The assessee sold property valued at Rs.13,22,629 for the purpose of stamp duty, for a consideration of Rs.10 lakhs during 2007-08. The valuation amount was considered for the purpose of calculating capital gain under Section 50 of the Act. The Assessing Officer allowed the exemption under section 54 to the extent of Rs. 6.60 lakhs for which the assessee purchased the residential plot but denied the exemption to the extent of Rs. 9,19,435 towards the cost of construction of the new house on the ground that the assessee had not produced any supporting evidence to show that the house was completed within the stipulated period provided under section.

On appeal, the CIT (A) confirmed the order passed by the AO since no valuation report of the constructed house was filed.

However, the Tribunal held that bank account statement showing withdrawal of money from time to time as well as various bills and vouchers towards purchase of construction material which were produced by the assessee showed that construction was completed within the stipulated time under section 54F. Further, the Assessing Officer had not disputed the fact that the house was finally constructed by the assesse although there was dispute regarding the cost of construction. Thus, rejection of the claim of the assesse without any enquiry and based on suspicion was not justified after the assesse had produced evidence of construction. (AY. 2007-08)