Murlidhar Bhaskar Ahirrao, Dhule V. ACIT, Cir.-3(1), Dhule

ITA 1297/PUN/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1789 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 18-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 17-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india; Bonafide mistake; Ignorance of law
• Section: 143(3); 54B; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO. 1297 /PN/20 1 1 / ASSESSMENT YEAR : 20 0 7 - 0 8 MURLIDHAR BHASKAR AHIRRAO, GURUPRASAD, HOUSE NO.3 3 , LANE NO.2, DHULE 424001 . / APPELLANT PAN: AFXPA6489H VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 3(1), DHULE . / RESPONDENT . / ITA NO. 1 870 /PN/20 1 3 / ASSESSMENT YEAR : 20 0 6 - 0 7 / ASSESSMENT YEAR : 20 0 6 - 0 7 MURLIDHAR BHASKAR AHIRRAO, GURUPRASAD, HOUSE NO.33, LANE NO.2, DHULE 424001 . / APPELLANT PAN: AFXPA6489H VS. THE ASST. COMMISSI ONER OF INCOME TAX, CIRCLE 3(1), DHULE . / RESPONDENT / APPELLANT BY : SHRI SUNIL GANOO / RESPONDENT BY : SHRI UMA SHANKAR PRASAD / DATE OF HEARING : 18 . 0 5 .201 6 / DATE OF PRONOUNCEMENT: 20 .0 5 .201 6 ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 2 / ORDER PER SUSHMA CHOWLA, J M : BOTH T HE APPEALS FILED BY THE SAME ASSESSEE ARE AGAINST SEPARATE ORDER S OF CIT (A) - II, NASHIK, DATED 23 . 08 .20 1 1 AND CIT(A) - I, NASHIK, DATED 16.08.2013 RELATING TO ASSESSMENT YEAR S 20 0 7 - 0 8 AND 200 6 - 0 7 AGAINST RESPECTIVE ORDER S PASSED UNDER SECTION S 143(3) AND 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) . 2 . BOTH THE APPEALS FILED BY THE SAME ASSESSEE ON SIMILAR ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. FIRST, WE SHALL TAKE UP THE APPEAL IN ITA NO.1297/PN/2011 RELATING TO ASSESSMENT YEAR 2007 - 08, WHEREIN THE ASSESSMENT ORDER WAS PASSED UNDER SECTION 143(3) OF THE ACT. 4 . T HE ASSESSEE IN ITA NO. 1297 /PN/20 1 1 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1] THE CIT(A) ERRED IN CONFIRMING THE FINDINGS OF A.O. TO THE EFFECT THAT THE DEEMED LONG TERM CAPITAL GAINS OF RS.39,75,000/ - ARE NOT TAXABLE IN THE A.Y. 2007 - 08 BUT IN A.Y. 2 006 - 07. 2] THE CIT(A) ERRED IN CONFIRMING THE FINDINGS OF THE A.O. THAT THE APPELLANT HAD NOT COMPLIED THE PROVISIONS OF SECTION U/S 54F FOR THE A.Y. 2004 - 05 , WHEN THE ASSESSMENT FOR A.Y. 2004 - 05 WAS COMPLETED BY ACCEPTING THE THEN COMPLIANCE U/S 54F, AND U/S 54B SIMULTANEOUSLY, BY DEPOSITING THE AMOUNT OF RS.45,00,000/ - OUT OF THE TOTAL SALE PROCEEDS OF RS.60,00,000/ - OF LAND IN THE CAPITAL GAIN ACCOUNT SCHEME. 3] THE CIT(A) ERRED IN CONFIRMING THE FINDINGS OF THE A.O. TO THE EFFECT THAT THE APPELLANT HA D NOT COMPLIED THE PROVISIONS OF SECTION 54B AND 54F WHEN THE DEPOSIT OF UNUSED SALE PROCEEDS OF THE LAND WERE NOT DEPOSITED IN THE TWO SEPARATE ACCOUNTS UNDER THE CAPITAL GAINS ACCOUNT SCHEME BUT WERE DEPOSITED IN ONE ACCOUNT UNDER THE CAPITAL GAINS ACCOU NT SCHEME AND THEREFORE HE ERRED IN CONFIRMING THE FINDINGS OF THE A.O. THAT THE DEPOSIT MADE UNDER ONE ACCOUNT OF CAPITAL GAINS ACCOUNT DEPOSIT MADE UNDER ONE ACCOUNT OF CAPITAL GAINS ACCOUNT SCHEME IS TO BE TREATED AS COMPLIANCE U/S 54B ONLY AND NOT U/S.54F. ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 3 4] IT SHOULD BE HELD THAT NON - OPENING OF TWO SEPARA TE ACOUNTS UNDER THE CAPITAL GAINS ACCOUNT SCHEME FOR THE COMPLIANCE U/S 54B AND U/S 54F IS ONLY A TECHNICAL BONAFIDE MISTAKE AND DEPOSITING THE TOTAL AMOUNT IN ONE ACCOUNT UNDER THE CAPITAL GAINS ACCOUNT SCHEME IS AMOUNTING TO THE COMPLIANCE OF THE PROVIS IONS U/S 54B AND U/S 54F IN ITS TRUE SPIRIT. 5] THE TOTAL DEEMED LONG TERM CAPITAL GAINS ACCOUNT OF RS.39,75,000/ - BE TREATED AS TAXABLE IN A.Y. 2007 - 08 AS RETURNED BY THE APPELLANT. 5. THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST ASSESSABILITY OF DEEMED LONG TERM CAPITAL GAINS IN THE HANDS OF ASSESSEE FOR NON - UTILIZATION OF AMOUNT DEPOSITED IN THE CAPITAL GAINS ACCOUNT SCHEME. 6. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD SOLD HIS AGRICULTURAL LAND SITUATED WITHIN EIGHT KILOMETERS FROM DH ULE CITY FOR RS.60 LAKHS ON 30.10.2003 . THE LONG TERM CAPITAL GAINS ON SALE OF SAID LAND AROSE IN ASSESSMENT YEAR 2004 - 05 . THE ASSESSEE OFFERED SUM OF RS.15 LAKHS FOR TAXATION IN ASSESSMENT YEAR 2004 - 05 AND IN RESPECT OF BALANCE CAPITAL GAINS OF RS.45 LA KHS, THE ASSESSEE DECLARED HIS INTENTION TO AVAIL THE DEDUCTION UNDER RS.45 LA KHS, THE ASSESSEE DECLARED HIS INTENTION TO AVAIL THE DEDUCTION UNDER SECTION 54B OF THE ACT AND / OR UNDER SECTION 54F OF THE ACT. THE SAID SUM OF RS.45 LAKHS WAS DEPOSITED IN SAVINGS BANK ACCOUNT UNDER THE CAPITAL GAINS ACCOUNT SCHEME, 1988 WITH STATE B ANK OF INDIA, MAIN BRANCH, DHULE ON 24.11.2003 . AS PER THE PROVISIONS OF THE ACT, THE ASSESSEE IN CASE HAD TO INVEST IN AGRICULTURAL LAND, THEN THE SAME SHOULD BE PURCHASED WITHIN STIPULATED PERIOD OF TWO YEARS AND WHERE HE WANTS TO PURCHASE RESIDENTIAL P ROPERTY OR CONSTRUCT THE SAME, THEN THE PERIOD PROVIDED UNDER THE ACT WAS THREE YEARS I.E. SUM OF RS.45 LAKHS HAD TO BE UTILIZED WITHIN SAID PERIODS. THE ASSESSEE PURCHASED AGRICULTURAL LAND WORTH RS.5,25,000/ - ON 15.02.2005 . HOWEVER, NO RESIDENTIAL PROP ERTY COULD BE PURCHASED BY THE ASSESSEE UP TO ASSESSMENT YEAR 2007 - 08, THEREFORE, IN THE RETURN OF INCOME, THE ASSESSEE OFFERED RS.39,75,000/ - FOR TAXATION ON ACCOUNT OF DEEMED CAPITAL GAINS . THE ASSESSING OFFICER CALLED FOR THE COPY OF ACCOUNT OPENING FO RM FILLED BY THE ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 4 ASSESSEE FOR OPENING AN ACCOUNT UNDER THE CAPITAL GAINS ACCOUNT SCHEME, 1988 AND IT WAS NOTED BY THE ASSESSING OFFICER THAT NO PROVISION WAS MARKED BY THE ASSESSEE IN THE APPLICATION FORM, REGARDING THE SECTION UNDER WHICH, HE WISHES TO CL AIM THE DEDUCTION. THE FORM A OF STATE BANK OF INDIA IS SCANNED AND IS PART OF THE ASSESSMENT ORDER. THE ASSESSING OFFICER WAS OF THE VIEW THAT WHERE THE ASSESSEE HAD NOT SPECIFIED HIS INTENTION TO CLAIM THE DEDUCTION , AND WHERE THE ASSESSEE HAD FAILED T O MAKE TWO APPLICATIONS FOR OPERATING THE ACCOUNT, UNDER EACH OF THE SECTIONS, THEN THE ASSESSEE WAS NOT ENTITLED TO CLAIM BOTH THE DEDUCTIONS. IN REPLY, THE ASSESSEE EXPLAINED THAT IT HAD THE INTENTION TO AVAIL THE DEDUCTION UNDER BOTH THE SECTIONS I.E. 54B AND 54F OF THE ACT AND THIS INTENTION OF HIS WAS MENTIONED BY WAY OF NOTE IN THE RETURN OF INCOME FOR ASSESSMENT YEAR 2004 - 05. FURTHER, IT WAS POINTED OUT BY THE ASSESSEE THAT IN THE FORM FOR OPENING THE CAPITAL GAINS ACCOUNT THOUGH DIFFERENT SECTIONS WERE MENTIONED AND ALL OF THEM WERE EARMARKED FOR THE PURPOSE OF CAPITAL GAINS ACCOUNT SCHEME. HE FURTHER STATED THAT NON - OPENING OF TWO SEPARATE ACCOUNTS FOR AVAILING THE DEDUCTION UNDER SECTION 54B OR 54F OF THE ACT WAS PROCEDURAL MISTAKE COMMITTED BY THE BANK AUTHORITIES FOR WHICH THE ASSESSEE SHOULD NOT BE MADE TO SUFFER. ANOTHER POINT RAISED BY THE ASSESSING OFFICER WAS THAT WHERE THE AM OUNTS HAVE NOT BEEN UTILIZED FOR ACQUIRING NEW ASSETS, THEN THE SAME SHOULD BE TAXED DURING THE YEAR IN WHICH THEY WERE ACTUALLY WITHDRAWN. IN THIS REGARD, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE REFERRED TO THE PROVISO TO SECTION 54F(4) OF THE ACT , WHEREIN IT IS PROVIDED THAT DEEMED INCOME WOULD BE CHARGEABLE TO TAX IN THE YEAR IN WHICH PERIOD OF THRE E YEARS FROM TRAN SFER OF ORIGINAL ASSET EXPIRES. THE ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF ASSESSEE ON ANY OF THE POINTS AND HELD THAT WHERE THE ASSESSEE HAD NOT OPENED TWO SEPARATE ACCOUNTS FOR CLAIMING DEDUCTION UNDER SECTION 54B AND 54F OF THE ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 5 ACT, THEN THE CLAIM OF THE ASSESSEE FOR DEDUCTION UNDER SECTION 54F OF THE ACT WAS NOT ALLOWABLE AS THE ASSESSEE HAD ALREADY CLAIMED DEDUCTION UNDER SECTION 54B OF THE ACT FOR ASSESSMENT YEAR 2005 - 06 OUT OF THE SAID ACCOUNT OPENED BY HIM, HENCE THE AS SESSEES CLAIM UNDER SECTION 54F OF THE ACT WAS NOT ALLOWED. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAD WITHDRAWN RS.6,15,000/ - ON 25.11.2004 AND HAD FURTHER DRAWN RS.2,10,000/ - AND RS.3,15,000/ - ADMITTEDLY FOR THE PURCHASE OF AGRICULTURAL LAND ON 18.01.2005 AND 09.02.2005 . FURTHER, SUM OF RS.15 LAKHS WAS WITHDRAWN ON 09.06.2006 . SINCE THE ASSESSEE HAD INVESTED RS.5,25,000/ - FOR THE PURCHASE OF AGRICULTURAL LAND ON 15.02.2005 , THE ASSESSING OFFICER OBSERVED THAT THE DEDUCTION UNDER SECTION 54B OF THE ACT WAS ALLOWABLE TO THE ASSESSEE FOR ASSESSMENT YEAR 2005 - 06. FURTHER, SUM OF RS.6,15,000/ - WAS DRAWN ON 26.11.2004 WHICH WAS NOT UTILIZED BY THE ASSESSEE FOR THE PURPOSE MENTIONED UNDER SECTION 54B OF THE ACT NOR IT WAS DEPOSITED IN THE CAPI TAL GAINS ACCOUNT SCHEME. ACCORDINGLY, THE ASSESSING OFFICER HELD THAT SUM OF RS.6,15,000/ - WAS CHARGEABLE FOR TAXATION AS LONG TERM CAPITAL GAINS IN ASSESSMENT YEAR 2005 - 06 FOR WHICH SEPARATE ACTION UNDER SECTION 147 OF THE ACT WAS TO BE TAKEN. SINCE TH E ASSESSEE WAS ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 54B OF THE ACT AND AS SUCH, THE ASSESSEE SHOULD HAVE DEPOSITED THE WHOLE AMOUNT BY THE CLOSE OF ASSESSMENT YEAR 2006 - 07 WHICH WAS NOT DONE AND THE ASSESSEE WAS HELD TO BE LIABLE TO BE TAXED AT RS .33,60,000/ - IN ASSESSMENT YEAR 2006 - 07 FOR WHICH ALSO, ACTION UNDER SECTION 147 OF THE ACT WAS TO BE TAKEN. SINCE THE DEDUCTION UNDER SECTION 54F OF THE ACT WAS DENIED TO THE ASSESSEE, THE ASSESSING OFFICER HELD THAT NO INCOME ON ACCOUNT OF DEEMED LONG T ERM CAPITAL GAINS WAS ASSESSABLE IN THE HANDS OF ASSESSEE IN THE INSTANT ASSESSMENT YEAR I.E. 2007 - 08 . ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 6 7. THE CIT(A) NOTED THAT UNDER SECTION 5 OF THE CAPITAL GAINS ACCOUNT SCHEME, 1988, IT IS PRESCRIBED THAT THE DEPOSITOR INTENDING TO AVAIL THE BENEFIT U NDER MORE THAN ONE SECTION OF THE ACT, SHALL MAKE SEPARATE APPLICATION FOR OPENING ACCOUNT OR ACCOUNTS UNDER EACH OF SUCH SECTIONS. HOWEVER, THE ASSESSEE OPENED ONLY ONE ACCOUNT AND WITHDREW RS.2,10,000/ - AND RS.3,15,000/ - ON 18.01.2005 AND ON 09.02.2005 , RESPECTIVELY FOR INVESTMENT IN AGRICULTURAL LAND ON 15.02.2005 . THE DEDUCTION UNDER SECTION 54B OF THE ACT WAS ALLOWABLE IN RESPECT OF SAID INVESTMENT OF RS.5,25,000/ - IN AGRICULTURAL LAND IN THE ASSESSMENT YEAR 2005 - 06 . FURTHER, THE ASSESSEE WITHDREW S UM OF RS.6,15,000/ - FROM THE SAID ACCOUNT ON 26.11.2004 , WHICH WAS NEITHER UTILIZED FOR INVESTMENT IN AGRICULTURAL LAND NOR DEPOSITED IN THE CAPITAL GAINS ACCOUNT SCHEME, 1988. THE OTHER CONTENTIONS OF THE ASSESSEE THAT THE BALANCE AMOUNT SHOULD BE CONSTR UED AS THE AMOUNT FOR THE PURPOSE OF SECTION 54F OF THE ACT, WAS REJECTED BY THE CIT(A) AND HE OBSERVED THAT WHERE THE ASSESSEE HAD FAILED TO OPEN TWO ACCOUNTS UNDER THE CAPITAL GAINS ACCOUNT SCHEME AND IT WAS MERE TECHNICAL MISTAKE OR IGNORANCE OF LAW, WA S NOT ACCEPTED AND THE ASSESSEE S CLAIM ON THIS GROUND WAS DISMISSED. THE CIT(A) FURTHER HELD THAT DEDUCTION UNDER SECTION 54B OF THE ACT WAS AVAILABLE ON TRANSFER OF AGRICULTURAL LAND AND IN ORDER TO AVAIL THE DEDUCTION UNDER SECTION 54B OF THE ACT, NEW AGRICULTURAL LAND WAS REQUIRED TO BE PURCHASED WITHIN PERIOD OF TWO YEARS FROM THE DATE OF TRANSFER OF AGRICULTURAL LAND. THE ASSESSEE HAD SOLD THE AGRICULTURAL LAND ON 30.10.2003 I.E. IN ASSESSMENT YEAR 2004 - 05 AND WHERE THE ASSESSEE HAD OFFERED RS.15 LA KHS TO TAX IN ASSESSMENT YEAR 2004 - 05 , THE BALANCE OF RS.45 LAKHS WAS TO BE INVESTED IN AGRICULTURAL LAND BY ASSESSMENT YEAR 2006 - 07 . SINCE THE ASSESSEE HAD ONLY INVESTED RS.5,25,000/ - , THE REMAINING AMOUNT OF RS.39,75,000/ - KEPT IN THE CAPITAL GAINS ACCO UNT SCHEME WAS TO BE TREATED AS DEEMED LONG TERM CAPITAL GAINS RELATING TO ASSESSMENT YEAR ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 7 2006 - 07. REFERENCE WAS ALSO MADE TO THE WITHDRAWL MADE BY THE ASSESSEE OF RS.6,15,000/ - ON 25.11.2004 AND RS.15 LAKHS ON 09.06.2006 AND IT WAS HELD THAT SUM OF RS.3 9.75 LAKHS WOULD BE TAXABLE AS LONG TERM CAPITAL GAINS IN ASSESSMENT YEAR 2006 - 07. THE ACTION OF ASSESSING OFFICER IN REOPENING THE ASSESSMENT FOR ASSESSMENT YEAR 2005 - 06 TO TAX RS.6,15,000/ - WITHDRAWN ON 25.11.2004 FROM THE CAPITAL GAINS ACCOUNT, AS LONG TERM CAPITAL GAINS WAS HELD TO BE NOT IN ORDER. 8. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 9. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE TOOK US THROUGH THE FACTS OF THE CASE AND POINTED OUT THAT THE ASSESSEE WANTED TO CLAIM THE DEDUCTION UNDER BOTH SECTIONS 54B AND 54F OF THE ACT. SINCE THE ASSESSEE HAD NOT UTILIZED SUM OF RS.39,75,000/ - BEFORE THE END OF THREE YEARS FROM THE DATE IN WHICH THE ASSET WAS SOLD, SUM OF RS. 39,75,000/ - WAS OFFERED FROM THE DATE IN WHICH THE ASSET WAS SOLD, SUM OF RS. 39,75,000/ - WAS OFFERED TO TAX, IN VIEW OF THE PROVISO T O SECTION 54F(4) OF THE ACT. HE FURTHER POINTED OUT THAT SUM OF RS.6,15,000/ - WAS WITHDRAWN ON 25.11.2004 FOR THE PURPOSE OF INVESTMENT IN AGRICULTURAL LAND , H OWEVER, ONLY SUM OF RS. 2,10,000/ - AND RS.3,15,000/ - WAS INVESTED AGAINST THE PURCHASE OF AGRICUL TURAL LAND. HE FURTHER STRESSED THAT THE ASSESSEE HAD WITHDRAWN THE AMOUNT FOR INVESTMENT PURPOSE AND THE SAME HAS NOT BEEN UTILIZED BY THE ASSESSEE, THEN IT IS TO BE TAXED IN THIRD YEAR AS THE ASSESSEE WANTED TO INVEST IN RESIDENTIAL PROPERTY. IN THIS R EGARD, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED REL IANCE ON THE RATIO LAID DOWN BY MUMBAI BENCH OF TRIBUNAL IN MR. KISHORE H. GALAIYA VS. ITO (2012) (9) TMI 40 (MUMBAI TRIB) , WHEREIN IT HAS BEEN HELD THAT NON - UTILIZATION OF AMOUNT FOR CLAIMING DEDUCTION UNDER SECTION 54F OF THE ACT IS TO BE TAXED IN THIRD YEAR. WITH REGARD TO CAPITAL GAIN ACCOUNT OPENED BY THE ASSESSEE, IT WAS POINTED OUT BY HIM THAT BECAUSE OF UNCERTAINTY OF THE ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 8 AMOUNT TO BE INVESTED IN AGRICULTURAL LAND AND / OR RESI DENTIAL PROPERTY, THE OPTION WHETHER INVESTMENT IS TO BE MADE UNDER SECTION 54B AND 54F OF THE ACT WAS NOT EXERCISED. HOWEVER, THE DEFAULT IN NOT SPECIFYING THE SECTION DOES NOT MAKE THE CLAIM INCORRECT. HE FURTHER STATED THAT VIS - - VIS FOR THE AMOUNT OF DEPOSIT , THE BENEFIT OF SECTION 54B OF THE ACT IS TO BE ALLOWED TO THE ASSESSEE. HOWEVER, THE CHOICE WAS WITH THE ASSESSEE TO INVEST EITHER UNDER AGRICULTURAL PROPERTY OR IN RESIDENTIAL PROPERTY. IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION OF CH ENNAI BENCH OF TRIBUNAL IN SHRI K.S. RAMACHANDRAN VS. ITO IN ITA NO.941/MDS/2011 , RELATING TO ASSESSMENT YEAR 2007 - 08, ORDER DATED 24.01.2012 AND IN MRS. SHIRLY SAJAN VS. ITO REPORTED IN (2016) (1) TMI 656 (CHENNAI TRIB) . 10. THE LEARNED DEPARTMENTAL RE PRESENTATIVE FOR THE REVENUE POINTED OUT THAT WHERE THE ASSESSEE HAS NOT GIVEN THE INTENTION OF BIFURCATING THE AMOUNT AND CLAIMING THE DEDUCTION UNDER TWO PROVISIONS OF THE ACT I.E. 54B AND 54F OF THE ACT, THEN WHERE THE ASSESSEE HAD MADE PARTIAL INVESTME NT IN PURCHASE OF AGRICULTURAL LAND WITHIN PERIOD OF TWO YEARS, THEN PRESUMPTION IS TO BE DRAWN THAT THE DEPOSIT IN THE CAPITAL GAINS ACCOUNT SCHEME WAS AGAINST THE CLAIM OF DEDUCTION UNDER SECTION 54B OF THE ACT. SINCE THE ASSESSEE HAD UTILIZED ONLY ABOU T RS.5 LAKHS FOR PURCHASE OF AGRICULTURAL LAND AND HAD ALSO WITHDRAWN FURTHER SUM OF RS.6,15,000/ - IN EARLIER YEARS, THE ENTIRE BALANCE CONSIDERATION WHICH HAS NOT BEEN UTILIZED BY THE ASSESSEE IS TO BE INCLUDED AS DEEMED INCOME IN THE HANDS OF THE ASSESSE E IN THE RELEVANT ASSESSMENT YEARS. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE FURTHER POINTED OUT THAT THE ENTIRE BALANCE SUM OF RS.39,750,000/ - WHICH HAS NOT BEEN UTILIZED BY THE ASSESSEE HAS BEEN ADDED AS INCOME IN THE HANDS OF ASSESSEE BY REOPENING THE ASSESSMENT FOR ASSESSMENT YEAR 2006 - 07 BY THE ASSESSING OFFICER BY ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 9 PASSING THE ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. IT WAS FURTHER POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT THE CIT(A) HAS DISMI SSED THE APPEAL OF ASSESSEE RELATING TO ASSESSMENT YEAR 2006 - 07 AND THE ASSESSEE HAS FILED AN APPEAL BEFORE THE TRIBUNAL AGAINST THE SAME WHICH IS ALSO LISTED FOR HEARING BEFORE THE BENCH TODAY. 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECO RD. IN THE FACTS OF THE PRESENT CASE BEFORE US, THE ASSESSEE HAD SOLD AGRICULTURAL LAND FOR SUM OF RS.60 LAKHS IN ASSESSMENT YEAR 2004 - 05 , AGAINST WHICH CONSIDERATION OF RS.15 LAKHS WAS OFFERED TO TAX IN ASSESSMENT YEAR 2004 - 05 ITSELF. HOWEVER, IN RESPEC T OF BALANCE CONSIDERATION OF RS.45 LAKHS, THE ASSESSEE OPTED TO DEPOSIT THE SAME IN CAPITAL GAINS ACCOUNT SCHEME, 1988 FOR FUTURE INVESTMENT IN THE PURCHASE OF AGRICULTURAL LAND AND / OR RESIDENTIAL PROPERTY AS ALLOWED UNDER SECTION 54B AND 54F OF THE ACT . THE REQUIREMENT OF THE ACT IS THAT WHERE THE ASSESSEE HAS FAILED TO UTILIZE THE SALE CONSIDERATION FOR MAKING THE INVESTMENT IN AGRICULTURAL LAND OR RESIDENTIAL PROPERTY F OR CLAIM ING ANY DEDUCTION UNDER SECTION 54B AND 54F OF THE ACT, RESPECTIVELY, THEN BEFORE DUE DATE OF FILING THE RETURN OF INCOME, THE ASSESSEE HAS TO EXERCISE THE OPTION AND DEPOSIT THE SAID MONEY IN A BANK ACCOUNT UNDER THE CAPITAL GAINS ACCOUNT SCHEME. THE ASSESSEE ADMITTEDLY, HAS FULFILLED THE CONDITIONS VIS - - VIS DEPOSIT OF RS.45 LAKHS IN A CAPITAL GAINS ACCOUNT SCHEME WITH STATE BANK OF INDIA. THE AUTHORITIES BELOW REFERRING TO THE PROVISIONS OF CAPITAL GAINS ACCOUNT SCHEME HAS POINTED OUT THAT WHILE SO DEPO SITING THE MONEY IN BANK ACCOUNT, THE ASSESSEE IS TO OFFER DEPOSIT OF AMO UNT IN REQUISITE SECTION. IN CASE, THE ASSESSEE WANTS TO CLAIM DEDUCTION UNDER TWO DIFFERENT SECTIONS I.E. IN THE CASE OF ASSESSEE UNDER SECTION 54B AND 54F OF THE ACT, TH EN AS PER THE CAPITAL GAINS ACCOUNT SCHEME, 1988 , THE ASSESSEE IS CONSTRAINED TO OPE N ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 10 TWO SEPARATE BANK ACCOUNTS IN THIS REGARD. HOWEVER, THE ASSESSEE BEFORE US HAS DEPOSITED THE WHOLE AMOUNT IN ONE BANK ACCOUNT WITH STATE BANK OF INDIA AS AGAINST THE DEPOSIT OF RS.45 LAKHS, THE ASSESSEE COULD UTILIZE ONLY SUM OF RS.5,25,000/ - FOR THE PU RCHASE OF AGRICULTURAL LAND IN THE PRECEDING YEAR I.E. ASSESSMENT YEAR 2005 - 06. FURTHER, THE ASSESSEE HAD WITHDRAWN SUM OF RS.6,15,000/ - FROM HIS ACCOUNT ON 26.11.2004 . THE REQUIREMENT OF THE ACT WAS THAT THE AMOUNT, IF ANY TO BE INVESTED IN THE PURCHASE OF AGRICULTURAL LAND WAS TO BE UTILIZED BY THE ASSESSEE BEFORE THE END OF ASSESSMENT YEAR 2006 - 07 AND IF THE SAME HAD TO BE INVESTED IN RESIDENTIAL PROPERTY, THEN THE INVESTMENT WAS TO BE MADE UP TO ASSESSMENT YEAR 2007 - 08 . THE ASSESSEE HAS FAILED TO MAK E ANY INVESTMENT IN RESIDENTIAL PROPERTY AND FOR THE YEAR UNDER CONSIDERATION , THE ASSESSEE OFFERED THE BALANCE CONSIDERATION OF RS.39,75,000/ - I.E. RS.45 L AKHS RS. 5,25,000/ - , AS THE DEEMED LONG TERM CAPITAL GAINS ASSESSABLE IN HIS HANDS IN ASSESSMENT YE AR 2007 - 08 . THE PLEA OF THE ASSESSEE IN THIS REGARD WAS THAT IN ORDER TO AVAIL THE DEDUCTION UNDER SECTION 54F OF THE ACT, WHERE THE STATUTE PROVIDED PERIOD OF THREE YEARS FROM THE END OF ASSESSMENT YEAR OF SALE OF PREVIOUS ASSET, THEN IN CASE THE SAID IN VESTMENT HAS NOT BEEN MADE BY THE ASSESSEE AND THE DEDUCTION UNDER SECTION 54F OF THE ACT IS TO DENIED TO THE ASSESSEE, THEN THE SURPLUS, IF ANY, IS TO BE TAXED IN THE HANDS OF ASSESSEE ON THE EXPIRY OF THREE YEARS I.E. IN ASSESSMENT YEAR 2007 - 08. HOWEVER , THE CASE OF REVENUE AUTHORITIES BEFORE US WAS THAT IN THE ABSENCE OF ASSESSEE HAVING EXERCISED THE OPTION OF OPENING TWO SEPARATE ACCOUNTS AND WHERE THE ASSESSEE HAS MADE PARTIAL INVESTMENT IN THE PURCHASE OF AGRICULTURAL LAND, THE ENTIRE DEPOSIT IN THE CAPITAL GAINS ACCOUNT SCHEME IS TO BE TREATED AS TO BE FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION 54B OF THE ACT. SINCE THE ASSESSEE HAD ONLY INVESTED SUM OF RS.5,25,000/ - IN THE PURCHASE OF AGRICULTURAL LAND AND HENCE, THE ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 11 BALANCE OF RS.39,75,00 0/ - WAS TREATED AS INCOME OF THE ASSESSEE IN ASSESSMENT YEAR 200 6 - 0 7 I.E. YEAR IN WHICH PERIOD OF TWO YEARS EXPIRE . THE ASSESSEE HAD STATED THAT SUM OF RS.39,75,000/ - WAS TO BE TAXED IN HIS HANDS IN ASSESSMENT YEAR 2007 - 08. THE ASSESSEE IS IN APPEAL BEFO RE US IN BOTH THE ASSESSMENT YEARS 2007 - 08 AND ALSO IN 2006 - 07. 12. THE FIRST OBJECTION OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE TO THE PROPOSITION ADOPTED BY THE AUTHORITIES BELOW IS THAT THE EXERCISE OF OPTION OF AVAILING TWO DEDUCTIO N S UNDER DIFFERENT SECTIONS UNDER THE SCHEME OF THE ACT HAS BEEN PROPOSED BY THE ASSESSEE BY NOT STRIKING OF SECTION IN THE ACCOUNT OPENING FORM WITH STATE BANK OF INDIA , FOR OPENING THE CAPITAL GAINS ACCOUNT SCHEME BY THE ASSESSEE. HENCE, WHERE THE ASSES SEE IN RETURN OF INCOME FILED FOR ASSESSMENT YEAR 2004 - 05 I.E. THE YEAR OF TRANSFER OF ASSET, HAD MADE A DECLARATION THAT IT WOULD BE CLAIMING THE DEDUCTION UNDER SECTION 54B AND / OR 54F OF THE ACT BY UTILIZING THE AMOUNT OF RS. 45 LAKHS, THEREAFTER, THE A SSESSEE DEPOSITED THE SAID SUM OF RS.45 LAKHS IN THE CAPITAL GAINS ACCOUNT SCHEME , THE ASSESSEE HAS COMPLIED WITH THE REQUIREMENTS OF THE ACT . THE AUTHORITIES BELOW REFERRING TO THE PROVISIONS OF THE SAID SCHEME HAS POINTED OUT THAT IN CASE THE ASSESSEE W ANTED TO AVAIL THE DEDUCTION UNDER TWO SEPARATE SECTIONS OF THE ACT, THEN AMOUNT SHOULD HAVE BEEN QUANTIFIED AND SO DEPOSITED IN SEPARATE ACCOUNTS TO BE MAINTAINED UNDER T HE CAPITAL GAINS ACCOUNT SCHEME. HOWEVER, THE ASSESSEE HAS FAILED TO DO SO AND AS SU CH, IS NOT ENTITLED TO CLAIM THE AFORESAID DEDUCTION UNDER TWO SEPARATE SECTIONS. WE DO NOT UPHOLD THE SAID PROPOSITION RAISED BY THE AUTHORITIES BELOW , SINCE AT BEST THE ACTION OF ASSESSEE COULD BE SAID TO BE A PROCEDURAL DEFAULT. ADMITTEDLY, THE ASSESS EE HAD DEPOSITED FULL AMOUNT OF RS.45 LAKHS IN THE CAPITAL GAINS ACCOUNT SCHEME WITH STATE BANK OF INDIA, BUT IN ONE ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 12 ACCOUNT, NOT IN TWO SEPARATE ACCOUNTS. HOWEVER, WHILE DEPOSITING THE SAID AMOUNT IN THE SAID SCHEME, THE ASSESSEE HAS FILLED UP THE FORM W HICH IS SCANNED AND INCORPORATED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND THE PERUSAL OF THE SAME WOULD REVEAL THAT THE ASSESSEE HAD NOT STRUCK OF THE SECTIONS UNDER WHICH, THE ASSESSEE COULD CLAIM DEDUCTION UNDER CHAPTER E OF THE ACT, MENTIO NED IN THE FORM AND ALSO BOTH THE SECTIONS 54B AND 54F OF THE ACT ARE ALSO MENTIONED THEREIN. THE ASSESSEE HAS NOT STRUCK ANY OF THE SAID SECTIONS AND HENCE HAD EXERCISED THE OPTION OF CLAIMING THE DEDUCTION UNDER TWO DIFFERENT SECTIONS. FURTHER, IN THE RETURN OF INCOME FILED, THE ASSESSEE HAS ALSO DECLARED THAT IT HAS DEPOSITED THE SAID SUM OF RS.45 LAKHS IN THE CAPITAL GAINS ACCOUNT SCHEME IN ORDER TO AVAIL DEDUCTION WITHIN STIPULATED PERIOD AND IN THE SAID DECLARATION, THE MENTION IS ON ACCOUNT OF INVE STMENT IN AGRICULTURAL LAND AND / OR RESIDENTIAL PROPERTY. HENCE THE INTENTION OF THE ASSESSEE IS TO BE SEEN FROM THE TOTALITY OF THE FACTS AND CIRCUMSTANCES I.E. THE ASSESSEE WANTED TO MAKE THE AFORESAID TWO INVESTMENTS. HOWEVER, SINCE IT HAD NOT IDENTI FIED THE ASSETS TILL DATE OF FILING THE RETURN OF INCOME FOR ASSESSMENT YEAR 2004 - 05, THE QUANTUM TO BE UTILIZED UNDER EACH OF THE SECTIONS WAS NOT CLEAR AND NO SUCH DECLARATION TO THAT EFFECT WAS MADE BY THE ASSESSEE . IN CASE, THE ASSESSEE HAD IDENTIFIED THE ASSET I.E. THE AGRICULTURAL LAND OR THE RESIDENTIAL PROPERTY, THEN THE ASSESSEE COULD HAVE EXERCISED HIS OPTION BUT IN THE ABSENCE OF THE SAME, IT IS NOT FEASIBLE TO EXPECT THE ASSESSEE TO DO SO AND TO MAKE SUCH A DECLARATION. 1 3 . NOW, COMING TO THE SECOND ASPECT OF NON - UTILIZATION OF THE SAID AMOUNT WITHIN STIPULATED PERIOD BY THE ASSESSEE AND AS SUCH, THE TAXABILITY OF THE SAID AMOUNT IN THE HANDS OF ASSESSEE. THE ASSESSEE HAD WITHDRAWN THE AMOUNTS FROM ITS CAPITAL GAINS ACCOUNT SCHEME AS UNDER: - ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 13 25.11.2004 RS.6,15,000/ - 18.01.2005 RS.2,10,000/ - 09.02.2005 RS.3,15,000/ - 09.06.2006 RS. 15,00,000/ - 1 4 . THE ASSESSEE HAD MADE INVESTMENT OF RS.5,25,000/ - FOR PURCHASING THE AGRICULTURAL LAND IN ASSESSMENT YEAR 2005 - 06 AND HAD ALSO WITHDRAWN SUM OF RS.6,15,000/ - IN THE SAID ASSESSMENT YEAR. THE ASSESSEE HAS CLAIMED DEDUCTION UNDER SECTION 54B OF THE ACT ON ACCOUNT OF INVEST MENT OF RS. 5,25,000/ - . HOWEVER, SUM OF RS.6,15,000/ - WAS NEITHER UTILIZED FOR THE PURCHASE OF AGRICULTURAL LAND NOR DEPOSITE D BACK IN THE CAPITAL GAINS ACCOUNT. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE DURING THE COURSE OF HEARING HAS POINTED OUT THE REASON FOR THE SAID WITHDRAWAL ON 25.11.2004 I.E. FOR THE PURPOSE OF INVESTMENT IN AGRICULTURAL LAND. HOWEVER, TH E INVESTMENT WAS MADE ONLY TO THE EXTENT OF RS.5,25,000/ - AND SUM OF RS.6,15,000/ - WAS NOT UTILIZED BY THE ASSESSEE. FURTHER, THE ASSESSEE HAS WITHDRAWN SUM OF RS.15 LAKHS ON 09.06.2006 , WHICH FALLS IN ASSESSMENT YEAR 2007 - 08 . THE QUESTION WHICH ARISES B EFORE US IS WHETHER WHERE THE ASSESSEE HA S NOT COMPLETELY UTILIZED THE AMOUNT FOR THE PURCHASE OF STIPULATED ASSETS, THE AMOUNT WHICH REMAINS TO BE UN - UTILIZED IS TO BE TAXED IN THE HANDS OF ASSESSEE AND THE YEAR IN WHICH IT IS TO BE TAXED. THE ASSESSEE C LAIMS THAT AFTER IT HAD MADE THE INVESTMENT FOR THE PURPOSE OF AGRICULTURAL LAND , THE BALANCE AMOUNT WAS TO BE UTILIZED FOR THE PURCHASE OF RESIDENTIAL PROPERTY, AGAINST WHICH THE ASSESSEE IS ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 54F OF THE ACT AND SINCE THE PERIOD FOR MAKING THE SAID INVESTMENT EXPIRES IN ASSESSMENT YEAR 2007 - 08 ; THEN THE AMOUNT REMAINING UN - UTILIZED IS TO BE TAXED IN THE HANDS OF ASSESSEE IN ASSESSMENT YEAR 2007 - 08. HOWEVER, THE CASE OF REVENUE ON THE OTHER HAND, WAS THAT WHERE T HE ASSESSEE HAD ONLY PURCHASED THE AGRICULTURAL LAND IN ASSESSMENT YEAR 2006 - 07 AND HAD NOT ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 14 UTILIZED THE BALANCE CONSIDERATION TILL ASSESSMENT YEAR 2006 - 07 AND ALSO FOR THE REASON THAT IT HAD NOT DEPOSITED THE MONEY IN SEPARATE TWO ACCOUNTS I.E. CAPITAL GA INS ACCOUNT, THE BALANCE CONSIDERATION WAS TO BE UTILIZED BY THE ASSESSEE FOR CLAIMING THE DEDUCTION UNDER SECTION 54B OF THE ACT AND PERIOD UNDER THE ACT WAS TWO YEAR, WHICH EXPIRES IN ASSESSMENT YEAR 2006 - 07, HENCE, THE AMOUNT WAS TO BE TAXED IN ASSESSME NT YEAR 2006 - 07. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WHERE THE ASSESSEE HAD ALREADY MADE HIS INTENTION CLEAR TO DEPOSIT THE MONEY IN TWO ASSETS, WHICH IS ALLOWED UNDER THE ACT AND CLAIM THE DEDUCTION BOTH UNDER SECTIONS 54B AND 54F OF THE ACT. SO, WHERE THE ASSESSEE HAS ALREADY CLAIMED DEDUCTION ON ACCOUNT OF INVESTMENT IN AGRICULTURAL LAND I.E. UNDER SECTION 54B OF THE ACT, THE BALANCE AMOUNT IS TO BE CONSIDERED AV AILABLE FOR MAKING INVESTMENT FOR THE PURCHASE OF RESIDENTIAL PROPER TY. SINCE THE ASSESSEE FAILED TO PURCHASE THE SAID RESIDENTIAL PROPERTY TILL CLOSE OF ASSESSMENT YEAR 2007 - 08, THE BALANCE UN - UTILIZED AMOUNT IN THE SAID CAPITAL GAINS ACCOUNT SCHEME IS TO BE TAXED IN THE HANDS OF ASSESSEE AS DEEMED LONG TERM CAPITAL GAIN S IN ASSESSMENT YEAR 2007 - 08. 1 5 . NOW, THE ONLY QUESTION WHICH REMAINS TO BE ADJUDICATED IS IN RESPECT OF SUM OF RS.6,15,000/ - WHICH WAS WITHDRAWN BY THE ASSESSEE ON 25.11.2004. IT MAY BE REITERATED HEREIN THAT THE INVESTMENT IN AGRICULTURAL LAND WAS M ADE BY THE ASSESSEE IN FEBRUARY, 2005. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE DURING THE COURSE OF HEARING HAS ALSO POINTED OUT THAT THE SAID SUM OF RS.6,15,000/ - WAS WITHDRAWN ALONG WITH RS.5,25,000/ - FOR MAKING THE INVESTMENT IN AGRICULT URAL LAND BUT THE INVEST MENT WAS MADE TO THE EXTENT OF RS.5,25,000/ - . IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE HOLD THAT SUM OF RS.6,15,000/ - WITHDRAWN ON 25.11.2004 HAD TO BE UTILIZED AS ITA NO. 1 297 /PN/20 1 1 ITA NO.1870/PN/2013 MURLIDHAR BHASKAR AHIRRAO 15 PER INTENTION OF ASSESSEE AGAINST PURCHASE OF AGRICULTURAL LAND AND SINCE THE ASSESSEE HAD NOT SO UTILIZED THE SAID SUM WITHIN PERIOD OF TWO YEARS, WHICH EXPIRES IN ASSESSMENT YEAR 2006 - 07, HENCE, SUM OF RS.6,15,000/ - IS TO BE BROUGHT TO TAX IN THE HANDS OF ASSESSEE IN ASSESSMENT YEAR 2006 - 07. ACCORD INGLY, WE HOLD THAT SUM OF RS.39,75,000/ - ( - ) RS.6,15,000/ - = RS.33,6 0 ,000/ - IS TO BE ASSESSED IN THE HANDS OF ASSESSEE AS DEEMED LONG TERM CAPITAL GAINS IN ASSESSMENT YEAR 2007 - 08 AND SUM OF RS.6,15,000/ - IS TO BE ASSESSED IN ASSESSMENT YEAR 2006 - 07 . IN VIEW THEREOF, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN BOTH THE APPEALS ARE PARTLY ALLOWED. 1 6 . IN THE RESULT, BOTH THE APPEALS OF ASSESSEE ARE PARTLY ALLOWED. ORDER P RONOUNCED ON THIS THE 20 TH DAY OF MAY , 201 6 . SD/ - SD/ - SD/ - SD/ - ( R.K. PANDA ) (SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 20 TH MAY , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - II / I , NASHIK ; 4. / THE CIT - I , NASHIK ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE