2021 (6) TMI 137 - AT - Income Tax

Disallowance of the exemption u/s 54 - capital gain taxable for the Assessment Year relevant - CIT(A) who sustained the findings of Assessing Officer and dismissed the appeal filed by the assessee - HELD THAT - From the finding of the Assessing Officer it is clear that one part of the direction was considered and another part regarding re-opening of the assessment or taxability of the correct Assessment Year was not considered. AO has failed to give appeal effect and Ld.CIT(A) mechanically sustained the finding of the Assessing Officer without giving any reason as to why the direction of Ld.CIT(A) regarding re-opening of the assessment for the purpose of taxability could not be given effect to. Under these undisputed facts the finding of Ld.CIT(A) cannot be sustained therefore the impugned order is set aside. The Assessing Officer is hereby directed to give effect to the order of the Ld.CIT(A) in accordance with law. It is clarified that the Assessing Officer would be at liberty to re-open the assessment for the relevant Assessment Year as directed by the Ld.CIT(A) in the original appellate proceedings if law so permit. The grounds raised by the assessee are allowed in terms as indicated above. Thus Grounds raised by the assessee are allowed.

Summary

Issues Involved:
1. Disallowance of exemption under Section 54 of the Income Tax Act, 1961.
2. Imposition of additional conditions by the Commissioner of Income Tax (Appeals) [CIT(A)].

Detailed Analysis:

1. Disallowance of Exemption under Section 54 of the Income Tax Act, 1961:
The primary issue in ITA No.3270/Del/2019 pertains to the disallowance of the exemption claimed under Section 54 of the Income Tax Act, 1961. The assessee sold a property on 08.11.2010 and claimed exemption under Section 54 based on the purchase of a new asset. The initial assessment under Section 143(3) concluded with an income of Rs. 4,55,84,363/- against the returned income of Rs. 27,37,571/-, disallowing the exemption claimed under Section 54.

The CIT(A) allowed the exemption but directed the assessee to submit a completion certificate or satisfactory progress certificate by 30.09.2017. The Assessing Officer, following this direction, framed an assessment order on 08.02.2018, denying the exemption due to non-production of the requisite documents. The CIT(A) upheld the Assessing Officer's decision, leading to the present appeal.

The Tribunal observed that the Assessing Officer failed to consider the direction regarding the reopening of the assessment for the correct assessment year. The Tribunal found that the Assessing Officer did not fully comply with the CIT(A)'s directions and that the CIT(A) mechanically sustained the Assessing Officer's findings without proper reasoning. Consequently, the Tribunal set aside the impugned order and directed the Assessing Officer to give effect to the CIT(A)'s original order, allowing the grounds raised by the assessee.

2. Imposition of Additional Conditions by the CIT(A):
In ITA No.5559/Del/2018, the issue revolves around the imposition of additional conditions by the CIT(A) while allowing the exemption under Section 54. The CIT(A) had directed the assessee to submit a completion certificate by a specified date, failing which the exemption would not be granted. The assessee argued that such conditions are not prescribed under the Act and that the CIT(A) is not empowered to impose them.

The Tribunal noted that the Assessing Officer had already passed the assessment order, rendering the appeal infructuous. Therefore, the Tribunal dismissed this appeal as infructuous.

Conclusion:
In conclusion, the Tribunal allowed the appeal in ITA No.3270/Del/2019, directing the Assessing Officer to give effect to the CIT(A)'s original order and consider reopening the assessment for the relevant assessment year if permissible by law. The appeal in ITA No.5559/Del/2018 was dismissed as infructuous since the assessment order had already been passed. This decision was pronounced on 03rd June 2021, following a virtual hearing.