ITAT Sends Back Section 54F Claim for Fresh Examination; Stamp Duty Value Addition Also Reopened:

ITAT Sends Back Section 54F Claim for Fresh Examination; Stamp Duty Value Addition Also Reopened An individual taxpayer from Pune, filed his return for AY 2020-21, reporting income from business, capital gains, and other sources. During scrutiny, the Assessing Officer noticed that the assessee had sold two small plots and invested the sale proceeds in a new residential property purchased jointly with his wife. The assessee claimed a deduction under Section 54F based on the full investment of Rs. 1.55 crore. However, owing to later non-compliance with notices, the AO completed the assessment ex-parte under Section 144, treating the difference between the ready reckoner value and the stamp duty paid as “misreported” value and made an addition of Rs. 75.33 lakh. The CIT(A) dismissed the appeal, holding that since the returns were declared invalid by the AO, the appeal itself was infructuous. Aggrieved, the assessee approached the ITAT. Main Issue: Whether the assessee’s Section 54F deduction and related stamp-value addition were wrongly disallowed due to incorrect facts, technical errors regarding return validity and lack of proper opportunity during assessment. ITAT Held: The Tribunal noted that the AO had adopted an incorrect approach by comparing the stamp duty paid with the ready reckoner value, two figures that are never meant to be compared. It also observed that the assessee had submitted evidence demonstrating that the entire investment in the new residential property was made from his own funds and that the inclusion of his spouse’s name did not affect his eligibility for Section 54F relief. The Tribunal further found merit in the claim that CPC had condoned the delay and treated the returns as valid, contrary to the assumption made by both the AO and CIT(A). The ITAT held that the matter required a fresh and fair examination. The entire issue was remanded to the Assessing Officer for a de novo assessment, with directions to consider all submissions and evidence already on record. To Read Full Judgment, Download PDF Given Below