Sh. Adarsh Kumar, New Delhi V. DCIT, New Delhi

CO 34/DEL/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3789 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-05-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 08-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K TIWARI
• Assessee Lawyers: NIPUN JAIN
• Keywords: Capital asset; Search and seizure; Rule of consistency
• Section: 143(3); 54F; 142(1); 54; 6; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'G, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 5331/DEL/2015 A.Y. 2012-13 DCIT, CC-19, VS. SH. ADARSH KUMAR, NEW DELHI 23, SUDHARSHAN APARTMENT, I.P. ROOM NO. 104, ARA CENTRE, EXTENSION, NEW DELHI 9 2 E-2, JHANDEWALAN EXTN., (PAN: AAAPK6345G) NEW DELHI (APPELLANT) (RESPONDENT) AND C.O. NO. 34/DEL/2016 (IN ITA NO. 5331/DEL/2015) A.Y. 2012-13 SH. ADARSH KUMAR, VS. DCIT, CC-19, 23, SUDHARSHAN APARTMENT, NEW DELHI I.P. EXTENSION, NEW DELHI 92 (APPELLANT) (RESPONDENT) DEPARTMENT BY : SH. K. TIWARI, SR. DR ASSESSEE BY : SH. AMIT GOYAL, CA & SH. NIPUN JA IN, CA ORDER PER H.S. SIDHU, JM : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS-XXVII), NEW DELHI DATED 09.06.2015 PERTAINING TO ASSESSMENT YEAR 2012-13 AN D THE CROSS 2 OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF TH E IMPUGNED ORDER. SINCE THE ISSUES INVOLVED IN THIS APPEAL AND CROSS OBJECT ION ARE INTER-CONNECTED, HENCE, THE SAME ARE BEING DISPOSED OF BY THIS COMMO N ORDER FOR THE SAKE OF CONVENIENCE, BY FIRST DEALING WITH REVENUES APP EAL. 2. THE GROUNDS RAISED IN THE REVENUES APPEAL READ AS UNDER:- 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DELETING THE ADDITION OF RS. 1,16,88,825/ - MADE BY THE AO. 2. (A) THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 3. THE GROUNDS RAISED IN THE ASSESSEES CROSS OBJE CTION READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ADDITION OF RS. 1,16,88,825/- ON ACCOUNT OF DISALLOWANCE OF DEDUCTION U/S. 54F OF THE INCOME TA X ACT, 1961 IS ERRONEOUS AND WITHOUT JURISDICTION. 2. THE ASSESSMENT MADE UNDER SECTION 143(3) IS WIT HOUT JURISDICTION. 3 THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTH ER. THE APPELLANT CRAVES LEAVE TO ADD ONE OR MORE GROUN D OF APPEAL OR TO ALTER / MODIFY THE EXISTING GROUND BEF ORE OR AT THE TIME OF HEARING OF APPEAL. . 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL WHO DURING THE YEAR UNDER CONSIDERATION DERIVED INCOME FROM 'SALARY', 'HOUSE PROPERTY' AND 'OTHER SOURCES. BESIDES, DURING THE Y EAR UNDER CONSIDERATION, THE ASSESSEE ALSO IN RECEIPT OF RS.1 ,89,68,895/- ON ACCOUNT OF SALE OF SHARES OF M/S IENERGIZER LTD. OUT OF WH ICH HE CLAIMED AS DEDUCTION U/S 54F OF THE I. T. ACT, 1961 AMOUNTING TO RS.1,16,77,825/- AND OFFERED THE BALANCE AMOUNT OF RS.72,91,070/- FO R TAXATION UNDER THE HEAD LONG TERM CAPITAL GAIN. A SEARCH AND SEIZURE O PERATION U/S 132 OF THE INCOME TAX ACT, 1961 WAS CONDUCTED BY THE INVESTIGA TION WING OF THE DEPARTMENT ON 22.03.2012 IN M/S FOCUS ENERGY GROUP OF CASES. SIMULTANEOUS SEARCH OPERATION UNDER SECTION 132 OF THE I. T. ACT, 1961 WAS ALSO CARRIED OUT AT THE BUSINESS PREMISES OF M/ S GRANADA SERVICES PVT. LTD., M/S I ENERGIZER IT SERVICES PVT. LTD., M /S IENERGIZER INDIA PVT. LTD. & ISERVICES INDIA PVT. LTD. AT A-37, SECTOR-60 , NOIDA. IN THE COURSE OF SEARCH OPERATION AT THE ABOVE PREMISES CERTAIN INCR IMINATING DOCUMENTS PERTAINING TO THE APPELLANT WERE FOUND AND SEIZED. THE CASE OF THE ASSESSEE WAS CENTRALIZED WITH THE CENTRAL CIRCLE-10 , NEW DELHI VIDE ORDER ULS 127 DATED 31.3.2013 NOW RESTRUCTURED AS CENTRAL CIRCLE-19, NEW DELHI. THE ASSESSEE FILED HIS RETURN OF INCOME ON 2 7.07.2012 DECLARING A TOTAL INCOME OF RS.2,71,44,880/-. THEREAFTER, NOTIC ES ULS 143(2), 142(1) OF THE ACT AND A DETAILED QUESTIONNAIRE WERE ISSUED AND SERVED UPON THE APPELLANT. IN RESPONSE TO THE SAME, THE ARS OF THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS AND FILED NECESSARY DETAILS, INFORMATION AND DOCUMENTS CALLED FROM TIME TO TIME, WHICH WERE CONS IDERED BY THE ASSESSING OFFICER. THEREAFTER, THE ASSESSMENT WAS C OMPLETED U/S. 143(3) 4 OF THE ACT DATED 25.03.2014 AT A TOTAL INCOME OF RS .3,89,41,516/- BY MAKING THE ADDITION OF RS.1,16,88,825/- AND DISALLO WING THE ASSESSEES CLAIM OF DEDUCTION ULS 54F OF THE I. T. ACT, 1961. AGGRIEVED WITH THE ASSESSMENT ORDER DATED 25.3.2014, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER DATED 09.6.2015 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. AGAINST THE IMPUGNED O RDER, THE REVENUE IS IN APPEAL BEFORE US AND ASSESSEE HAS FILED THE CROS S OBJECTION. 5. LD. DR RELIED UPON THE ORDER OF THE AO AND REITE RATED THE CONTENTIONS RAISED IN THE GROUNDS OF APPEAL. 6. ON THE CONTRARY, THE LD. COUNSEL OF THE ASSESSEE HAS RELIED UPON THE ORDER OF THE LD. CIT(A) AND STATED HE HAS PASSE D A WELL REASONED ORDER, WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. TO SUPPORT HIS CONTENTION, HE ALSO RELIED UPON AND FILED THE COPY OF THE DECISION OF THE ITAT, E BENCH, DELHI DATED 4.8.2017 IN THE CASE O F ACIT VS. MOHINDER KUMAR JAIN IN WHICH IDENTICAL ISSUE WAS DECIDED I N FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE IMPUGNED ORDER. WE FIND THAT ASSESSEE HAS CLAIM ED DEDUCTION AMOUNTING TO RS.1,16,88,825/- U/S 54F OF THE INCOME TAX ACT, 1961. THE DEDUCTION HAS BEEN CLAIMED IN RESPECT OF CAPITAL GA IN ARISING ON SALE OF LONG TERM CAPITAL ASSET BEING SHARES OF A COMPANY. THERE IS NO DISPUTE BY THE ASSESSING OFFICER THAT THE CAPITAL GAIN ARISING TO THE ASSESSEE WAS A LONG TERM CAPITAL GAIN. THERE IS ALSO NO DISPUTE BY THE ASSESSING OFFICER WITH REGARD TO AMOUNT OF INVESTMENT MADE BY THE APP ELLANT FOR CLAIMING DEDUCTION U/S 54F. WE NOTE THAT THE DISPUTE BY THE ASSESSING OFFICER IS THAT THE ASSESSEE IS NOT ENTITLED TO CLAIM OF DEDUC TION U/S 54F OF THE ACT BECAUSE AS ON THE DATE OF SALE OF LONG TERM CAPITAL ASSET, THE ASSESSEE 5 WAS OWNING MORE THAN TWO IMMOVABLE PROPERTIES. WE HAVE GONE THROUGH THE PROVISIONS OF SECTION 54F OF THE INCOME TAX ACT , 1961 AS PER WHICH DEDUCTION U/S 54F IS NOT ALLOWABLE IF (1) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THE NEW ASSETS ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET AND 2) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHE R THAN ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSETS, IS CHARGEABLE UNDER THE HEAD OF INCOME FROM HOUSE PROPERTY'. AFT ER PERUSAL OF AFORESAID PROVISIONS WOULD REVEAL THAT THE RESTRICT ION FOR CLAIMING DEDUCTION U/S 54F OF THE ACT WOULD APPLY ONLY IF TH E AFORESAID TWO CONDITIONS ARE SATISFIED. THE WORD USED BY THE LEGI SLATURE IN THE AFORESAID TWO CONDITIONS IS 'AND' MEANING THEREBY THAT BOTH T HE CONDITIONS ARE REQUIRED TO BE FULFILLED FOR DISENTITLING THE ASSES SEE FROM CLAIM OF DEDUCTION U/S 54F. HOWEVER, IN THE INSTANT CASE, TH E ASSESSEE WAS OWNING ONLY ONE ASSET I.E. FLAT NO. 5006, 5TH FLOOR, ROYAL GARDEN ESTATE, SECTOR- 61 GHAZIABAD, THE INCOME OF WHICH WAS CHARGEABLE UN DER THE HEAD 'INCOME FROM HOUSE PROPERTY'. THE OTHER FOUR PROPER TIES MENTIONED BY THE ASSESSING OFFICER WERE NOT CHARGEABLE TO TAX UN DER THE HEAD 'INCOME FROM HOUSE PROPERTY'. THIS POSITION IS NOT DISPUTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HIMSELF ASSESSED ONL Y ONE PROPERTY I.E. FLAT NO. 5006, 5TH FLOOR, ROYAL GARDEN ESTATE, SECTOR-61 , GHAZIABAD UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' IN RESPECT OF PROPERTY NO. L 601, GATE WAY TOWER, SECTOR-44, NOIDA, THE ASSESSING OFF ICER HIMSELF MENTIONED THAT THE SAME WAS SELF OCCUPIED. THE REMA INING THREE PROPERTIES MENTIONED BY THE ASSESSING OFFICER ARE T HOSE IN RESPECT OF WHICH THE ASSESSEE HAS ONLY BEEN ISSUED ALLOTMENT L ETTER AND NO POSSESSION HAS BEEN GIVEN TO THE ASSESSEE EVEN UPTO THE END OF THE YEAR UNDER APPEAL BEFORE THE LD. CIT(A) AND THEREFORE TH ERE WAS NO QUESTION OF ANY INCOME OF THESE PROPERTIES BEING CHARGEABLE TO TAX UNDER THE HEAD INCOME FROM HOUSE PROPERTY. WE NOTE THAT LD. CIT(A) IN HIS IMPGEND ORDER HAS RELIED UPON THE DECISION OF THE HON'BLE B OMBAY HIGH COURT IN THE CASE OF SHREE NIRMAL COMMERCIAL LTD V CIT (1992 ) 60 TAXMAN 324 (BOM) WHEREIN, IT WAS HELD THAT IT WAS NECESSARY T O BE CHARGED U/S 22 OF 6 THE INCOME TAX ACT, 1961 THAT IT SHOULD BE CAPABLE OF BEING LET OUT. IN VIEW OF THE ABOVE, WE ARE OF THE CONSIDERED VIEW TH AT AO HAS ERRED IN DENYING THE DEDUCTION IN THE SECTION 54F OF THE ACT . THE RESTRICTION IMPOSED BY SECTION 54F AS MENTIONED ABOVE DISENTITL ING THE CLAIM OF DEDUCTION U/S 54F NOT ONLY REQUIRES THAT THE ASSESS EE OWNS MORE THAN ONE RESIDENTIAL HOUSE BUT IT ALSO REQUIRES THAT INC OME FROM SUCH RESIDENTIAL HOUSE IS CHARGEABLE TO TAX UNDER THE HE AD INCOME FROM HOUSE PROPERTY. IN THE ASSESSEES CASE SINCE THE SECOND C ONDITION OF INCOME OF SUCH RESIDENTIAL HOUSE BEING CHARGEABLE TO TAX IS N OT BEING MET, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN DENYING THE ASSESSEE DEDUCTION U/S 54F OF THE I. T. ACT, 1961. WE HAVE ALSO PERUSED T HE DECISION OF THE ITAT, DELHI E BENCH DATED 04.08.2017 IN THE CASE OF ACIT VS. MOHINDER KUMAR JAIN REPORTED (2017) 84 TAXMANN.COM 141 (DELH I-TRIB.) WHEREIN SIMILAR AND IDENTICAL ISSUE WAS DEALT BY THE TRIBU NAL IN ASSESSEES FAVOUR. FOR THE SAKE OF CLARITY, WE ARE REPRODUCING HEREWIT H THE RELEVANT PORTION OF THE AFORESAID DECISION OF THE TRIBUNAL, DELHI BENCH AS UNDER:- 9. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE FIND THAT THE LD. C IT- (A) HAS ALLOWED THE DEDUCTION UNDER SECTION 54F OF THE ACT ON THE FOLLOWING THREE GROUNDS: 1. IN THE ASSESSMENT YEAR 2009-10, THE ASSESSING OFFICER HAS ALLOWED DEDUCTION UNDER SECTION 54F OF THE ACT ON SAME SET OF CIRCUMSTANCES AND THEREFORE IN VIEW OF THE PRINCIPLE OF CONSISTENCY, THE DEDUCTION UNDER SECTION 54F OF THE ACT, IN THE YEAR UNDER CONSIDERATION, IS ALSO ALLOWABLE. 7 2. THE HOUSE PROPERTY D-3/8 VASANT VIHAR, NEW DELHI WAS LET OUT DURING THE YEAR AND THE ASSESSEE WAS NOT USING THAT HOUSE FOR A RESIDENCE DURING THE YEAR UNDER CONSIDERATION. AT THE SAME TIME CONSTRUCTION OF THE RESIDENTIAL HOUSE 9, MEHANDI FARMS WAS ALSO NOT COMPLETE. THUS THE CONDITION THAT THE ASSESSEE WAS OWNING MORE THAN ONE RESIDENTIAL HOUSE WAS NOT SATISFIED. 3. THE NEW ASSET I.E. 9, MEHANDI FARMS, BHATI MINES, NEW DELHI WAS UNDER CONSTRUCTION AND CANNOT BE SAID RESIDENTIAL HOUSE OWNED BY THE ASSESSEE. 4. THERE IS NO BAR IN THE SECTION 54F OF THE ACT FOR CLAIMING DEDUCTION FOR SECOND TIME OR THIRD TIME FOR THE SAME PROPERTY, IF THE COST OF THE PROPERTY IS WITHIN THE CAPITAL GAIN AROSE TO THE ASSESSEE. 10. THE LD. SR. DR CONTENDED THAT ASSESSEE HAS ACCEPTED THE DISALLOWANCE OF RS.86,00,000/- UNDER SECTION 54F OF THE ACT FOR ASSESSMENT YEAR 2010-11 AND THEREFORE THE DEDUCTION IN THE YEAR UNDER CONSIDERA TION SHOULD ALSO BE DISALLOWED. WE ARE NOT CONVINCED WIT H THIS ARGUMENT OF THE LD. SENIOR DR AS IN WHAT 8 CIRCUMSTANCES THE DEDUCTION WAS WITHDRAWN BY THE ASSESSEE IN THE PRECEDING YEAR, IS NOT RELEVANT FOR US. WHAT IS RELEVANT IS WHETHER THE ASSESSEE SATISFIES THE CONDITIONS OF SECTION 54 F OF THE ACT IN THE YEAR U NDER CONSIDERATION. BEFORE US, THE LD. SENIOR DR COULD N OT CONTROVERT FINDINGS OF THE LD. CIT-(A). IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR