Denial of Section 54F Exemption and Property Value Enhancement Cannot Be Sustained Without Considering Evidence: ITAT Sets Aside ₹13.06 Lakh Addition [Read Order]

The Income Tax Appellate Tribunal (ITAT) Delhi Bench held that denial of exemption under Section 54F of the Income TaxAct, 1961 and enhancement of property valuation cannot be sustained where the documentary evidence furnished by the assessee was not properly examined by the lower authorities. The Tribunal set aside the impugned orders and remanded the matter for fresh adjudication.

The appeal was filed by the assessee Nirmal Kishore Jain challenging the order passed by the

Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) for the Assessment Year 2015–16. The dispute primarily concerned the denial of exemption claimed under Section 54F and enhancement of property value by ₹13.06 lakh increasing the valuation from ₹40 lakh to ₹53.06 lakh.

The assessee contended that the lower authorities had wrongly rejected the Section 54F claim by misapplying the statutory proviso and ignoring crucial documentary evidence demonstrating that the property in question constituted a single residential building.

Further, It was stated that despite placing relevant material on record neither the Assessing Officer (AO) nor the CIT(A) raised any adverse findings or objections against such evidence. Instead, the appeal was dismissed mechanically by merely reiterating the assessment findings.

The assessee further argued that the appellate authority failed to independently adjudicate the issues on merits and passed the order without due appreciation of the facts, thereby violating the principles of natural justice. On the other hand, the Revenue relied upon the orders of the lower authorities and defended the additions made.

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The Tribunal observed that the assessment order had been passed without duly considering the details and documents furnished by the assessee during the proceedings. The Bench further noted that the CIT(A) had simply affirmed the action of the AO without undertaking an independent evaluation of the material available on record or adjudicating the issues on merits.

The Bench comprising Yogesh Kumar [Judicial Member], and Krinwant Sahay [Accountant Member], emphasized that tax authorities are duty-bound to decide matters based on evidence and merits.

Holding that the assessee deserved an effective opportunity of hearing the Tribunal set aside the impugned orders and restored the matter to the file of the AO for de novo adjudication after considering all submissions and evidence. Consequently, the appeal was allowed for statistical purposes.

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