2016 (5) TMI 1100 - AT - Income Tax

Tribunal upholds reassessment, grants deduction under Section 54F, dismisses Revenue's appeal, and assessee's cross objection.

The Assistant Commissioner of Income Tax, Circle I, Cuddalore Versus Smt. Umayal Annamalai

The Assistant Commissioner of Income Tax, Circle I, Cuddalore Versus Smt. Umayal Annamalai - TMI Issues Involved:1. Condonation of delay in filing the appeal.2. Validity of the reassessment proceedings.3. Entitlement to deduction under Section 54F of the Income Tax Act, 1961.Detailed Analysis:1. Condonation of Delay:The Department filed the appeal with a delay of 47 days. The Departmental Representative submitted an affidavit explaining the reasons for the delay, and the Assessee's Representative did not object. The tribunal, satisfied with the reasons provided, condoned the delay and admitted the appeal.2. Validity of Reassessment Proceedings:The assessee challenged the reassessment on the grounds that it was based on an audit objection and thus amounted to a change of opinion, which is not permissible. The Commissioner of Income Tax (Appeals) (CIT(A)) found that the Assessing Officer (AO) had sufficient reasons to believe that income had escaped assessment due to the lack of evidence supporting the investments in NABARD bonds and the construction of a residential property. The tribunal upheld the CIT(A)'s decision, confirming that the reassessment proceedings were valid and based on genuine reasons, thus rejecting the assessee's contention.3. Deduction under Section 54F:The main issue revolved around whether the assessee was entitled to a deduction under Section 54F of the Income Tax Act, 1961, for the investment in a new residential property. The AO denied the exemption, stating that the assessee did not deposit the net consideration in the Capital Gain Account Scheme before the due date of filing the return under Section 139(1) and utilized the funds after the due date.The CIT(A) found that the assessee had invested Rs. 68,00,000 in the new property before the extended due date of filing the return under Section 139(4) and took possession of the property within three years from the date of the transfer of the original asset. Citing judicial precedents, including decisions from the Punjab & Haryana High Court and the Gauhati High Court, the CIT(A) concluded that substantial compliance with Section 54F(1) was sufficient, even if the investment was made before the extended due date under Section 139(4).The tribunal agreed with the CIT(A)'s findings, emphasizing that Section 54F is a beneficial provision and should be interpreted liberally. The assessee's investment in the residential property within the stipulated period was deemed sufficient compliance, and the tribunal upheld the CIT(A)'s decision to allow the deduction under Section 54F.Cross Objection by the Assessee:The assessee's cross objection argued that the reassessment was invalid as it was based solely on an audit objection. The tribunal found that the reassessment was initiated due to the non-availability of evidence on record and upheld the CIT(A)'s decision, rejecting the assessee's cross objection.Conclusion:The tribunal dismissed both the Revenue's appeal and the assessee's cross objection, upholding the CIT(A)'s decisions on the validity of the reassessment proceedings and the entitlement to deduction under Section 54F. The order was pronounced on April 22, 2016, in Chennai.