therefore taking into consideration all these circumstances we do not see any good reason to set aside this issue to the file of Assessing Officer. We allow this ground of appeal of assessee and direct the Assessing Officer to grant relief u/s 54 of the Act to the assessee. However we remit the computation of relief admissible u/s 54 to the Assessing Officer. He shall compute the relief taking into consideration the payments made by the assessee within the time limit and he shall carry out such exercise after affording due opportunity of hearing to the assessee. In the result the appeal of the assessee is allowed.

Issues Involved:
1. Denial of benefit under section 54 of the Income-tax Act.
2. Valuation of the flat sold as on 1-4-1981.
3. Condonation of delay in filing the appeal.

Detailed Analysis:

1. Denial of Benefit Under Section 54 of the Income-tax Act:
The primary grievance of the assessee was the denial of the benefit under section 54 of the Income-tax Act. The assessee had purchased a flat in December 1978, sold it on 27-10-1992, and booked another flat on 2-4-1993. The Assessing Officer denied the benefit under section 54, leading to an assessed income of Rs. 27,56,690. The CIT(A) upheld this decision, stating that the assessee could not produce a sale agreement with the builder, only the booking confirmation, thus not fulfilling the requisite conditions under section 54.

Upon further appeal, the Tribunal initially held that no dispute regarding section 54 emerged from the record against the second order of the CIT(A). However, the assessee provided substantial documentation, including the booking letter, bank statements, cheque copies, and the State Redressal Commission's order, which directed the builder to execute the sale agreement. The Tribunal, satisfied that the investment in the new flat was made within one year of selling the old flat, directed the Assessing Officer to grant relief under section 54, subject to computation adjustments.

2. Valuation of the Flat Sold as on 1-4-1981:
The assessee also disputed the valuation of the flat sold as on 1-4-1981. Initially, the Assessing Officer's valuation was contested, leading to a reassessment. The CIT(A) set aside the issue for fresh determination, which was upheld upon further appeal. The Tribunal refrained from addressing this issue in the current appeal, as it had been settled in earlier rounds of litigation.

3. Condonation of Delay in Filing the Appeal:
The appeal was time-barred by 7 years and 192 days. The assessee attributed the delay to multiple factors, including personal circumstances, procedural delays, and litigation in various forums. The Tribunal considered the explanation provided, referencing several Supreme Court rulings that emphasized a liberal approach towards condonation of delay to advance substantial justice. The Tribunal noted that the delay was not due to mala fide intentions but rather procedural and circumstantial factors.

The Tribunal cited the case of N. Balakrishnan v. M. Krishnamurthy, emphasizing that the length of delay is immaterial if the explanation is acceptable. The Tribunal also referenced the case of Nand Kishore v. State of Punjab, where a delay of 31 years was condoned under similar circumstances. Consequently, the Tribunal condoned the delay and proceeded to decide the issue on merit.

Conclusion:
The Tribunal allowed the appeal, directing the Assessing Officer to grant relief under section 54 of the Income-tax Act, subject to computation adjustments. The delay in filing the appeal was condoned, and the valuation issue was not reconsidered as it had been settled in prior litigation rounds.

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