Kum. Nalini Surrendrabhai Patel, Baroda V. The Income Tax Officer, Ward-2(1), Baroda

ITA 1013/AHD/2014

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 3931 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 07-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Set aside
• Section: 54; 263; 154; 143(3); 54F; 142(1); 143(1); 143(2); 54EC

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘C’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD (Conducted Through Virtual Court) ] ] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND T.R. SENTHIL KUMAR, JUDICIAL MEMBER ITA No.1013/Ahd/2014 Asst. Year : 2009-2010 Kumari Nalini Surrendrabhai Patel C/o. Shri Ramesh G. Desai (Taxation Consultants) 4/A, Meeraj Apartments Race Course Circle (West) Baroda 390 007. Vs ITO, Ward-2(1) Baroda. अपीलाथ / (Appellant) यथ / (Respondent) Assessee by : Shri Rushin Patel, AR for Shri M.J. Shah, Advocate Revenue by : Shri A.P. Singh, CIT-DR स ु नवाई क तार ख/Date of Hearing : 21/04/2022 घोषणा क तार ख /Date of Pronouncement: 24/06/2022 आदेश/O R D E R PER T.R. SENTHIL KUMAR, JUDICIAL MEMBER: This appeal is filed by the assessee against order dated 13.2.2014 passed by the ld.Commissioner of Income-Tax-1, Baroda under section 263 of the Income Tax Act, 1961 ("the Act" for short) relating to the Asstt.Year 2009-10. 2. Brief facts of the case is that the assessee is an individual and senior citizen. She is the co-owner of the Plot Nos.34 and 35 Nandanvan Cooperative Housing Society, Baroda along with her brother, Shri Vijay Patel. The above properties were being inherited by her and her brother from their father who expired in 1985. In Plot No.34, the assessee’s father had constructed a residential house ITA No.1013/Ahd/2014 2 while Plot No.35 is an open plot adjacent to the Plot No.34. During the assessment year 2009-10, the assessee along with his brother sold Plot No.34 viz. residential house to one Shri Kishor Aishiram Sewani for a consideration of Rs.1,41,21,250/-; whereas Plot No.35 open plot was sold to Mrs.Rekhaben Kishorbhai Sewani for a consideration of Rs.1,39,72,600/-. Thus, the assessee got her 50% on sale of these two plots for a consideration of Rs.1,48,58,170/-. After indexation long term capital gain was worked out at Rs.1,26,59,265/-. The assessee re-invested in new flat for a consideration of Rs.84,92,600/- and claimed exemption under section 54 and 54F of the Act, and the balance of Rs.42,00,000/- has also been invested by the assessee in the capital gain bonds. Thus, entire amount of long term capital gain has been invested in purchase of new flat under section 54 and 54F of the Act and in capital gain bonds under section 54EC of the Act. The assessee filed her return of income admitting the above capital gain on 20.7.2009 and declared a total income of Rs.1,09,210/-. The return was processed under section 143(1) of the Act, and thereafter taken for scrutiny assessment and notices under sections 143(2) and 142(1) of the Act were served upon the assessee. The assessee submitted various details as are required under the notice and on perusal of the submissions and relevant records, the AO satisfied with the claim of exemption under section 54 and 54F of the Act and passed an order under section 143(3) of the act on 23.8.2011 accepting the returned income. 3. The ld.CIT-1, Baroda issued a show cause notice under section 263 of the Act, on the ground that order passed by the AO was erroneous and prejudicial to the interest of the Revenue on the following grounds: ITA No.1013/Ahd/2014 3 “On perusal of records it is seen that the assessee had sold properties and received sale proceeds of Rs. 1,44,58,170/- on sale of two properties at plot No. 34 and 35 for Rs. 1,39,72,500/- in Nandanvan Co-operative Housing Society (Rs. 74,71,180 + Rs. 69,86,300) in which assessee is a co-owner alongwith her brother, and claimed exemption of Rs. 69,86,300/- u/s. 54F and Rs. 15.06,300/- u/s. 54 of the I.T.Act on total investment made of Rs. 84,92,600/- in new flat No. 302 of Surmaya. Thus, the assessee had claimed exemption aggregating to Rs. 84,92,600/- u/s. 54 and 54F of the I.T.Act. As per provisions of the Income-tax Exemption u/s. 54F can be availed in respect of transfer of any long term capital asset not being a residential house, while deduction u/s 154 can be claimed as capital gains on sale of residential unit. However, in the case of the assessee the long term capital asset was identical. As such, claiming the exemption u/s. 54F and also u/s 54 was wrong which led to under assessment.” 4. The assessee gave a detailed reply, which is as follows: “I wish to clarify that as the properties sold under consideration had residential unit as well as open plot, exemption U/s 54 and 54F of the Act has been claimed. During the year under consideration I have purchased new flat amounting to Rs.84,92,600/-. Thus Long Term Capital Gain on sale of Plot No.35 amounting to Rs. 69,86,300/- had been utilized for purchase of new flat of Rs.84,92,600/-. The balance amount of Rs.15,06,300/- had been utilized against the Long Term Capital Gain arose on sale of Plot No. 34 on which residential house is constructed. Further, I have purchased the Capital Bonds amounting to Rs.42,00,000/- (Rupees Forty two Lacs). Thus entire amount of Long Term Capital Gain of Rs.56,72,965/- is utilized against purchase of new flat and Capital Bonds. Thus, both the plots are adjoining plots and in my opinion utilization of purchase value of new flat is as per the scheme of the Act. The above view is upheld by the decision of Hon'ble ITAT Bench of Mumbai in the case of Smt. Anagha Ajit Patnekar Vs. Income Tax Officer (2006) 9 SOT 685 (Mumbai) wherein against purchase of property, deduction of capital gain has been claimed for second and third time. In your notice U/s 263(1) you have mentioned that they are two residential properties which are sold and I have claimed wrong deduction U/s 54F. This is far m reality and as explained earlier, there is only one residential house and property, which is an open plot and therefore, as explained above, I have claimed deduction U/s 54F.” 5. However, the reply was not accepted by the ld.CIT on the ground that the assessee has not furnished any evidence in support of such contentions that residential house was constructed on one ITA No.1013/Ahd/2014 4 plot. The sale deed of two plots are identical and sale deed for Plot no.34 does not mention anywhere that there was residential building sold through the sale deed. From the sale deed itself apparent that both were only plots of land, though the contentions of the assessee that two different kinds of properties were sold were not supported by documents; there is nothing on record to prove when the construction was made; what was the size of the construction; when approval was taken; when the completion certificate was acquired. The assessee has failed to furnish before the AO any evidence in support of claim and the AO had also not examined this issue properly and had not brought any evidence on record in support of the contentions that two different kinds of properties were sold by the assessee, and the assessee has also made 100% deduction, though the assessee owned only 50% share in the sale proceeds of the land. Thus, the order passed by the AO is erroneous and prejudicial to the interest of the Revenue, and accordingly, the ld.CIT set aside the assessment and directed the AO to pass order de novo, after affording an opportunity of being heard to her. The AO was also directed to bring documentary evidence on record with reference to the sections 54 and 54F of the Act and pass a speaking order. 6. Aggrieved against this order, the assessee is before the Tribunal with the following grounds: “The Appellant objects to order u/s 263 of IT Act dated 13.02.2014 passed by Commissioner of Income tax-l, Baroda on following among other grounds of appeal. (1)(a) The learned CIT -I, Baroda has erred in resorting to proceedings u/s 263. (b) That on the facts of the case the order u/s 143(3) passed by learned Assessing Officer is neither erroneous nor prejudicial to the interest of revenue. Hence the proceedings u/s 263 based on certain assumptions ought to be held as bad-in-law. ITA No.1013/Ahd/2014 5 (2)(a) That the learned C I T-l, Baroda has erred in setting aside the order u/s 143(3) passed by the assessing officer. (b) That on the facts and circumstances of the case and in law the order u/s 143(3) ought to be upheld. (3)(a) That the learned C IT -I, Baroda erred in observing that the appellant has failed to furnish all the relevant information. (b) That the facts on record indicate that all the relevant information in support of the Appellant's claim was duly furnished at the time of assessment proceedings as also all required data was furnished during proceedings u/s 263. (4)(a) That the learned CI T-l, Baroda has further erred in observing that 100% deduction has been wrongly claimed as against 50%. (b) That on facts and circumstances of the case and in law the claim has been rightly made for full Investment made'by the appellant from her 50% share in sale proceeds. (5)(a) That the learned CIT -I, Baroda has failed to appreciate and accept the detailed submissions made during proceedings u/s 263. (b) That on the facts and circumstances of the case and provisions of law as presented in the submission the proceedings u/s 263 are invalid and order u/s 263 ought to be cancelled. (6)(a) That the learned CI T-l,Baroda has erred in directing the Assessing Officer to pass a fresh order de-nova. (b) That on the facts and circumstances of the case and in law no such fresh assessment is required to be made as the same will unnecessarily prolong the proceedings.” 7. The ld.counsel, Shri Manish J. Shah appeared on behalf of the assessee submitted a Paper Book wherein a copy of reply dated 2.9.2013 filed by the assessee to the show cause notice issued under section 263 of the Act, which was reproduced by the ld.CIT in his impugned order. There is one more reply dated 12.11.2013, wherein the assessee also enclosed various other documents viz. (i) copy of the property card issued by City Survey Office; (ii) copy of sale deed for Plot Nos.34 and 35, (iii) copy of Income-tax acknowledgements for earlier years (to show that rental income from the above property), ITA No.1013/Ahd/2014 6 (iv) copy of bank accounts, (v) copy of Will, and (vi) copy of citations. 7.1 The ld.counsel has also brought to our notice page no.14 of the Paper Book, wherein property sketch issued by the Competent Authority (in Gujarati) for Plot Nos.34 and 35 as well as property tax paid by the assessee. Thus, he contended that the ld.CIT has not appreciated the reply filed by the assessee and also not perused documents placed before him. 8. The ld.counsel has also submitted that the assessee with her brother Shri Vijay Patel is a co-owner of the property having 50% share. Her brother being an NRI, on sale of the above land filed his Return of Income on 30.7.2009 in the office of ITO Ward-2(1), Baroda, declaring total income at Rs.1,33,000/- and after re- investing long term capital gain in Flat No.304, Suramiya Apartments, Vadodara. The above return was transferred to ITO(International Taxation), Baroda. After issuance of notice under section 142(1) calling for various details, the returned income was accepted and claim of deduction under section 54 and 54F has been accepted in the case of the assessee’s brother, who was owning 50% share in the above property. In his case, the above 143(3) assessment was not subject to revision by the Income Tax Department. Thus, the ld.counsel pleaded that this co-owner’s claim of deduction was accepted, and therefore it was not correct on the part of the ld.CIT in invoking section 263 proceedings in the other co-owner case on the ground that assessment order passed by the AO is erroneous and prejudicial to the interest of the Revenue. In this connection, the ld.AR relied on the following case laws: ITA No.1013/Ahd/2014 7 i) Shri Sangram J. Patel Vs. DCIT, 377/Ahd/2018 dated 25.10.2021 (ITAT-Ahd) ii) Rajeshkumar Shantilal Patel Vs. ITO, 127 taxmann.com 342 (ITAT-Surat); iii) CIT Vs. Kumararani Smt. Meenakshi Achi, 158 taxman 4 (Mad); iv) Charu Agrawal Vs. DCIT, 137 taxmann.com 283 (ITAT- Delhi); 9. Per contra, the ld.DR appearing for the Revenue supported the order of the ld.CIT and also submitted that the ld.AO has not passed a speaking order allowing the claim of deduction. Thus, his order is erroneous and prejudicial to the interest of the Revenue and pleaded to uphold the revision order. 10. We have given our thoughtful consideration and perused material available on record and Paper Book filed by the ld.counsel for the assessee. It is seen from the paper book that the assessee has made a detailed reply to the show cause notice by producing relevant document viz. sale deed; property tax receipts, copy of Income-Tax Returns for earlier years showing rental income from the above property; copies of bank accounts and copy of the Will executed by the assessee’s father. Without appreciating the above documents, the ld.CIT has come to a conclusion that Plot No.34 does not mention anywhere that there was a residential building sold through the sale deed. Further, CIT absolutely erred in stating that the assessee has made 100% claim of deduction whereas she has only 50% as co-owners in the above properties and from going through the Sale Deeds both the lands are vacant lands. Thus, the above finding of the ld.CIT is not correct from the perusal of the above record. The ld.CIT has not given due credence to the reply filed by the assessee and passed this revision order. However, it can be seen from the co-owner, assessee’s brother Shri Vijay Patel’s case ITA No.1013/Ahd/2014 8 that similar deduction was being allowed by the ITO (International Taxation), Baroda after detailed inquiry, wherein the assessee’s brother has also given detailed reply dated 12.12.2011. After considering the above reply, the ITO(International taxation) has accepted the returned income and allowed the deduction by passing order under section 143(3) of the Act dated 29.12.2011 and that assessment order was not subject matter of revision or reopening by the Department, but in the case of the assessee being co-owner of the same properties, a show cause notice under section 263 of the Act dated 23.8.2013 was issued and explanation was called for from the assessee. Here it is to be noted that ld.CIT has not verified, what happened to other co-owner viz. assessee’s brother Shri Vijay Patel case which assessment has attained finality. In this connection, we draw support from Rulings of the Hon’ble Madras High Court in the case of Kumarani Smt. Meenakshi Achi (supra) has held as follows: “4.2 That apart, the Tribunal, while passing the order under appeal, had also taken into consideration the order of the Commissioner of Income-tax initiated under section 263 of the Income-tax Act, in and by which, the proposal to revise the assessment in the case of other co-owner was dropped, finding that there was no justification to reject the value adopted by the assessee. The Tribunal, in the light of the decision in Jaswant Rai v. CWT [1977] 107 ITR 477 (Punj. & Har.), held that differential treatment cannot be met out to another co-owner while making the assessment of the same property or while valuing the same property. 4.3 The learned counsel for the revenue is not in a position to satisfy us, as to how the Commissioner of Income-tax dropped the proceedings initiated under section 263 of the Income-tax Act qua the co-owner, who had also adopted the same value for the property as the petitioner herein. 5. It is trite that if during the same assessment year the same quantity of wealth in possession of one co-sharer is subjected to a lower rate of taxation, it would be highly improper to burden a similarly situated co- sharer with a higher rate of tax. If such an action on the part of the assessing authorities sanctioned, it would militate against the principle of equality of law as enshrined in article 14 of the Constitution, vide Jaswant Rai v. CWT [1977] 107 ITR 477 (Punj. & Har.). ITA No.1013/Ahd/2014 9 11. Similarly, Co-ordinate Bench in the case of Shri Sangram J. Patel Vs. DCIT (supra) has held as follows: “12.4 It is not also out of place to mention that the assessee was the co- owner in the property along with his brother. The claim of the assessee's brother by the same AO was accepted and the deduction/exemption was allowed for the investment made by the co-owner with M/s Sharnam builders for the purchase of the property. In such a situation, we are of the view that the AO was to maintain the consistency. In simple words, the AO cannot reject the claim of the assessee whereas in the case of the brother of the assessee in the identical facts and circumstances, the same was accepted. Accordingly on this count, we are not convinced with the finding of the authorities below. Hence, we set aside the finding of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the ground of appeal of the assessee is partly allowed for the statistical purposes.” 12. Another Co-ordinate Bench in the case of Rajeshkumar Shantilal Patel (supra) held as follows: “14. Considering the aforesaid factual and legal discussion, we accept the contention of ld. AR for the assessee that once, the similar STCG offered by the co-owner has been accepted by the revenue, and the assessee is also entitled for similar relief. We find convincing force in the submissions learned AR for the assessee. Hence, the appeal of the assessee is allowed. So far as the objection of learned DR for the Revenue is that the case of co- owner of Shri Dipakbhai Dalpatbhai Rana, no scrutiny assessment was initiated, is concern, we find that this fact was brought by assessee at the earliest possible action. The Revenue has not taken any action for reopening the case of co-owner and thereby accepted the similar STCG on same transaction, therefore, in our view, the assessee cannot be treated indifferently for similar transaction. Thus, the objection raised by the learned DR for the revenue is not acceptable to us.” 13. Following the above judicial precedents, we have no hesitation in holding that different treatments cannot be given on the same set of facts in respect of different co-owners of a common piece of land which are subjected to capital gains. If such action on the part of Revision Authority is approved, it would militate against the principle of equality of law as enshrined in the Article 14 of the Constitution. Further, it is seen that the ld.CIT has not taken any steps for reopening the case of other co-owner viz. Shri Vijay Patel and thereby accepted similar long term capital gain and claim of ITA No.1013/Ahd/2014 10 deduction under section 54 and 54F of the Act on the said transaction. Therefore, in our considered view, the assessee cannot be treated differently for similar transaction. This ground of appeal of the assessee is allowed on this preliminary aspect, and Revision Order under section 263 of the Act is hereby quashed. 14. In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 24 th June, 2022 at Ahmedabad. Sd/- Sd/- (WASEEM AHMED) ACCOUNTANT MEMBER (T.R. SENTHIL KUMAR) JUDICIAL MEMBER Ahmedabad, dated 24/06/2022