2023 (3) TMI 911 - AT - Income Tax

Exemption u/s.54F - Claim denied as property purchased by assessee for a consideration from his wife was never registered as sale deed and even after expiry of more than three years the property was in the name of his wife because no pacca sale deed has been registered - HELD THAT - Admittedly, it is a fact that the above property purchased by assessee on 22.12.2011 at Padikuppam is land only and not a house and hence, the same is not hit by the provisions of section 54F(1) proviso (a)(ii) of the Act. Secondly, the assessee entered into sale agreement with his wife towards purchase of this residential property situated at Kalashetra Colony, Chennai on 10.12.2011 and assessee has fulfilled all the conditions of section 53A of Transfer of Property Act although the sale deed is not registered but the transaction is completed. CIT(A) power to set aside or sending the issue back for examining the issue afresh - We agree with the contention of the Revenue but by going through the decision of CIT(A), we noted that the CIT(A) has only directed the AO to examine this supporting documents but he has actually allowed the claim of deduction u/s.54F of the Act on principle. According to us, this is not setting aside of the issue or remanding the matter back to the file of the AO for fresh consideration, simpliciter verification is not barred u/s.251(1)(a) of the Act. Hence, we find no infirmity in the order of CIT(A) and the same is confirmed. The appeal of Revenue is dismissed. Disallowing trading loss on sale of shares - primary onus to prove the sources in respect of trade transaction squarely lies on the assessee - HELD THAT - We are of the view, let the assessee be given one more chance to produce Demat account and the details of banking transactions to prove that the assessee has actually suffered loss - assessee will also file details by quantifying the loss and will prove with reference to Demat account maintained for this purpose. Appeal of the assessee is allowed for statistical purposes. Addition u//s 69 - assessee could not submit the relevant supporting documents with regard to amount received from Shri K. Kesavan - HELD THAT - We noted that the assessee could not submit the relevant supporting documents with regard to amount received from Shri K. Kesavan - Even the order of CIT(A) is non-speaking and how he reached to the conclusion that the AO has given sufficient opportunities. We could not make out how this amount was disallowed and added u/s.69 of the Act because the individual entry was not discussed by the AO. Hence, keeping in view of facts in mind, we remand this issue back to the file of the AO.

Summary

Issues Involved:
1. Deduction under Section 54F of the Income Tax Act.
2. Disallowance of trading loss on the sale of shares.
3. Addition of Rs.5 lakhs under Section 69 of the Income Tax Act.

Detailed Analysis:

1. Deduction under Section 54F of the Income Tax Act:
The Revenue's appeal contested the CIT(A)'s directive to the Assessing Officer (AO) to verify and allow the deduction claim under Section 54F. The Revenue argued that CIT(A) lacked the authority to set aside or re-examine the issue as per Section 251(1)(a) of the Act, which was omitted by the Finance Act 2001. The AO had denied the exemption claim for several reasons, including the absence of a registered sale deed, the unregistered nature of the agreement, and the ownership of more than one residential property by the assessee on the date of transfer. The CIT(A) allowed the claim, noting that the property was sold when possession was handed over upon receipt of full consideration and that the AO had not considered that another property was only land at the time. The Tribunal upheld the CIT(A)'s decision, stating that the CIT(A) had directed the AO to verify supporting documents but had not set aside the issue, which is permissible under Section 251(1)(a).

2. Disallowance of Trading Loss on Sale of Shares:
The assessee's appeal challenged the CIT(A)'s confirmation of the AO's disallowance of a trading loss of Rs.19.45 lakhs on the sale of shares. The AO and CIT(A) disallowed the claim due to the assessee's failure to furnish details, including the Demat account. The Tribunal remanded the issue back to the AO, allowing the assessee another opportunity to produce the Demat account and banking transaction details to substantiate the claimed loss.

3. Addition of Rs.5 lakhs under Section 69 of the Income Tax Act:
The assessee's appeal also contested the CIT(A)'s confirmation of the AO's addition of Rs.5 lakhs under Section 69, which was received from Shri K. Kesavan. The Tribunal noted that the assessee could not submit relevant supporting documents and that the CIT(A)'s order was non-speaking. The Tribunal remanded the issue back to the AO for re-examination, directing the assessee to provide all necessary details to substantiate the claim.

Conclusion:
The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeals for statistical purposes, remanding the issues back to the AO for further verification and examination. The Tribunal emphasized the need for proper documentation and adherence to legal provisions in claiming deductions and substantiating losses.