DIGUMARTI VENKATRAM GOPAL, MUMBAI V. ITO 10(3)(1), MUMBAI

ITA 1091/MUM/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7854 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 10-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R S SRIVASTAVA
• Keywords: Salary income; Opportunity of being heard; Benefit of exemption
• Section: 143(3); 54F; 234B; 131; 54; 139

Judgement Text

1 ITA NO.1091/MUM/2010 ASSTT. YEAR : 2006-07. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI V. DURGA RAO, JUDICIAL MEMBER. I.T.A. NO. 1091/MUM/2010. ASSESSMENT YEAR : 2006-07. DIGUMARTI VENKATRAM GOPAL, THE INCOME-TAX OFFICER, 18, EDEN BUNGALOWS, VS. 10(3)(1), ADI SHANKARACHARYA MARG, MUMBAI. HIRANANDANI GARDEN, POWAI, MUMBAI 400 076. PAN AACPD 1336J. APPELLANT RESPONDENT. APPELLANT BY : SHRI VIJAY MEHTA. RESPONDENT BY : SHRI R.S. SRIVASTAVA. O R D E R PER J. SUDHAKAR REDDY, A.M. : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED A GAINST THE ORDER OF THE CIT(APPEALS)- 22, MUMBAI DATED 07-12-2009. 2. FACTS IN BRIEF: THE ASSESSEE IS AN INDIVIDUAL AND HAS FILED HIS RET URN OF INCOME DECLARING INCOME FROM SALARY, INCOME FROM BUSINESS AND INCOME FROM LONG TERM CAPITAL GAINS. HE ALSO HAD INCOME FROM OTHER SOURCES. THE A SSESSEE CLAIMED DEDUCTION U/S 54 OF THE INCOME-TAX ACT. 3. THE ASSESSEE WAS A QUALIFIED ENGINEER IN DESIGNI NG, DRAWING, MANUFACTURING AND MARKETING POLLUTION CONTROL SYSTEM AND RELATED MATTERS. HE WAS WORKING AS AN 2 ITA NO.1091/MUM/2010 ASSTT. YEAR : 2006-07. EXECUTIVE DIRECTOR OF AN ENGINEERING COMPANY, M/S A EROVENT PROJECTS P. LTD. FROM 17 TH MAY, 1988 TO 30 TH SEPT., 2005. THE ASSESSEE CLAIMS THAT HE RESIGNED FROM THE ABOVE COMPANY AND STARTED HIS PROFESSION AS A C ONSULTANT ENGINEER, OFFERING SERVICES BY WAY OF THE CONSULTANCY, DESIGNING AND D RAWING ETC. OF POLLUTION CONTROL SYSTEM. THE ASSESSEE JOINED M/S AARCO ENGI NEERING PROJECT P. LTD. ON 1 ST APRIL, 2006. THE ASSESSEE CLAIMED THAT HE CONTINUED HIS PROFESSION AS A CONSULTANT ENGINEER, WHILE WORKING AS A DIRECTOR OF AARCO ENGI NEERING PROJECTS P. LTD. 4. DURING THE IMPUGNED PREVIOUS YEAR, THE ASSESSEE CLAIMED THAT HE HAD RECEIVED PROFESSIONAL FEES OF RS.11,000/- IN CASH F ROM M/S DOLPHIN FIBRE GLASS INDUSTRIES, G-108, GIRIJA COMPOUND, OPP. IPCL, THA NE BELAPUR ROAD, RABALE, NAVI MUMBAI-400 071. HE CLAIMED THAT HE HAD RENDERE D SERVICES BY WAY OF DISCUSSIONS AND ADVISE ON DESIGN, ESTIMATE AND PREP ARATION OF DRAWINGS FOR FUME SCRUBBBERS AND CENTRIFUGAL FANS FOR ONE OF THEIR P ROJECTS. 5. THIS AMOUNT OF RS.11,000/- WAS DECLARED BY THE A SSESSEE UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AND THE RETUR N OF INCOME WAS FILED ON 30- 10-2006. THE ASSESSEES CLAIM IS THAT THE DUE DATE FOR FILING OF RETURN IN HIS CASE WAS 30 TH OCT., 2006 FOR THE REASON THAT, THE ASSESSEE HAS I NCOME FROM PROFESSION. THE ASSESSEE HAD CLAIMED EXEMPTION U/S 54 OF THE AC T AND HAS DEPOSITED THE CAPITAL GAIN IN THE SPECIFIED CAPITAL GAIN ACCOUNT, IN TERM S OF SECTION 54(2) ON 28 TH SEPT., 2006 WHICH IS WELL BEFORE THE DUE DATE OF RETURN ON 31 ST OCT., 2006. 6. THE AO DOUBTED THE CLAIM OF THE ASSESSEE THAT HE HAS RECEIVED PROFESSIONAL FEES OF RS.11,000/- AND HAD EXAMINED MR. P.S. JOHNS ON, PROPRIETOR OF M/S DOLPHIN FIBRE GLASS INDUSTRIES ON TWO OCCASIONS I.E. 3 RD OCT., 2008 AND 18 TH NOV., 2008. THE AO ALSO EXAMINED THE ASSESSEE ON OATH ON 18 TH NOV., 2008. AFTER QUESTIONING BOTH 3 ITA NO.1091/MUM/2010 ASSTT. YEAR : 2006-07. THE PARTIES AND ALSO EXAMINING AN AFFIDAVIT FILED B Y THE ASSESSEE, IN SUPPORT OF HIS CLAIM I.E. ENGAGED IN PROFESSION, THE AO AT PARA 5 .1 TO 5.4 HELD AS FOLLOWS : 5.1 ASSESSEES CLAIM AS BUSINESS/PROFESSIONAL REC EIPTS: WITHOUT PREJUDICE TO THE ABOVE VIEW TAKEN ABOUT G ENUINENESS OF TRANSACTION, OTHER ISSUES WHICH REQUIRED TO BE EXAM INED ARE: 1. WHETHER THE ASSESSEE HAD REALLY CARRIED OUT BUSINES S OR PROFESSIONAL ACTIVITIES. 2. WHETHER THE RECEIPTS FROM A SINGLE TRANSACTION COUL D BE CONSIDERED AS BUSINESS/PROFESSIONAL INCOME? 5.2 TO EXAMINE THIS ISSUE, THE ASSESSEE WAS ISSUED A SHOW CAUSE NOTICE VIDE 21.11.2008 AS PER BELOW: IT IS SEEN THAT DURING A.Y. 2006-07, YOU HAVE STAT ED TO HAVE ENTERED INTO ONLY ONE BUSINESS / PROFESSIONAL TRANSACTION F OR WHICH YOU HAD ACCEPTED TOKEN FEES OF RS.11,000/-. IN A.Y. 2007-08 THERE WAS NO SUCH ACTIVITY / INCOME. IN A.Y. 2008-09, YOU HAVE S TATED IN THE STATEMENT THAT THERE IS ONLY ONE TRANSACTION IN THE YEAR FOR WHICH YOU HAVE NOT RECEIVED PAYMENT TILL DATE OF THE RECORDIN G OF STATEMENT AND EVEN RETURN OF INCOME IS ALSO NOT FILED FOR A.Y. 20 08-09. IN THESE CIRCUMSTANCES, YOU ARE REQUESTED TO SHOW CAUSE WHY THE PROFESSIONAL INCOME OF RS.11,000/- DECLARED BY YOU IN A.Y. 2006- 07 SHOULD NOT BE TREATED AS CASUAL INCOME OR INCOME FROM OTHER SOURC ES. 5.3. VIDE LETTER DATED 28.11.2008, THE ASSESSEE SUB MITTED FOLLOWING REPLY: OUR CLIENT IS A QUALIFIED ENGINEER WITH VAST EXPE RIENCE IN DESIGNING, DRAWING, MANUFACTURE AND MARKETING POLLUTION CONTRO L SYSTEM AND RELATED MATTES. HE COMMENCED HIS PROFESSION AS CONS ULTING ENGINEER IN THE LAST QUARTER OF 2005 AND CARRIES ON THE PROF ESSION TILL DATE AND CONTINUOUS TO EARNS INCOME BY WAY OF PROFESSIONAL F EES. WHILE THE FREQUENCY OF RECEIPT OF PROFESSIONAL FEES HAVE NOT BEEN AS OUR CLIENT WOULD HAVE WISHED, AS YOU WOULD APPRECIATE, SUCH FR EQUENCY OR OTHERWISE IS NOT RELEVANT IN DETERMINING THE NATURE OF THE INCOME. UNDER THESE CIRCUMSTANCES, OUR CLIENT WONDERS HOW Y OU COULD TREAT SUCH INCOME AS CASUAL INCOME OR AS ONE ARISING OU TSIDE HIS PROFESSION. 4 ITA NO.1091/MUM/2010 ASSTT. YEAR : 2006-07. WE HAVE BEEN INSTRUCTED BY OUR CLIENT THAT SHOULD Y OU HOLD AN ERRONEOUS VIEW THAT THE INCOME OF RS.11,000/- RECEIVED BY OUR CLIENT DURING THE PREVIOUS YEAR IS NOT HIS PROFESSIONAL FEES, KINDLY LET HIM KNOW THE SPECIFIC REASON FOR YOUR VIEW AND GIVEN HIM AN OPPORTUNITY O F BEING HEARD ON THE MATTER. 5.4 THE ASSESSEES REQUEST FOR FURTHER OPPORTUNITY OF BEING HEARD IS REJECTED AS THERE IS NO ANY DIFFERENT REASON OTHER THAN THOSE MENTIONED IN THE SHOW CAUSE NOTICE DATED 21/11/2008. THE NOTICE IS V ERY CLEAR IN TERMS OF THE INTENTION OF THE UNDERSIGNED AND REASONS THEREOF. H OWEVER, THE CASE DISCUSSED WITH SHRI M.J. KAPADIA, THE AR ON 8/12/20 08. THEREAFTER THE AO HELD THAT THE DUE DATE FOR FILING OF THE RETURN OF INCOME U/S 139(1), FOR THE ASSESSEE WAS 31-7-2006 AND AS THE A SSESSEE HAS NOT DEPOSITED THE CAPITAL GAINS EARNED, IN A CAPITAL GAINS ACCOUNT, BEFORE 31-07-2006, THE EXEMPTION CLAIMED BY THE ASSESSEE U/S 54 IS TO BE REJECTED. H E ASSESSED THE INCOME AT RS.49,64,019/-. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL WITHOUT SUCCESS. FURTHER AGGRIEVED, THE ASSESSEE IS IN APPE AL BEFORE US ON THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE I NCOME-TAX ACT, 1961. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN UPHOLDING THE ASSESSMENT OF A SUM OF RS.11,000/- UNDER THE HEAD INCOME FROM OTHER SOURCES AS AGAINST THE DECLARED HEAD, NAMELY, PRO FITS AND GAINS OF BUSINESS OR PROFESSION. 3. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE DENIAL OF THE BENEFIT OF EXEMPTION U/S 54(2) OF THE ACT IN RESPECT OF RS.38,35,700/- DEPOSITED BY THE ASSESSEE AS PER CAP ITAL GAIN ACCOUNT SCHEME, 1988. 4. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN SUSTAINING THE LEVY OF INTEREST U/S 234A, 234B AND 234C OF THE INCOME-TAX ACT. 5 ITA NO.1091/MUM/2010 ASSTT. YEAR : 2006-07. 7. THE LEARNED COUNSEL FOR THE ASSESSEE, MR. VIJAY MEHA, TOOK THIS BENCH THROUGH THE FACTS AS RECORDED BY THE AO AS WELL AS THE CIT(APPEALS). HE FILED A PAPER BOOK RUNNING INTO 148 PAGES, WHICH INCLUDED THE DECISIONS FROM VARIOUS COURTS. MR. VIJAY MEHTA DREW THE ATTENTION OF THE B ENCH TO PAGE 8 OF THE ASSESSEES PAPER BOOK WHICH CONTAINS THE COPY OF TH E STATEMENT OF SHRI P.S. JOHNSON RECORDED ON 8-11-2008, WHEREIN IN ANSWER TO QUESTION NO. 2, MR. JOHNSON HAS REPLIED THAT HE HAD VISITED MR. GOPALS PLACE 3 TO 4 TIMES AND IN REPLY TO QUESTION NO. 4 THAT HE HAD PAID MR. GOPAL IN CASH, AS ON THAT DATE HE WAS CARRYING SOME CASH. HE TOOK THIS BENCH TO ANSWERS TO QUESTIO N NOS. 8, 14 AND 16, AND POINTED OUT THAT NOWHERE IN THE STATEMENT, MR. JOHN SON, PROPRIETOR OF DOLPHIN FIBRE GLASS INDUSTRIES GAVE A SUGGESTION THAT SUCH PAYMENT WAS NOT MADE FOR SERVICES RENDERED. HE DREW THE ATTENTION OF THE BEN CH TO PAGE 11 WHICH CONSISTS A COPY OF THE STATEMENT OF THE ASSESSEE RECORDED BY T HE AO U/S 131 OF THE ACT ON 18- 11-2008 TO POINT OUT TO THE RECEIPT ISSUED BY THE A SSESSEE TO DOLPHIN FIBRE GLASS INDUSTRIES, A COPY OF WHICH IS AT PAGE 15 OF THE AS SESSEES PAPER BOOK, CORRESPONDENCE WITH DOLPHIN FIBRE GLASS INDUSTRIES AT PAGE 16, AFFIDAVIT OF THE ASSESSEE AT PAGES 17 & 18. HE POINTED OUT THAT THE AO WAS WRONG IN TRYING TO PICK UP INCONSISTENCIES IN THE REPLIES GIVEN BY THE ASSE SSEE AND TRIED TO DEMONSTRATE THAT THE REPLIES WERE SIMILAR AND IDENTICAL. HE ALSO REF ERRED TO THE INFORMATION GATHERED BY THE AO FROM M/S AARCO ENGINEERING PROJECTS P. LT D. AND POINTED OUT THAT THE COMPANY HAS STATED THAT THE ASSESSEE WAS EMPLOYED O N CONTRACT BASIS AND NO RESTRICTION HAS BEEN PLACED IN REGARD TO CARRYING O N ANY BUSINESS OR PROFESSION OUTSIDE OFFICE HOURS. HE REFERRED TO PAGE 98 OF THE PAPER BOOK TO DEMONSTRATE THAT THE INFORMATION GIVEN BY THE ASSESSEE AND THE PROPR IETOR OF DOLPHIN FIBRE GLASS INDUSTRIES WERE NOT ONLY IDENTICAL BUT MINUTE DETAI LS TALLIED. HE RELIED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF RAM AGARWAL VS. JCIT 81 ITD 163 FOR THE PROPOSITION THAT EVEN A SIN GLE TRANSACTION IS ASSESSABLE AS 6 ITA NO.1091/MUM/2010 ASSTT. YEAR : 2006-07. INCOME FROM BUSINESS. HE FURTHER POINTED OUT THAT I N THIS CASE THE ASSESSEE COULD NOT DEPOSIT THE AMOUNT IN THE CAPITAL GAINS ACCOUNT ON OR BEFORE 31-8-1995, WHICH IS THE LAST DATE SPECIFIED BY THE STATUTE, FOR CER TAIN REASONS WHICH WERE BEYOND THE CONTROL OF THE ASSESSEE AND KEEPING IN MIND THE AV OWED OBJECT BEHIND INSERTION OF SECTION 54F THE ASSESSEE WOULD BE ENTITLED TO EXEMP TION, THOUGH THE DEPOSIT WAS MADE ON 1-9-1995. HE LAID EMPHASIS ON THE SPIRIT OF THE SECTION. 8. HE RELIED ON THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF MUKESH G. DESAI (HUF) VS. ITO 312 ITR 302 (AT) WHER EIN THE TRIBUNAL HELD THAT, IN THE CONTEXT OF RELIEF U/S 54 OF THE INCOME-TAX A CT, 1961, INVESTMENT HAS TO BE UNDERSTOOD IN A LIBERAL SENSE WITHOUT LIMITING THE MEANINGS OF LEXICAL LEGALESE. HE POINTED OUT THAT AN AMOUNT OF RS.27 LAKHS WAS KE PT AS A FIXED DEPOSIT WITH THE VERY SAME BANK ALL ALONG AND ON 29-9-2006, THE F.D . WAS PRE MATUREALLY LIQUIDATED WITH INTEREST AND WAS CONVERTED INTO CAP ITAL GAIN FIXED DEPOSIT, TO COMPLY WITH SECTION 54F(4) OF THE ACT. SIMILARLY HE SUBMITTED THAT AN AMOUNT OF RS.7,86,548/- WAS HELD BY THE ASSESSEE IN A SAVING BANK ACCOUNT WITH CORPORATION BANK WHICH WAS ALSO TRANSFERRED TO CAPITAL GAINS AC COUNT ON 29-9-2006. SIMILARLY HE WAS HOLDING UTI DEBT FUND (MUTUAL FUND) AMOUNTIN G TO RS.4 LAKHS AND SUBMITTED THAT THIS AMOUNT WAS DIRECTLY TRANSFERRED TO CAPITAL GAIN ACCOUNT ON 29-9- 2006. MR. VIJAY MEHTA SUBMITTED THAT THE AMOUNTS IN QUESTION, RIGHT FROM THE DATE OF RECEIPT OF SALE PROCEEDS, WERE LYING WITH THE BA NK EITHER IN THE FIXED DEPOSIT ACCOUNT OR SAVINGS BANK ACCOUNT AND IT WAS ONLY ON 29-9-2006, THESE AMOUNTS WERE CONVERTED INTO CAPITAL GAIN FIXED DEPOSIT WIT H THE VERY SAME BANK. SIMILARLY, THE AMOUNT LYING WITH THE UTI DEBIT FUND WAS ALSO C ONVERTED INTO CAPITAL GAIN FIXED DEPOSIT. HE RELIED ON THE JUDGMENT OF THE HON BLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. RAJESH KUMAR JALAN 286 ITR 274 FOR THE PROPOSITION THAT BENEFICIAL PROVISION SHOULD BE INTERPRETED IN SUCH A MANNER TH AT THE OBJECT OF THE PROVISION IS 7 ITA NO.1091/MUM/2010 ASSTT. YEAR : 2006-07. ACHIEVED. HE ALSO POINTED OUT THAT THE HONBLE HIGH COURT HAS HELD THAT SECTION 139 CANNOT MEAN ONLY SECTION 139(1) BUT ALSO MEANS OF ITS SUB-SECTIONS. IT HELD THAT IF THE AMOUNT IS DEPOSITED BEFORE THE TIME ALLOWED U/S 139(4), THE BENEFIT SHOULD BE GRANTED TO THE ASSESSEE. 9. THE LEARNED DR, MR. R.S. SRIVASTAVA, OPPOSED THE CONTENTIONS OF THE ASSESSEE. HE SUBMITTED THAT THE FACTS DEMONSTRATE T HAT THE ASSESSEE HAS NOT RENDERED ANY SERVICES WHATSOEVER TO M/S DOLPHIN FI BRE GLASS INDUSTRIES. HE SUBMITTED THAT THIS IS A MAKE BELIEVE TRANSACTION A ND THIS WAS ONLY WITH AN INTENTION THAT DECLARING INCOME UNDER THE HEAD INC OME FROM PROFITS & GAINS OF BUSINESS AND PROFESSION AND CONSEQUENTLY HAVE EXTE NDED TIME FOR FILING THE RETURN OF INCOME. HE TOOK THIS BENCH THROUGH THE ORDER OF THE AO AND POINTED OUT THAT THERE WERE INCONSISTENCIES IN THE STATEMENTS GIVEN BY THE ASSESSEE AND MR. P.S. JHONSON OF DOLPHIN FIBRE GLASS INDUSTRIES. HE EMPHA SIZED THE POINT THAT THIS IS A SINGLE RECEIPT AND IT IS RIGHTLY HELD AS ASSESSABLE UNDER THE HEAD OTHER SOURCES. HE EMPHASIZED THE POINT THAT THE ASSESSEE HAS REFERRED TO THIS PAYMENT AS A TOKEN AMOUNT AND NOTHING IS SAID ABOUT THE FULL PAYMENT. HE TOOK THIS BENCH THROUGH PARA 4.10 OF THE ASSESSMENT ORDER AND POINTED OUT T HAT THE ASSESSEE STATED THAT HE HAS NOT RECEIVED INCOME FROM CONSULTANCY SERVICES F OR THE PREVIOUS YEAR 2007-08. ON THE DECISION IN THE CASE OF RAM AGARWAL VS. JCIT 81 ITD 163, THE LEARNED DR SUBMITTED THAT IT WAS A CASE WHERE THE ASSESSEE HAD DECLARED PROFESSIONAL INCOME IN THE SUBSEQUENT YEAR AND THE AO ACCEPTED THE SAME AN D THAT UNDER THOSE CIRCUMSTANCES THE CLAIM OF THE ASSESSEE WAS ACCEPTE D. HE POINTED OUT THAT IN THE CASE ON HAND THE FACTS ARE DIFFERENT. HE REFERRED T O PARA 5.10 OF THE AOS ORDER AT PAGE 11 FOR THE DEFINITION OF PROFESSION AND VOCATI ON, AND REFERRED THE JUDGMENT OF THE ALLAHABAD HIGH COURT IN THE CASE OF B. MALICK VS. CIT 67 ITR 616 (ALL.). 8 ITA NO.1091/MUM/2010 ASSTT. YEAR : 2006-07. 10. THE LEARNED COUNSEL FOR THE ASSESSEE IN HIS REP LY SUBMITTED THAT THE WORD TOKEN WAS USED AS IT WAS THE FIRST RECEIPT AND TH E QUANTUM OF RECEIPT AND CANNOT BE SAID TO BE PART PAYMENT. 11. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERA TION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPE RS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITE D, WE HOLD AS FOLLOWS. 12. THE ENTIRE EFFORT OF THE AO SEEMS TO BE TO DENY THE CLAIM OF EXEMPTION BY THE ASSESSEE U/S 54, ON THE GROUND THAT THE ASSESSE E HAD MADE A TECHNICAL VIOLATION BEING, DEPOSITING THE AMOUNT IN THE SPECIFIED ACCOU NT OF THE BANK ON 28 TH SEPT., 2006 INSTEAD OF 31 ST JULY, 2006, WHEN THE ASSESSEE IS CLAIMING THAT THE LAST DATE OF THE FILING OF THE RETURN, IN HIS CASE, WAS 30 TH OCT., 2006. THE FACT REMAINS THAT THE ASSESSEE HAS NOT UTILIZED THE AMOUNT IN QUESTION AN D RS.39 LAKHS WAS ALWAYS KEPT BY THE ASSESSEE IN THE VERY SAME BANK I.E. CORPORAT ION BANK, EITHER AS A FIXED DEPOSIT OR IN THE SAVINGS BANK ACCOUNT. IT WAS ONL Y ON 29-9-2006, THAT THE BANK HAS TECHNICALLY CALLED THIS AMOUNT AS CAPITAL GAIN ACCOUNT FIXED DEPOSIT. THIS IS JUST A CHANGE IN NOMEN CULTURE OF THE FD BY THE BAN K. IT IS NOT THE CHANGE OF THE AO THAT THE ASSESSEE HAS UTILIZED THE MONEY FOR SOM E OTHER PURPOSE. THE FACTS DO NOT SUGGEST SO. THE OBJECT OF LEGISLATURE IN REQUIR ING THE ASSESSEE TO DEPOSIT THE AMOUNT IN A SPECIFIED BANK ACCOUNT, IS TO PREVENT T HE UTILIZATION OF THE AMOUNT FOR SOME OTHER PURPOSE AND NOT TO DENY EXEMPTION. WE DO NOT APPRECIATE THE ATTITUDE OF THE AO. REPEATED SUMMONS WERE ALSO ISSUED TO A R ETIRED EMPLOYEE, WHO HAS FOLLOWED THE LAW. SUMMONS WERE ALSO ISSUED TO THE P ERSON PAYING THE PROFESSIONAL FEES, JUST TO PROVE THE POINT THAT, WHAT WAS RECEIV ED WAS NOT THE PROFESSIONAL FEES SO THAT THE AO CAN HOLD THAT THE LAST DATE OF FILIN G THE RETURN OF INCOME WAS 30-6- 2006.. THE FACT REMAINS THAT WHAT WAS RECEIVED IS INCOME AND HAD BEEN ASSESSED AS SUCH. JUST BECAUSE THE AO SHIFTS THE HEAD OF INC OME, THE LAST DATE OF FILING DOES 9 ITA NO.1091/MUM/2010 ASSTT. YEAR : 2006-07. NOT CHANGE AND WHAT IS TO BE SEEN IS THE CLAIM OF T HE ASSESSEE. FACTUALLY ALSO THE FINDINGS OF THE AO CANNOT BE UPHELD. WE HAVE PERUSE D THE REPLIES GIVEN BY THE ASSESSEE AS WELL AS THE REPLY GIVEN BY MR. P.S. JOH NSON AND ON COMPARISON OF THE SAME, WE UPHOLD THE SUBMISSION OF THE ASSESSEE THAT CONCLUSIONS DRAWN BY THE AO ARE NOT ONLY ERRONEOUS BUT ALSO PERVERSE. THE REPLI ES TALLY ON MINUTE DETAILS AND THERE IS NO VARIATION, AS CLAIMED BY THE AO AT PAG ES 98 AND 99 OF THE ASSESSEES PAPER BOOK, A COMPARATIVE STATEMENT HAS BEEN GIVEN AND IT IS DEMONSTRATED TO US THAT THERE IS NOT MUCH VARIANCE IN THE ANSWERS GIV EN BY THE ASSESSEE AND MR. P.S. JOHNSON SEPARATELY ON THE ISSUES OF DURABILITY, SI ZE AND WEIGHT OF THE PRODUCT. THE ISSUE OF MAKING THE PAYMENT IN CASH IS ALSO PROPERL Y EXPLAINED. THE FACT THAT THE ASSESSEE HAD TAKEN EMPLOYMENT WITH M/S AARCO ENG INEERING PROJECT P. LTD., ALSO DOES NOT COME IN THE WAY OF HIS CLAIM THAT HE HAS R ENDERED PROFESSIONAL SERVICES AND RECEIVED THE FEES. THE FACT THAT THE ASSESSEE H AS RECEIVED SUCH AN AMOUNT FROM M/S DOLPHIN FIBRE GLASS INDUSTRIES IS NOT DISPUTED BY THE AO AND IN FACT THE AMOUNT HAS BEEN ASSESSED BY THE AO AS INCOME OF THE ASSESSEE. WHEN THE ASSESSEE CLAIMS THAT HE HAS RENDERED CERTAIN SERVICES AND A DVISES AND WHEN THE PERSON PAYING THE AMOUNT STATES THAT THE PURPOSE OF PAYMEN T, IS IN LIEU OF PROFESSIONAL SERVICES RENDERED TO HIM, THE AO CANNOT, MERELY ON SURMISES AND CONJECTURES, HOLD OTHERWISE. IN OUR OPINION THE AO HAS NO EVIDENCE W HATSOEVER TO CONTROVERT THE EVIDENCE PRODUCED BY THE ASSESSEE. ALL THE PAPERS ON RECORD, AFFIDAVITS FILED, THE SWORN STATEMENT TAKEN, THE RECEIPTS AND OTHER DOCUM ENTS CLEARLY DEMONSTRATE THAT THE ASSESSEE HAS RENDERED PROFESSIONAL SERVICES IN THAT YEAR AND HAS RECEIVED PROFESSIONAL INCOME. THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING INCOME FROM PROFESSION AND IT IS NOT THE CASE OF THE AO TH AT THE RETURN WAS FILED U/S 139(4). IN OUR HUMBLE OPINION, THE DUE DATE OF FILING OF TH E RETURN FOR THE ASSESSEE IS 30 TH OCT., 2006 AND THE ASSESSEE HAS OPENED A CAPITAL GA INS ACCOUNT U/S 54(2) WELL WITHIN TIME. 10 ITA NO.1091/MUM/2010 ASSTT. YEAR : 2006-07. 13. EVEN OTHERWISE THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. RAJESH KUMAR JALAN 286 ITR 247 HELD AS FOLLOWS : HELD, DISMISSING THE APPEAL, THAT FROM A READING O F SUB-SECTION (2) OF SECTION 54 OF THE ACT IT IS CLEAR THAT ONLY SECTION 139 HAS BEEN MENTIONED THEREIN, IN THE CONTEXT THAT THE UNUTILIZED PORTION OF THE CAPITAL GAINS ON THE SALE OF PROPERTY USED FOR RESIDENCE SHOULD BE DEPOS ITED BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139 O F THE INCOME-TAX ACT, 1961. SECTION 139 CANNOT MEAN ONLY SECTION 139(1) B UT IT MEANS ALL SUB- SECTIONS OF SECTION 139. UNDER SUB-SECTION (4) OF S ECTION 139 ANY PERSON WHO HAS NOT FURNISHED A RETURN WITHIN THE TIME ALLOWED TO HIM UNDER SUB-SECTION (1) OF SECTION 142 MAY FURNISH THE RETURN FOR ANY P REVIOUS YEAR AT ANY TIME BEFORE THE EXPIRY OF ONE YEAR FROM THE END OF THE R ELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASSESSMENT WHICHEVER I S EARLIER. THE ASSESSEES CASE WAS THAT SINCE THE RETURN FOR THE ASSESSMENT Y EAR 1996-97 COULD BE FURNISHED BEFORE THE EXPIRY OF ONE YEAR FROM THE EN D OF THE RELEVANT ASSESSMENT YEAR OR BEFORE THE COMPLETION OF THE ASS ESSMENT, WHICHEVER IS EARLIER, UNDER SUB-SECTION (4), HE WAS ENTITLED TO FULFIL THE CONDITIONS FOR EXEMPTION UNDER SECTION 54 UP TO MARCH 30, 1998. TH E ASSESSEE WAS ENTITLED TO EXEMPTION UNDER SECTION 54 ON THE ENTIRE CAPITAL GAINS ON THE SALE OF HIS HOUSE PROPERTY. 14. APPLYING THE PROPOSITIONS THEREIN TO THE FACTS OF THE CASE, ALTERNATIVELY WE HAVE TO UPHOLD THE CLAIM OF THE ASSESSEE, AS HE HAS DEPOSITED THE AMOUNT IN THE SPECIFIED BANK ACCOUNT, WELL WITHIN THE TIME ALLOWE D U/S 139(4). THE ISSUE IS ALSO COVERED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT O F THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF RAM AGARWAL (SUPRA) AS WELL AS THE DECISION IN THE CASE OF MUKESH G. DESAI 312 ITR 302 (AT). IN VIEW OF THE AB OVE DISCUSSION, WE UPHOLD THE CONTENTIONS OF THE ASSESSEE AND ALLOW GROUND NO S. 1, 2 AND 3. 11 ITA NO.1091/MUM/2010 ASSTT. YEAR : 2006-07. 15. GROUND NO. 4 IS ON THE ISSUE OF LEVY OF INTERES T U/S 234A, 234B AND 234C. THE LEVY OF INTEREST IS MANDATORY AND CONSEQUENTIAL . HENCE THIS GROUND IS DISMISSED. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH MARCH , 2011. SD/- SD/- (V. DURGA RAO) (J. SUDHAK AR REDDY) JUDICIAL MEMBER. A CCOUNTANT MEMBER MUMBAI, DATED: 30 TH MARCH, 2011. WAKODE. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, D-BENCH (TRUE COPY) BY ORDER ASSTT. REGISTRA R, ITAT, MUMBAI.