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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal o f the assessee is directed against the order dated 28.11.2025 of ld. CIT(A)/NFAC, Delhi passed u/s 250 of the Income Tax Act, 1961 (here inafter referred to as “the Act”) wherein the appeal has been dismissed, against the assessment order dated 29.03.2023.
Brief facts as culled out from the orders of the authorities below are that the assessee derives income fro m partnership firms and as proprie tor of M/s Bhuvesh Enterprises, rental income and salary income. The assessee filed his return of income on 23.02.2023 declaring total income of Rs.2,62,89,700/-, which included Long-Term Capital Gain of Rs.2,57,31,619/- arising from sale of his share in an industrial constructed property (shed) situated at Gurugram. During the course of assessment proceedings, in response to the show-cause notice, the assessee furnished copies of the agreement to sell/sale dee ds relating to the purchase and sale of the aforesaid property as well as documents re lating to the purchase of the new capital asset. The assessee also furnished details of the construction carr ied out in the new capital asset and claimed exemption u/s 54F of the Act. However , the Assessing Officer did not accept the assessee's computation of Long-Term Capital Gain in full. The claim of indexed cost of acquisition, including the indexed co st of furniture, was restr icted, and the cost of construction claimed for the purpose of exemption under se ction 54F was also not accepted for want of supporting documentary evidence . Consequently, the Assessing Officer reworked the Long-Term Capital Gain at Rs.3,34,91,172/- as against Rs.2,57,31 ,619/- declared by the assessee and made an addition of Rs.77,59 ,553/- to the retur ned income.
Aggrieve d by the assessment order, the assessee filed appeal before the ld. CIT(A) who condoned the delay of 32 days in filing the appeal. During the appellate proceedings, various notices were issued to the assessee, however, the assessee did not respond to notices issued by the ld. CIT(A). Thereafter, the ld. CIT(A) proceeded to adjudicate the appeal on the basis of the material available on record and upheld the addition of Rs.77 ,59,553/- made by the AO .
Aggrieve d by the impugned order, the assessee is in appeal and has raised the following grounds of appeal:
“1.That both the learne d Commissioner o f Income-tax (Appeals) [“CIT(A)”] andthe Responde nt-NFAC (“AU”) erre d in law and on facts in dismissing the appe al vide impugned orde r dated 28.11.2025 and in upholding the i mpugnedreassessment orde r date d 29.03.2023 passe d u/s. 147 r.w.s. 144B of the Incometax Act, 1961 (“Act”) there by affirming addition of Rs.77,59,553/- as Long TermCapital Gain u/s 45 of the Act.
2.That the Ld. CIT(A) and AU failed to appreciate that the no tice issued u/s. 148and the consequential reassessment pro ceedings were bad in law, void ab initioand w ithout jurisdiction, inasmuch as the mandator y statutory requirements andj urisdictional conditio ns prescribed u/ss. 147, 148 and 148A of the Act we re notsatisfied.
3.T hat the Ld. CIT(A) and AU erred in law in not adjudicating the jurisdictionalgro und challenging reopening of assessment and in mechanically affirm ing there assessment solely on the basis of observations made by the Assessing Officer,the reby rende ring the appellate or der unsustainable in law vide R ajkumar A nandchand Jain v. DCIT , ITA No. 3092/Mum/2023 ( date d 07.02.2024).
4.That the Ld. C IT(A) and AU err ed in law and on facts in upholding the additio no f Rs.77,59,553/-made on account of re-computatio n of Long Te rm CapitalG ain, despite the fact that the Appell ant had duly furnished documentarye vide nce during assessment proceedings in support o f cost o f acquisitio n, cost ofimprovement and e xemptio n claimed unde r section 54F o f the Act.
5.That the Ld. CIT(A) and AU erred in confirm ing the disallo wance of indexedco st o f furni ture and fixtures, without appreciating that such furniture andfixtures formed an inte gral part of the industrial constr ucte d prope rty andconstituted ‘cost o f im provement’ within the meaning of section 55 o f the Actsame forming par t of an industrial asset qualify as cost o f improvement even ifnot se parate ly mentione d in sale deed.
6.That the L d. CIT(A) and AU to appreciate that merely because the sale dee ddescr ibed the asse t as an ‘industrial she d’, it could not be inferred that fur nitureand fixtures embedded therein had no existence or val ue, especially when theindustrial prope rty was used as a functional industrial unit.
7.That Ld. CIT(A) and AU failed to appreciate that exemptio n under section 54Fis a beneficial provision and ought to be construed liberally, and that denial ofsuch exemption on hyper- technical gro unds is contr ar y to the settled principleso f law.”
We have heard the ld. AR and the ld. DR. The ld. AR at the very outset, submitted that the assessee was prevented by unavoidable circumstances fro m effectively prosecuting the appeal before the ld. CIT(A). It was fur ther submitted that the assessee had already furnished substantial documentary evidence during the course of assessment proceedings, which was duly noticed by the Assessing Officer. It is submitted that the show-cause notice dated 20.03.2023, the assessee had submitted a detailed reply on 23.03.2023 along with computation of inco me and capital gain, copy of sale agreement, possession letter, sale deed of the sold pro perty, sale deed of the new asset, de tails of construction of the new property, Form-16, invoices, Form 26AS, self-declaration regar ding rental income and bank acco unt statement. It was, there fore, submitted that the issues involved required verification and appreciation of documentary evidence and that the assessee may be granted one more effective opportunity before the fir st appellate authority so that the issues may be decided afresh on merits.
The ld. DR, on the other hand, relied upon the orders of the authoritie s below.
We have heard the rival submissions and peruse d the material available on record.There is no dispute with regard to the fact that the asse ssee had furnished certain documentary evidence before the Assessing Officer in suppor t of his claim relating to computation of Long-Term Capital Gain and exemption u/s 54F of the Act. However, the Assessing O fficer did not accept the claim of indexed co st of acquisition to the extent it included the cost of furniture and fixtures, and also restr icted the claim u/s 54F of the Act on the ground that the cost of construction was not supported by sufficient documentary evidence. The Assessing O fficer accordingly made the addition of Rs.77,59,553/- as Long Term Capital Gain. It is evident from the order of the ld. CIT(A) that the assessee did not effectively participate in the appellate procee dings. Consequently, the ld. CIT(A) proceeded to adjudicate the appeal on the basis of the material available on record.In our considered view, the issues involved in the present appeal are essentially factual in nature and require proper examination of the documentary evide nce relating to acquisition of the or iginal property, investment in furniture and fixtures, sale consideration, investment in the new residential property and expe nditure incurred towards co nstructio n/improvement thereof.Considering the totality of the facts and circumstances of the case, and in the interest of substantial justice, we deem it appropriate to set aside the impugned order of the ld. CIT(A) and restore the matter to his file for fresh adjudication in accor dance with law after giving one more effective oppor tunity of hearing to the assessee.T he asse ssee/appellant is also directed to make the necessary submissions/ de tailed material before the ld. CIT(A) w ithin the period of 60 days of this order.
In the result, the appeal of the assessee is allowe d for statistical pur poses.