2014 (6) TMI 256 - AT - Income Tax

Admission of additional evidence under Rule 46A Addition of LTCG on sale on immovable property Held that - In absence of any documentary evidence with regard to the claim of exemption u/s 54 of the Act, the AO added the amount to the income of the assessee - in the remand report, the AO observed that the assessee had failed to furnish the required sale deed in support of investment made qualifying the deduction u/s 54 of Act CIT(A) observed that no comments were offered by the AO on the merits of the evidence - the remand report says that the claim was allowable as per Income-tax Act, 1961 - The CIT (A) granted the relief by admitting the additional evidence as the remand report says that the claim of the assessee is allowable as per Income-tax Act, 1961, thus, there is no merits in the appeal of the revenue Decided against Revenue.

Issues:
1. Admission of additional evidence in violation of Rule 46A of the Income-tax Act.
2. Deletion of Long Term Capital Gain addition on the sale of immovable property.
3. Allowability of claim under section 54 for exemption.

Issue 1: Admission of additional evidence in violation of Rule 46A of the Income-tax Act:
The appeal filed by the revenue challenged the acceptance of additional evidence by the CIT (A) in violation of Rule 46A of the Income-tax Act. The Assessing Officer had added an amount to the assessee's income due to lack of documentary evidence supporting the claim of exemption under section 54. The assessee submitted additional evidence regarding the purchase of a new property before the CIT (A), which was forwarded to the Assessing Officer for comments. The Assessing Officer's remand report stated that the claim was allowable under the Income-tax Act, but objected to the admission of additional evidence. However, the CIT (A) admitted the evidence and granted relief based on the remand report's content, which indicated the claim's allowability.

Issue 2: Deletion of Long Term Capital Gain addition on the sale of immovable property:
The revenue also contested the deletion of the addition of Long Term Capital Gain on the sale of an immovable property. The case involved scrutiny based on information about the sale of a property in Mumbai. The Assessing Officer added the amount to the assessee's income as no documentary evidence was provided regarding the claim of exemption under section 54. The CIT (A) allowed the additional evidence submitted by the assessee, leading to the deletion of the Long Term Capital Gain addition. The appellate tribunal found no merit in the revenue's appeal, as the remand report confirmed the claim's allowability under the Income-tax Act.

Issue 3: Allowability of claim under section 54 for exemption:
The core issue revolved around the allowability of the claim under section 54 for exemption concerning the investment in a new residential property. The Assessing Officer initially rejected the application under section 154, citing the filing of an appeal before the rectification application. However, the CIT (A) admitted the additional evidence submitted by the assessee, which included details of the purchase of a new property. The remand report highlighted that the claim was allowable under the Income-tax Act, and the CIT (A) granted relief based on this observation. The appellate tribunal upheld the CIT (A)'s decision, dismissing the revenue's appeal and confirming the order.

In conclusion, the appellate tribunal upheld the CIT (A)'s decision to admit additional evidence and grant relief to the assessee regarding the exemption claim under section 54. The tribunal dismissed the revenue's appeal, finding no fault in the CIT (A)'s order based on the remand report's confirmation of the claim's allowability under the Income-tax Act.

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