The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) in a recent ruling has upheld the revision order observing that allowing deduction under section 54B without verification of claim amounts to erroneous assessment.
Section 54B deals with exemption of income from transfer of capital gain on transfer of capital asset -agricultural land
Ramanbhai was an individual and also Directors of Popular Estate Management Ltd. drawing income from salary, rent and interest income. The return filed by the assessee was taken to scrutiny then, it was noticed that the assessee had shown Long Term Capital Gain on sale of land at Thaltej. On further verification of the sale deed, it was found that he had purchased another agricultural land and appellant’s share being 15 per cent, assessee had claimed exemption under Section 54B of the Income Tax Act 1961 from the above Long Term Capital Gain.A revision proceeding initiated in which the deduction was denied.
Nupur Shah, on behalf of the assessee submitted that the Assessing Officer after verification and all the details placed before him, allowed the deduction u/s. 54B of the Act.Therefore the assessment was neither erroneous order nor prejudicial to the interest of Revenue and pleaded that the Revision proceedings were liable to the quashed.
James Kurian, on behalf of the revenue submitted that the Assessing Officer had not applied his mind with regard to the said lands were not put to use for Agricultural purposes two years before such transfer, which was a condition precedent for claim of deduction u/s. 54B of the Act. Theassessee failed to furnish any supporting evidence and that the land was used for agricultural purposes in the two years preceding the date of transfer. He also contended that even the copy of agreement with Shri Vaghela was not provided. The assessing officer’s failure to note any of these facts and allowing the assessee’s claim without proper verification was also raised in his contentions.
The Division Bench of Waseem Ahmed (Accountant Member) and T.R. Senthil Kumar (Judicial Member) dismissed the appeal upholding the revision order observing that the “assessee had failed to furnish any supporting evidence and the land was used for agricultural purposes in the two years preceding the date of transfer. Even the copy of agreement with Shri Vaghela was not provided. The assessing officer had failed to take note of any of these facts and without verifying this issue allowed the claim of the assessee. The Bench also held that the AO order was erroneous and prejudicial to the interest of the revenue.”
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