The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) recently remanded a case relating to a ₹2.75 crore capital gains exemption claimed where the assessee failed to submit the requisite documents during the initial proceedings, but did so before the appellate tribunal only.
The decision was given against an Income Tax Appeal filed by Syed Hussain Syed Asif, proprietor of Alpha Medicals in Hosur. Syed had declared a total income of ₹14,63,060 and claimed an exemption of ₹2,54,57,551 after selling his 9,600 sq ft property for ₹2.75 crore.
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During the assessment process, it was noted by the Assessing Officer (AO) that only ₹60 lakh of the alleged ₹1.29 crore investment in a new house was made by cheque, and ₹44.8 lakh was supported by self‐made vouchers.
It was averred that the remainder of the amount which was claimed to have been withdrawn in cash, lacked evidence to corroborate the same. Further, it was noted that the Assessee had not deposited the amount in a designated bank account to avail exemption as mandated under Section 54F of the Income Tax Act, 1961.
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Due to such discrepancy, the AO proceeded to disallow ₹1.71 crore of the amount for which exemption was claimed by the appellant under Section 54F In appeal, the Commissioner of Income Taxes (Appeals) ( CIT(A) ), upheld the decision of the AO, leading to the present appeal.
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Authorized representative of the appellant, Badrinarayan Badrinarayanan, submitted two voluminous paper books containing a valuation report, building plans, bank statements, sale deeds dated June 17 and 20, 2016, income‐tax returns, construction invoices, and vouchers. He urged that these documents remedy the evidentiary gaps that had been noted by the lower authorities and prayed for remitting the matter for fresh adjudication.
Departmental representative, R. Anita, IRS, contested claiming that the assessee had failed to produce these materials during the initial proceedings despite ample opportunity, and that the Tribunal may not entertain them at this stage.
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The two‐member bench, Manoj Kumar Aggarwal, Accountant Member, and Manu Kumar Giri, Judicial Member, observed that the appellant had not submitted the requisite documents before the lower authorities. In the view of substantial justice, the Tribunal proceeded to set aside the impugned order while remitting the matter back to the file of the AO for denovo assessment on merits, after receiving evidence and provision of opportunity for hearing to the appellant.
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