2014 (9) TMI 952 - AT - Income Tax

Tribunal grants appeal, remands for fresh assessment under Income Tax Act

Shri D. Giriyappa Versus The Assistant Commissioner of Income Tax, Circle 4 (1), Bangalore

Shri D. Giriyappa Versus The Assistant Commissioner of Income Tax, Circle 4 (1), Bangalore - [2014] 36 ITR (Trib) 186 (ITAT [Bang]) Issues:1. Claim of exemption under section 54/54F of the Income Tax Act.Detailed Analysis:1. The only issue in this appeal was whether the Revenue authorities were justified in rejecting the assessee's claim for exemption under section 54/54F of the Income Tax Act. The assessee, an individual, sold a vacant site and purchased another site, claiming exemption for the capital gains. The Assessing Officer disallowed the exemption claimed by the assessee, leading to an appeal before the Commissioner of Income-tax (Appeals) and subsequently before the Tribunal.2. The assessee contended that a major portion of the capital gain was reinvested in the purchase of a vacant site, and construction of a residential house had commenced within the stipulated period. The assessee argued that the construction did not need to be completed within three years, citing legal precedents. Additionally, a portion of the sale proceeds was deposited in a fixed deposit. However, the Commissioner of Income-tax (Appeals) rejected these contentions, emphasizing the lack of evidence provided by the assessee to support the claim for exemption.3. The Tribunal observed that the assessee had expressed the intention to construct a residential house by detailing the construction activities carried out. Photographs of the property showing the existence of a house were also submitted. The Tribunal noted that the construction had started within the required timeframe, as indicated by the evidence presented. Consequently, the Tribunal set aside the Commissioner's order and remanded the issue to the Assessing Officer for fresh consideration, allowing the assessee to provide further evidence to support their case.4. Furthermore, the Tribunal highlighted that the basis for initiating the reassessment proceedings under section 148 was not adequately explained in the Assessing Officer's order. The Tribunal emphasized the importance of reviewing the reasons recorded before issuing the notice under section 148 to ensure compliance with the necessary conditions for reassessment. This aspect was left open for the assessee to address during the reassessment proceedings.5. Ultimately, the Tribunal partially allowed the appeal, granting the assessee the opportunity to substantiate their case with additional evidence and directing a reevaluation of the reassessment proceedings to ensure procedural compliance. The judgment was pronounced on September 12, 2014, by the Tribunal.