No Requirement To Disclose Amount Of Sale Consideration Received In Cash While Claiming Exemption U/S.54 Income Tax Act: Gujarat HC
Ashwinbhai Babubhai Dudhat v. The Interim Board For Settlement (CA 20186 of 2023)
Facts:
1. The Petitioner was subjected to search proceedings by the Income Tax Authority under Section 132 of the Act on March 6, 2018. During search proceedings, it was alleged various incriminating material and documents were found and seized and proceedings for assessment under Section 153A of the Act commenced.
2. Petitioner thereafter filed an application before the Settlement Commission for the period from A.Y. 2011–12 to 2018–19 disclosing the total income of Rs.2,99,15,288/-. The petitioner stated that the undisclosed income has been earned by carrying out transactions for the buying and selling of land. The petitioner also declared unaccounted investment in the construction of a bungalow out of unaccounted sale proceeds for the sale of properties.
3. The petitioner, inter alia, claimed exemption under Section 54 of the IT Act on long-term capital gains earned on the sale of residential bungalows before Respondent No. 1. He also filed a rectification application, which was not decided.
4. A petition was filed under Article 227 of the Constitution praying for setting aside the order passed by the Interim Board for Settlement, so far as it rejects the claim of the exemption under Section 54 of the IT Act amounting to Rs.2,40,14,000/- for Assessment Year 2016-17.
Hon Gujarat HC held as below:
1. We find that the respondent no.1-Board has committed serious error in law in disallowing the claim of the petitioner inasmuch as the petitioner is entitled to the deduction under Section 54 of the Act considering the claim made by the petitioner in respect of cash portion of Rs.2,40,14,000/- also as the petitioner has already disclosed such sale consideration as part of the undisclosed income and it is not in dispute that the petitioner has made investment for purchase of the property at Sahajanand Bungalows.
2. On bare perusal of the above provisions, the Settlement Commission/ Board is required to pass order in accordance with the provisions of the Act. Therefore, the grounds for rejection given by the board for denying the deduction under Section 54 of the Act apparently are not in accordance with the provisions of Section 54 of the Act.
3. The impugned order passed by the Settlement Commission under Section 245D(4) of the Act to be modified to such extent by directing the Respondent Authority to grant deduction under Section 54 of the Act as claimed by the petitioner.
The Copy Of the Order as Under:
