Think, if you have done everything right according to the law. Sold the land, put money in buying a house and filed returns for tax exemption, but only a tax notice of crores comes on writing section number wrong? Something similar happened with the border of Patna. Seema claimed a tax exemption in the wrong section by selling assets worth Rs 4.5 crore. This was a small typing fault, but because of this he had to go to court. But after years of fighting, ITAT Patna finally clarified that the rights cannot be taken away due to the mistake.
How did this case begin?
In 2016, Seema sold its land in Danapur, Patna for Rs 4.5 crore. He received a long -term capital gain (LTCG) of about Rs 2.58 crore from this sale. According to the law, if someone spends this amount in buying a house, then there is a tax exemption. Seema also bought a new house in Delhi on 5 November 2016 for Rs 2.62 crore.
Now the real mess took place here. While filing ITR, the limit claimed exemption under section 54, while the correct section should have been 54F. The difference is that Section 54 applies only when you sell your residential house and buy another house. But if you have sold the land or other property to buy that money in buying a house, then the case comes under Section 54F. That is, Seema followed the rules, but wrote the section wrong.
Income tax department raised questions
Catching this mistake in the ITR of the border, the Income Tax Department sent a notice in 2019. Despite calling several times, he did not respond. Finally, on 28 December 2019, the tax assessment officer (AO) rejected his exemption. The matter proceeded and in 2024 CIT (A) i.e. Appeal Commissioner also rejected the appeal. Seema did not give up and knocked on the door of ITAT Patna in 2025.
What did ITat say?
ITAT judges George Maithon and Rakesh Mishra clarified that Seema only accidentally mentioned the wrong section, while the investment was made according to the rules. In such a situation, it is wrong to exempt tax exemption. He also cited the old circular of CBDT 1955, which clearly states that the tax officer should not take advantage of the taxpayers’ ignorance, but should give them the benefit of their rights.
The tribunal sent the case back to the AO and said that the border exemption under Section 54F should be accepted and they should be given full opportunity to present evidence. On 6 June 2025, ITAT Patna ordered that the appeal of the border is partially accepted. Now AO will have to re -examine the case and give relief under Section 54F. That is, now the way has been cleared to get relief from LTCG tax of Rs 2.58 crore for the limit.
The biggest learning from this case is that it is very important to write the right currents and provisions while filing ITR. Even a small mistake can turn into a big tax dispute. However, ITAT’s decision has given relief to taxpayers that their real rights should not be taken away due to any technical mistake.
