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Having regard to the facts and circumstances, where the assessee is a farmer and a senior citizen, the claim of deduction U/s 54F of the Act cannot be denied without verification of the fact of utilization of the sale consideration for construction of the house. Since it is acaseof non-filing of return of income and the A.O. has issued notice U/s 148 of the Act for assessing the capital gain in the hands of the assessee, therefore, there is no bar in claiming the deduction U/s 54F of the Act against the capital gain proposed to be taxed by the A.O. in the proceedings U/s 147 of the Act.Hence, the issue of deduction U/s 54F of the Act is required to be considered and decided after considering the facts of utilization of sale proceed in construction of new residential house.

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Sec. 54F & 147 of Income Tax Act, 1961 - Reassessment - The assessee is a farmer and more than 70 years old. There is a capital gain arising from sale of capital asset. Since the assessee did not appear before the authorities below and therefore, the relevant documentary evidence in support of the claim of deduction U/s 54F of the Act could not be produced, thus, the assessee prayed for one more opportunity of hearing to present his case before the authorities below and to produce the evidence in support of claim of deduction U/s 54F of the Act. The respondent objected the prayer of the assessee. ITAI held ”Having regard to the facts and circumstances, where the assessee is a farmer and a senior citizen, the claim of deduction U/s 54F of the Act cannot be denied without verification of the fact of utilization of the sale consideration for construction of the house. Since it is a case of non-filing of return of income and the A.O. has issued notice U/s 148 of the Act for assessing the capital gain in the hands of the assessee, therefore, there is no bar in claiming the deduction U/s 54F of the Act against the capital gain proposed to be taxed by the A.O. in the proceedings U/s 147 of the Act. Hence, the issue of deduction U/s 54F of the Act is required to be considered and decided after considering the facts of utilization of sale proceed in construction of new residential house. Therefore, in the substantial interest of justice, set aside the matter back to the record of the A.O. for deciding the same afresh after giving due and reasonable opportunity of hearing of the assessee“. Appeal of the assessee allowed.—SHRI PYARE LAL SAINI vs. ITO. [2020] 26 ITCD Online 027 (ITAT-JAIPUR)