Mahesh Malneedi., Hyderabad. V. Income Tax Officer, Ward-11(3)., Hyderabad.

ITA 1021/Hyd/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2692 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 15-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N RAVI BABU
• Assessee Lawyers: D V ANJANEYULU
• Keywords: Unexplained cash credit; Cost of acquisition
• Section: 54F; 142(1); 68; 54

Judgement Text

ITA NO 102 1 OF 2017 MAHESH MALNEEDI HYDERABAD. PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1021/HYD/2017 (ASSESSMENT YEAR: 2014-15) SHRI MAHESH MALNEEDI HYDERABAD PAN: AW LPM 1058 P VS ITO WARD 11 ( 3 ) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI D.V. ANJANEYULU FOR REVENUE : SHRI N. RAVI BABU, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2014-15. IN T HIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF T HE LEARNED CIT (A)-5, HYDERABAD, DATED 29.05.2017 CONFIRMING THE O RDER OF THE AO DISALLOWING THE DEDUCTION CLAIMED U/S 54F OF THE ACT AND ALSO IN SUSTAINING THE ADDITIONS OF RS.20.00 LAKHS AND R S.6.00 LAKHS U/S 68 OF THE I.T. ACT. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y 2014-15 ON 25.07.2014 ADMITTING AN INCOME OF RS.11,17,920. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS ON THE GROUND THAT LARGE DEDUCTION CLAIMED U/S 54 & LARGE CASH DEPOSITS IN S AVINGS BANK DATE OF HEARING: 06.11.2017 DATE OF PRONOUNCEMENT: 2 5 . 0 1 .2018 ITA NO 102 1 OF 2017 MAHESH MALNEEDI HYDERABAD. PAGE 2 OF 10 A/C. HENCE, NOTICES U/S 143(2) & 142(1) OF THE ACT WERE ISSUED AND DULY SERVED ON THE ASSESSEE. THE ASSESSEE FILED THE REQUIRED INFORMATION AND THE AO VERIFIED THE SAME. THE AO FO UND THAT THE ASSESSEE HAS SHOWN NIL INCOME UNDER THE HEAD CAP ITAL GAINS IN THE RETURN OF INCOME AFTER REDUCING THE COST OF ACQUISITION AND THE CLAIMING DEDUCTION U/S 54F OF THE ACT AS UNDER: A) SALE CONSIDERATION RECEIVED RS.1,01,40,000 VIDE SALE DEED DATED 7.11.2013 B) LESS: INDEXED COST OF ACQUISITION RS. 4,66,0 70 VIDE DEED DT. 21.8.1996 -------------------- RS. 96,73,930 LESS: REINVESTED IN PURCHASE OF RS. 96,73,930 JUBILEE HILLS PROPERTY FOR RS.1.00 CRORE VIDE SALE AGREEMENT DT. 3.7.2013. N I L 3. THE AO, IN ORDER TO EXAMINE THE ALLOWABILITY, IS SUED A SHOW-CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN HOW DE DUCTION U/S 54F IS ALLOWABLE. THE AO ALSO OBSERVED THAT THOUGH THE ASSESSEE CLAIMED TO HAVE PAID RS.1.00 CRORE FOR PURCHASE OF THE PROPERTY WITHIN ONE YEAR BEFORE THE TRANSFER OF THE PROPERTY , ON VERIFICATION OF INCOME STATEMENT, IT IS OBSERVED THAT THE ASSESS EE HAS DEPOSITED THE AMOUNT OF RS.1.00 CRORE ON 7.11.2013 INTO HIS BANK A/C AND THEREFORE, THE PURCHASE TRANSACTION HAS NOT MATERIALIZED. THE ASSESSEE WAS THEREFORE, ASKED AS TO HOW THE ASS ESSEE IS ELIGIBLE FOR THE CLAIM OF EXEMPTION U/S 54F OF THE ACT. 4. FURTHER, THE AO ALSO OBSERVED THAT THERE ARE CAS H DEPOSITS TO THE TUNE OF RS.1,67,80,000 MADE INTO TH E BANK A/CS OF THE ASSESSEE DURING THE FINANCIAL YEAR 2013-14 A ND ASKED THE ASSESSEE TO EXPLAIN THE SOURCES FOR THE DEPOSITS OF RS.30.00 LAKHS AND RS.20.00 LAKHS ON 5.11.2013. IN REPLY TO THE SA ID SHOW CAUSE ITA NO 102 1 OF 2017 MAHESH MALNEEDI HYDERABAD. PAGE 3 OF 10 NOTICE, THE ASSESSEE SUBMITTED THAT HE HAD ENTERED INTO THE AGREEMENT OF SALE ON 3.7.2013 AND HAS PAID RS.1.00 CRORES, WHEREAS THE ASSESSEE HAD SOLD THE PROPERTY ON 7.11. 2013 AND HAS DEPOSITED THE SALE CONSIDERATION OF RS.1.00 CRORES INTO HIS BANK A/C AND THAT BOTH THE TRANSACTIONS ARE INDEPENDENT AND ARE NOT RELATED TO EACH OTHER. AS REGARDS THE CLAIM OF EXEM PTION U/S 54F, HE SUBMITTED THAT THE SALE AGREEMENT FOR PURCHASE O F RESIDENTIAL HOUSE IS WELL WITHIN THE ONE YEAR PERIOD BEFORE THE TRANSFER OF THE PROPERTY AND THEREFORE, SUBMITTED THAT THE CAPITAL GAINS ARISING OUT OF THE SALE OF THE PROPERTY ON 3.7.2013 I.E. RS .96,73,930, IS ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT AS HE HAD COMPLIED WITH ALL THE NECESSARY CONDITIONS. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE COPIES OF THE SALE DEED DATED 7.11 .2013 AND AGREEMENT OF SALE DATED 3.7.2013 WERE FILED AND VER IFIED. THE AO OBSERVED THAT THE ASSESSEE HAD MADE PAYMENT OF RS.6 3,83,000 VIDE CHEQUE NO.994653, DATED 11.07.2013 AND RS.36,1 7,000 VIDE CHEQUE NO.994652, DATED 11.07.2013 BUT THAT THE SAL E COULD NOT BE COMPLETED AND ALSO THE VENDOR OF THE NEW PROPERT Y HAS NOT CAME FORWARD FOR REGISTRATION. IT WAS OBSERVED THAT THE ASSESSEE MADE EFFORTS TO CONCLUDE THE PURCHASE OF THE ABOVE PROPERTY MEANT FOR REINVESTMENT OF CAPITAL GAIN ON SALE OF T HE ORIGINAL ASSET FOR AVAILING EXEMPTION U/S 54F OF THE ACT BUT SINCE THE ASSESSEE HAS NOT CONCLUDED THE SALE TRANSACTION WITHIN THE P ERIOD STIPULATED U/S 54F OF THE ACT, THE AO DISALLOWED TH E CLAIM OF DEDUCTION U/S 54F OF THE ACT AND ADDED IT TO THE RE TURNED INCOME OF THE ASSESSEE AND BROUGHT IT TO TAX. 5. AS REGARDS THE CASH DEPOSITS OF RS.30.00 LAKHS I NTO THE BANK A/C, THE AO OBSERVED THAT THE ASSESSEE HAS BEE N ABLE TO ITA NO 102 1 OF 2017 MAHESH MALNEEDI HYDERABAD. PAGE 4 OF 10 EXPLAIN THE SOURCE FOR RS.24.00 LAKHS BUT HAS NOT P RODUCED SATISFACTORY EXPLANATION TO THE EXTENT OF RS.6.00 L AKHS. AS REGARDS THE SOURCE FOR DEPOSIT OF RS.20.00 LAKHS, THE AO DI D NOT ACCEPT THE ASSESSEES CONTENTION THAT HE HAD WITHDRAWN THI S SUM EARLIER FOR PURCHASE OF A PROPERTY AND THAT HE HAS RE-DEPOS ITED IT INTO THE BANK A/C AFTER A PERIOD OF ONE YEAR. THEREFORE, THE AO BROUGHT TO TAX THE UNEXPLAINED CASH CREDIT OF RS.6.00 LAKHS AN D RS.20.00 LAKHS RESPECTIVELY. 6. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE A SSESSEE IS IN SECOND APPEAL BEFORE US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE HAD INVESTED THE ENTIRE CAPITAL GAINS FOR PURCHASE OF A RESIDENTIAL PROPERTY AT JUBILEE HILLS BY PAYING A SUM OF RS.1.00 CRORES TO THE VENDOR, BUT THE VENDOR, WITH A MALAFI DE INTENTION OF CHEATING THE ASSESSEE, HAS NOT COME FORWARD TO REGI STER THE PROPERTY IN ASSESSEES NAME EVEN THOUGH THE ASSESSE E WAS WILLING TO PAY THE BALANCE OF THE SALE CONSIDERATION AND TH E ASSESSEE HAD TO RESORT FILING OF A SUIT FOR SPECIFIC PERFORMANCE BEFORE THE CIVIL COURT TO GET THE PROPERTY REGISTERED IN HIS NAME. H E SUBMITTED THAT AS FAR AS ASSESSEES CLAIM OF EXEMPTION U/S 54 F OF THE ACT DURING THE RELEVANT A.Y IS CONCERNED, THE ASSESSEE HAS SATISFIED THE CONDITIONS THEREOF AND THEREFORE, SHOULD BE ALL OWED EXEMPTION U/S 54F OF THE ACT. HE SUBMITTED THAT EVEN IF THE P ROPERTY IS NOT REGISTERED IN HIS NAME, THE CAPITAL GAINS CANNOT BE BROUGHT TO TAX IN HIS HANDS FOR THE RELEVANT A.YS BECAUSE THE ASSE SSEE HAS FULFILLED THE CONDITIONS AND IT CAN BE BROUGHT TO T AX ONLY IN THE ITA NO 102 1 OF 2017 MAHESH MALNEEDI HYDERABAD. PAGE 5 OF 10 YEAR IN WHICH THE ASSESSEE FAILS TO GET THE PROPERT Y REGISTERED I.E. AFTER TWO YEARS OF THE SALE OF AN ORIGINAL ASSET. I N SUPPORT OF THIS CONTENTION, HE PLACED RELIANCE UPON THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL (TO WHICH BOTH OF US ARE SIGN ATORY) IN THE CASE OF VIKAS KUMAR VS. DCIT REPORTED IN (2017) 166 ITD 481. IN SUPPORT OF HIS CONTENTION THAT THE LAW DOES NOT COM PEL THE ASSESSEE TO PERFORM THE IMPOSSIBLE, THE LEARNED COU NSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE DECISIONS OF THE HON'BLE SUPREME COURT IN THE CASE OF LIC VS. CIT (1996) 219 ITR 410 (S.C), KRISHNASWAMY S.PD AND ANR. VS. UNION OF INDI A & ORS (2006) 281 ITR 313 AND MANISH MAHESHWARI VS. ACIT & ANR (2007) 289 ITR 341. THUS, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, THE ASSESSEE HAVING MADE INVESTMENT I N THE PROPERTY BONAFIDELY, CANNOT BE EXPECTED TO GET THE DOCUMENT REGISTERED WHEN THE OTHER PARTY WAS NOT COOPERATING WITH THE ASSESSEE WITH AN INTENTION TO CHEAT THE ASSESSEE. 8. THE LEARNED DR, ON THE OTHER HAND, SUBMITTED THA T EVEN IF THE CONTENTIONS OF THE ASSESSEE ARE ACCEPTE D THAT HIS VENDOR WAS NOT COOPERATING WITH HIM AND HAS CHEATED HIM AND HAS NOT REGISTERED THE PROPERTY INSPITE OF THE RECE IPT OF RS.1.00 CRORE AS ADVANCE FOR SALE OF THE PROPERTY, THE ASSE SSEE CANNOT BE ALLOWED EXEMPTION U/S 54F OF THE ACT AS HE HAS FAIL ED TO COMPLY WITH THE CONDITIONS MENTIONED THEREIN I.E. OF HAVIN G PURCHASED THE PROPERTY WITHIN ONE YEAR BEFORE OR TWO YEARS AF TER THE SALE OF THE ORIGINAL ASSET. THEREFORE, ACCORDING TO HIM, TH E EXEMPTION U/S 54F HAS RIGHTLY BEEN DENIED AND THE CAPITAL GAIN BR OUGHT TO TAX IN THE HANDS OF THE ASSESSEE FOR THE RELEVANT A.Y. ITA NO 102 1 OF 2017 MAHESH MALNEEDI HYDERABAD. PAGE 6 OF 10 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE UNDISPUTED FACTS ARE TH AT THE ASSESSEE HAS SOLD HIS PROPERTY AND THERE IS NO DISPUTE ABOUT THE QUANTUM OF CAPITAL GAIN ARISING ON SUCH SALE OF PROPERTY. I T IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS PAID A SUM OF RS.1.00 CRORES TO THE VENDOR, THOUGH THE CIT (A) HAS OBSERVED THAT THE AS SESSEE HAS PROVED THE PAYMENT OF ONLY A SUM OF RS.37.00 LAKHS BY WAY OF CHEQUE AND THE BALANCE BY WAY OF CASH IS NOT PROVED . THEREFORE, THE PAYMENT OF CONSIDERATION TO THE EXTENT OF RS.37 .00 LAKHS IS PROVED BEYOND REASONABLE DOUBT, WHEREAS THE PAYMENT OF THE BALANCE BY WAY OF CASH AFTER WITHDRAWAL FROM BANK A /C IS DOUBTED BY THE CIT (A). WE FIND THAT THE AO HAS NOT DOUBTED THE PAYMENT OF RS.1.00 CRORES TO THE VENDOR. IT IS ALSO NOT IN DISPUTE THAT THE TOTAL SALE CONSIDERATION FOR THE PROPERTY IS FOR RS.4.40 CRORES AND THE ASSESSEE WAS REQUIRED TO MAKE THE PA YMENT OF THE BALANCE AMOUNT. ACCORDING TO THE ASSESSEE, THE SALE TRANSACTION HAS NOT GONE THROUGH BECAUSE THE VENDOR INTENDED TO CHEAT HIM AND IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE HAS ISSUED A LEGAL NOTICE TO THE VENDOR AND ALSO FILED A CIVIL SUIT BE FORE THE CIVIL COURT AT HYDERABAD FOR SPECIFIC PERFORMANCE OF THE SALE AGREEMENT. 10. AS FAR AS THE CLAIM OF EXEMPTION U/S 54F IS CON CERNED, IT IS ON THE GROUND THAT HE HAS INVESTED THE ENTIRE CAPITAL GAIN FOR PURCHASE OF THE RESIDENTIAL HOUSE BY PAYING THE ADV ANCE OF RS.1.00 CRORE WITHIN ONE YEAR BEFORE THE SALE OF TH E ORIGINAL ASSET. WE FIND THAT TO CLAIM EXEMPTION U/S 54F OF THE ACT, THE ASSESSEE HAS TO INVEST THE CAPITAL GAINS IN PURCHASE OF A RE SIDENTIAL HOUSE WITHIN A PERIOD OF ONE YEAR BEFORE OR WITHIN A PERI OD OF TWO YEARS ITA NO 102 1 OF 2017 MAHESH MALNEEDI HYDERABAD. PAGE 7 OF 10 AFTER SALE OF THE ORIGINAL ASSET OR INVEST IN CONST RUCTION OF A RESIDENTIAL HOUSE WITHIN A PERIOD OF THREE YEARS AF TER THE SALE OF THE ORIGINAL ASSET, THE DR HAS PLACED MUCH RELIANCE ON THE WORDS PURCHASED/CONSTRUCTED USED IN THE SAID SECTION TO MEAN THAT THE TRANSACTION HAS TO BE CONCLUDED WITHIN THE SPEC IFIED PERIOD TO BE ELIGIBLE FOR DEDUCTION U/S 54F OF THE ACT. 11. LET US THEREFORE, CONSIDER THE JUDICIAL PRECEDE NTS RELIED UPON BY THE LEARNED COUNSEL FOR THE ASSESSEE ON THE ISSUE. THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SHAKUNTALA DEVI (DECD.) & OTHERS REPORTED IN (2016) 389 ITR 36 6 (KAR.) HAS HELD THAT WHERE THE CAPITAL GAINS HAS BEEN INVESTED IN EITHER PURCHASE OF RESIDENTIAL BUILDING OR SPENT ON CONSTR UCTION OF RESIDENTIAL BUILDING, THE ASSESSEE WOULD BE ENTITLE D TO THE BENEFIT FLOWING FROM SECTION 54 OF THE ACT IRRESPECTIVE OF THE FACT OF THE TRANSACTION NOT BEING COMPLETE IN ALL RESPECTS. FUR THER, IN THE CASE OF PR. CIT V. C. GOPALA SWAMY (KAR.) REPORTED IN (2016) 384 ITR 307 (KAR.), THE HON'BLE KARNATAKA HIGH COURT H AS HELD THAT THE FACT THAT THE BUILDER HAS NOT HANDED OVER THE P OSSESSION WITHIN A PERIOD OF THREE YEARS AFTER THE SALE OF TH E ORIGINAL ASSET, WOULD NOT DISENTITLE THE ASSESSEE FROM CLAIMING BEN EFIT U/S 54F AND THAT THE ASSESSEE WAS ENTITLED TO THE CLAIM OF EXEMPTION U/S 54F BECAUSE HE HAD REINVESTED THE ENTIRE CAPITAL GA INS BY MAKING PAYMENT IN FULL TO THE BUILDER. THE DECISION OF THE COORDINATE BENCH IN THE CASE OF MRS. BHAVANA CUCCRIA VS. ITO R EPORTED IN (2017) 165 ITD 124 (CH.) ALSO HAS LAID DOWN THAT FO R THE PURPOSE OF CLAIMING EXEMPTION U/S 54F OF THE ACT, THE INVES TMENT OF SUBSTANTIAL AMOUNT IN THE NEW ASSET IS SUFFICIENT C OMPLIANCE AND IN SUCH CIRCUMSTANCES, THE ASSESSEE IS ENTITLED TO CLAIM ITA NO 102 1 OF 2017 MAHESH MALNEEDI HYDERABAD. PAGE 8 OF 10 EXEMPTION DESPITE THE FACT THAT THE CONSTRUCTION IS NOT COMPLETED WITHIN THREE YEARS OR THE HOUSE IS NOT PURCHASED WI THIN TWO YEARS OF THE SALE OF THE ORIGINAL ASSET. THE COORDINATE B ENCH OF THIS TRIBUNAL IN THE CASE OF VIKAS KUMAR VS. DCIT (CITED SUPRA) WAS CONSIDERING THE CASE OF AN ASSESSEE WHO, AFTER PURC HASE OF A NEW RESIDENTIAL PROPERTY HAD CLAIMED EXEMPTION U/S 54F OF THE ACT AND THEREAFTER, ENTERED INTO A DEVELOPMENT AGREEMEN T WITH THE BUILDER IN THE SUBSEQUENT A.Y, TO CONSTRUCT A COMME RCIAL PROPERTY AND HAD DEMOLISHED THE NEW ASSET. THE TRIBUNAL HELD THAT IN THE RELEVANT A.Y, THE ASSESSEE WAS ELIGIBLE TO CLAIM EX EMPTION U/S 54F AS HE SATISFIED THE RELEVANT CONDITIONS AND IF THE ASSESSEE DEMOLISHED THE BUILDING SUBSEQUENTLY WITHIN A PERIO D OF THREE YEARS, THE ASSESSEE LOSSES THE BENEFIT U/S 54F AND THE CAPITAL GAINS SO CLAIMED IS TAXABLE IN THE YEAR IN WHICH TH E NEW ASSET IS TRANSFERRED. 12. HAVING REGARD TO THE ABOVE DECISIONS, WE FIND T HAT THE COMMON FINDING OF ALL THE COURTS IS THAT IF THE ASS ESSEE HAS INVESTED THE LONG TERM CAPITAL GAINS IN PURCHASE OR CONSTRUCTION OF A NEW RESIDENTIAL HOUSE WITHIN THE PERIOD SPECIF IED IN THE SECTION, THEN, THE ASSESSEE IS ELIGIBLE TO CLAIM DE DUCTION U/S 54F OF THE ACT. ADMITTEDLY, THE ASSESSEE HAS PAID AN A DVANCE OF RS.1.00 CRORE TO THE VENDOR, BUT THE PROPERTY COULD NOT BE REGISTERED BECAUSE OF THE VENDORS ATTITUDE. THERE IS NO MATERIAL ON RECORD TO ATTRIBUTE THE NON-REGISTRATION DUE TO ANY FAULT OF THE ASSESSEE. THE ASSESSEE HAS ALSO FILED A COPY OF THE SUIT FOR SPECIFIC PERFORMANCE IN OS NO.20094/2015 FILED BEFORE THE AD DITIONAL CHIEF JUDGE, CITY CIVIL COURT, HYDERABAD WHEREIN TH E ASSESSEE HAS STATED THAT HE HAD PAID THE ADVANCE TO THE VEND OR ON ITA NO 102 1 OF 2017 MAHESH MALNEEDI HYDERABAD. PAGE 9 OF 10 3.7.2013 AND THAT THE ASSESSEE HAS ISSUED LEGAL NOT ICES TO THE VENDOR ON 5.4.2014 AND ALSO ON 21.5.2015 FOR EXECUT ION OF THE REGISTERED SALE DEED IN FAVOUR OF THE ASSESSEE. IT IS ALSO SEEN FROM THE SAID DOCUMENT THAT ON 31.8.2015, THE HSBC BANK LTD HAS EXECUTED A REGISTERED SALE DEED IN FAVOUR OF ONE MR . DAGGUMATI KOTI REDDY BY AUCTIONING THE PROPERTY SINCE THE VEN DOR HAD NOT CLEARED THE DUES TO THE BANK AND COMMITTED DEFAULT. THUS, ON 31.8.2015, THE AGREEMENT OF SALE HAS BECOME IMPOSSI BLE TO BE HONOURED AS THE PROPERTY ITSELF HAS BEEN AUCTIONED AND SOLD TO ANOTHER PARTY. THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 25.7.2014 I.E. AFTER ISSUANCE OF THE LEGAL NOTICE D T. 5.4.2014 TO THE VENDOR CALLING UPON HIM TO EXECUTE THE REGISTERED S ALE DEED IN FAVOUR OF THE ASSESSEE BY CLEARING THE BANK LOAN AN D RECEIVING THE BALANCE SALE CONSIDERATION OF RS. 3.4 CRORES. THERE FORE, AS FAR AS THE ASSESSEE IS CONCERNED, HE WAS AWARE OF THE BANK LOAN AND ALSO THE DEFAULT COMMITTED BY THE VENDOR IN REPAYIN G THE LOAN. THUS, THE PROPERTY WAS NOT WITHOUT AN ENCUMBRANCE A S ON THE DATE OF FILING OF THE RETURN AND THERE WAS NO CERTA INTY OF THE TRANSACTION GOING THROUGH. IN A CASE WHERE THE SALE IS NOT CONCLUDED OR THE AGREEMENT OF SALE IS NOT CERTAIN T O BE HONOURED, THE ASSESSEE COULD NOT HAVE CLAIMED TO HAVE PURCHAS ED THE RESIDENTIAL PROPERTY WITHIN ONE YEAR BEFORE OR WITH IN TWO YEARS AFTER THE SALE OF THE ORIGINAL ASSET OR TO HAVE CON STRUCTED THE PROPERTY WITHIN THREE YEARS AFTER THE SALE OF THE P ROPERTY FOR THE PURPOSES OF CLAIMING THE DEDUCTION U/S 54F(4) OF TH E ACT. THE DECISIONS RELIED UPON BY THE ASSESSEE ARE THEREFORE , DISTINGUISHABLE ON FACTS. THUS, THE DISALLOWANCE OF ASSESSEES CLAIM U/S 54F IS CONFIRMED AND THE ASSESSEES GROUN DS ON THIS ISSUE ARE REJECTED. ITA NO 102 1 OF 2017 MAHESH MALNEEDI HYDERABAD. PAGE 10 OF 10 13. AS REGARDS THE UNEXPLAINED CASH DEPOSITS WITH R EGARD TO RS.6.00 LAKHS INTO THE BANK A/C OF THE ASSESSEE, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THEY ARE OU T OF THE ASSESSEES SAVINGS OVER THE PAST THREE YEARS ARISIN G OUT OF RENTAL INCOME AND ALSO AGRICULTURAL INCOME. IN SUPPORT OF HIS CONTENTION THAT THE ASSESSEE HAD SUFFICIENT INCOME IN THE EARL IER A.Y, HE HAS FILED THE COPIES OF THE RETURNS OF RELEVANT A.Y AND THE COMPUTATION OF INCOME IN SUCH YEARS. FROM THE DETAILS FILED BY THE ASSESSEE, IT IS SEEN THAT THE ASSESSEE HAD AGRICULTURAL INCOME A ND ALSO INCOME FROM OTHER SOURCES AND HOUSE PROPERTY FROM THE A.YS 2012-13 TO 2014-15 SUFFICIENT TO EXPLAIN THE SOURCES FOR THE D EPOSIT OF RS.6.00 LAKHS. THEREFORE, THE SOURCE FOR THE DEPOSI T OF RS.6.00 LAKHS IS ACCEPTED. HOWEVER, AS REGARDS THE SOURCE F OR THE DEPOSIT OF RS.20.00 LAKHS, BEING THE AMOUNT CLAIMED TO BE W ITHDRAWN FOR PURCHASE OF PROPERTY IN THE EARLIER YEAR AND RE-DEP OSITED THE SAME AFTER THE PERIOD OF ONE YEAR DUE TO THE TRANSACTION NOT MATERIALIZING, IS NOT ACCEPTABLE. THEREFORE, THE AD DITION OF RS.20.00 LAKHS IS CONFIRMED. 14. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JANUARY, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 25 TH JANUARY, 2018 VINODAN/SPS COPY TO: 1 M/S. ANJANEYULU & CO. CAS, 30 BHAGYALAKSHMI NAGAR , GANDHI NAGAR, HYDERABAD 500080 2 ITO WARD 11(3) HYDERABAD 3 CIT (A) - 5 HYDERABAD 4 PR. CIT 5 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER