Santosh Maruti Borate, Pune V. Income-tax Officer, Ward - 8(5), Pune

ITA 1006/PUN/2018

AI Insights

The case involves Santosh Maruti Borate, who appealed against the order of the CIT(A) confirming the disallowance of deductions claimed under sections 54B and 54F of the Income Tax Act, 1961, related to the sale of agricultural land and subsequent purchase of new agricultural land and construction of a residential house. The Assessing Officer had initially assessed the appellant's income significantly higher than declared, attributing it to capital gains from the sale of land. The CIT(A) partly allowed the appeal by recognizing some deductions but upheld the disallowance of others due to non-compliance with the statutory requirements. The Tribunal agreed with the CIT(A)'s decision, emphasizing the importance of adhering to the procedural requirements for claiming exemptions under sections 54B and 54F.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 137130 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-12-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 05-06-2018
• Other Referred Cases: Humayun Suleman Merchant vs. CCIT [2016] 73 taxmann.com 2 (Bombay)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reason to believe; Capital Gains
• Section: 148; 143(3); 54B; 54F; 234B; 139(1); 73

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.1006/PUN/2018 िनधाᭅरण वषᭅ / Assessment Year : 2009-10 Santosh Maruti Borate, Chandrabhaga Niwas, Nageshwar Nagar, Moshi Haveli, Pune- 412105. PAN : ALOPB4851D Vs. ITO, Ward-8(5), Pune. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of the ld. CIT(A)-13, Pune [‘the CIT(A)’] dated 21.03.2018 for the assessment year 2009-10. 2. At the outset, there is a delay of 04 days in filing the present appeal. The appellant filed an affidavit stating that due to health issue of his authorized representative, the appeal could not be filed on time. He submitted that delay in filing the present appeal was not intentional and beyond the control of the assessee. He prayed for condonation of delay. Assessee by : Shri Pratik Navlakha Revenue by : Shri Ramnath P. Murkunde Date of hearing : 12.12.2022 Date of pronouncement : 02.01.2023 ITA No.1006/PUN/2018 2 3. Considering the above submissions of the ld. AR and no objection from the side of ld. DR for condoning the delay, we find it is a fit case to condone the delay of 04 days and admit the appeal for adjudication. 4. The appellant raised the following grounds of appeal :- “1. On the facts and circumstances of the case, the learned A.O. has erred in assessing income of Rs.77,00,000/- as against Income as per Return of Rs.1,76,000/- and addition of Rs.75,24,000/- is on account of Long Term Capital Gain. The addition made on that account should be deleted. 2. Without prejudice to Ground No 1 the A.O. has erred both on facts and in law in treating amount of Rs. 75,24,000/- as Long Term Capital Gain should be deleted. 3. Without prejudice to Ground No 2, the fact that the relevant details of the claim u/s 54B and 54F are available with the assessee. 4. The Assessing Officer erred in charging interest under sections 234A, 234B and 234C when in fact there was no default as contemplated by the said sections. 5. The appellant has not concealed any income and it is prayed that the Penalty proceedings U/s 271(1) initiated by the A.O. should be dropped. 6. Appellant prays for just & equitable relief. 7. That the appellant craves leave to add to, alter, amend, modify, substitute, delete and/or rescind all or any of the GROUNDS OF THE APPEAL on or before the final hearing, if necessities so arises. 8. Appellant prays leave to adduce such evidence to substantiate its case.” 5. Briefly, the facts of the case are as under :- The appellant is an individual deriving agricultural income. The Return of Income for the assessment year 2009-10 was filed on 02.03.2015 declaring total income of Rs.1,76,000/-. Subsequently, a notice u/s 148 was issued on the appellant on 22.03.2016. Against ITA No.1006/PUN/2018 3 the said return of income, the assessment was completed by the Income Tax Officer, Ward-8(5), Pune (‘the Assessing Officer’) vide order dated 26.12.2016 passed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (‘the Act’) at total income of Rs.77,00,000/-. While doing so, the Assessing Officer made addition of Rs.75,24,000/- on account of sale of lands under the head “capital gains”. The factual matrix of the case is as under :- The appellant along with his family members and M/s Pharande Promoters & Builders had entered into an agreement with M/s Manik Builders for the sale of land at Gat No.122, located at Borhadewadi, Moshi, Tal. Haveli at a consideration of Rs.3,00,00,000/- on 06.09.2008. On perusal of the same, it was observed by the AO that Santosh Maruti Borate (Appellant) was one of the owner of the said plot and he had received his share consideration of Rs.77,00,000/- by cheque. Further, it was also observed that he had not offered to tax any capital gains arising out of the sale of the above said land. The AO, had reason to believe that the income of Rs.77,00,000/- had escaped assessment. Therefore, notice u/s 148 was issued in this case on 22.03.2016. Further, during the assessment proceedings, the AO noted that the appellant had claimed deduction u/s 54F and 54B of the Act of Rs.43,00,000/- and Rs.32,24,000/- respectively. The appellant was asked by the AO to furnish documentary evidence in support of ITA No.1006/PUN/2018 4 claim made u/s 54B and 54F, which the appellant did not furnish till the date of the Assessment Order. The appellant had furnished copies of 7/12 extracts in respect of agricultural land sold stating that the said land was used for agricultural purpose during the F.Ys. 2006-07 and 2007-08. The appellant could not furnish before the AO, any other documentary evidence in support of his statement. It was observed from the sale deed of the land sold that the said land was under residential area and no agricultural income was derived out of it which was the reason because of which the appellant agreed to sell the land. Further, the appellant did not disclose any agricultural income in his return of income and computation of income filed for the A.Y. 2009-10. Also, the appellant did not submit any proof of investment of the sale proceeds in capital gain deposit account before the due date of filing of return of income. On going through the submission furnished by the appellant for his claim of exemption u/s 54F of the Act, the AO observed that the appellant had entered into an unregistered agreement with Shri Nageshwar construction for the construction of residential house. The said document did not mention of any quotation or cost of construction thereof. Further, the appellant did not submit before the AO any supporting bills or receipts in support of its claim of exemption u/s 54F. The appellant had, thus, failed to satisfy before the AO, the basic conditions of section 54F and 54B, therefore, the ITA No.1006/PUN/2018 5 AO disallowed the claim of deduction u/s 54F and 54B of the Act. With the result, the AO assessed the total income of the appellant at Rs.77,00,000/- as against his returned income of Rs.1,76,000/-. 6. Being aggrieved by the above assessment order, an appeal was filed before the ld. CIT(A), who vide impugned order confirmed the disallowance of claim of deduction u/s 54B on the ground that unutilized sale proceeds were not deposited in the capital gains deposits scheme placing reliance on the decision of the Jurisdictional High Court in the case of Humayun Suleman Merchant vs. CCIT [2016] 73 taxmann.com 2 (Bombay). As regards the disallowance of claim of deduction u/s 54F, the ld. CIT(A) taking into consideration the fact that the appellant had spent in construction of house a sum of Rs.5,50,000/- before due date of filing of return of income u/s 139(1) and the balance unutilized sale proceeds were not deposited under the capital gains deposits scheme before due date of filing of the return of income, allowed the benefit of deduction of Rs.5,50,000/- u/s 54F of the Act. Thus, the appeal filed by the assessee before the ld. CIT(A) came to be partly allowed. 7. Being aggrieved by the decision of the ld. CIT(A), the appellant is in appeal before us in the present appeal. 8. It is contended that the Assessing Officer ought to have allowed the exemption u/s 54B of Rs.32,24,000/- and u/s 54F of ITA No.1006/PUN/2018 6 Rs.43,00,000/-. He further submitted that the ld. CIT(A) ought not to have disallowed the claim for deduction u/s 54B, inasmuch as, the purchase agreement is registered within the stipulated time. As regards section 54F claim, he submits that the construction agreement was made with the contractor within the stipulated time. 9. On the other hand, ld. Sr. DR placed reliance on the orders of the lower authorities. 10. We heard the rival submissions and perused the material on record. The ground of appeal nos.1, 2, 6 and 7 are general in nature did not require any adjudication. Therefore, the same are dismissed. 11. The ground of appeal no.4 and 5 are consequential in nature therefore, the same are dismissed as such. 12. The ground of appeal no.3 challenges the disallowance of claim for deduction u/s 54B as well as 54F of the Act. We have carefully gone through the impugned order, wherein, the ld. CIT(A) has set out the clear facts relating to the claim for deduction u/s 54F and 54B of the Act. The ld. CIT(A) clearly stated that the appellant purchased new agricultural land and entered into an agreement dated 28.06.2010 with Kande family for consideration of Rs.31,00,000/- and registered by paying stamp duty of Rs.1,24,000/-. However, the appellant paid consideration of Rs.4,00,000/- only on the date of agreement and the balance consideration was paid on 27.07.2010 - Rs.9,00,000/-, 28.08.2010 – ITA No.1006/PUN/2018 7 Rs.10,00,000/- and Rs.8,00,000/- on 12.02.2011 which clearly fall beyond due date prescribed for filing the return of income under the provisions of section 139(1) of the Act. It is an admitted fact that the appellant had not deposited the unutilized sale consideration under the capital gains deposits scheme as prescribed under sub- section (2) of section 54B of the Act. We also find that the agreement for purchase of new agricultural land was entered into on 28.06.2010 which is also beyond due date for filing the return of income and, therefore, the above fact clearly would go to show that the appellant had not utilized any portion of the sale consideration towards purchase of new agricultural land and the ratio of decision of the Hon’ble Bombay High Court in the case of Humayun Suleman Merchant (supra) has been rightly applied by the ld. CIT(A). As regards to the deduction u/s 54F, the ld. CIT(A) has clearly set out the fact vide para 9 of his impugned order. On perusal of the said para 9 of the impugned order, it is clear that only amount of Rs.4,00,000/- was utilized before due date for filing of the return of income for purchase of residential house and the entire balance consideration was paid on 27.07.2010, 28.08.2010 and 12.02.2011 which is clearly beyond due date for filing the return of income for the assessment year 2009-10 and it is undisputed fact that unutilized consideration was not deposited under the capital gains deposits ITA No.1006/PUN/2018 8 scheme, as stipulated time under sub-section (4) of section 54F of the Act. The ld. CIT(A) had rightly restricted the deduction to the extent of investment made in construction of new house till the date of construction of the house property and the ratio of the decision of the Hon’ble Bombay High Court (supra) is squarely applicable. Therefore, we find that the order of the ld. CIT(A) is well reasoned and based on the proper appreciation of facts and legal position governing the issue on hand. Accordingly, we do not find any reason to interfere with the order of the ld. CIT(A). Thus, the ground of appeal no.3 filed by the assessee stands dismissed. 13. In the result, the appeal filed by the assessee stands dismissed. Order pronounced on this 02 nd day of January, 2023. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 02 nd January, 2023. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-13, Pune. 4. The Pr. CIT-5, Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “A” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.