TaxTMI 
TaxTMI 
2026 (9) TMI 1804
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....ppeals) has erred in upholding the action of the Ld. Assessing Officer who erred in denying the deduction under the provisions of section 54F of the Income Tax Act, 1961 ("the Act") merely because the Appellant had inadvertently mentioned details of deduction under section 54 in the return of income in place of section 54F of the Act. 2. In the facts and circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the above action of the Ld. Assessing Officer in utter disregard to the decision of Hon'ble Jurisdictional High Court in the case of CIT vs. Pruthvi Brokers & Shareholders [2012] 23 taxmann.com 23 (Bombay) wherein the Hon'ble High Court after considering the decision of Hon'ble Supreme Court in the case of Goetze (India) Ltd. vs. CIT [2006] 157 Taxman 1 (SC) held that the said decision does not impinge upon the power of the appeal authorities - as the issue in that case was limited to the power of the assessing officer and that the appeal authorities could consider additional claims raised before them as per the judgment of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. vs. CIT [1998] 229 ITR ....
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.... capital gain at Rs. 8,79,99,000/- and claimed exemption of the entire amount under section 54 of the Act. The assessment record further showed that the assessee had acquired a residential property being Bungalow No.4 in Udadhi Tarang Cottages Co-operative Housing Society Limited, Juhu Tara Road, Vile Parle (West), Mumbai. The property was acquired from her sons, Mr. Zia Shiekh and Mr. Wasim Shiekh. An Agreement to Sell was executed on 06.06.2024 and the registered Deed of Transfer was executed on 21.05.2025. 6. In response to the notices issued under section 142(1), the assessee furnished copies of the purchase deed and sale documents relating to the Satbari land, computation of capital gains, details of the consideration received, Agreement to Sell relating to the new residential property, registered Deed of Transfer dated 21.05.2025, bank statements evidencing payments to the joint bank account of Mr. Zia Shiekh and Mr. Wasim Shiekh, and the documents relating to deduction and deposit of tax under section 194-IA of the Act. The assessee submitted that the sellers, Mr. Zia Shiekh and Mr. Wasim Shiekh, held 50 per cent share each in the new residential property. She also furnis....
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....ction 144B of the Act. Interest under sections 234A, 234B, 234C and 234D was directed to be charged, as applicable, and penalty proceedings under section 270A were initiated for under-reporting of income in consequence of misreporting. 9. Aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee submitted that she was a 76-year-old senior citizen and a widow without any active source of income. It was explained that the original return filed on 26.07.2024 and the revised return filed on 13.12.2024 had both been processed under section 143(1) without any variation in the declared total income. The revised return had been filed to correct the fair market value of the original property as on 01.04.2001, which had initially been taken at Rs. 50,00,000/- instead of Rs. 5,00,000/-. The assessee reiterated that she had transferred the Satbari land under an Agreement to Sell dated 21.12.2023 for Rs. 9,00,00,000/- and had thereafter entered into an Agreement to Sell dated 06.06.2024 for the purchase of the residential bungalow in Mumbai from Mr. Zia Shiekh and Mr. Wasim Shiekh. The consideration for the new prop....
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....admissible. 12. As regards the alternative contention that the exemption should be allowed under section 54F, the learned CIT(A) held that the claim under section 54F had not been made either in the original return filed under section 139(1) or in the revised return filed under section 139(5). The learned CIT(A) relied upon the decision of the Hon'ble Supreme Court in Goetze (India) Ltd. v. CIT, 284 ITR 323 (SC). The learned CIT(A) further observed that the assessee had already availed herself of the opportunity to file a revised return but had not claimed exemption under section 54F even in that return. The claim under section 54F had been made only through written submissions filed during the assessment proceedings. 13. The learned CIT(A) also rejected the contention that the matter involved a mistake apparent from the record within the meaning of section 154. It was held that adjudication of the claim under section 54F would require examination of several statutory conditions, including the assessee's ownership of any other residential house, the extent of investment of the net consideration and compliance with section 54F(4). Such examination would involve factual verific....
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....rary to CBDT Circular No.14(XL-35) dated 11.04.1955, which requires the income-tax authorities not to take advantage of the ignorance or inadvertent mistake of an assessee and to extend the relief legitimately admissible under the Act. 19. The learned AR further submitted that the learned CIT(A) had erred in applying the decision of the Hon'ble Supreme Court in Goetze (India) Ltd. v. CIT [2006] 157 Taxman 1 (SC). He contended that the restriction considered in that decision was confined to the power of the Assessing Officer to entertain a fresh claim otherwise than by way of a revised return and did not curtail the powers of the appellate authorities to entertain and adjudicate such a claim. 20. In support of this proposition, the learned AR relied upon the decision of the Hon'ble jurisdictional High Court in CIT v. Pruthvi Brokers & Shareholders [2012] 23 taxmann.com 23 (Bom.). The relevant proposition relied upon by the learned AR, as reproduced in the written submissions, reads as under: "The said decision does not impinge upon the power of the appeal authorities. As the issue in that case was limited to the power of the assessing officer; the appellate authoritie....
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.... section 54 because the original asset transferred was land and not a residential house. To that extent, the Assessing Officer was correct that section 54, as such, was not applicable. However, despite the assessee's specific request, the Assessing Officer did not examine the claim under section 54F and merely observed that the reply of the assessee was "considered but not acceptable as per the IT Act". No reason was recorded as to why section 54F was inapplicable to the disclosed transaction. 27. The learned CIT(A) upheld the disallowance principally on the ground that the claim under section 54F had not been made in the original or revised return and, by relying upon Goetze (India) Ltd. v. CIT [2006] 284 ITR 323 (SC), held that such a claim could not be entertained. The learned CIT(A) further observed that entertaining the claim in appellate proceedings would amount to permitting modification of the return beyond the statutory time limit. 28. In our considered view, the aforesaid approach of the learned CIT(A) is contrary to the binding decision of the Hon'ble jurisdictional High Court in CIT v. Pruthvi Brokers & Shareholders Pvt. Ltd. [2012] 23 taxmann.com 23 (Bom.)/[2012]....
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....established that the omission was deliberate, mala-fide or even otherwise. The inference that the omission was inadvertent is, therefore, irresistible." "22. It was then submitted by Mr. Gupta that the Supreme Court had taken a different view in Goetze (India) Ltd (supra). We are unable to agree. The decision was rendered by a Bench of two learned Judges and expressly refers to the judgment of the Bench of three learned Judges in National Thermal Power Comp. Ltd. (supra). The question before the Court was whether the appellant-assessee could make a claim for deduction, other than by filing a revised return. After the return was filed, the appellant sought to claim a deduction by way of a letter before the Assessing Officer. The claim, therefore, was not before the appellate authorities. The deduction was disallowed by the Assessing Officer on the ground that there was no provision under the Act to make an amendment in the return of income by modifying an application at the assessment stage without revising the return. The Commissioner of Income-tax (Appeals) allowed the assessee's appeal. The Tribunal, however, allowed the department's appeal. In the Supreme Court,....
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....rrected the claim during the assessment proceedings. The claim was rejected by the Assessing Officer for want of a revised return. The CIT(A) entertained and allowed the correct claim and the Tribunal affirmed that decision. The relevant findings in paragraphs 8.2, 8.3 and 9 read as under: "8.2. Thus, the CIT(A) has accepted the claim of the Assessee that the Assessee is entitled to claim deduction under Section 54F of the Act. On perusal of the grounds raised by the Revenue we find that no infirmity has been pointed out by the Revenue in the claim of deduction under Section 54F of the Act on merits. It is not the case of the Revenue that the conditions specified in Section 54F of the Act are not satisfied in the case of the Assessee. The case set up by the Revenue is that the Assessing Officer could not have entertained or allowed the claim of the Assessee for deduction under Section 54F of the Act since the same was not made by way of the revised return." "8.3. We note that the Hon'ble Supreme Court had, in the case of National Thermal Power Co. Ltd. v. CIT: [1998] 229 ITR 383, held that the failure to make a claim in the return of income does not take away the ....
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....7 ITD 558 (Mumbai), order dated 28.02.2019, also supports the proposition that an exemption otherwise available under the correct provision cannot be denied merely because the assessee referred to an incorrect provision in the return. Paragraph 7 of that order reads as under: "7. We have considered rival submissions and perused material on record. Undoubtedly, the issue in dispute hinges on assessee's claim of deduction under section 54 of the Act. Insofar as the factual aspect relating to the aforesaid issue is concerned, undisputedly, the deduction claimed under section 54 of the Act is against the net long term capital gain arising out of sale of a residential property viz. Dhruv Malad Building. It is also a fact on record that in the return of income filed for the impugned assessment year the assessee had claimed deduction under section 54F of the Act. When the Assessing Officer referring to the provision contained under the first proviso to section 54F(1) of the Act proposed to disallow assessee's claim of deduction, the assessee filed a revised computation of income claiming deduction under section 54 of the Act. However, the Assessing Officer rejected such c....
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....n Jai Kumar Gupta (HUF) (supra) was in the converse direction, namely section 54F was mentioned instead of section 54, the governing principle applies with equal force. A mistake in mentioning the statutory provision cannot be used to deny an exemption which is otherwise admissible on the disclosed facts. The tax liability has to be determined in accordance with the substantive provisions applicable to the transaction and not merely on the basis of the section number entered in the return. 34. The decision of the Patna Bench in Seema Srivastava v. ITO, ITA No.715/Pat/2024, order dated 06.06.2025, deals directly with a claim entered under section 54 instead of section 54F. The relevant finding in paragraph 11 reads as under: "11. We have considered the rival submission and have also gone through the order of the Hon'ble Supreme Court in the case of Goetze India Ltd. (supra) which has also been discussed in the case of CIT vs. Jai Parabolic Springs Ltd. (supra) by the Hon'ble Delhi High Court. As mentioned by the assessee the limitation for allowing the deduction by filing a revised return is applicable only to the Assessing Officer and not to the Appellate Author....
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....dential house on 06.06.2024 and the registered Deed of Transfer was executed on 21.05.2025. Both dates fall within the period prescribed under section 54F with reference to the transfer of the original asset on 21.12.2023. The assessee also furnished the bank statements, Agreement to Sell, registered Deed of Transfer and tax deduction documents during the assessment proceedings. 37. The learned CIT(A) referred to the ownership of other residential houses, investment of the net consideration and section 54F(4) as matters requiring examination. However, no particular condition of section 54F was found to have been violated. There is no finding by either authority that the assessee owned more residential houses than permitted under the proviso to section 54F(1), that the new asset was acquired beyond the prescribed period, or that the documents furnished by the assessee were not genuine. A general observation that certain conditions would require examination cannot substitute a finding that any specified condition was not satisfied. 38. The assessment order records the consideration for the new property at one place as Rs. 8,80,00,000/-. However, the Statement of Facts and writt....