2020 (5) TMI 87 - AT - Income Tax

Reopening of assessment u/s 147 - claim of deduction u/s 54F disallowed on the ground that it was not raised in his return of income - HELD THAT - In the original return of income, the assessee has not offered the capital gain to tax nor has he claimed deduction u/s 54F - assessment order, disallowing the claim of deduction u/s 54F is justified. Assessee had filed written submissions before the CIT(A) and had submitted before the Tribunal that he had all the relevant evidence to substantiate the claim u/s 54F. Since S.54F of the Act is a beneficial provision and the Hon ble Courts have held that the beneficial provision should be construed liberally, deem it fit and proper to admit assessee s claim of deduction u/s 54F of the Act and remand the issue to the file of the AO with a direction to consider the eligibility of the assessee for deduction u/s 54F and allow the same if the assessee satisfies the conditions. The assessee is directed to produce all the necessary evidence before the AO and cooperate with the AO for early completion of the assessment - Assessee s appeal is partly allowed for statistical purposes.

Summary

Issues:
1. Applicability of Section 50C of the Income Tax Act, 1961.
2. Claim of deduction under Section 54F of the Income Tax Act.
3. Disallowance of deduction by Assessing Officer.
4. Appeal before CIT(A) and subsequent dismissal.
5. Second appeal before the Tribunal with multiple grounds.

Applicability of Section 50C:
The case involved the applicability of Section 50C of the Income Tax Act, 1961, concerning the determination of the market value of a property for tax purposes. The Assessing Officer (AO) reopened the assessment under Section 147 due to the non-disclosure of capital gains from the sale of a house property. The AO held that the provisions of Section 50C were applicable as the market value of the property exceeded the declared consideration. Consequently, the AO brought the long-term capital gain to tax, leading to the initiation of the appeal process.

Claim of Deduction under Section 54F:
The primary contention revolved around the claim of deduction under Section 54F of the Income Tax Act by the assessee. The assessee, despite not initially claiming the deduction before the AO, raised the claim subsequently. The AO disallowed the claim on the grounds of non-disclosure in the original return of income. However, the Tribunal, considering the beneficial nature of Section 54F and the availability of relevant evidence with the assessee, admitted the claim for deduction under Section 54F. The Tribunal remanded the issue to the AO for further consideration, directing the assessee to provide necessary evidence and cooperate for the assessment.

Dispute and Appeal Process:
The assessee, dissatisfied with the CIT(A)'s dismissal of the appeal, approached the Tribunal with multiple grounds challenging various aspects of the lower authorities' decisions. The Tribunal, after considering the submissions and contentions of both parties, partially allowed the appeal for statistical purposes. The Tribunal emphasized the importance of providing all necessary evidence to support the claim of deduction under Section 54F and directed the AO to reevaluate the eligibility of the assessee for the deduction, ensuring a fair opportunity for the assessee to present their case.

In conclusion, the Tribunal's judgment addressed the issues of applicability of Section 50C, the claim of deduction under Section 54F, and the subsequent appeal process, providing relief to the assessee by allowing the claim for deduction under Section 54F and remanding the matter for further assessment in accordance with the law.