2024 (9) TMI 733 - AT - Income Tax

LTCG - Disallowance of claim of exemption of capital gains u/s 54F - assessee has not given any submissions in support of its claim before the AO, and has failed to participate in the appellate proceedings also - whether the issue be restored back to the file of the Revenue authorities below for giving the assessee another opportunity to prove its claim of exemption u/s 54F to be decided in accordance with the directions of the ITAT in the first round? - HELD THAT -Undeniably, the assessee has not given any submissions in support of its claim before the AO, and has failed to participate in the appellate proceedings also. It is clear, therefore, that the assessee has been lax in pursuing its matter before the Revenue authorities. No plausible reasons for the same have been adduced before us. In the light of the same, though the assessee ideally should not be given any further opportunity, but in the interest of justice considering that even the ITAT noted the assessee to be in possession of certain facts/ documents to prove construction activity being carried out by it on the land purchased and the direction of the ITAT being that the assessee be allowed exemption even if construction is incomplete, we consider it fit to restore the matter back to the AO, giving the assessee one more opportunity to prove its claim of exemption under section 54F. AO is directed to examine the issue afresh in accordance with the directions of the ITAT in the first round. The assessee is directed to cooperated in the proceedings failing which the AO is at liberty to reiterate his order passed earlier. Matter is restored back subject to levy of cost of Rs. 1000/- on the assessee for giving no plausible reason for not attending the assessment as well as appellate proceedings. Appeal of the assessee is allowed for statistical purpose.

Summary

Issues:
- Delay in filing appeal
- Disallowance of exemption claimed under section 54F of the Income Tax Act
- Lack of evidence for construction of residential property
- Restoration of the issue to the Assessing Officer for re-examination

Delay in Filing Appeal:
The appeal was delayed by 105 days due to the accountant's oversight in submitting the appellate order to the assessee. The delay was condoned by the ITAT, noting the accountant's responsibility for the oversight and finding sufficient cause for the delay.

Disallowance of Exemption under Section 54F:
The primary issue raised in the appeal was the disallowance of the exemption claimed under section 54F of the Income Tax Act. The assessee claimed exemption on capital gains by investing in a new residential property. The AO and the CIT(A) denied the claim due to lack of evidence of construction and investment in the new property. However, the ITAT interpreted section 54F liberally, emphasizing the promotion of residential construction and relaxed the strict requirement of completing construction within three years. The ITAT directed the AO to re-examine the claim, considering the facts and evidence presented by the assessee.

Lack of Evidence for Construction of Residential Property:
Despite several opportunities, the assessee failed to provide evidence of construction activity on the new property. The AO reiterated the denial of exemption under section 54F, and the CIT(A) confirmed this decision ex parte. The ITAT acknowledged the availability of some evidence, such as electricity bills, with the assessee but noted the lack of cooperation before the authorities. The ITAT restored the issue to the AO for a fresh examination, granting the assessee another opportunity to prove the claim.

Restoration of the Issue to the Assessing Officer:
Considering the lack of cooperation by the assessee and the need for further verification of the claim, the ITAT decided to restore the matter to the AO for re-examination. The assessee was directed to cooperate in the proceedings, and a cost of Rs. 1000 was imposed for not attending previous assessments and appellate proceedings. The AO was instructed to re-evaluate the claim in line with the ITAT's directions from the first round.

In conclusion, the appeal was allowed for statistical purposes, subject to the payment of the imposed cost, and the matter was restored to the Assessing Officer for a fresh examination of the exemption claim under section 54F of the Income Tax Act.