2019 (6) TMI 1046 - AT - Income Tax

Denial of exemption claimed u/s 54F - assessee has not produced any construction agreement with the builder - HELD THAT - The payment through three cheques for a total amount before due date of filing of return of income u/s 139 was not in dispute. When there was no clarity on the purpose for which the assessee made payment with the builder, u/s 133, AO would have called for details/explanation from the builder, which was not done by the AO. Since the assessee has paid sizeable amount towards purchase of new flat out of the sale consideration, the Department cannot deny the claim of deduction u/s 54F. However, the reason for not filing copy of the purchase agreement with the builder against which the payment was made by the assessee was not explained. The assessee is liable to file complete details for claiming any deduction under Income Tax Act, otherwise, such deduction is not allowable. Since there was long delay in construction of property, the assessee made a request dated 18.08.2014 for withdrawal of the amount paid and the entire was refunded to the assessee on 06.02.2015. However, the assessee has not furnished any evidence of payment with the builder with whom the assessee has entered into an agreement for purchase of new flat. Without furnishing payment details, the assessee s claim cannot be entertained. We direct the assessee to furnish complete evidence towards payment of the above amount before the AO for verification and the details are found to be correct, the assessee can be allowed to claim deduction u/s 54F and otherwise not. AO is also directed to call for explanation from the builder to verify as to what purpose the assessee made payment on 07.07.2012 and subsequently, it was refunded to the assessee on 06.02.2015. Levy of interest u/s 234B and 234C is consequential to the tax liability. - Appeal filed by the assessee is allowed for statistical purposes

Summary

Issues:
- Denial of exemption claimed under section 54F of the Income Tax Act, 1961.

Analysis:
1. The appeal was against the order of the Commissioner of Income Tax (Appeals) regarding the denial of exemption claimed under section 54F of the Income Tax Act for the assessment year 2012-13.

2. The assessee filed the return of income for the relevant year, which was later reopened for assessment. The Assessing Officer disallowed the claim of deduction under section 54F of the Act, leading to an increased taxable income. The Commissioner (Appeals) upheld this disallowance.

3. The assessee contended that payments made towards a new flat after selling a property were eligible for deduction under section 54F. The counsel submitted the apartment buyer's agreement as evidence. The Assessing Officer and the Commissioner (Appeals) were criticized for denying the claim despite the undisputed payments made by the assessee.

4. The Department argued that the assessee failed to provide an agreement with the builder for the flat purchase, questioning the lack of evidence for the payments made. They supported the denial of the deduction.

5. The Tribunal reviewed the case and noted the sale of a plot by the assessee, claiming deduction under section 54F for investing in a new flat. Receipts for "Negotiation Deposit" were submitted, but no construction agreement with the builder was provided. The Tribunal acknowledged the payments made but stressed the necessity of complete documentation for deductions under the Income Tax Act.

6. Due to a delay in property construction, the assessee requested a refund of the amount paid for the flat. However, no evidence of payment to the builder was presented. The Tribunal directed the assessee to provide complete payment evidence for verification. It also instructed the Assessing Officer to seek an explanation from the builder regarding the purpose of the payments. Interest under sections 234B and 234C was deemed consequential to the tax liability.

7. Consequently, the appeal was allowed for statistical purposes, emphasizing the importance of fulfilling documentation requirements for deductions under the Income Tax Act.