2022 (7) TMI 956 - AT - Income Tax

Exemption u/s 54B and u/s 54F denied - Capital gain - assessee with other co-owner sold property being agricultural land - Assessee was having 50% share in the said property - HELD THAT - We note that assessee has furnished the relevant documents and evidences to claim exemption under section 54B and 54F of the Act however the same have not been examined by the assessing officer in right perspective therefore we are of the view that assessee should be given one more opportunity to plead its case before the assessing officer. We note that it is settled law that principles of natural justice and fair play require that the affected party is granted sufficient opportunity of being heard to contest his case. Therefore we deem it fit and proper to set aside the order of the ld. CIT(A) and remit the matter back to the file of the assessing officer to adjudicate the issue afresh on merits. For statistical purposes the appeal of the assessee is treated as allowed.

Summary

Issues Involved:
1. Addition of long-term capital gain
2. Denial of exemption under sections 54B and 54F of the Income Tax Act, 1961

Issue 1: Addition of Long-term Capital Gain:
The appeal pertains to the Assessment Year 2012-13 and challenges the order by the Commissioner of Income Tax (Appeals) confirming the assessing officer's addition of Rs. 68,03,622 as long-term capital gain. The property in question, agricultural land, was sold for Rs. 1,39,50,000 with the Stamp Valuation Authority valuing it at Rs. 1,50,09,950. The assessing officer applied section 50C of the Act, accepted by the assessee, and computed the long-term capital gain after deducting indexed cost of acquisition. The assessing officer also denied exemptions under sections 54B and 54F, leading to the appeal.

Issue 2: Denial of Exemption under Sections 54B and 54F:
The assessing officer denied the exemptions claimed by the assessee under sections 54B and 54F of the Act. The assessee argued that the assessing officer did not examine the documents and evidence supporting the claims. The assessee contended that the assessing officer failed to consider the agreement for investment in another agricultural land for section 54B deduction and evidence for section 54F exemption. The appellant asserted that the assessing officer's reasons were invalid as the legislative intent was met by the purchase of new agricultural land and construction of a residential property. The appellant further cited legal precedents to support the claim for exemptions under sections 54B and 54F.

The Appellate Tribunal found that the assessing officer did not thoroughly examine the documents and evidence submitted by the assessee regarding exemptions under sections 54B and 54F. The Tribunal noted that the basic conditions for claiming exemption under section 54B were not adequately assessed by the assessing officer. Citing legal principles, the Tribunal emphasized the burden on the Department to prove taxable income and the right of the assessee to demonstrate exemption eligibility. Therefore, the Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and remitted the matter back to the assessing officer for a fresh examination, granting the assessee an opportunity to present its case effectively. The appeal of the assessee was allowed for statistical purposes.