Pranav B Prem

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has remitted the addition made on account of capital gains deduction to the Assessing Officer for fresh adjudication, after observing that the remand report sought by the Commissioner of Income Tax (Appeals) [CIT(A)] was never furnished by the Assessing Officer despite multiple reminders. The Tribunal was considering the assessee’s claim that the disputed amount was exempt under Section 10(10D) of the Income Tax Act as it represented maturity proceeds from life insurance policies.

Also Read: ITAT Mumbai Rules, Refund Of Capital Advance From Karta To HUF Is Capital Receipt; Commercial Use Of Capital Does Not Convert It Into Income

The single-member Bench comprising Mahavir Singh (Vice President) noted that the assessee had filed her return for AY 2018–19 declaring total income of ₹15,57,940. During scrutiny, the Assessing Officer observed that the Schedule CG of the return reflected long-term capital gains of ₹2,99,38,656 on which deduction under Section 54 had been claimed. The Assessing Officer highlighted that the figure included ₹17,21,385 from HDFC Mutual Fund, yet no corresponding investment had been shown in the return of the preceding year (AY 2017–18). On this basis, the Assessing Officer made an addition under Section 69 read with Section 115BBE treating the amount as unexplained investment and completed the assessment at ₹32,79,330.

In appeal before the NFAC, the assessee submitted that the amount in question was not a capital gain from mutual funds but rather the proceeds from maturity of Unit Linked Insurance Plans (ULIPs). She explained that the premiums for these policies had been paid by her parents and therefore did not appear in her own books of accounts. It was further contended that the receipts qualified as exempt income under Section 10(10D) of the Act, being sums received under a life insurance policy. Although this exemption had not been specifically claimed in the return, the assessee submitted that she was nevertheless eligible for relief.

Also Read: Delhi ITAT Allows Full Foreign Tax Credit to Canon India for Taxes Withheld in Japan Despite Nil Indian Tax Liability

The CIT(A) admitted the additional evidence filed by the assessee and sought a remand report from the Assessing Officer. The Tribunal noted that the CIT(A) had issued six reminders to the Assessing Officer but received no response. In the absence of a remand report, the appellate authority adjudicated the matter on merits and upheld the addition on the ground that the exemption under Section 10(10D) had not been claimed in the original return and therefore could not be entertained in appellate proceedings. The CIT(A) held that the scope of appellate powers was confined to issues already raised before the Assessing Officer, and hence the new ground could not be admitted.

After hearing the Departmental Representative and examining the record, the ITAT observed that the CIT(A) had admitted additional evidence but could not obtain verification from the Assessing Officer due to his non-compliance. Given this procedural deficiency, the Tribunal found it appropriate to send the matter back for fresh determination. The Bench directed the Assessing Officer to examine the assessee’s additional evidence and adjudicate the matter afresh after granting adequate opportunity of being heard. It also directed the assessee to furnish all required documents and cooperate fully during the reassessment process.

Also Read: Delhi ITAT Quashes TDS Demand, Says Dept. Cannot Invoke Multiple Provisions to Fasten Liability on EDC Payments to HUDA

The ITAT set aside the order of the CIT(A) and remitted the issue to the Assessing Officer for fresh adjudication after verifying the additional evidence. The appeal was therefore allowed for statistical purposes in favour of the assessee.

Appearance

Appellant by: None

Respondent by: Shri Manoj Kumar, Sr. DR

Cause Title: Anupama Agarwal vs. DCIT

Case No: ITA No. 5676/Del/2025

Coram: Mr. Mahavir Singh (Vice President)