The Bangalore Income Tax Appellate Tribunal (ITAT) has recently held that capital gain exemption under section 54B of Income Tax Act 1961 could be claimed without filing of Income Tax Return.
Section 54B of Income Tax Act 1961 provides relief to taxpayers who sell his agricultural land for purchasing another agricultural land, not for earning income .
Assessee Thimme Gowda Shekar entered into a Development Agreement with the Developer R.Veeresh, residing in Mysore. As per the agreement executed assessee transferred five acres of land situated in Mysore. From the verification of records, it was observed that for the relevant assessment year 2006-07, the assessee did not disclose this transaction nor any capital gains arising on the transfer of aforesaid agricultural land. The assessee did not file return of income for the assessment year 2006-07 under section 139. The case was reopened and an opportunity was granted to the assessee for filing return of income in spite of he did not file any return of income and several opportunities were also granted to the assessee for filing return of income and even did not appear for personal hearing .Thereafter assessing officer computed the assessment. Accordingly, the AO treated the entire transaction as “transfer” in terms of section 2(47)(v) of the Income Tax Act 1961.Against the order assesee filed an appeal before ITAT.
V.Srinivasan Counsel for the assessee submits that being an agricultural person, the assessee was not aware about the proceedings of the Income tax Act. Therefore, he could not file return of income within the due date specified and he also submitted that for claiming exemption under section 54B of Income Tax Act 1961 the assessee was required to file return of income.
Ganesh R.Ghale counsel for the revenue submits that for getting exemption under section. 54B of the Income Tax Act, 1961 the return was required to be filed as per the section 139(1) and he also referred to the sixth Proviso of the section 139(1) and as per the provisions for getting exemption under section 54B of the Income Tax Act, 1961, the assessee was required to file the return of income in the prescribed form and verified in the prescribed manner within the due date and also referred to section 80C of the Income Tax Act, 1961
After considering the contentions of the both parties the single bench of Laxmi Prasad Sahu, (Accountant member) allowed the appeal filed by the assessee and observed on the in section 139(1) of sixth Proviso, section 54, section 54B or section 54D or section 54EC or section 54F or section 54G or section 54GA or section 54GB were inserted by the Finance Act, 2019 which is effective from 01.04.2020, but the impugned case on hand is related to the assessment year 2006-07. It indicates that the exemption under section 54B Income Tax Act, 1961 can be claimed without filing of return of income
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