2026 (7) TMI 126

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....nt order dated 7 February 2023, passed under section 147 read with section 144B of the Income-tax Act, 1961, was dismissed. The assessee is therefore before us. 2. The Revenue received information that the assessee had sold immovable property for Rs.1,28,15,000 but had not filed his return of income for assessment year 2015-16. Consequently, notice under section 148 of the Act was issued on 31 March 2022. In response, the assessee filed his return on 28 November 2022 and submitted replies during the assessment proceedings. 3. In return, the assessee declared sale consideration of Rs.1,28,15,000 and claimed indexed cost of acquisition of Rs.92,07,958, resulting in long-term capital gain of Rs.36,07,042. He claimed exemption of Rs.34,70....

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....ue date under section 139(1). Since the unutilized sale consideration was not deposited in the notified Capital Gains Account Scheme under section 54F (4), the Assessing Officer restricted the exemption under section 54F to the investment of Rs.37,73,455. The exemption was accordingly computed at Rs.10,62,116 [Rs.37,73,455 x (Rs.36,07,042 / Rs.1,28,15,000)], and the balance claim of Rs.24,08,390 [Rs.34,70,506 - Rs.10,62,116] was proposed to be disallowed. 6. Thus, only the investment of Rs.37,73,455 made up to 31 August 2015 towards construction of the residential house qualified for exemption under section 54F. Exemption was therefore allowed to the extent of Rs.10,62,116, and the balance claim of Rs.24,08,390 was disallowed. Accordingl....

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....erits of the issue are squarely covered in favour of the assessee by the decision of the Hon'ble Karnataka High Court in Fatima Bai v. ITO, 32 DTR 243. He further submitted that the reopening for assessment year 2015-16 was made by issuing notice under section 148 of the Act, an issue which, according to him, has been considered by Revenue before the Hon'ble Supreme Court. He therefore submitted that the reassessment is invalid. 9. The learned Departmental Representative strongly supported the orders of the lower authorities, both on merits and on the validity of the reopening of the assessment. 10. We have carefully considered the rival submissions and perused the orders of the lower authorities. The deduction under section 54F was d....