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2020 (6) TMI 205 - AT - Income TaxReopening of assessment u/s 147 - deduction u/s 54F - HELD THAT - Where the assessee is a farmer and a senior citizen, the claim of deduction u/s 54F cannot be denied without verification of the fact of utilization of the sale consideration for construction of the house. Since it is a case of non-filing of return of income and the A.O. has issued notice u/s 148 for assessing the capital gain in the hands of the assessee, therefore, there is no bar in claiming the deduction u/s 54F of the Act against the capital gain proposed to be taxed by the A.O. in the proceedings U/s 147 of the Act. Hence, the issue of deduction u/s 54F of the Act is required to be considered and decided after considering the facts of utilization of sale proceed in construction of new residential house. Therefore, in the substantial interest of justice, we set aside the matter back to the record of the A.O. for deciding the same afresh after giving due and reasonable opportunity of hearing of the assessee. Appeal of the assessee is allowed for statistical purposes only.
Issues involved:
Appeal against ex parte order by CIT(A) without adequate hearing, denial of deduction U/s 54F of the Income Tax Act, 1961, non-appearance of assessee before authorities, need for verification of sale consideration utilization for construction of new residential house, setting aside the matter to AO for fresh decision. Analysis: The appeal was filed against the ex parte order by the CIT(A) for the A.Y. 2010-11. The assessee contended that the order was passed without providing a reasonable opportunity for hearing. The assessee, a farmer over 70 years old, claimed deduction U/s 54F of the Act for utilizing sale proceeds in constructing a new residential house. The assessee requested another opportunity to present evidence supporting the deduction claim. The Revenue objected to the remand, citing non-filing of income tax return U/s 139 and lack of response despite multiple notices. The CIT(A) dismissed the appeal due to the assessee's non-appearance and non-submission of evidence. However, the issue of deduction U/s 54F required verification of sale consideration utilization for house construction. The CIT(A) mentioned that the assessee did not attend hearings despite multiple notices, leading to dismissal of the appeal. The assessee, a co-owner of the sold property, raised the deduction claim U/s 54F for house construction. The assessee's non-appearance before the A.O. and CIT(A) was noted. The matter was remanded to the A.O. for fresh consideration of the deduction claim after verifying the sale proceeds' utilization for the new residential house. The decision emphasized the need for a reasonable opportunity for the assessee to be heard. In conclusion, the appeal was allowed for statistical purposes only, and the matter was sent back to the A.O. for a fresh decision on the deduction U/s 54F after ensuring a fair opportunity for the assessee to present evidence. The judgment highlighted the importance of due process and verification in tax assessment matters, especially concerning deductions under the Income Tax Act, 1961.
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