Considering the same circumstances and issues as those decided in the previous case, the ITAT takes the same stand and allows the exemption under section 54B

The Raipur Bench of Income Tax Appellate Tribunal (ITAT) ruled that the capital gain exemption shall not be denied just because the claim was made additionally in the revision assessment. The tribunal stated that if the assessee meets all the conditions of exemption 56B of the Income Tax Act, the AO cannot deny it. Assessee, Rahul Kumar Jain filed his income tax return for the assessment year 2009-10 declaring Rs. 1,00,000 as the total income. The assessing officer found that the assessee sold urban land in Dharampura for Rs. 20,00,000, jointly with Raja Vikram but failed to report the capital gains in his initial return which led to a reassessment under section 148 of the Income Tax Act, 1961.  The assessing officer formulated Rs. 9,00,585 as an escaped assessment, recorded the reasons to believe notice under section 148 of the Income Tax Act, and issued a notice to the assessee. The assessee complied with the notices and responded accordingly. However, the AO found the replies non-satisfactory and additions were made. Get a Copy of Income Tax Rules with FREE e-book access, Click here During the reassessment period, the assessee revised the income tax return and claimed an exemption under section 54B of the Income Tax Act, which was disallowed by the assessing officer. The AO completed the assessment by adding Rs. 27,07,443 as assessed income. Aggrieved by this decision, the assessee appealed against the order of the AO before the Commissioner of Income Tax (Appeals) where the decision ended up in favor of the assessee. Being Aggrieved by the CIT(A) order, the revenue appealed before the ITAT, Raipur. The Revenue questioned whether CIT(A) was justified in allowing the deduction of Rs. 4,31,581 under section 54B of the Income Tax Act, 1961. The legal representative of revenue, G.N Singh argued that the exemption under section 54B was invalid because it was not claimed in the original income tax return but filed after the notice under section 148. The revenue’s counsel argued that the claim was only made in response to the reassessment notice under Section 148, which the AO contended was time-barred and not in accordance with the Act. The assessee’s counsel relied on the CIT(A) order and argued that the Assessing Officer (AO) had misinterpreted the facts of the case. Get a Copy of Income Tax Rules with FREE e-book access, Click here The two-member bench comprising Ravish Sood (Judicial Member) and Jamlappa D Battull (Accountant Member) observed that the issue in this case is directly covered by the decision of this tribunal in ITO vs. Shri Rajavikram. In that case, the tribunal granted an exemption under section 54B to a co-owner of the land stating AO cannot deny an exemption just because the assessee raised an additional claim later. In the absence of any development or new material, the tribunal has no reason to decide the issue on a different stand. The tribunal decided the issue in favor of the assessee and dismissed the appeal of the revenue.