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2023 (2) TMI 344 - AT - Income TaxExemption u/s. 54B denied - Assessee did not file return of income within due date specified as per the amendment in sixth Proviso of section 139(1) - HELD THAT - As observed on the amendment in section 139(1) of sixth Proviso, section 54, section 54B or section 54D or section 54EC or section 54F or section 54G or section 54GA or section 54GB were inserted by the Finance Act, 2019 which is effective from 01.04.2020, but the impugned case on hand is related to the AY 2006-07. It indicates that the exemption u/s 54B can be claimed without filling of return of income , now it has been amended by the Finance Act. 2019. The arguments advanced by the ld. DR. will not support the case of the revenue regarding compulsory filing return of income for getting exemption u/s. 54B of the I.T.Act r.w.s. 80C 139(1). Issue is remitted back to the file of the AO for the purpose of verification whether the assessee has fulfilled the conditions of section 54B of the I.T. Act for getting exemption or not and the assessee is directed to provide necessary documents for substantiating his claim before the AO and further directed not to seek unnecessary adjournments for early disposal of case. The AO shall give three effective opportunities to the assessee and decide the issue as per law. Appeal of the assessee is allowed for statistical purposes.
Issues Involved:
1. Lack of sufficient and effective opportunity for the appellant. 2. The appellant's failure to receive notices due to a change of residence. 3. Denial of exemption under Section 54B of the Income Tax Act. 4. Requirement of filing a return of income for claiming exemption under Section 54B. Detailed Analysis: 1. Lack of Sufficient and Effective Opportunity for the Appellant: The appellant contended that the assessment and appellate proceedings were completed without giving sufficient and effective opportunity, thereby opposing principles of law and equity. The authorities were criticized for not accommodating the appellant's circumstances adequately, which included a change of residence that led to non-receipt of notices. 2. The Appellant's Failure to Receive Notices Due to Change of Residence: The appellant argued that after receiving a notice from the DDIT (Inv.), Mysore, he had shifted his residence and consequently did not receive any subsequent notices issued during the assessment proceedings. This non-receipt of notices was a significant factor in the appellant's non-compliance with procedural requirements. 3. Denial of Exemption Under Section 54B of the Income Tax Act: The appellant claimed exemption under Section 54B, which was denied by the CIT(A) on the grounds that the appellant had not filed the Income Tax Return (ITR) or furnished necessary details before the Assessing Officer (AO). The appellant argued that he had purchased two agricultural lands qualifying for the exemption and that the denial was unjustified merely due to non-filing of the return. 4. Requirement of Filing a Return of Income for Claiming Exemption Under Section 54B: The appellant's representative argued that Section 54B does not mandate the filing of a return of income for claiming the exemption. The representative requested that the matter be remitted back to the AO for verification of the purchase of agricultural land. The Department's representative countered that the return of income is required to be filed as per Section 139(1) for claiming exemption under Section 54B, referencing the sixth Proviso of Section 139(1). Tribunal's Findings: The Tribunal noted that the appellant had transferred five acres of land and entered into a Joint Development Agreement (JDA) without filing a return of income for the relevant assessment year. The appellant did not appear before the AO during the assessment proceedings. However, additional documents were submitted before the CIT(A) for claiming exemption under Section 54B, which were not entertained due to the non-filing of the return. The Tribunal observed that the amendment to Section 139(1) requiring the filing of a return for claiming exemptions under Section 54B was effective from 01.04.2020, while the case pertained to AY 2006-07. Therefore, the requirement to file a return for claiming exemption did not apply to the appellant's case. Conclusion: The Tribunal remitted the issue back to the AO for verification of whether the appellant fulfilled the conditions of Section 54B for claiming exemption. The appellant was directed to provide necessary documents to substantiate his claim and to avoid unnecessary adjournments. The AO was instructed to give three effective opportunities to the appellant and decide the issue as per law. Judgment: The appeal of the appellant was allowed for statistical purposes, and the order was pronounced on 08th February 2023.
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