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Judgment
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
This appeal arises from order dated 02.09.2025, passed u/s 250 of the Income Tax Act, 1961 (hereafter as “the Act”), by Ld. CIT(A)-NFAC, Delhi. In this case, the assessee did not file his return of income for the concerned year, thereafter, following a transaction in immovable property worth Rs.4.5 crores, a notice u/s 148 was thereafter issued. The assessee filed his return of income at “Nil” in response to this notice. The Ld. AO completed the assessment after making an addition of Rs.4,42,04,700/- as Long Term Capital Gain (LTCG) on sale of land. Another addition of Rs.28,000/- has also been made on account of alleged undisclosed rental income from house property.
Aggrieved with these additions the assessee approached the Ld. CIT(A), where also he could not succeed and his claim of exemption from LTCG and an alternative claim u/s 54F of the Act were both denied on the basis of detailed findings in the impugned order.
Further aggrieved the assessee has approached the ITAT with grounds challenging the impugned additions, especially the addition pertaining to LTCG and the denial of claim u/s 54F of the Act.
Before us the Ld. AR argued with the help of written submissions and paper book. The Ld. AR specifically argued on the merit of the case. It was stated that the assessee was owner of ancestral agricultural land in the village Noorpur, Jharsa, which lies within the municipal limits of Gurgaon. Thereafter, the assessee was advised by several officials of the Municipal Corporation of Gurgaon (MCG) to part with some portion of his agricultural land for the sake of an upcoming group housing project nearby. Thereafter, the assessee gifted 1200 sq. yards of land to the MCG for common use as a public passage. However, the developer of the land paid an amount of Rs.4,50,00,000/- to the assessee in lieu of this gift. Thereafter, the appellant not only claimed exemption u/s 10(37) of the Act but also claimed deduction u/s 54F on a particular residential property. Incidentally, this so-called residential property was only a residential plot, that too purchased by the wife of the assessee. The Ld. AO subjected the amount received from the builder/developer to LTCG after working out an indexed cost of acquisition at Rs.7,95,300/-. It was stated that the assessee admitted to claim deduction u/s 54F on a house which he had started constructing in April, 2018, with the construction being completed in April, 2020. It was stated that this time period was well within the time prescribed for claiming a deduction u/s 54F of the Act. It was stated by the Ld. AR that a valuation report of this house property was also prepared and the valuation of Rs.201,00,770/- was presented before the Ld. AO. However, the Ld. AO disregarded this. It was stated that this valuation was without including the value of land on which the house was constructed and thereafter another valuationreport was prepared. These documents have been placed in the paper book as new evidence, which was not before either of the authorities below. It was argued that if the latest valuationreport was considered then the entire LTCG would be subsumed within the cost of the new property. For this purpose, the Ld. AR prayed that the assessee may be given another chance to present the facts before the Ld. AO.
The Ld. DR relied on the orders of the authorities below and argued that the assessee has been inconsistent in tendering his claims and the Ld. AO has simply assessed his income on the basis of documents available with him. Also, the assessee could not claim any deduction u/s 54F of the Act for a residential plot of land.
We have carefully considered the documents before us and heard the Ld. AR/DR. It is evident that either through ignorance or wrong advice the assessee has not been able to tender an appropriate claim for relief before the Ld. AO or even the Ld. CIT(A). The case in point is that afresh valuation report has now been tendered before us for consideration. In the light of these facts and circumstances, we deem it fit to set aside the impugned order and remand these proceedings to the file of Ld. AO with a direction that the Ld. AO would examine the claim u/s 54F of the Act in light of the valuation report to be submitted by him. In case required, the AO would refer the matter to the DVO for examining the veracity of such valuation report. Needless to say, the Ld. AO would give adequate opportunity of being heard.
In the result, appeal of the assessee is allowed for statistical purpose.