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2017 (7) TMI 302 - AT - Income TaxDisallowance of exemption u/s.54 - admission of additional evidence - Held that - There is strength in the submissions of the Ld. AR and the assessee filed petition under Rule 29 of the ITAT Rules for admitting the additional evidence having valuable impact on the assessment of the assessee. Further, there is no dispute on the sale and purchase of the property but only on the claim of exemption by the assessee and additional construction cost. We are of the opinion that the Assessing Officer shall be provided an opportunity to verify these additional evidences and comply the provisions of Rule 46A of IT Rules. In the interest of justice, we remit the disputed issue to the file of the Assessing Officer to verify and examine the genuineness of evidence filed and Ld. AO shall provide an adequate opportunity of hearing to the assessee before passing the order on merits. Assessee appeal is allowed for statistical purposes.
Issues Involved:
1. Jurisdiction of the Assessing Officer. 2. Disallowance of exemption under Section 54 and Section 54F of the Income Tax Act. 3. Construction cost of the first floor and its eligibility for exemption. 4. Validity of the valuation report and other evidences submitted by the assessee. Issue-wise Detailed Analysis: 1. Jurisdiction of the Assessing Officer: The assessee contended that the order of the Assessing Officer (AO) was without jurisdiction. However, there was no detailed discussion or separate adjudication on this issue in the judgment, implying that it was not a primary ground of contention in the final decision. 2. Disallowance of Exemption under Section 54 and Section 54F of the Income Tax Act: The assessee claimed exemptions under Section 54 and Section 54F for the sale of a residential property and the purchase of new residential properties. The AO disallowed part of the exemption claimed under Section 54 for the construction cost of the first floor and the entire exemption under Section 54F for the purchase of another residential villa. The AO's primary reason for disallowance was the lack of evidence supporting the construction and the indivisibility of the sold property into land and building components. 3. Construction Cost of the First Floor and Its Eligibility for Exemption: The assessee claimed an additional construction cost of ?24,10,000/- for the first floor of the property, which was not mentioned in the sale deed. The AO rejected this claim due to the absence of an approval plan for the construction. The assessee argued that the construction was done with the seller's permission before the property was registered in her name. The Tribunal noted that the assessee provided additional evidence, including a valuation report and an affidavit from the previous owners, to support the construction claim. 4. Validity of the Valuation Report and Other Evidences Submitted by the Assessee: The assessee submitted a valuation report and other documents, including bank statements and affidavits, to substantiate the construction costs and the purchase of the villa. The Tribunal observed that these additional evidences were not presented before the AO or the Commissioner of Income Tax (Appeals) (CIT(A)) during the initial proceedings. The Tribunal decided to remit the case back to the AO for re-examination of these additional evidences, ensuring compliance with Rule 46A of the Income Tax Rules. Conclusion: The Tribunal found merit in the assessee's submissions and additional evidences, which were not previously considered by the AO and CIT(A). Consequently, the case was remitted back to the AO for a thorough verification of the additional evidences and a fresh adjudication on the exemptions claimed under Sections 54 and 54F. The Tribunal refrained from making a final decision on the exemptions until the AO re-evaluates the case with the new evidences. The appeal was allowed for statistical purposes, ensuring that the AO provides an adequate opportunity for the assessee to present her case. Order Pronouncement: The order was pronounced on Tuesday, the 4th day of April, 2017, at Chennai.
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