Nilesh Dharod, Hyderabad V. ITO,Ward 6(3), Hyderabad

ITA 179/HYD/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82320 (ITAT-HYDERABAD)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 05-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LAXMINIWAS SHAR MA
• Keywords: Reopening of assessment; Cost of acquisition; Assessment record
• Section: 143(3); 142(1); 147; 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 179/HYD/2014 ASSESSMENT YEAR : 2005-06 NILESH DHAROD, HYDERABAD PAN ABAPD2093B INCOME-TAX OFFICER, WARD 6(3), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI LAXMINIWAS SHARMA REVENUE BY SHRI SOLGY JOSE T. KOTTARAM DATE OF HEARING 21-08-2014 DATE OF PRONOUNCEMENT 05-09-2014 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 29/11/2013 PASSED BY THE CIT(A)-IV, HYDERABAD FOR T HE AY 2005-06. 2. THE ASSESSEE HAS RAISED 6 GROUNDS. GROUND NO. 1 & 6 ARE GENERAL IN NATURE, HENCE, NEED NOT BE ADJUDICATED U PON. IN GROUND NOS. 2 & 3 ASSESSEE HAS RAISED A LEGAL ISSUE ON THE VALIDITY OF PROCEEDING INITIATED U/S 147 OF THE ACT. 3. WE WILL FIRST DEAL WITH THE AFORESAID LEGAL ISSU E RAISED BY THE ASSESSEE. BRIEFLY, THE FACTS ARE, ASSESSEE AN INDIV IDUAL FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER DISP UTE ON 01/08/2005 DECLARING TOTAL INCOME OF RS. 6,62,633/- . INITIALLY, THE 2 ITA NO. 179/H/14 NILESH DHAROD RETURN WAS PROCESSED U/S 143(1) ON 01/08/2005. SUBS EQUENTLY, ACTION WAS TAKEN U/S 147 OF THE ACT BY ISSUING A NOTICE U/ S 148 OF THE ACT ON 17/01/2008 AND THE ASSESSMENT WAS COMPLETED U/S 143 (3) READ WITH SECTION 147 VIDE ORDER DATED 03/06/2008 BY ACCEPTIN G INCOME RETURNED OF INCOME OF RS. 6,62,638/-. THE ASSESSMEN T SO COMPLETED WAS AGAIN REOPENED U/S 147 VIDE NOTICE DATED 19/07/ 2011 ISSUED U/S 148 OF THE ACT FOR THE REASON THAT ASSESSEE HAS SOL D A PROPERTY FOR RS. 1,95,00,000/- ON 30/11/2004, WHICH WAS JOINTLY PURCHASED WITH SMT. MANJULA D. SHAH AND OTHERS. IN THE CASE OF MAN JULA SHAH, IT WAS FOUND THAT THE ASSESSEE HAS RECEIVED CAPITAL GAINS IN FY 2003-04 RELEVANT TO AY 2004-05 AND THE INVESTMENT IN PURCHA SE OF THE SAID PROPERTY WAS CLAIMED AS EXEMPTION U/S 54. AO NOTED THAT AS PER THE PROVISIONS OF SECTION 54(1)(II) OF THE IT ACT, IF T HE PROPERTY ON WHICH EXEMPTION U/S 54 WAS CLAIMED IS SOLD WITHIN THREE YEARS, THE AMOUNT OF CAPITAL GAINS CLAIMED AS EXEMPTION SHOULD BE RED UCED FROM THE COST OF THE ASSET. ACCORDINGLY, IN CASE OF SMT. MAN JULA D. SHAH ASSESSMENT FOR THE AY 2005-06 WAS REOPENED AND ASSE SSMENT WAS COMPLETED BY COMPUTING CAPITAL GAINS TO TAX. ON THE AFORESAID BASIS, AO WAS OF THE VIEW THAT AS THE ASSESSEE HAS ALSO MA DE SIMILAR CLAIM OF EXEMPTION U/S 54 OF THE ACT AND HAS SOLD THE PRO PERTY WITHIN THREE YEARS, EXEMPTION CLAIMED U/S 54 AMOUNTING TO RS. 31 ,41,007/- HAS TO BE REDUCED FROM THE COST OF ACQUISITION FOR THE PUR POSE OF CALCULATION OF CAPITAL GAINS. SINCE THE SAID AMOUNT HAS ESCAPED ASSESSMENT, THERE IS NEED TO REOPEN THE ASSESSMENT. DURING THE ASSESSMENT PROCEEDING WHEN THE AO ASKED THE ASSESSEE TO SHOW C AUSE AS TO WHY THE EXEMPTION CLAIM OF RS. 31,41,007/- U/S 54 S HALL NOT BE REDUCED FROM THE COST OF ACQUISITION, ASSESSEE REPL IED THAT SALE PROCEEDS WERE USED BY THE ASSESSEE FOR PURCHASE OF UNITS OF MUTUAL FUND, SINCE ASSESSEE HAS NOT UTILIZED SALE PROCEEDS OF HOUSE SOLD DURING THE YEAR IN ACQUIRING THE ASSET, HE IS ELIGI BLE FOR CLAIM OF DEDUCTION U/S 54. IT WAS SUBMITTED THAT THE ASSESSE E HAS NOT ADMITTED ANY CAPITAL GAIN ARISING ON SALE OF RESIDENTIAL PRO PERTY DURING THE PREVIOUS YEAR RELEVANT TO AY 2005-06 AND HAS ALSO N OT CLAIMED ANY 3 ITA NO. 179/H/14 NILESH DHAROD EXEMPTION U/S 54. THE AO, HOWEVER, DID NOT ACCEPT T HE CONTENTION OF THE ASSESSEE AND PROCEEDED TO COMPLETE THE ASSESSME NT VIDE ORDER DATED 31/12/2012 BY REDUCING THE EXEMPTION CLAIMED U/S 54 OF RS. 41,41,007/- FROM THE COST OF ACQUISITION AND COMPUT ED SHORT TERM CAPITAL GAIN OF RS. 27,02,254/-. 4. BEING AGGRIEVED WITH THE ASSESSMENT ORDER, SO PA SSED, ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A), CHALLE NGING THE ASSESSMENT ORDER BOTH ON THE VALIDITY OF ACTION TAK EN U/S 147 AS WELL AS MERITS OF THE ISSUE. 5. SO FAR AS THE VALIDITY OF REOPENING OF ASSESSMEN T IS CONCERNED, ASSESSEE SUBMITTED BEFORE THE CIT(A) THAT DURING EA RLIER ASSESSMENT PROCEEDING U/S 147 OF THE ACT, AO VIDE LETTER DATED 21/11/2007 HAD MADE FULL SCRUTINY AND TAKEN ON RECORD, THE DETAILS OF PURCHASE OF IMMOVABLE PROPERTY WHEREIN THE ASSESSEE HAD SPECIFI CALLY MENTIONED ABOUT THE SALE OF THE HOUSE, THEREFORE, ASSESSEE HA VING DISCLOSED ALL MATERIAL FACTS RELEVANT TO THE PURCHASE OF THE HOUS E DURING EARLIER PROCEEDING, REOPENING OF ASSESSMENT U/S 147 OF THE ACT BEYOND THE PERIOD OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR IS BAD IN LAW. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE IN THE LIGHT OF THE MATERIALS ON RECORD NOTED THAT IN RESPONSE TO NOTICE DATED 21/11/2007 U/S 142(1`) OF THE ACT, ASSESSEE I N HIS REPLY DATED 24/12/2007 HAS SUBMITTED INFORMATION IN RESPONSE T O THE SAID NOTICE AND SUBMITTED THE DETAILS REGARDING PURCHASE OF IMM OVABLE PROPERTY WORTH RS. 1,95,00,000/-. SUBSEQUENTLY, IN ANOTHER L ETTER DATED 17/03/2008 TO THE ITO, ASSESSEE SUBMITTED FURTHER I NFORMATIONS WITH REGARD TO THE SALE CONSIDERATION RECEIVED OF RS. 1, 95,00,000/- AND THE COMPUTATION OF CAPITAL GAINS. ASSESSEE ALSO SUBMITT ED THE COPIES OF THE SALE DEEDS OF THE PROPERTY SOLD AND THE NEW PRO PERTY PURCHASED BY HIM. THE CIT(A) FURTHER NOTED THAT THE ITO THERE AFTER INFORMED THE CONCERNED AO VIDE LETTER DATED 26/03/2010 THAT THE ASSESSEE ALONG WITH SOME OTHERS HAD PURCHASE A PROPERTY AT 8-2-701 /1, ROAD NO. 12, 4 ITA NO. 179/H/14 NILESH DHAROD BANJARA HILLS, HYDERABAD FOR RS. 1,95,00,000/- ON 2 7/02/2004 AND HAD SOLD ON 30/11/2004 FOR THE SAME AMOUNT , BUT, EXEMP TION U/S 54 HAD BEEN ON THE BASIS OF THE PURCHASE OF THIS PROPERTY. THEREFORE, THE COST OF ACQUISITION NEEDED TO BE REDUCED TO THE EXT ENT OF EXEMPTION U/S 54 CLAIMED EARLIER AND RESULTANT CAPITAL GAINS NEEDED TO BE BROUGHT TO TAX. SINCE THE JURISDICTION OVER THE CAS E AGAIN WAS REFERRED BACK TO THE ITO, IN THE MEANWHILE ON 26/03/2011, TH E ITO, WHO BECAME THE AO AGAIN ISSUED A NOTICE U/S 148 ON 19/0 7/2011. THE CIT(A), THEREFORE, WAS OF THE OPINION THAT NOTICE D ATED 21/11/2007 ISSUED BY THE ITO AND THE CONSEQUENTIAL REPLIES DAT ED 24/12/2007 AND 17/03/2008 FILED BEFORE THE ITO WAS NOT IN THE CAPACITY AS AO AS THE AO AT THAT TIME WAS THE ACIT. THE CIT(A) FUR THER NOTED THAT THE ORIGINAL ASSESSMENT PROCEEDING U/S 147 AND THE PROC EEDING U/S 142(1) WENT ON ALMOST SIMULTANEOUSLY AND PARALLALY BEFORE THE ACIT AND LATER BEFORE THE ITO RESPECTIVELY. THE CIT(A), THEREFORE, WAS OF THE VIEW THAT THE INFORMATION SUBMITTED BY THE ASSE SSEE REGARDING IMMOVABLE PROPERTY WAS NOT SUBMITTED TO THE AO(ACIT ) BUT TO ANOTHER INCOME-TAX AUTHORITY (ITO). AS A RESULT, THE INFORM ATION WAS NOT AVAILABLE BEFORE THE AO DURING THE PENDENCY OF THE ORIGINAL ASSESSMENT PROCEEDING. THE CIT(A) HELD THAT THOUGH THE FINAL ORDER U/S 143(3) READ WITH SECTION 147, WHICH IS UNDER AP PEAL, IS PASSED BY THE ITO, WHO HAD EXAMINED THE MATTER THROUGH THE NO TICE ISSUED U/S 142(1) DATED 21/11/2007, BUT, HE WAS NOT THE AO WHE N HE ISSUED THAT NOTICE. HENCE, THE ASSESSEES CLAIM THAT HE HAD FUR NISHED INFORMATION BEFORE THE AO DURING THE EARLIER PROCEEDING IS FACT UALLY NOT CORRECT. NEGATING ASSESSEES CONTENTION THAT ASSESSMENT PROC EEDING IS TIME BARRED AS THE SECOND REOPENING OF ASSESSMENT IS BEY OND FOUR YEARS FROM THE EXPIRY OF AY, THE CIT(A) HELD THAT AS THE MATTER OF SALE OF PROPERTY HAD NOT BEEN DISCLOSED IN THE RETURN OF IN COME AT ALL, THERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE F ULLY AND TRULY THE MATERIAL FACTS RELEVANT TO ASSESSMENT, HENCE, 4 YEA RS RESTRICTION WOULD NOT APPLY IN THE PRESENT CASE. 5 ITA NO. 179/H/14 NILESH DHAROD 6. THE LEARNED AR REITERATING SUBMISSIONS MADE BEFO RE THE CIT(A), SUBMITTED THAT THE ORDER PASSED BY THE CIT( A) ITSELF IS EVIDENT OF THE FACT THAT THE INFORMATION RELATING TO SALE O F PROPERTY FOR WHICH CONSIDERATION OF RS. 1,95,00,000/- WAS PAID WAS AVA ILABLE BEFORE THE AO AT THE TIME OF ASSESSMENT PROCEEDING U/S 143(3) READ WITH SECTION 147 OF THE ACT, WHICH WAS COMPLETED VIDE ASSESSMENT ORDER DATED 03/06/2008. THEREFORE, THE ASSESSEE HAVING DISCLOSE D ALL MATERIAL FACTS RELATING TO THE SALE OF PROPERTY TRULY AND FU LLY INITIATION OF SECOND PROCEEDING U/S 147 OF THE ACT, BEYOND THE PERIOD OF 4 YEARS IS WITHOUT JURISDICTION. THE LEARNED AR SUBMITTED THAT THE IN FORMATION SUBMITTED BEING PART OF THE ASSESSMENT RECORD, IT CANNOT BE S AID THAT IT HAS COME SUBSEQUENTLY TO THE POSSESSION OF THE AO AND T HERE IS A FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND T RULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSMENT. FURTHER, REFERR ING TO THE FACT THAT THE ITO VIDE LETTER DATED 26/03/2010 HAD INFORMED T O THE THEN AO (ACIT) REGARDING SALE OF THE PROPERTY AND CLAIM OF EXEMPTION U/S 54 OF THE IT ACT THERE IS NO REASON WHY THE AO SHOULD HAV E SAT OVER THE MATTER TAKING ANY ACTION AND ONLY TOOK ACTION AFTER EXPIRY OF 4 YEARS. IN THE AFORESAID CIRCUMSTANCES, IT WAS SUBMITTED TH AT REOPENING OF ASSESSMENT IS INVALID AND BAD IN LAW. 7. THE LEARNED DR, HOWEVER, SUPPORTING THE ORDER OF CIT(A) ON THE ISSUE AND JUSTIFYING THE REOPENING OF ASSESSMENT SU BMITTED THAT THE ASSESSEE HAVING NOT DISCLOSED FULLY AND TRULY ALL M ATERIAL FACTS RELATING TO SALE OF PROPERTY AND RELATING TO CLAIM OF EXEMPTION U/S 54 OF THE ACT, THERE IS ESCAPEMENT OF INCOME, HENCE, P ROCEEDING INITIATED U/S 147 AFTER EXPIRY OF 4 YEARS IS VALID. 8. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AND PERUSED THE MATERIALS ON RECORD AS WELL AS THE ORDERS OF THE RE VENUE AUTHORITIES. BEFORE PROCEDDING TO DECIDE THE ISSUE, IT IS NECESS ARY TO BEAR IN MIND CERTAIN DATES, WHICH HAVE A CRUCIAL BEARING ON THE OUTCOME OF THE CASE: 6 ITA NO. 179/H/14 NILESH DHAROD 1. 01/08/2005 RETURN OF INCOME FILED BY THE ASSE SSEE 2. 01/08/2005 RETURN WAS PROCESSED U/S 143(1) OF THE ACT. 3. 17/01/2008 FIRST NOTICE U/S 148 OF THE ACT FOR REOPENING OF ASSESSMENT U/S 147. 4. 03/06/2008 ASSESSMENT COMPLETED U/S 143(3) REA D WITH SECTION 147 OF THE ACT. 5. 19/07/2011 REASONS RECORDED FOR REOPENING OF A SSESSMENT AND NOTICE U/S 148 ISSUED FOR SECOND TIME. 6. 31/12/2012 ASSESSMENT COMPLETED U/S 143(3) REA D WITH SECTION 147OF THE ACT. 9. AS CAN BE SEEN, IN CASE OF THE ASSESSEE, REOPENI NG OF THE ASSESSMENT HAS BEEN MADE ON TWO OCCASIONS. FIRST TI ME ON 17/01/2008 AND AGAIN ON 19/07/2011. AS PER THE ORDE R SHEET ENTRY DATED 19/07/2011, REASONS RECORDED FOR REOPENING TH E ASSESSMENT ARE AS UNDER: THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS COMP LETED U/S 143(3) R.W.S. 147 WAS ON 03/06/2008. SUBSEQUENT LY, INFORMATION WAS RECEIVED THAT THE ASSESSEE HAS SOLD A PROPERTY FOR RS. 1,95,00,000/- ON 30/11/2004 AND THE PROPERT Y WAS JOINTLY PURCHASED WITH SMT. MANJULA D. SHAH AND OTHERS. IN THE CASE OF MANJULA SHAH, IT WAS FOUND THAT THE ASSESSEE HAS RE CEIVED CAPITAL GAINS IN FY 03-04 (AY 2004-05) AND THE INVE STMENT IN PURCHASE OF THE SAID PROPERTY WAS CLAIMED AS EXEMPT ION U/S 54. AS PER THE PROVISIONS OF SECTION 54(1)(II) OF THE I T ACT, 1961, IF THE PROPERTY ON WHICH EXEMPTION U/S 54 WAS SOLD WIT HIN 3 YEARS, THE AMOUNT OF CAPITAL GAIN CLAIMED SHOULD BE REDUCE D FROM THE COST OF ASSET. ACCORDINGLY, THE CASE OF SMT. MANJUL A D. SHAH FOR AY 2005-06 WAS REOPENED AND REASSESSMENT WAS DONE O N 28/12/2010 BRINGING THE CAPITAL GAINS TO TAX. SIMIL AR CLAIM WAS MADE BY THE ASSESSEE SRI NILESH DHAROD IN AY 2004-0 5. AS PER THE DETAILS FURNISHED BY SMT. MANJULA D. SHA H, THE ASSESSEE SHRI NILESH DHAROD HAS RECEIVED CAPITAL GA INS OF RS. 31,41,007/- DURING AY 2004-05 AND THE SAME WAS CLAI MED AS EXEMPTION U/S 54. AS THE PROPERTY ON WHICH EXEMPTIO N HAS BEEN CLAIMED WAS SOLD WITHIN THREE YEARS, THE EXEMPTION U/S 54 OF RS. 31,41,007/- IS TO BE REDUCED FROM THE COST OF A CQUISITION FOR THE PURPOSE OF CALCULATION OF CAPITAL GAINS. SINCE, THE AMOUNT OF RS. 31,41,007/- HAS ESCAPED ASSESSMENT, I HAVE REAS ON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS ESCAPED A SSESSMENT. NOTICE U/S 148 OF THE IT AT, 1961 IS TO BE ISSUED F OR AY 2005-06 TO BRING THE ESCAPED INCOME TO TAX. 7 ITA NO. 179/H/14 NILESH DHAROD 10. THUS, IT CAN BE SEEN FROM THE REASONS RECORDED, BASIS FOR REOPENING OF ASSESSMENT IS SALE OF PROPERTY FOR RS. 1,95,00,000/-, ON WHICH ASSESSEE EARLIER HAS CLAIMED EXEMPTION U/S 54 OF THE ACT. THEREFORE, THE EXEMPTION CLAIMED WAS REQUIRED TO BE REDUCED FORM THE COST OF ACQUISITION. IT IS EVIDENT FROM THE ORD ER OF THE CIT(A) THAT THE ASSESSEE DURING THE PENDENCY OF FIRST REASSESSM ENT PROCEEDING, IN RESPONSE TO A NOTICE U/S 142(1) DATED 21/11/2007 HAS FURNISHED THE DETAILS WITH REGARD TO THE SALE OF PROPERTY AND IN ANOTHER LETTER DATED 17/03/2008 HAS COMPUTED CAPITAL GAIN. AS CAN BE SEE N FROM THE OBSERVATION OF THE CIT(A) AT PARAS 4.6 & 4.7 OF THE ORDER, THE SAID INFORMATION IS ALSO AVAILABLE IN THE ASSESSMENT RE CORD. THEREFORE, ONCE THE INFORMATION RELATING TO SALE OF PROPERTY O N WHICH ASSESSEE HAS CLAIMED EXEMPTION U/S 54 WAS AVAILABLE IN THE A SSESSMENT RECORD DURING THE FIRST REASSESSMENT PROCEEDING, NEITHER IT CAN BE SAID THAT THERE IS FAILURE ON THE PART OF THE ASSESSEE IN DIS CLOSING FULLY AND TRULY ALL MATERIAL FACTS RELATING TO ASSESSMENT NOR IT CA N BE SAID THAT THE INFORMATION RELATING TO SALE OF THE PROPERTY SUBSEQ UENTLY CAME TO THE NOTICE OF THE AO. THOUGH IN PARA 4.8 OF THE ORDER, CIT(A) REFERS TO THE LETTER DATED 26/03/2010 OF THE ITO INFORMING THE AC IT (WHO WAS THE THEN AO) ABOUT THE SALE OF PROPERTY AND THE ISSUE O F REDUCTION OF EXEMPTION CLAIMED U/S 54 OF THE ACT FROM THE COST O F ACQUISITION, HOWEVER, FACT REMAINS THAT INFORMATION RELATING TO THE SALE OF PROPERTY WAS AVAILABLE BEFORE THE AO AT THE TIME OF COMPLETI ON OF THE FIRST ASSESSMENT U/S 143(3) READ WITH SECTION 147 OF THE ACT, BY VIRTUE OF ASSESSEES LETTERS DATED 21/11/2007 AND 17/03/2008, HENCE THERE IS NO REASON WHY THE ISSUE RELATING TO REDUCING THE EX EMPTION CLAIMED U/S 54 FROM THE COST OF ACQUISITION WAS NOT CONSIDE RED IN THE ORIGINAL ASSESSMENT ORDER PASSED ON 03/06/2008. IN THESE CIR CUMSTANCES, WHEN THE ASSESSEE HAS FURNISHED ALL INFORMATION REL ATING TO THE SALE OF IMMOVABLE PROPERTY IN PURSUANCE TO ENQUIRY CONDU CTED BY DEPARTMENT, WHICH FORMS PART OF THE ASSESSMENT RECO RD AT THE TIME OF COMPLETION OF ORIGINAL ASSESSMENT U/S 143(3) READ W ITH SECTION 147 OF 8 ITA NO. 179/H/14 NILESH DHAROD THE ACT, REOPENING OF ASSESSMENT AGAIN ON THE VERY SAME ISSUE AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT A Y IS LEGALLY UNSUSTAINABLE AS IT IS AGAINST STATUTORY MANDATE OF SECTION 147. IN THE AFORESAID VIEW OF THE MATTER, PROCEEDING INITIATED U/S 147 OF THE ACT IS INVALID IN LAW AND CONSEQUENTLY, ASSESSMENT ORDER P ASSED U/S 147 ALSO CANNOT BE SUSTAINED. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF CIT(A) AND QUASH THE IMPUGNED ASSESSMENT ORDER. 11. SO FAR AS MERITS OF THE ISSUE IS CONCERNED, LD. AR SUBMITTED THAT AFTER SALE OF ORIGINAL ASSET ON 28/05/2003 IN WHICH ASSESSEES SHARE OF CAPITAL GAIN WAS RS. 31,41,007, ASSESSEE A LONG WITH OTHERS PURCHASED A RESIDENTIAL HOUSE AT ROAD NO. 12, BANJA RA HILLS ON 27/02/2004 FOR RS. 1,95,00,000/-. HOWEVER, FOR RELI GIOUS AND SENTIMENTAL REASONS THE SAID HOUSE WAS SOLD FOR RS. 1,95,00,000 ON 30/11/2004, IN WHICH ASSESSEES SHARE WAS RS. 32,50 ,000/-. IT WAS STATED THAT ASSESSEE AGAIN MADE INVESTMENT OF HIS S HARE IN SALE PROCEED IN A RESIDENTIAL HOUSE AT PLOT NO. 1092, R OAD NO. 45, JUBILEE HILLS ON 01/05/2005 PURCHASED FOR A CONSIDERATION O F RS. 2,05,07,445 IN THE NAME OF HIS WIFE SMT. NEENA DHAROD AND SON M AYUR DHAROD. THUS, IT WAS SUBMITTED THAT SINCE INVESTMENT AT ROA D NO. 45, JUBILEE HILLS WAS MADE WITHIN A PERIOD OF TWO YEARS FROM TH E DATE OF SALE OF ORIGINAL ASSET, ASSESSEE WOULD STILL BE ENTITLED FO R EXEMPTION U/S 54 OF THE ACT. HAVING CONSIDERED THE SUBMISSIONS OF THE A SSESSEE IN THE CONTEXT OF THE FACTS AND MATERIALS ON RECORD WE FIN D FORCE IN THEM. THERE IS NO DISPUTE THAT ASSESSEE HAS MADE INVESTME NT IN THE NEW PROPERTY AT ROAD NO. 45, JUBILEE HILLS. IT IS ALSO BORNE OUT FROM FACTS ON RECORD THAT INVESTMENT IN THE SECOND PROPERTY IS WITHIN THE PERIOD OF TWO YEARS FROM THE DATE OF SALE OF ORIGINAL ASSE T. THAT BEING THE CASE, ASSESSEE WILL BE ELIGIBLE FOR EXEMPTION U/S 54 OF THE ACT. SO FAR AS AOS OBJECTIONS WITH REGARD TO PURCHASE OF T HE PROPERTY IN THE NAME ASSESSEES WIFE IS CONCERNED, THE SAME IN OUR VIEW IS TOTALLY IRRELEVANT AND UNTENABLE. IN ANY CASE OF THE MATTER , SINCE WE HAVE 9 ITA NO. 179/H/14 NILESH DHAROD ALREADY HELD THAT PROCEEDING INITIATED U/S 147 IS I NVALID, THIS ISSUE HAS BECOME MERELY OF ACADEMIC INTEREST. 12. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 05/09/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED: 5 TH SEPTEMBER, 2014 KV COPY TO:- 1) NILESH DHAROD, C/O M/S LAXMINIWAS NEETH & CO., 4 TH FLOOR, 402, MOGULS COURT, BASHEERBAGH, HYDERABAD 500 001 2) ITO, WARD 6(3), HYDERABAD. 3) CIT(A)-IV, HYDERABAD. 4) THE CIT-III, HYDERABAD 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDER ABAD.