Nitin Shrikrishna Rathi, Pune V. Income-tax Officer,

ITA 1146/PUN/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0105 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-09-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 11-08-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ARISES OUT OF PASSED
• Keywords: Benefit of exemption
• Section: 54F; 6; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER . / ITA NO.1146/PUN/2015 / ASSESSMENT YEAR : 2010-11 MR. NITIN SHRIKRISHNA RATHI, RATHI NIWAS, LONI KALBHOR, TAL. HAVELI, PUNE 412201 PAN : AFOPR4387J VS. ITO, WARD-4(3), PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER PASS ED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-7, PUNE ON 19.0 3.2015 IN RELATION TO THE ASSESSMENT YEAR 2010-11. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMA TION OF ADDITION OF RS.13,10,000/- ON ACCOUNT OF UNEXPLAINED C ASH DEPOSITS. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSE E WAS FOUND TO HAVE DEPOSITED CASH OF RS.19,14,000/- IN HIS BA NK ACCOUNT APPELLANT BY SHRI ABHAY AVCHAT RESPONDENT BY MS. BRINDHA DATE OF HEARING 19-09-2019 DATE OF PRONOUNCEMENT 20-09-2019 ITA NO.1146/PUN/2015 MR. NITIN S. RATHI 2 MAINTAINED WITH SHIVAJIRAO BHOSALE SAH. BANK. ON BEING CALLED UPON TO EXPLAIN THE SOURCE OF DEPOSITS, THE ASSESSEE SUBM ITTED THAT HE WAS ENGAGED IN THE WHOLESALE AND RETAIL BUSINESS AND THE DEPOSITS WERE MADE OUT OF CASH SALES EFFECTED DURING THE YEAR AM OUNTING TO RS.1.26 CRORE. THE ASSESSING OFFICER (AO) OBSERVED FROM THE BANK PASSBOOK THAT THE ASSESSEE MADE CASH DEPOSIT OF RS.9,80, 000/- ON 19-11-2009 AND OF RS.3,30,000/- ON 23-11-2009 TOTALLING RS.13,10,000/-. IN HIS OPINION, THE ASSESSEE FAILED TO PRO PERLY EXPLAIN THE SOURCE OF SUCH DEPOSITS. HE, THEREFORE, MADE ADDITION FOR SUCH AN AMOUNT, WHICH CAME TO BE AFFIRMED IN THE FIRST APPE AL. 4. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. THE ASSESSEE HAS PLACED ON RECORD AN ABSTRACT OF HIS CASH BOOK ON PAGE 100 ONWARDS OF THE PAPER BOOK. THE RELEVANT EXTRACT OF CASH BOOK FOR THE MONTH OF NOVEMBER, 2009, W HEN CASH OF RS.13,10,000/- WAS DEPOSITED, HAS BEEN PLACED AT P AGE 108 OF THE PAPER BOOK. IT CAN BE SEEN THAT THE OPENING CASH BALANCE AS ON 01- 11-2009 STOOD AT RS.13,35,601/-. THE ASSESSEE MADE C ASH SALES OF RS.23,22,240/- AND RS.3,78,600 ON 01-11-2009. THUS , A TOTAL CASH SALES ON 01-11-2009 STOOD AT RS.27,00,840/-. OUT OF S UCH AVAILABLE CASH BALANCE, THE ASSESSEE DEPOSITED A SUM OF RS.13,1 0,000/- IN HIS BANK ACCOUNT. THE LD. DR SUBMITTED THAT THE AUTHENTICITY OF SU CH AN ITA NO.1146/PUN/2015 MR. NITIN S. RATHI 3 ABSTRACT OF CASH BOOK IS NOT ESTABLISHED. IN OUR OPINION, IF THE POSITION OF CASH SALES VIS-A-VIS THE BANK DEPOSITS AS DEPICTED IN THE ABSTRACT FOR THE MONTH OF NOVEMBER, 2009 IS CORRECT, THEN OBVIOUSLY NO ADDITION ON ACCOUNT OF CASH DEPOSITS IN THE BANK CAN B E MADE BECAUSE SUCH DEPOSITS CAN BE SAFELY PRESUMED TO HAVE B EEN MADE OUT OF CASH SALES MADE DURING THE MONTH, WHICH IS MUCH MOR E THAN THE AMOUNT OF DEPOSITS. CONCURRING WITH THE SUBMISSIONS OF TH E LD. DR, WE SET-ASIDE THE IMPUGNED ORDER AND REMIT THE MATTE R TO THE FILE OF THE AO FOR EXAMINING THE ABSTRACT OF CASH BOOK GIVEN O N PAGE 108 OF THE PAPER BOOK FOR THE MONTH OF NOVEMBER, 2009. IF THE SAME ACCORDS WITH THE REGULAR BOOKS OF ACCOUNT MAINTAINED B Y THE ASSESSEE, THEN NO ADDITION SHOULD BE MADE. IN THE OTHERWISE SCENARIO, THE AO WOULD BE FREE TO PROCEED AS PER LAW. 5. THE NEXT GROUND IS AGAINST THE CONFIRMATION OF ADDITION OF RS.10,75,920/- ON ACCOUNT OF COST OF IMPROVEMENT. 6. THE FACTS APROPOS THIS ISSUE ARE THAT THE ASSESSEE SOLD SHOP AT MARKET YARD FOR RS.35,18,382/-. THIS SHOP WAS PURCHA SED ON 23-07-2007 FOR A SUM OF RS.22,40,000/-. THE ASSESS EE CLAIMED COST OF IMPROVEMENT AT RS.10,75,920/-. IN SUPPORT OF SUCH C OST OF IMPROVEMENT, THE ASSESSEE FILED A LETTER OF M/S. S.S. RATHI ITA NO.1146/PUN/2015 MR. NITIN S. RATHI 4 DEVELOPERS DATED 02-06-2009, WHICH WAS IN THE NATURE OF B ILL FOR CARRYING OUT WORK IN RESPECT OF THE PROPERTY SOLD. THE AO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE DID NOT FURNISH THE DATE AND MODE OF PAYMENT TO M/S. S.S. R ATHI DEVELOPERS. THE LD. CIT(A) ECHOED THE ADDITION. 7. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ASSESSEE CARRIED OUT IMPROVEMENT TO THE PROPERTY THROUGH M/S. S.S. RATHI DEVELOPERS . A COPY OF LEDGER ACCOUNT OF THE CONTRACT RECEIPTS OF MR. S. S. RATHI HAS BEEN PLACED ON RECORD, IN WHICH RECEIPT OF RS.10,75,920 /- FROM THE ASSESSEE HAS BEEN INCLUDED. SUCH AMOUNT OF TOTAL CONTRACT R ECEIPTS AT RS.29,56,976/- HAS GONE INTO HIS PROFIT AND LOSS ACCOU NT. HE FURNISHED THE RETURN WITH THE RESULTANT INCOME ACCORDINGLY. WH EN THE ASSESSEE FURNISHED BILL FROM M/S. S. S. RATHI DEVELOPERS FOR CARRYING OUT IMPROVEMENT TO THE PROPERTY AND THE SAID RECEIP T FROM THE ASSESSEE HAS BEEN SUBJECTED TO TAX IN THE HANDS OF MR. S.S. RATHI, WE DO NOT FIND ANY REASON FOR SUSTAINING THE DISALLOWA NCE ON THE GROUND THAT THE ASSESSEE FAILED TO PROVE THAT IMPROVEME NT WAS CARRIED OUT TO THE PROPERTY IN QUESTION. THE IMPUGNED ORDE R IS OVERTURNED PRO TANTO AND THE CLAIM OF THE ASSESSEE IS ALLOWED. ITA NO.1146/PUN/2015 MR. NITIN S. RATHI 5 8. THE LAST ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMA TION OF DISALLOWANCE OF RS.58,44,849/- ON ACCOUNT OF EXEMPTION U/S.54F OF THE ACT. 9. THE FACTUAL SCENARIO QUA THIS GROUND IS THAT THE ASSESSEE SOLD HIS AGRICULTURAL LAND LOCATED AT GAT NO.309 & 310, KADAMWAKWA STI, TAL. HAVELI, DIST. PUNE ON 13-07-2007 TO M/S. SAMRUDDI CONSTRUCTIONS FOR RS.60.00 LAKH. IN THE COMPUTATION OF THE LONG TERM CAPITAL GAIN FROM TRANSFER OF THIS PROPERTY, THE ASSESS EE CLAIMED EXEMPTION U/S.54F TO THE TUNE OF RS.58,44,849/- ON THE GRO UND THAT HE PURCHASED ONE RESIDENTIAL PROPERTY. THE AO DENIED THE BENEFIT OF EXEMPTION BY RELYING ON SUB-CLAUSE (II) OF PROVISO (A) TO SECTION 54F OF THE ACT. THE LD. CIT(A) AFFIRMED THE ACTION OF THE AO BY OBSERVING THAT THOUGH THE PROPERTY PURCHASED AT BIBVEWADI, HYDE PARK ON 08-03-2010 WAS SOLD ON 21-06-2010, BUT THE AS SESSEE WAS HAVING A SEPARATE HOUSE ALSO AT RATHI NIWAS, LONI KALBHOR, T AL. HAVELI, PUNE. HE DID NOT ACCEPT THE CONTENTION OF THE ASSES SEE FOR GRANT OF EXEMPTION U/S.54F IN RELATION TO THE AGREEMENT OF PURC HASE MADE ON 28-09-2010. 10. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD, IT IS OBSERVED THAT THE ASSESSEE SOLD AGR ICULTURAL ITA NO.1146/PUN/2015 MR. NITIN S. RATHI 6 LAND ON 13-07-2009 AND THE FINANCIAL YEAR UNDER CONSIDER ATION IS FROM 01-04-2009 TO 31-03-2010. THE ASSESSEE PURCHAS ED ONE RESIDENTIAL PROPERTY ON 08-03-2010 WHICH WAS SOLD AFTER 3 M ONTHS ON 24-06-2010. NO EXEMPTION U/S.54F WAS CLAIMED WITH REFE RENCE TO SUCH PROPERTY PURCHASED AND SOLD WITHIN A GAP OF AROUN D 3 MONTHS. THE ASSESSEE PURCHASED ANOTHER PROPERTY ON 28 -09-2010. IT IS THIS PROPERTY WITH REFERENCE TO WHICH THE ASSESSEE CLAI MED EXEMPTION U/S.54F. THE AO HAS RELIED ON PROVISO (A)(II) OF SECTION 54F FOR DENYING THE EXEMPTION. THIS PART OF THE PROVISION STIPULATES THAT NO BENEFIT OF EXEMPTION U/S.54F WOULD BE ALLOWED WHERE THE ASSESSEE : `PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET . WHAT IS RELEVANT TO NOTE IN THE FACTS OF THE INSTANT CASE IS THAT THE NEW ASSET FOR WHICH THE EXEMPTION WAS CLAIME D IS THE ONE WHICH WAS PURCHASED ON 28-09-2010. THE HOUSE PURCHASED ON 08-03-2010 AND SOLD ON 24-06-2010 HAS NO BEARING O N THE DETERMINATION OF THE EXEMPTION U/S.54F. AS IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE PURCHASED ANY FURTHER RESIDENTIAL HOUS E OTHER THAN THE NEW ASSET PURCHASED ON 28-09-2010 WITHIN THE STIPU LATED PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE AG RICULTURAL LAND, SUB-CLAUSE (II) OF PROVISO (A) BECOMES INAPPLICABLE. ITA NO.1146/PUN/2015 MR. NITIN S. RATHI 7 11. THE LD. CIT(A) DENIED THE BENEFIT OF EXEMPTION U/S.54 F BY NOTICING THAT THE ASSESSEE WAS HAVING A SEPARATE HOUSE ALSO AT RATHI NIWAS, LONI KALBHOR, TAL. HAVELI, DIST. PUNE. IMPLIEDLY, HE RELIED ON SUB-CLAUSE (I) OF CLAUSE (A) TO PROVISO OF SECTION 54F. THIS PROVISION STATES THAT THE BENEFIT OF EXEMPTION WOULD NOT BE AVAILA BLE WHERE THE ASSESSEE: ` OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET . THUS THE BENEFIT OF EXEMPTION AS PER THIS PROVISION CAN BE DENIED IF THE ASSESSEE OWNS TWO OR MORE RESIDENTIAL HOUSES ON THE DA TE OR TRANSFER OF ORIGINAL ASSET, INCLUDING THE NEW ASSET FOR WHICH THE EXEMPTION IS CLAIMED. THE BALANCE SHEET OF THE ASSESSEE A S ON 31-03-2010, WHOSE COPY HAS BEEN PLACED AT PAGE 7 OF T HE PAPER BOOK, SHOWS THE FLAT AT HYDE PARK, WHICH WAS PURCHASED ON 08-03-2010 BUT SOLD AFTER THE CLOSE OF THE YEAR ON 24-06- 2010. THERE IS ANOTHER FLAT AT SALISBURY PARK REFLECTED IN THE BALANCE SHEET WITH VALUE OF RS.17,05,710/-. THIS WAS THE ONLY RESIDENTIA L HOUSE THAT THE ASSESSEE WAS OWNING ON THE DATE OF TRANSFER OF AG RICULTURAL LAND ON 13-07-2009. THE LD. CIT(A) NOTICED THAT THE ASSE SSEE WAS HAVING ONE MORE RESIDENTIAL HOUSE, BEING, RATHI NIWAS, LONI KALBHOR, TAL. HAVELI, DIST. PUNE, WHICH WAS SHOWN AS HIS RESIDENTIAL ADDRESS IN THE RETURN OF INCOME. THE LD. AR SUB MITTED ITA NO.1146/PUN/2015 MR. NITIN S. RATHI 8 THAT RATHI NIWAS HOUSE BELONGS TO HIS FATHER. IN SUPPORT OF THIS CONTENTION, HE PLACED ON RECORD A COPY OF PAYMENT OF HOU SE TAX IN RESPECT OF THIS PROPERTY BY HIS FATHER. IT, THEREFORE, BEC OMES EVIDENT THAT RATHI NIWAS HOUSE WAS NOT A RESIDENTIAL HOUSE OWNED BY TH E ASSESSEE ON THE DATE OF TRANSFER OF THE AGRICULTURAL LAND. THE ASSESSEE WAS HAVING ONLY ONE HOUSE, NAMELY, FLAT AT SALISB URY PARK. AFTER TRANSFERRING THE AGRICULTURAL LAND, THE ASSESSEE AVAILED EXEMPTION BY PURCHASING ANOTHER PROPERTY ON 28-09-2010. THUS, IT IS SEEN THAT THERE IS NO VIOLATION OF SUB-CLAUSE (I) OF CLAUS E (A) OF PROVISO TO SECTION 54F AS WELL. 12. IN VIEW OF THE ABOVE CIRCUMSTANCES, WE ARE SATISF IED THAT THE ASSESSEE WAS RIGHT IN CLAIMING THE BENEFIT OF EXEMPTION U/S.54 F. THE IMPUGNED ORDER IS, THEREFORE, OVERTURNED TO THIS EXTEN T AND THE GROUND IS ALLOWED. 13. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH SEPTEMBER, 2019. SD/- SD/- (S.S. VISWANETHRA RAVI) (R.S.SY AL) JUDICIAL MEMBER VICE P RESIDENT PUNE; DATED : 20 TH SEPTEMBER, 2019 ITA NO.1146/PUN/2015 MR. NITIN S. RATHI 9 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-7, PUNE 4. 5. 6. THE PR. CIT-6, PUNE , , / DR B, ITAT, PUNE; / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 19-09-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 19-09-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *