The AO observed that aside from purchasing land jointly with K, he bought vacant land from his spouse, sold some of the land, and bought a brand-new house, the assessee had claimed an exemption under section 54F. The AO denied the exemption because the assesee failed to produce documents for the same transactions and he also owned other properties. Since the property was sold when possession was transferred on receipt of full consideration and the Assessing Officer had not taken into account that on the date of transfer, the other property was only landed property, the Commissioner (Appeals) allowed the assessee’s claim, subject to the Assessing Officer’s verification of documents. This did not disqualify the assessee’s claim of deduction. The Revenue contends that the Assessing Officer did not have the authority under section 251(1)(a) to set aside or reexamine the Commissioner (Appeals’) directive to the Assessing Officer to check and approve the assessee’s claim of deduction.

On several appeals by both, the final decision stands as follows. Rejecting the Revenue’s appeal and granting the Assessee’s, it was determined that (i) the Commissioner (Appeals) had simply instructed the Assessing Officer to review the supporting documentation and had only, in theory, approved the claim of deduction under section 54F. This was not the same as putting the matter on hold or returning it to the Assessing Officer. No infraction of section 251(1)(a) occurred. It was observed that it was not clear as to how the AO had given enough chances to the assessee to prove its claim and furnish the document. As a result, the assessee was given one more chance to produce documents on various counts.  (AY.2012-13 to 2014-15)