Non Appearance and Failure to submit Documentation in exemption claim u/S 54 of Income Tax Act: ITAT dismisses appeal [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) dismissed appeal due to non-appearance and failure to submit documentation for exemption claim under Section 54 of the Income Tax Act 1961

The Assesse declared a total income of Rs.55,50,890/- on 29/11/2014. The return was processed under section 143(1) of the Income Tax Act 1961. Subsequently, the Assessee's case underwent scrutiny under CASS, and statutory notices were issued.

The Assessing Officer noted a deduction claim of Rs.2,15,63,497/- under section 54 of the Income Tax Act 1961 for capital gains. The Assessee segregated Rs.1,05,00,000 for house property and deposited Rs.1,40,00,000/- in the capital gain account scheme. The Assessing Officer requested supporting documents, but the submitted details were deemed unacceptable. While accepting the deposit in the capital gain account scheme, the Assessing Officer disallowed the Rs.1,05,00,000/- house property investment, adding it to the total income.

The Assessee, discontented, appealed to the Commissioner of Income Tax (Appeals), who upheld the addition. The Commissioner reasoned that the Assessee failed to fulfill the primary condition under Section 54 of the Income Tax Act 1961 by not acquiring a new residential property within the prescribed timelines after selling the house. The intended purchase was obstructed by a dispute with the seller, and no Agreement for Sale/Sale Deed or possession was executed. As a result, the deduction under section 54 of the Income Tax Act 1961 was denied.

The two member bench of the tribunal comprising Gagan Goyal (Account member) and Narendar Kumar Choudhary (Judicial member) concluded that Assessee neither appeared nor filed an adjournment application. The appeal was decided ex parte. The authorities noted that the Assessee, despite claiming exemption of Rs.1,05,00,000/- under section 54 of the Income Tax Act 1961 for investment in house property, failed to provide supporting documents. The denial of the claim was affirmed, as no contrary reason or material was found against the Commissioner's findings.

In the result, an appeal filed by the Assessee stands dismissed.

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