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Amtula Tasneen Heera Banu Vs ITO (ITAT Chennai)
54F Claim Rejected on Technicalities – Best-Judgment Addition of ₹3.10 Cr u/s 69A Set Aside; Matter Remanded—Penalty u/s 271AAC Also Cancelled
Assessee, a 70-year-old senior citizen, sold property for ₹3.10 Cr (TDS ₹3,10,000) in AY 2018-19 but did not file ROI, stating that entire sale consideration was re-invested in new residential property of ₹3.07 Cr, making her eligible for exemption u/s 54F. AO issued notice u/s 148 (30.03.2022) & finding no response, completed best-judgment assessment u/s 144 r.w.s.147, treating full ₹3.10 Cr as unexplained money u/s 69A & taxing it u/s 115BBE. Demand raised: ₹3.66 Cr.
Before CIT(A), Assessee produced Sale Deed, Purchase Deed, bank statements & computation claiming s.54F exemption. CIT(A) refused to consider documents on hyper-technical grounds—no Rule 46A application, no certified copies, no affidavit—without giving opportunity to cure defects. CIT(A) also confirmed penalty u/s 271AAC(1).
Tribunal noted that natural justice was violated:
- Notices were sent to an email of a firm dissolved in 2015.
- CIT(A) mechanically rejected crucial evidence instead of allowing proper filing.
- Penalty was passed on the very day reply was due (23.05.2025).
Relying on TIN Box Co. (SC, 249 ITR 216), Tribunal held that when proper opportunity is lacking, entire matter must be restored.
Thus, quantum assessment is remanded de novo to AO with direction to consider all documents including Sale Deed & Purchase Deed and decide s.54F claim on merits. Since quantum is remanded, penalty u/s 271AAC(1) is cancelled.
Appeals allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
These are appeals preferred by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)/NFAC, (hereinafter referred to as ‘Ld.CIT(A)‘), Delhi, dated 21.05.2025 against confirming the quantum assessment; and order dated 23.05.2025 against confirming the penalty u/s.271AAC(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act‘) for the Assessment Year (hereinafter referred to as ‘AY‘) 2018-19.
2. The brief facts are that the assessee claims to be a senior citizen of around 70 years old and admittedly didn’t file any return of income (RoI) for AY 2018-19. The AO noticed that despite the assessee having sold immovable property for a consideration of ₹3.10 Crs. [after deducting TDS] didn’t file any RoI, formed a view that there was escarpment of income; and consequently, issued notice u/s.148 of the Act on 30.03.2022 and framed best judgment assessment u/s.144 of the Act, finding no response from assessee to his several notices. Thus, the AO added ₹3.10 Crs. u/s.69A of the Act and taxed it u/s.115BBE of the Act and raised a demand of ₹3,66,49,675/- by passing assessment order dated 15.02.2023 u/s.144 r.w.s.147 of the Act.
3. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) wherein the assessee is noted to have brought to the notice of the Ld.CIT(A) that she sold her immovable property for ₹3.10 Crs. on which TDS was duly deducted at ₹3,10,000/-. According to assessee, from the ibid sale consideration she received, she had invested ₹3,07,00,000/- in purchasing another immovable property and hence, claimed deduction u/s.54F of the Act. And since she has promptly invested the gain from the transaction in another immovable property, there was no tax liability left to be offered for tax, she didn’t file the ITR/RoI. The Ld.CIT(A) didn’t entertain the aforesaid claim of the assessee (section 54 deduction) on the plea that assessee failed to (i) file the certified copy of the Sale-Deed of her property, by virtue of it she received an amount of ₹3.10 Crs.; and (ii) assessee failed to file the certified true copy of document to prove that assessee had made investment in another immovable property. Further, according to the Ld.CIT(A), the assessee’s fresh claim (deduction u/s.54F) can’t be entertained since the assessee didn’t file any application under Rule 46A of the Income Tax Rules, 1962 (hereinafter referred to as ‘the Rules‘) for admission of fresh evidences. Therefore, he rejected the claim made by the assessee and confirmed the action of the AO. Aggrieved by the aforesaid action of the Ld.CIT(A) dated 21.05.2025, the assessee filed ITA No.1959/Chny/2025.
4. Meanwhile, the AO is noted to have initiated penalty u/s.271AAC(1) of the Act and since, he has made addition u/s.69A of the Act of ₹3.10 Crs. vide assessment order dated 23.02.2023 [passed u/s.144 of the Act], the AO issued penalty notice u/s.271AAC(1) of the Act on 15.02.2022. And having noted that assessee didn’t respond to his notice, he passed an ex parte order levying penalty of ₹18,60,000/- [computed @10% on the value of tax payable u/s.115BBE(1)(i) of the Act of ₹1,86,000,00/-]. On appeal, the Ld.CIT(A) has confirmed the penalty vide order dated 23.05.2025. Aggrieved, the assessee has filed appeal i.e. ITA No.1960/Chny/2025.
5. Having heard both the parties and after perusal of the records, it is noted that the AO has passed best judgment assessment u/s.144 of the Act by making addition u/s.69A of the Act of the entire consideration received from the sale of an immovable property to the tune of ₹3.10 Crs. Likewise, he has levied a penalty u/s.271AAC(1) of the Act of ₹18,60,000/-. The Ld.CIT(A) is noted to have confirmed both the actions. The main grievance of the assessee is that the AO has framed the assessment without giving proper opportunity to the assessee. In order to demonstrate such a contention, the Ld.AR submitted that the notices were sent to the e-mail of the firm which was dissolved in the year 2015. Hence, according to the assessee, she was in the dark about the assessment proceedings going on against her. Likewise, while penalty proceedings were going on, the AO had given time to respond till 23.05.2025. However, it was pointed out that the AO hurriedly passed penalty on the same day i.e. 23.05.2025 before the assessee could upload the reply. Further, it was brought to our notice that on appeal, before the Ld.CIT(A), the assessee had duly filed the copy of the Sale-Deed (proving sale of her immovable property) and agreement for purchase of property (for claiming deduction u/s54F) as well as copy of bank statement, computation of total income with capital gains etc., but the Ld.CIT(A) on hyper/flimsical technical grounds has rejected the same. [i.e. failure to file application under Rule 46A, certified true copy (CTC) of sale of immovable property and CTC of documents to prove investments, non-filing of affidavit]. Such an impugned action of the Ld.CIT(A) can’t be countenanced by us for the reason that if the Ld.CIT(A) was of the view that the assessee failed to file certified true copy of the Sale Deed/Purchase Deed then he ought to have given opportunity to the assessee to file/upload the same. Likewise, if he felt that the assessee failed to file the application under Rule 46A along with an affidavit, then in all fairness, he should have asked the assessee to do so. Without doing so, he ought not to have rejected the grounds of appeal raised by the assessee wherein assessee had claimed deduction u/s.54F of the Act. Therefore, we find the impugned action of the Ld.CIT(A) to be fragile for non-adherence to natural justice. Hence, we set aside the impugned action of the Ld.CIT(A) and restore the assessment back to the file of the AO for de novo assessment by relying on the decision of the Hon’ble Supreme Court in the case of TIN Box Co. v. CIT reported in [2001] 249 ITR 216 (SC). The assessee is directed to file/upload all the relevant documents to prove its claim without fail and failing which, the AO to take action in accordance to law.
6. Since the quantum assessment has been restored back to the file of the AO, the penalty levied doesn’t survive and is cancelled.
7. In the result, appeals filed by the assessee are allowed for statistical purposes.
Order pronounced on the 04th day of December, 2025, in Chennai.
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