Smt. Nirmala S Shah, Hyderabad V. ITO - Ward 6(3), Hyderabad

ITA 1593/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69903 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 16-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LAXMINIVAS SHARMA
• Keywords: Reopening of assessment; Deduction for capital gain; Cost of acquisition; Condonation of delay; Revised return; Reassessment proceedings
• Section: 143(3); 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1591/HYD/2012 ASSESSMENT YEAR 2005-06 SMT. NEENA N. DHAROD HYDERABAD PAN: ACNPD7876L VS. THE INCOME TAX OFFICER WARD-6(3) HYDERABAD APPELLANT RESPONDENT ITA NO. 1593/HYD/2012 ASSESSMENT YEAR 2005-06 SMT. NIRMALA S. SHAH HYDERABAD PAN: ADAPN5288J VS. THE INCOME TAX OFFICER WARD-6(3) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI LAXMI NIVAS SHARMA RESPONDENT BY: SRI JEEVAN LAL LAVIDIYA DATE OF HEARING: 0 7 .11.2013 DATE OF PRONOUNCEMENT: 07 .11.2013 O R D E R PER CHANDRA POOJARI, AM: THE ABOVE TWO APPEALS BY DIFFERENT ASSESSEES ARE D IRECTED AGAINST DIFFERENT ORDERS OF THE CIT(A)-IV, HYDERABAD DATED 31.7.2012 FOR ASSESSMENT YEAR 2005-06. 2. THE GROUNDS AND FACTS IN THESE APPEALS ARE COMMON I N NATURE. FOR CONVENIENCE SAKE, WE ARE NARRATING THE GROUNDS AND FACTS FROM THE APPEAL IN ITA NO. 1591/HYD/2012. THE GROUNDS R AISED BY THE ASSESSEES ARE AS FOLLOWS: I) THE LEARNED CIT(A)-IV IS ERRED IN THE FACTS AND IN LAW WHILE PASSING THE APPEAL ORDER. ITA NO. 1591/HYD/2012 & ANR. SMT. NEENA N. DHAROD &ANR. ======================== 2 II) THE LEARNED CIT(A) HAS NOT CONSIDERED THE GENUINE FACTUAL SITUATION FOR CONDONATION OF DELAY IN FILING THE APPEALS (6 MONTHS 12 DAYS). III) THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE FACT THAT THE FIRST AND SECOND PROPERTY WAS PURCHASED WITHIN THE SPECIFIED PERIOD PERMISSIBLE U/S. 54(1) TO CLAIM EXEMPTION. IV) FOR THESE AND OTHER GROUNDS WHICH BE RAISED DURING OR BEFORE HEARING OF APPEAL, IT IS PRAYED THAT THE RELIEF SOUGHT BE GRANTED. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE HA D FILED HER RETURN OF INCOME FOR A.Y. 2005-06 ON 1.8.2005, DECLA RING AN INCOME OF RS. 5,29,877, AFTER CLAIMING EXEMPTION U/S. 54 O N THE ENTIRE CAPITAL GAINS. LATER, IT WAS FOUND THAT THE PROPER TY PURCHASED FOR CLAIMING SUCH EXEMPTION WAS SOLD WITHIN 3 YEARS. AC CORDINGLY, A NOTICE U/S. 148 WAS ISSUED ON 26.3.2010. THE ASSES SEE'S AR VIDE ORDER SHEET NOTING DATED 21.12.2010 REQUESTED THAT THE RETURN FILED ON 1.8.2005 MAY BE TREATED AS THE RETURN FILED IN R ESPONSE TO THE SAID NOTICE. THE ASSESSMENT ORDER PASSED IN CONSEQ UENCE OF THE SAID NOTICE IS THE SUBJECT MATTER OF THE PRESENT AP PEAL. 4. AS DISCUSSED IN THE ASSESSMENT ORDER, THE ASSESSEE, ALONG WITH OTHER 5 CO-OWNERS. HAD SOLD A HOUSE PROPERTY I N THE FINANCIAL YEAR RELEVANT TO THE A.Y. 2004-05. THE ASSESSEE'S S HARE OF CAPITAL GAIN FROM THE SAID SALE WAS RS. 34,03,603. THE ASS ESSEE, ALONG WITH 6 CO- OWNERS, HAD INVESTED IN A HOUSE PROPERTY BY I NVESTING RS. 1,95,00,000 TOWARDS THE COST OF HOUSE AND RS. 26,3 2,520 TOWARDS STAMP DUTY, TOTALLING TO RS. 2,21,32,520. THE ASS ESSEE'S SHARE OF INVESTMENT THEREIN WAS RS. 36,88,753. ACCORDINGLY, T HE ASSESSEE CLAIMED CAPITAL GAIN EXEMPTION OF RS. 34,03,603 IN ENTIRETY U/S. 54 IN THE A.Y. 2004-05, CLAIMING THAT THE SALE PROCEEDS WE RE INVESTED IN ACQUIRING THE NEW HOUSE. SUBSEQUENTLY, HOWEVER, THE ABOVE MENTIONED 'NEW HOUSE PROPERTY' IN WHOSE RESPECT EXE MPTION U/S. 54 WAS CLAIMED, WAS SOLD FOR RS. 1,95,00,000/- IN THE FINANCIAL YEAR ITA NO. 1591/HYD/2012 & ANR. SMT. NEENA N. DHAROD &ANR. ======================== 3 RELEVANT TO THE A.Y. 2005-06. THE ASSESSEE'S SHARE O N THE SAID SALE CAME TO RS. 32,50,000. IN VIEW OF THESE FACTS, THE ASSESSING OFFICER OPINED THAT SINCE THE ASSESSEE HAD CLAIMED CAPITAL GAIN EXEMPTION OF RS. 34,03,603/ -, THE SAME WAS REQUIRED TO BE REDUC ED FROM THE COST OF ACQUISITION AS PER THE PROVISIONS OF SEC. 54(1)( II) OF THE ACT. ACCORDINGLY, THE SHORT TERM CAPITAL GAINS ON SALE OF THE HOUSE IN THE A.Y. 2005-06 WAS WORKED OUT AS UNDER: SALE CONSIDERATION : RS. 32,50,000 LESS: COST OF ACQUISITION (RS. 36,88,753 - RS. 34,03,603) : RS. 2,85,150 --------------------- SHORT TERM CAPITAL GAINS : RS. 29,64,850 ========= THE ASSESSING OFFICER HAS FURTHER MENTIONED IN THE A SSESSMENT ORDER THAT THE ASSESSEE, VIDE A LETTER DTD. NIL, AC CEPTED THE ABOVE COMPUTATION OF SHORT TERM CAPITAL GAINS AT RS. 29,6 4,850/-. 5. ON APPEAL, THE CIT(A) OBSERVED THAT FIRSTLY THE DEL AY IN FILING OF THE APPEAL ITSELF DOES NOT DESERVE TO BE CONDONE D. SECONDLY, EVEN ON MERITS, THE CLAIM OF THE ASSESSEE CANNOT BE ENTE RTAINED AT THIS STAGE FOR TWO REASONS. THE ONE BEING THAT IN THE L IGHT OF THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF GOETZE (IND IA) LTD. (284 ITR 323), SUCH CLAIM COULD NOT HAVE BEEN MADE WITHOUT F ILING A REVISED RETURN OF INCOME BEFORE THE ASSESSING OFFICER. AND T HE SECOND, THAT THE ASSESSEE IN THE COURSE OF REASSESSMENT PROCEEDI NGS HERSELF ADMITTED THE SHORT TERM CAPITAL GAINS OF RS. 29,64, 850/ - WITHOUT DISCLOSING ANY INVESTMENT IN THE SECOND PROPERTY. ACCORDINGLY, THE CIT(A) DECIDED THE GROUNDS RAISED IN THE APPEAL AGAI NST THE ASSESSEE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. ADMITTEDLY, THE CIT(A) FIRST NOT CONDONED TH E DELAY IN FILING ITA NO. 1591/HYD/2012 & ANR. SMT. NEENA N. DHAROD &ANR. ======================== 4 THESE APPEALS BEFORE HIM ON THE REASON THAT THE DEL AY IN FILING OF APPEAL IN THE PRESENT CASE WAS ONLY ON ACCOUNT OF R EMISSNESS OF THE ASSESSEE. IT CANNOT EVEN BE SAID THAT SUCH DELAY W AS UNINTENTIONAL, BECAUSE IF ANY INVESTMENT OUT OF THE SALE PROCEEDS OF THE ORIGINAL PROPERTY WAS MADE IN THE PROPERTY ACQUIRED ON 5.1.2 005, NOTHING WOULD HAVE PREVENTED THE ASSESSEE FROM STATING THIS FACT DURING THE COURSE OF REASSESSMENT PROCEEDINGS AND MAKING A CLA IM U/S. 54 ON THIS ACCOUNT. ON THE OTHER HAND, IT IS CLEAR THAT BY ADMITTING THE SHORT TERM CAPITAL GAINS BY WAY OF FILING THE REVIS ED COMPUTATION OF INCOME AND SUBMISSIONS BEFORE THE ASSESSING OFFICER, THE ASSESSEE PREVENTED THE ASSESSING OFFICER FROM CARRYING OUT AN Y FURTHER INVESTIGATIONS IN THE MATTER, WHICH COULD HAVE PROV ED WHETHER THAT THE SALE PROCEEDS OF THE ORIGINAL PROPERTY WERE ACT UALLY INVESTED IN THE ACQUISITION OF THE SECOND HOUSE PROPERTY. 7. THE LEARNED AR SUBMITTED BEFORE US THAT THE ASSESSME NT ORDER WAS PASSED ON 28.12.2010 U/S. 143(3) OF THE AC T AND THE APPEAL WAS FILED BEFORE THE CIT(A) ON 18.8.2011. TH ERE WAS A MARGINAL DELAY OF 6 MONTHS 12 DAYS WHICH WAS UNINTE NTIONAL AND MAY BE CONDONED. HE DREW OUR ATTENTION TO THE REAS ONS MENTIONED IN THE PETITION FILED BEFORE THE CIT(A) WHICH ARE AS UNDER: ' THIS APPEAL OUGHT TO HAVE BEEN FILED IN FEBRUARY 20 11, HOWEVER, THE SAME COULD NOT BE FILED SINCE WE WERE UNDER THE IMPRESSION THAT THE REOPENING/ASSESSMENT MADE BY THE ASSESSING OFFICER WAS CORRECT. HOWEVER, WE NOTICED THAT SINCE THE INVESTMENT MADE IN PURCHA SE HOUSE PROPERTY IN LIEU OF THE SALE PROCEEDS OF THE EARLIER HOUSE PROPERTY WAS WITHIN THE TIME LIMIT PRESCRIBED U/S. 54(1), EVEN IF THERE WAS LITTLE DEL AY OR DEVIATION IT WAS A TECHNICAL BREACH TO WHICH ASSESS EE SHOULD NOT BE PENALISED.' 8. WE HAVE GONE THROUGH THE ABOVE PETITION. IN OUR O PINION, IT IS APPROPRIATE TO CONDONE THE DELAY. WHEN A QUESTI ON OF SUBSTANTIAL JUSTICE IS INVOLVED, TECHNICALITIES ARE TO BE IGNOR ED. THE ASSESSEE HAD A BONA-FIDE BELIEF THAT REOPENING OF ASSESSMENT WAS CORRECT AND THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S. 54( 1) OF THE ACT. BEING ITA NO. 1591/HYD/2012 & ANR. SMT. NEENA N. DHAROD &ANR. ======================== 5 SO, IN OUR OPINION, THE BONA-FIDE BELIEF IS A REASO N FOR DELAY IN FILING THE APPEAL BEFORE THE CIT(A). IF THE ASSESSEE IS OT HERWISE ENTITLED FOR EXEMPTION U/S. 54(1), WE DIRECT THE CIT(A) TO EX AMINE THE ISSUE AFRESH AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW. AS THE APPELLATE AUTHORITIES ARE EMPOWERED TO ENTERTAIN THE CLAIM DU RING THE APPEAL PROCEEDINGS WHICH WAS NOT PUT BEFORE THE AO ON EARLI ER OCCASION BY THE REVISED RETURN. THE JUDGEMENT OF SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD. VS. CIT (283 ITR 323) (SC) DOES NOT PREVENT THE CIT(A) IN ENTERTAINING THIS ISSUE. ACCORDINGLY, WE R EMIT THE ISSUE TO THE CIT(A) FOR DECIDING IT AFRESH. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEES' A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 7 TH NOVEMBER, 2013 SD/ - (SAKTIJIT DEY) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 7 TH NOVEMBER, 2013 TPRAO COPY FORWARDED TO: 1. SMT. NEENA N. DHAROD , PLOT NO. 992, ROAD NO. 46, JUBILEE HILLS, HYDERABAD. 2. SMT. NIRMALA S. SHAH, 8 - 2 - 681/4, STREET NO. 20, BANJARA HILLS, HYDERABAD. 3 . THE INCOME TAX OFFICER, WARD - 6(2), HYDERABAD. 4 . THE CIT(A) - IV, HYDERABAD. 5 . THE CIT - III, HYDERABAD. 6 . THE DR ' B ' BENCH, ITAT, HYDERABAD