AO Can’t Deny Sec. 54 Relief to Non-Resident Merely on Ground That She Didn’t File ITR Claiming Deduction | ITAT

Case Details: Seema Heera vs. ACIT - [2024] 164 taxmann.com 329 (Mumbai-Trib.)

Judiciary and Counsel Details

• Pavan Kumar Gadale, Judicial Member & Girish Agrawal, Accountant Member
• Dharan Gandhi, Adv. for the Appellant.
• Ms Rajeshwari Menon, Sr. DR for the Respondent.

Facts of the Case

The assessee was a non-resident. During the relevant assessment year, the assessee transferred an immovable property for a consideration of Rs 2 crores. However, the assessee failed to file the return of income for that assessment year. Considering that the assessee transferred an immovable property, the Assessing Officer (AO) issued a notice under section 148.

In response, the assessee neither filed her return in response to the notice under section 148 nor complied with various notices issued. Accordingly, the assessment order was passed ex parte by the AO, which treated the entire receipt of Rs 2 crores as unexplained short-term capital gain and added it to the assessee’s total income.
On appeal, the CIT(A) upheld the AO’s order. The aggrieved assessee filed the instant appeal before the Tribunal.

ITAT Held

The Tribunal held that the assessee had failed to claim the benefit in her return but made all the efforts by furnishing the required details with corroborative documentary evidence before the First Appellate Authority and the AO in the remand proceedings.

It is a settled position of law that no tax can be levied or recovered without the authority of law. Further, the AO had accepted in the remand report that all the conditions of section 54 for claiming deduction were satisfied.

The denial of the claim was only on technical grounds that the assessee had not furnished the return of income claiming such deduction. Substantively, when the law confers a benefit on the assessee under the statute, the authority cannot take it away on mere technicalities.

Thus, the matter was remanded to the AO to recompute the assessee’s taxable total income by considering the benefit available under section 54.

List of Cases Reviewed

• Sneh Lata Jain v. CIT [2004] 140 Taxman 156 (J&K)
• Goetze (India) Ltd. v. CIT [2006] 157 Taxman 1 (SC)/[2006] 284 ITR 323 (SC) (para 10) followed.

List of Cases Referred to

• Goetze (India) Ltd. v. CIT [2006] 157 Taxman 1/284 ITR 323 (SC) (para 4.1)
• Sneh Lata Jain v. CIT [2004] Taxman 156 (para 9.2).