ITAT allows appeal for fresh review of LTCG exemption denial under section 54F after additional evidence submission

The ITAT Raipur allowed the assessee's appeal for statistical purposes regarding denial of LTCG exemption under section 54F. The CIT(A) had denied the exemption due to lack of corroborative evidence for investment in new house property. However, the assessee submitted additional evidence under Rule 29 of ITAT Rules, which was not available before the CIT(A). The ITAT held that despite absence of construction bills/vouchers, the deduction claim cannot be denied without considering relevant additional documents. In the interest of natural justice, the matter was remanded to CIT(A) for fresh adjudication considering the additional evidence.

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Issues Involved:
1. Ex-parte order by CIT(A) without allowing opportunity to the appellant.
2. Denial of exemption u/s 54F of the Income Tax Act, 1961.

Summary:

Issue 1: Ex-parte Order by CIT(A)
The assessee contended that the CIT(A), NFAC, Delhi, erred in passing an ex-parte order without allowing an opportunity to the appellant, despite an adjournment application filed on 25.10.2023. The order was passed on 07.12.2023, one day before the requested adjournment date of 08.12.2023. The CIT(A) provided multiple opportunities for the appellant to present submissions, but the appellant failed to comply, leading to the dismissal of the appeal for non-prosecution. The CIT(A) cited judicial pronouncements, including CIT Vs. B.N. Bhattachargee & Ors. and Estate of Late Tukojirao Holkar Vs. CWT, to justify the dismissal.

Issue 2: Denial of Exemption u/s 54F
The assessee claimed an exemption u/s 54F for Rs. 53,86,108/- on the grounds of reinvestment in house property. The AO observed a transaction of land sale for Rs. 1,08,00,000/- on 07.03.2014, which was not reflected in the return of income. The AO requested details of the sales transaction and exemption claimed u/s 54F. The assessee provided calculations showing the sale amount, indexed cost, and investment in house property. However, the AO was not satisfied with the proof of investment in house property amounting to Rs. 68,58,900/-, leading to an addition of Rs. 54,13,892/- under capital gains by rejecting the exemption claim u/s 54F.

The CIT(A) upheld the AO's decision, noting the appellant's failure to furnish vital evidence such as bank statements, purchase deeds, and construction-related receipts. The CIT(A) concluded that the appellant did not satisfactorily prove eligibility for the deduction u/s 54F.

Tribunal's Decision:
The Tribunal considered the rival submissions and additional evidence submitted by the assessee, including a valuation report and municipal permissions. The Tribunal noted that the assessee had shown the investment in the balance sheet but failed to substantiate it with corroborative evidence. The Tribunal referred to similar cases, such as Govind Gangadhar Sabane vs. ITO and Pawan Aggarawal vs. DCIT, where exemptions u/s 54F were allowed despite the absence of bills/vouchers, provided there was other supporting evidence.

The Tribunal concluded that the additional evidence submitted was not considered by the CIT(A) and, in the interest of natural justice, restored the matter to the CIT(A) for fresh adjudication. The assessee was to be afforded reasonable opportunities to present necessary evidence.

Conclusion:
The appeal was partly allowed for statistical purposes, with the matter remanded to the CIT(A) for reconsideration, ensuring the assessee is given a fair opportunity to substantiate the claim for exemption u/s 54F.

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