2021 (6) TMI 129 - AT - Income Tax

Additional claim made during the appeal proceedings - Deduction u/s 54F denied on the ground that the claim was not made originally - HELD THAT - We find that the assessee claim of deduction u/s 54F has been rejected without due examination. It is settled law that no tax can be collected or imposed except under the mandate of law. Accordingly, the rejection of claim without examination is not permissible in law. Hon ble Supreme Court in the case of Goetze (India) Ltd. 2006 (3) TMI 75 - SUPREME COURT has reiterated the power of ITAT to consider a claim which was made otherwise then by revised return. Hence, in the interest of justice, we remit the issue to the file of the AO. AO shall examine the assessees claim and duly decide the same. Appeal by the assessee is allowed for statistical purpose.

Summary

Issues:
1. Deduction for investment in new residential house under Section 54 of the Income Tax Act.
2. Eligibility for deduction under Section 54F for investment in residential house.
3. Consideration of additional claim during appeal proceedings.
4. Rejection of claim for deduction under Section 54F without due examination.

Issue 1: Deduction for investment in new residential house under Section 54:
The appellant contested the denial of deduction under Section 54 for long-term capital gains earned during the assessment year. The appellant argued that all relevant details were submitted during the appellate proceedings to prove eligibility for the deduction. However, the Commissioner of Income Tax (Appeals) upheld the denial, stating that the claim was not originally made in the return and was not examined by the Assessing Officer. The appellant's claim was based on the investment in a new flat, but complete details to fulfill the conditions of the deduction were not provided. The Tribunal found that the claim was rejected without proper examination, emphasizing that tax cannot be imposed without following the law. Citing the precedent set by the Hon'ble Supreme Court in the case of Goetze (India) Ltd., the Tribunal remitted the issue back to the Assessing Officer for a thorough examination and decision, allowing the appeal for statistical purposes.

Issue 2: Eligibility for deduction under Section 54F for investment in residential house:
The appellant also raised a claim for deduction under Section 54F, asserting that the sale receipts of the property were invested in a residential house, thus entitling them to the deduction. However, the Commissioner of Income Tax (Appeals) did not accept this plea. The Tribunal observed that the claim under Section 54F was rejected without proper examination. The Tribunal reiterated the importance of following due process and remitted the issue back to the Assessing Officer for a comprehensive review and decision.

Issue 3: Consideration of additional claim during appeal proceedings:
The appellant contended that additional claims made during the appeal proceedings should be decided on merit, even if the details were incomplete. The Tribunal acknowledged this argument but emphasized the necessity of providing complete details to substantiate the claim for deductions under the Income Tax Act. The Tribunal highlighted that all conditions for deductions must be fulfilled, and incomplete information cannot warrant the allowance of claims.

Issue 4: Rejection of claim for deduction under Section 54F without due examination:
The Tribunal noted that the rejection of the appellant's claim for deduction under Section 54F was done without a proper examination. Referring to the legal principle that tax imposition must adhere to the law, the Tribunal directed the Assessing Officer to thoroughly examine the claim and make a well-founded decision. By remitting the issue back to the Assessing Officer, the Tribunal ensured that the claim would be duly considered and decided in accordance with the law.

This detailed analysis of the judgment highlights the key issues addressed by the Appellate Tribunal ITAT Mumbai in the case, emphasizing the importance of proper examination and fulfillment of conditions for claiming deductions under the Income Tax Act.