The ITO, Ward-9(3), Ahmedabad V. Shri Dr. Prabodh Mukundrai Desai, Ahmedabad

ITA 1583/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5878 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: S N DIVATIA
• Keywords: Reopening of assessment; Capital asset; Cost of acquisition; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 54F; 147; 148; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO.1583/AHD/2015 AY 2008-09 AND CROSS OBJECTION NO.129/AHD/2015 2008-09 ( IN ITA NO.1583/AHD/2015 AY 2008-09 ) THE INCOME TAX OFFICER WARD-9(4) AHMEDABAD / VS. DR. PRABODH MUKUNDRAI DESAI 13/A, PLOT NO.7/3, SPRING VELLY B/H. KARNAVATI CLUG OFF S.G. HIGHWAY AHMEDABAD # ./ ./ PAN/GIR NO. : ADPPD 9926 J ( #% / APPELLANT ) .. ( &#% / RESPONDENT & CROSS OBJECTOR ) REVENUE BY : SHRI DINESH SINGH, SR.DR ASSESSEE BY : SHRI S.N. DIVATIA, AR '()* / DATE OF HEARING 31/01/2018 +,-.)* / DATE OF PRONOUNCEMENT 23 /03/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTA NCE OF THE REVENUE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 2 - TAX(APPEALS)-4, AHMEDABAD [CIT(A) IN SHORT] DATED 12/03/2015 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) R.W .S.147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'T HE ACT') DATED 19/02/2014 RELEVANT TO ASSESSMENT YEAR (AY) 2008-09 . THE ASSESSEE HAS ALSO FILED CROSS OBJECTION DATED 22/06/2015 IN THE REVENUES APPEAL. 2. THE REVENUE HAS ASSAILED THE ACTION OF THE CIT (A) IN GRANTING RELIEF TO THE ASSESSEE BY ALLOWING DEDUCTION OF RS. 53,35,649/- CLAIMED BY THE ASSESSEE UNDER S.54 OF THE ACT. 3. BRIEFLY STATED, THE ASSESSEE, AN INDIVIDUAL FILE D ITS RETURN OF INCOME FOR THE AY 2008-09 DECLARING TOTAL INCOME OF RS.7,4 2,816/-. THE RETURN FILED BY THE ASSESSEE WAS SUBJECTED TO SCRUTINY ASS ESSMENT. IN THE COURSE OF SCRUTINY ASSESSMENT, IT WAS INTER ALIA NOTICED BY THE ASSESSING OFFICER (AO) THAT ASSESSEE HAS SOLD A RESIDENTIAL PROPERTY DURING THE FINANCIAL YEAR (FY) 2007-08 (RELEVANT TO AY 2008-09) FOR AN A MOUNT OF RS.1,03,00,000/- ON 28/03/2008. THE ASSESSEE HAS D ECLARED LONG TERM CAPITAL GAIN (LTCG) THEREON AT RS.63,35,649/- AFTE R DEDUCING THE INDEXED COST OF ACQUISITION OF THE AFORESAID PROPER TY. AGAINST THE AFORESAID LTCG SO DERIVED, THE ASSESSEE CLAIMED EXE MPTION OF RS.10 LAKHS UNDER S.54EC. THE ASSESSEE ALSO CLAIMED DEDU CTION TOWARDS BALANCE AMOUNT OF RS.53,35,649/- UNDER S.54 OF THE ACT. ON THE ELIGIBILITY OF CLAIM OF DEDUCTION UNDER S.54 OF THE ACT, THE AO OBSERVED ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 3 - THAT THE ASSESSEE HAS NEITHER PURCHASED THE NEW PRO PERTY NOR CONSTRUCTED THE NEW RESIDENTIAL PROPERTY WITHIN THREE YEARS FRO M THE DATE OF SALE OF ORIGINAL PROPERTY AS WRONGLY CLAIMED AND INCORRECTL Y ASSERTED. THE AO ACCORDINGLY DENIED THE CLAIM OF DEDUCTION IN VIEW O F THE ALLEGED BREACH OF CONDITIONS STIPULATED UNDER S.54 OF THE ACT. TH E ASSESSED INCOME WAS ACCORDINGLY INCREASED TO THE EXTENT OF RS.53,35,649 /-. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A). 5. THE CIT(A) REVISITED THE SUBMISSIONS AND FOUND T HAT THE ACTION OF THE AO WAS NOT JUSTIFIED IN DENYING THE DEDUCTION C LAIMED UNDER S.54 OF THE ACT. THE RELEVANT OPERATIVE PARA OF THE ORDER OF THE CIT(A) IS REPRODUCED HEREUNDER:- 5. I HAVE CONSIDERED THE FACTS RECORDED IN THE AS SESSMENT ORDER AND THE WRITTEN SUBMISSION FILED BY THE APPELLANT. 5.1 FIRSTLY, THE ADDITIONAL GROUND RAISED ARE ADMIT TED IN VIEW OF THE JUDGEMENT RELIED UPON BY THE APPELLANT. APPELLANT HAS CLAIMED THAT THERE WAS NO INDEPENDENT APPLICATION OF MIND BY THE AO. ALL MATE RIAL FACTS RELEVANT FOR ASSESSMENT WERE PLACED BY THE APPELLANT ON RECORD. REOPENING OF ASSESSMENT HAS BEEN CHALLENGED AS ACCORDING TO APPELLANT IT WA S BASED ON CHANGE OF OPINION ONLY. I DO NOT FIND MYSELF IN AGREEMENT TO THESE CONTENTIONS OF APPELLANT. FIRSTLY, RE-OPENING OF ASSESSMENT WAS NE VER CHALLENGED BEFORE THE AO AS CLEAR FROM THE OBSERVATION IN THE ASSESSMENT ORDER THAT THE AR OF APPELLANT ATTENDED ON SEVERAL OCCASIONS AND SUBMITT ED REQUISITE DETAILS. IF APPELLANT WAS OF THE OPINION THAT REOPENING WAS NOT VALID, THE SAME SHOULD HAVE BEEN CHALLENGED BEFORE THE AO. NOW RAISING THI S ISSUE DURING APPEAL ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 4 - MEANS THAT AO WOULD NOT GET ANY OPPORTUNITY TO GIVE HIS COMMENTS ON THE SAME. THE APPELLANT, NOW AFTER COMPLETION OF ASSESS MENT CANNOT CHALLENGE THE JURISDICTION OF THE AO. THE MATTER OF JURISDICTION SHOULD NOT AND NEED NOT ORDINARILY COME BEFORE ANY APPELLATE AUTHORITY OR T HE COURTS EXCEPT WHERE THERE IS FAILURE TO FOLLOW THE PROCEDURE LAID DOWN OR EXPECTED BY LAW. IN THE PRESENT CASE, THE APPELLANT HAS NOT CHALLENGED ISSU E OF STATUTORY NOTICE WITHIN STIPULATED TIME OR BEFORE COMPLETION OF ASSESSMENT. EVEN WHERE JURISDICTION HAS BEEN WRONGLY ASSUMED, IT CANNOT BE CHALLENGED F OR THE FIRST TIME IN APPEAL IN VIEW OF SECTION 124 OF INCOME TAX ACT, 1961 AS D ECIDED BY HONBLE SUPREME COURT IN CASE OF RAI BAHADUR SETH TOEMAL VS. CIT (3 6 ITR 9). THE PRINCIPLE BEHIND SECTION 124 IS THAT NO ASSESSEE CAN CLAIM A BASIC RIGHT TO BE ASSESSED BY ANY PARTICULAR ASSESSING OFFICER. FURTHER, IT WAS HELD BY JURISDICTIONAL AND BINDING HONBLE GUJARAT HIGH COURT IN CASE OF SHIVA BHAI KODABHAI PATEL VS. CIT (244 ITR 457) THAT THE JURISDICTION CAN BE CHAL LENGED ONLY BY THE PROCEDURE LAID DOWN BY LAW, SO THAT, WHERE IT IS NO T CHALLENGED, IT AMOUNTS TO WAIVER OR ACQUIESCENCE, WHICH THE LAW WILL NOT DISR EGARD. IN THE PRESENT CASE, THE JURISDICTION WAS NOT CHALLENGED AS PER THE PROC EDURE LAID DOWN U/S.124 OF INCOME TAX ACT, 1961, THEREFORE, WHERE IT IS NOT CH ALLENGED, IT AMOUNTS TO WAIVER OR ACQUIESCENCE 5.2 IN ADDITION TO ABOVE, THE PROVISIONS CONTAINE D IN SEC 147 OF THE ACT INVEST THE AO WITH THE POWER TO ASSESS OR REASSESS ANY INC OME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEA R. IT HAS BEEN PROVIDED THAT IF THE AO HAS REASON TO BELIEVE THAT ANY INCOM E CHARGEABLE TO TAX HAS ESCAPED FOR ANY ASSESSMENT YEAR THEN HE MAY, SUBJEC T TO PROVISIONS OF S. 148 TO 153, ASSESS OR REASSESS SUCH INCOME. THE AO HAS ALS O BEER INVESTED WITH THE POWER TO ASSESS OR REASSESS ANY OTHER INCOME CHARGE ABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SU BSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER S. 147 OF THE ACT. 5.3 SUCH REASONS MUST BE RECORDED BEFORE ISSUE OF NOTICE U/S 148 OF THE ACT. THERE IS NO SET FORMAT IN WHICH SUCH REASONS MUST B E RECORDED. IT IS NOT THE LANGUAGE BUT THE CONTENTS OF SUCH RECORDED REASONS WHICH ASSUMES IMPORTANCE. ALL THESE CONDITIONS ARE SATISFIED BY T HE AO. ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 5 - 5.4. WHAT WOULD AMOUNT TO TRUE AND FULL DISCLOSURE OF ALL MATERIAL FACTS DEPENDS ON THE FACTS OF EACH CASE AND NO FORMULA OF UNIVERSAL APPLICATION IS AVAILABLE. IT CAN HOWEVER SAFELY BE STATED THAT TH E DUTY OF THE ASSESSEE IS TO DISCLOSE PRIMARY FACTS AND IT IS NOT HIS DUTY TO LE AD THE ASSESSING OFFICER TO ANY PARTICULAR INFERENCE OF FACT OR OF LAW ON THE BASIS OF SUCH PRIMARY DISCLOSURES. IN OTHER WORDS, ONCE THE ASSESSEE DISCHARGES HIS DU TY OF STATING ALL THE PRIMARY FACTS, WHAT INFERENCES AND CONCLUSIONS SHOULD BE DR AWN THE DUTY OF THE ASSESSING OFFICER. AS CLEAR FROM ASSESSMENT ORDER, THE INFORMATION ABOUT COMPLETION OF CONSTRUCTION OF HOUSE WAS NOT DISCLOS ED BY THE APPELLANT DURING EARLIER PROCEEDINGS. THIS DEFINITELY IS AN INFORMAT ION RELEVANT FOR VERIFYING CLAIM OF DEDUCTION U/D 54F OF THE ACT AND CONSEQUEN TLY FOR ASSESSING INCOME OF APPELLANT. THUS, IN MY VIEWS, AO'S ACTION OF REOPEN ING WAS CORRECT AND LEGALLY VALID. ACCORDINGLY, ADDITIONAL GROUNDS RAISED BY TH E APPELLANT ARE HEREBY DISMISSED. 5.5 ADMITTEDLY, APPELLANT HAS SOLD A RESIDENTIAL HO USE FOR TOTAL CONSIDERATION OF RS.1,03,00,000/-. APPELLANT CLAIMED EXEMPTION UND ER SECTION 54F OF THE ACT AGAINST CAPITAL GAINS EARNED FROM THIS TRANSACTION. THE CAPITAL GAIN WAS CLAIMED TO BE INVESTED IN THE CONSTRUCTION O F A NE W RESIDENTIAL HOUSE. THESE FACTS ARE ADMITTED BY THE AO AS WELL AS APPELLANT. IN ORDER TO CLAIM EXEMPTION UNDER SECTION 54F, APPELLANT WAS REQUIRED TO COMPLETE THE CONSTRUCTION OF THE HOUSE WITHIN THREE YEARS OF THE SALE OF ORIGINAL ASSET. THE AO HAS NOTED THAT APPELLANT DID NOT FILE ANY DETAIL S TO PROVE THAT THE CONSTRUCTION OF THE NEW HOUSE WAS COMPLETED WITHIN STIPULATED THREE YEARS. APPELLANT HAS SUBMITTED MANY EVIDENCES BEFORE THE A O DURING REASSESSMENT PROCEEDINGS TO PROVE HIS CLAIM. HOWEVER, AS CLEAR F ROM 'PARA-5.1' OF THE ASSESSMENT ORDER, AO HAS NOT DISCUSSED ANY OF THESE EVIDENCES AND THE REASONS OF THEIR UNACCEPTABILITY. APPELLANT HAS SUBMITTED F OLLOWING EVIDENCES TO PROVE THAT THE CONSTRUCTION OF THE HOUSE WAS COMPLETED WI THIN THREE YEARS. THESE EVIDENCES ARE: I) CERTIFICATE OF GOVERNMENT APPROVED VALUER SHRI SURESH BANKER, II) COPIES OF ELECTRICITY BILLS OF TORRENT POWER F OR THE MONTH OF OCTOBER 2008, DECEMBER 2008 WHICH ARE IN THE NAME OF APPELL ANT WITH THE ADDRESS OF THE NEW CONSTRUCTED PROPERTY, ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 6 - III) LETTER OF TORRENT POWER DATED 16/10/2012 IN RESPONSE TO A WRITTEN REQUEST FROM THE APPELLANT. IV) SOME OF THE LETTERS WRITTEN BY THE APPELLANT B ETWEEN AUGUST 2008 TO DECEMBER 2008 REGARDING CHANGE OF ADDRESS TO POST O FFICE, TELEPHONE DEPARTMENT AND PROFESSIONAL ASSOCIATE IS ETC, V) IMPORTANTLY, COPIES OF A FIXED DEPOSIT RECEIPTS ISSUED BY BANK OF INDIA DATED 28/03/2009 AND OF STATE BANK OF INDIA DATED 01/06/2009 MENTIONING THE NEW ADDRESS OF THE APPELLANT OF NEW LY CONSTRUCTED PROPERTY, VI) CERTIFICATE FROM THE CONTRACTOR SHREE SARAL CON STRUCTION CONFIRMING THAT THE WORK WAS STARTED ON 17/6/2007 AND WAS COMP LETED ON 5/8/2008. 5.6. THE AO HAS IGNORED ALL THE ABOVE EVIDENCES AND HAS NOT COMMENTED THEREUPON. DURING REASSESSMENT PROCEEDINGS, BY LET TER DATED 31/07/2013, THE AO ASKED THE APPELLANT TO SUBMIT SOME EVIDENCES ON THIS ISSUE. ALL THESE DETAILS/EVIDENCES WERE SUBMITTED BY THE APPELLANT W ITH REPLY DATED 03/09/2013. THUS, IT IS NOT A CASE OF NON-COMPLIANCE ON THE PAR T OF THE APPELLANT. ALL THESE EVIDENCES ARE SUFFICIENT TO PROVE THAT APPELLANT HA S CONSTRUCTED THE NEW PROPERTY WITHIN STIPULATED THREE YEARS. THEREFORE, AO WAS NOT JUSTIFIED IN REJECTING THE CLAIM OF APPELLANT OF EXEMPTION UNDER SECTION 54F. 5.7. EVEN OTHERWISE, EVEN IF THE CONSTRUCTION OF TH E PROPERTY WAS NOT COMPLETED BY THE APPELLANT WITHIN THREE YEARS, AS P ER PROVISO TO SUB-SECTION(2) OF SECTION 54, THE CAPITAL GAIN IS REQUIRED TO BE TREATED AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FR OM THE DATE OF TRANSFER OF ORIGINAL ASSET EXPIRES. THEREFORE NO CAPITAL GAIN CAN BE TAXED IN THE CASE OF APPELLANT IN THIS PREVIOUS YEAR I.E. THE YEAR OF TR ANSFER OF ORIGINAL ASSET. 5.8. IN VIEW OF ABOVE DISCUSSION, IT IS HELD THAT A O WAS NOT JUSTIFIED IN DISALLOWING DEDUCTION OF RS.53,35,649/- CLAIMED BY THE APPELLANT U/S.54F OF THE ACT. ACCORDINGLY, ALL FOUR ORIGINAL GROUNDS OF APPEAL ARE ALLOWED. 6. THE CIT(A) ACCORDINGLY REVERSED THE ACTION OF TH E AO AND ALLOWED CLAIM OF DEDUCTION UNDER S.54 OF THE ACT. ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 7 - 7. AGGRIEVED, THE REVENUE HAS PREFERRED APPEAL BEFO RE THE TRIBUNAL. 8. THE LD.DR FOR THE REVENUE VEHEMENTLY SUPPORTED T HE ACTION OF THE AO AND SUBMITTED THAT THE CIT(A) HAS MISDIRECTE D ITSELF IN LAW IN ALLOWING THE CLAIM OF DEDUCTION UNDER S.54 OF THE A CT IN THE GIVEN FACTS. THE LD.DR FIRSTLY SUBMITTED THAT THE CIT(A) HAS TAK EN COGNIZANCE OF THE IRRELEVANT MATERIAL TO ASSUME THE CORRECTNESS OF C OST OF CONSTRUCTION AND COMPLETION THEREOF. THE LD.DR POINTED OUT THAT M AJORITY OF THE EXPENSES HAVE BEEN INCURRED PRIOR TO THE SALE OF TH E ORIGINAL HOUSE PROPERTY AND THEREFORE SUCH EXPENSES CANNOT BE TAKE N INTO ACCOUNT FOR THE PURPOSES OF CONSTRUCTION OF NEW HOUSE IN VIEW OF TH E EXPRESS LANGUAGE OF THE ACT. THE LD.DR CONTENDED THAT ALLEGATION OF TH E AO THAT NO SUPPORTING/CONCRETE EVIDENCE TOWARDS EXPENSES INCUR RED FOR CONSTRUCTION OF NEW HOUSE REMAIN UNADDRESSED BY THE CIT(A). THE ASSESSEE HAD FAILED TO FILE THE BILLS ETC. TOWARDS THE COSTS BEF ORE AO. THE LD.DR NEXT SUBMITTED THAT THE ASSESSEE COULD NOT ALSO PROVIDE ANY CONCLUSIVE PROOF TO SHOW THAT THE CONSTRUCTION OF THE PROPERTY WAS C OMPLETED WITHIN THREE YEARS FROM THE DATE OF SALE OF ORIGINAL PROPERTY AS STIPULATED UNDER S.54 OF THE ACT. THE LD.DR ACCORDINGLY SUBMITTED THAT THE CLAIM OF DEDUCTION UNDER S.54 OF THE ACT WAS REQUIRED TO BE DISALLOWED AT THE THRESHOLD IN AY 2008-09 ITSELF IN THE ABSENCE OF DEPOSIT MADE IN THE CAPITAL GAIN ACCOUNT SCHEME. THE LD.DR SUBMITTED THAT THE CIT(A) THEREFORE ALSO ERRED IN TAKING COGNIZANCE OF THE ALTERNATIVE CONTE NTION OF THE ASSESSEE IN ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 8 - TERMS OF PROVISO TO SUB-SECTION(2) OF SECTION 54 OF THE ACT THAT CAPITAL GAIN IS REQUIRED TO BE TAXED AFTER THE EXPIRY OF A PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET. THE L D.DR ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) REQUIRES TO BE SET ASIDE AND THE ORDER OF THE AO REQUIRES TO BE RESTORED. 9. THE LD.AR, ON THE OTHER HAND, STRONGLY DEFENDED THE ACTION OF THE CIT(A) AND SUBMITTED THAT THE CIT(A) HAS CORRECTLY APPRECIATED THE FACTS IN PERSPECTIVE. THE LD.AR REFERRED TO RESIDENTIAL HOUSING CONSTRUCTION ACCOUNT (PAGE NOS.23 TO 32 OF THE PAPER-BOOK) AND S UBMITTED THAT THE ASSESSEE HAS INCURRED EXPENSES TOWARDS CONSTRUCTION OF THE HOUSE AS REFLECTED IN THE LEDGER. THE LD.AR NEXT REFERRED T O A CERTIFICATE FROM BANK OF INDIA DATED 06/05/2013 TO SHOW THAT THE ASS ESSEE HAD ADOPTED THE ADDRESS OF THE NEWLY CONSTRUCTED HOUSE PROPERTY FRO M OCTOBER-2008 TO JUSTIFY THAT THE CONSTRUCTION OF THE PROPERTY WAS C OMPLETED PRIOR TO THE AFORESAID PERIOD. THE LD.AR NEXT REFERRED TO AN AP PLICATION (WITHOUT ACKNOWLEDGEMENT) ADDRESSED TO POSTMASTER REQUESTING CHANGE OF ADDRESS TO THE NEW CONSTRUCTION FOR THE PURPOSES OF RECEIVI NG POSTAL ARTICLES. THE LD.AR SIMILARLY RELIED UPON AN APPLICATION DATED 04 /12/2008 MADE TO BHARATI AIRTEL LTD. TO SEND TELEPHONE BILLS TO THE NEW ADDRESS. THE LD.AR REFERRED TO SIMILAR APPLICATIONS MADE TO VARIOUS AU THORITIES AS LISTED IN THE ORDER OF CIT(A) TO PROVE THAT THE ASSESSEE HAS ACT UALLY OCCUPIED THE NEW HOUSE PROPERTY WITHIN THREE YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 9 - PROPERTY. THE LD.AR ACCORDINGLY SUBMITTED THAT THE CIT(A) HAS CORRECTLY APPRECIATED THAT THESE EVIDENCES ARE SUFF ICIENT TO PROVE THAT THE ASSESSEE HAS COMPLIED WITH THE CONDITIONS OF SECTIO N 54 OF THE ACT AND HAS COMPLETED THE CONSTRUCTION OF THE NEW HOUSE PRO PERTY WITHIN STIPULATED PERIOD OF THREE YEARS. THE LD.AR ACCORD INGLY SUBMITTED THAT NO INTERFERENCE WITH THE ORDER OF CIT(A) IS CALLED FOR. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND MATERIAL RE FERRED TO AND RELIED UPON HAVING REGARD TO THE RULE 18(6) OF THE ITAT RU LES, 1963. THE SHORT CONTROVERSY FOR ADJUDICATION IS TOWARDS MAINTAINABI LITY OF CLAIM OF DEDUCTION UNDER S.54 OF THE ACT AGAINST THE LTCG E ARNED BY THE ASSESSEE ON SALE OF ORIGINAL HOUSE PROPERTY. IT IS THE CASE OF THE ASSESSEE THAT AGAINST THE SALE OF THE ORIGINAL HOUSE PROPERTY, TH E ASSESSEE HAS CONSTRUCTED NEW RESIDENTIAL PROPERTY WITHIN THREE Y EARS FROM THE TRANSFER OF THE ORIGINAL ASSET AS STIPULATED UNDER S.54 OF T HE ACT AND THEREFORE THE CLAIM OF DEDUCTION UNDER S.54 OF THE ACT IS REGULA RLY ENTITLED TO THE ASSESSEE. THE REVENUE, ON THE OTHER HAND, CONTENDS THAT NO COGENT EVIDENCE HAS BEEN FILED TO SUPPORT THE COST OF CONS TRUCTION AND THE COMPLETION OF CONSTRUCTION OF HOUSE PROPERTY WITHIN THREE YEARS. ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 10 - 10.1 TO ADDRESS THE ISSUE, WE FIRSTLY REFER TO THE STATEMENT OF FACTS FILED BEFORE THE CIT(A) AND FIND AT THE FIRST INSTANCE TH AT THE ASSESSEE HAS TAKEN A POSITION ON FACTS THAT IT HAS INCURRED EXPENDITU RE OF RS.63,01,067/- IN THE FY 2006-07 AND RS.34,21,688/- IN FY 2007-08. I T WAS CATEGORICALLY POINTED OUT BY THE ASSESSEE IN THE STATEMENT OF FAC TS PLACED BEFORE THE CIT(A) THAT THE ASSESSEE SPENT IN ALL RS.97,22,755/ - TOWARDS CONSTRUCTION OF THE NEW RESIDENTIAL PROPERTY OVER A PERIOD OF TW O YEARS, I.E. RS.63,01,067/- IN FY 2006-07 AND RS.34,21,688/- IN FY 2007-08. THUS, THE SUBSTANTIAL COSTS TOWARDS CONSTRUCTION WAS APPA RENTLY INCURRED PRIOR TO THE TRANSFER OF ORIGINAL ASSET, WHEREAS THE IMPE TUS OF THE S.54 IS TO UTILIZE THE LTCG TOWARDS CONSTRUCTION AFTER THE TRA NSFER OF ORIGINAL ASSET. 10.2. TO DELINEATE, WE MAKE REFERENCE TO THE PROV ISIONS OF SECTION 54 OF THE ACT WHICH PROVIDES FOR DEDUCTION OF LTCGS ARISI NG FROM SALE OF A RESIDENTIAL HOUSE WHERE THE ASSESSEE HAS, WITHIN A STIPULATED PERIOD, PURCHASED OR CONSTRUCTED ANOTHER RESIDENTIAL HOUSE. AS PROVIDED, THE DEDUCTION UNDER S.54 CAN BE AVAILED ON BOTH PURCHA SE AS WELL AS CONSTRUCTION OF NEW RESIDENTIAL HOUSE. THE SCOPE AND SYMMETRY OF SECTION PROVIDES FOR UTILIZATION OF CAPITAL GAINS F OR CONSTRUCTION OF PROPERTY WITHIN A PERIOD OF THREE YEARS AFTER THE D ATE OF TRANSFER OF ORIGINAL LONG TERM CAPITAL ASSETS BEING RESIDENTIAL HOUSE. FROM THE ADMITTED FACTS EMERGING FROM RECORD, THE ASSESSEE H AS ALREADY SPENT ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 11 - RS.63,01,067/- IN THE FY 2006-07 RELEVANT TO AY 200 7-08. SIMILARLY, REMAINING AMOUNT OF RS.34,21,688/- WAS ALSO SPENT I N FY 2007-08 OSTENSIBLY PRIOR TO THE TRANSFER OF THE ORIGINAL AS SET ON 28/03/2008. THE CONSTRUCTION OF NEW RESIDENTIAL HOUSE IS THUS SUBST ANTIALLY COMPLETE BEFORE THE TRANSFER OF ORIGINAL RESIDENTIAL PROPERT Y. AT THIS JUNCTURE, WE OBSERVE THAT THE LEGISLATURE IN OWN WISDOM UNDER S. 54(1) ENJOINS UTILIZATION OF LTCG IN NEW CONSTRUCTION AFTER THE TRANSFER OF ORIGINAL ASSET IN CONTRAST TO UTILIZATION ON PURCHASE WHE RE IT CAN BE MADE BEFORE TRANSFER ALSO. THEREFORE, THE AMOUNT UTILIZED FOR CONSTRUCTION IN THE PERIOD EARLIER TO THE TRANSFER OF THE ORIGINAL ASSE T IS NOT IN SYNC WITH THE SCHEME OF S.54 AND CONSEQUENTLY NOT ELIGIBLE FOR D EDUCTION. 10.3. PERTINENT TO NOTE, THE ASSESSEE HAS CLAIMED THAT CONSTRUCTION WORK HAS BEEN COMPLETED ON 05/08/2008. THE AMOUNT SPENT AFTER THE TRANSFER OF THE ORIGINAL ASSET IN THE CONSTRUCTION OF NEW RE SIDENTIAL PROPERTY UPTO THE DATE OF COMPLETION OF CONSTRUCTION IS THEREFORE ELIGIBLE AND IS IN ACCORD WITH PROVISIONS OF SECTION 54 OF THE ACT. 10.4. SIGNIFICANTLY, IT IS ALSO THE CASE OF THE AO THAT THE DOCUMENTARY EVIDENCES HAVE NOT BEEN FILED BEFORE HIM TO SUPPORT THE CLAIM OF CONSTRUCTION. THE CIT(A) HAS NOWHERE ASSERTED THAT SUCH EVIDENCES HAVE BEEN PLACED BEFORE HIM AND FOUND TO HIS SATISFACTIO N. THERE IS NO REFERENCE OF ANY REMAND REPORT IN THIS REGARD EITHE R. NO SUCH EVIDENCES ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 12 - HAVE BEEN PLACED BEFORE US EITHER. THE CIT(A) HAS REVERSED THE ACTION OF THE AO MERELY ON THE GROUND THAT THE EVIDENCES SHO WING OCCUPATION OF THE RESIDENTIAL PROPERTY HAVE BEEN DISREGARDED BY T HE AO. WE FIND THAT NONE OF THE EVIDENCES RELIED UPON BY THE ASSESSEE A RE CONCLUSIVE OF THE PROOF OF DATE OF OCCUPATION OF THE RESIDENTIAL PROP ERTY FROM AUGUST- SEPTEMBER2008 AS CLAIMED. NEEDLESS TO SAY, IT WAS INCUMBENT UPON THE CIT(A) TO VERIFY OR CAUSE TO VERIFY THE DOCUMENTARY EVIDENCES TO SUPPORT THE COST OF CONSTRUCTION AND COMPLETION THEREOF. THE CIT(A) SHOULD NOT HAVE BRUSHED ASIDE THE ACTION OF THE AO SUMMARILY W ITHOUT CONFRONTING THE AO ON THE EVIDENCES TO SUPPORT COST INCURRED TO WARDS CONSTRUCTION, IF ANY, AND COMPLETION THEREOF. A LEDGER ACCOUNT PREP ARED BY THE ASSESSEE DOES NOT TAKE THE PLACE OF PROOF OF COST INCURRED. THUS, WE CONSIDER IT APPROPRIATE TO SET ASIDE THE ISSUE TO THE FILE OF T HE CIT(A) FOR RE- EXAMINATION OF FACTS IN THE LIGHT OF SECTION 54 OF THE ACT AND CONFINE THE RELIEF TO THE EXTENT OF COST OF CONSTRUCTION INCURR ED AFTER THE TRANSFER OF THE ORIGINAL ASSET TILL THE COMPLETION OF THE CONSTRUCT ION BASED ON DOCUMENTARY EVIDENCES. FOR THIS PURPOSE, SUITABL E OPPORTUNITY SHALL BE GRANTED TO THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 13 - ASSESSEES CROSS OBJECTION NO.129/AHD/2015 AY 200 8-09 (IN ITA NO.1583/AHD/2015-AY-2008-09-REVENUES APPEAL) 12. THE ASSESSEE HAS FILED CROSS OBJECTION IN THE R EVENUES APPEAL CHALLENGING THE JURISDICTION OF THE AO TO REOPEN TH E ASSESSMENT UNDER S.147 OF THE ACT. HOWEVER, THE LD.AR FOR THE ASSES SEE AT THE TIME OF HEARING MADE A STATEMENT AT THE BAR THAT THE CROSS OBJECTIONS RAISED ON BEHALF OF THE ASSESSEE ARE NOT PRESSED. THE CROSS OBJECTION IS ACCORDINGLY DISMISSED AS NOT PRESSED. 13. IN THE COMBINED RESULT, THE APPEAL OF THE REVEN UE IS ALLOWED FOR STATISTICAL PURPOSES, WHEREAS ASSESSEES CROSS OBJE CTION IS DISMISSED AS NOT PRESSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 23 / 03/2018 SD/- SD/- () ( ) (RAJPAL YADAV) ( PRADIP KUMAR KEDIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 23/ 03 /2018 2..',.'../ T.C. NAIR, SR. PS ITA NO.1583/AHD /2015 & CO NO.129/AHD/2015 (BY ASSESSEE) ITO VS. DR.PRABODH M.DESAI ASST.YEAR 2008-09 - 14 - !'!# / COPY OF THE ORDER FORWARDED TO : 1. #% / THE APPELLANT 2. &#% / THE RESPONDENT. 3. 345* 6* / CONCERNED CIT 4. 6* ( ) / THE CIT(A)-4, AHMEDABAD 5. 789*'45 , 45. , 3 / DR, ITAT, AHMEDABAD 6. 9;( / GUARD FILE. / BY ORDER, &7** //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 21.3.18(DICTATION-PAD 21- P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.3.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.23.3.18 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.3.18 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER