DCIT, Chandigarh V. Sh. Harmohinder Singh Chadha, Chandigarh

ITA 187/CHANDI/2015

• Counselvise Citation: 18721514 RSA 2015
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 02-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL VERMAN
• Assessee Lawyers: VINEET KRISHAN
• Keywords: Capital asset; Gift
• Section: 54; 143(3); 54F; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO. 187/CHD/2015 ASSESSMENT YEAR: 2009-10 THE DCIT, VS SHRI HARMOHINDER SINGH CHADHA, CENTRAL CIRCLE II, HOUSE NO. 114, CHANDIGARH. SECTOR 18-A, CHANDIGARH. PAN: AAOPC9351Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHIL VERMAN RESPONDENT BY : SHRI VINEET KRISHAN DATE OF HEARING : 05.11.2015 DATE OF PRONOUNCEMENT : 18.11.2015 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF LD. CIT(APPEALS)-III GURGAON DATED 31.12.2014 FO R ASSESSMENT YEAR 2009-10 ON THE FOLLOWING REVISED GROUNDS OF APPEAL: 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A)(C) IS CORRECT IN DELETING THE WITHDRAWAL OF EXEMPTION U/S 54F BY MERELY STATING THAT THE ISSUES OF WITHDRAWAL OF EXEMPTION PERTAINS TO A.Y. 2008-09 AS THE CAPITAL GAIN ACCOUNT WAS DEBITED THE N, WITHOUT APPRECIATING THE FACT THAT AS PER PROVISO TO SECTIO N 54F THE ENTIRE AMOUNT DEPOSITED IN THE CAPITAL GAIN ACCOUNT WILL B E CHARGED U/S 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET EXPIRES. 2 2. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A)(C) IS CORRECT IN SUMMARILY DELETING THE ADDITION MADE IN A.Y. 2 009-10 BY HOLDING THAT THE TRANSACTION PERTAINS TO A.Y. 2008-09.. 3. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE THE CIT(A)(C) IS CORRECT IN PASSING A NON- SPEAKING ORDER WITHOUT APPRECIATING THE FACTS AND MERITS OF THE CASE. 4. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE AND AS PER PROVISIONS OF LAW THE LD. CIT(A)(C) IS CORRECT IN ALLOWING THE EXEMPTION U/S 54 DESPITE THE FACT THAT THE ASSESSEE FAILED TO GENUINELY ACQU IRE A NEW ASSET AND CLAIMED A BOGUS DEDUCTION IN VIOLATION OF PROVISO T HE SUB-SECTION(4) TO SECTION 54F. 2. THE FACTS OF THE CASE ARE THAT DURING THE PREVIO US YEAR 2005-06, THE ASSESSEE HAD SOLD SHARES OF M/S PRAGATI NIRMAL (P) LTD. AND HAD LONG TERM CAPITAL G AIN OF RS. 5,53,38,219/-. TO AVAIL THE BENEFIT OF EXEMPTI ON ON LONG TERM CAPITAL GAIN IN TERMS OF SECTION 54F OF T HE INCOME TAX ACT, THE ASSESSEE DEPOSITED SALE PROCEED S TO THE EXTENT OF RS. 3,47,49,000/- IN CAPITAL GAIN ACC OUNT BEFORE THE DUE DATE OF FURNISHING OF RETURN OF INCO ME FOR THE RELEVANT ASSESSMENT YEAR 2006-07. THE ASSESSEE WAS ALLOWED EXEMPTION OF RS. 3,29,29,364/- UNDER SECTIO N 54F OF THE INCOME TAX ACT IN ASSESSMENT YEAR 2006-0 7. AS PER THE PROVISIONS OF SECTION 54F, THE ASSESSEE WAS REQUIRED TO PURCHASE A RESIDENTIAL HOUSE WITHIN TWO YEARS FROM THE DATE OF TRANSFER OF THE ORIGINAL ASSET OR CONSTRUCT A RESIDENTIAL HOUSE WITHIN THREE YEARS FR OM THE DATE OF TRANSFER OF THE ORIGINAL ASSET. THE DATE O F TRANSFER OF ORIGINAL ASSET I.E. SHARES OF M/S PRAGA TI NIRMAL (P) LTD. WAS 15.02.2006. THE PROVISIONS OF SECTION 54F OF THE ACT CLEARLY STIPULATES THAT IF T HE 3 ASSESSEE FAILS TO ACQUIRE OR CONSTRUCT A RESIDENTIA L HOUSE WITHIN TIME ALLOWED OR FAILS TO UTILIZE THE AMOUNT DEPOSITED IN THE CAPITAL GAIN ACCOUNT, THE ENTIRE A MOUNT OR THE AMOUNT WHICH THE ASSESSEE HAS FAILED TO UTIL IZE, AS THE CASE MAY BE, WILL BE TAXABLE AS PER PROVISIONS OF SECTION 45 OF THE INCOME TAX ACT IN THE YEAR IN WHI CH TIME LIMIT OF THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET EXPIRES. THE ASSESSING OFFICER NOTE D THAT AS FAR AS THE CASE OF THE ASSESSEE IS CONCERNED, TH E ASSESSEE CLAIMED TO HAVE PURCHASED A RESIDENTIAL HO USE I.E. HOUSE NO. 114 SECTOR 18-A, CHANDIGARH WITHIN T HE TIME LIMIT AS LAID DOWN IN SECTION 54F OF THE ACT. 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSE E FILED COPY OF THE AGREEMENT TO SELL DATED 13.12.200 7 ENTERED INTO WITH HER OWN MOTHER SMT. SATWANT KAUR FOR PURCHASE OF THIS HOUSE FOR A CONSIDERATION OF RS. 3 .48 CRORES IN WHICH THE ASSESSEE WAS RESIDING ALL ALONE WITH HIS MOTHER AND OTHER FAMILY MEMBERS. AS PER SAID AGREEMENT, ASSESSEE HAS PAID AN EARNEST MONEY OF RS . 2.50 CR ON 13.02.2007 TO HER MOTHER SMT. SATWANT KA UR IN THIS REGARD. THE ASSESSEE ALSO FILED A COPY OF THE TRANSFER DEED EXECUTED ON 05.02.2008 VIDE WHICH THE SAID PROPERTY WAS TRANSFERRED IN THE NAME OF THE ASSESSEE. NO STAMP DUTY WAS PAID FOR TRANSFER OF T HIS PROPERTY, SINCE THE STAMP DUTY WAS EXEMPT FOR TRANS FER OF THE PROPERTY AMONGST THE BLOOD RELATIONS. THE 4 ASSESSING OFFICER NOTED THAT THERE WAS NO MENTION O F ANY PAYMENT OF CONSIDERATION IN THE SAID TRANSFER DEED. 4. THE ASSESSING OFFICER NOTED THAT ASSESSEE CLAIME D EXEMPTION UNDER SECTION 54 OF THE INCOME TAX ACT BU T THE MODUS-OPERANDI OF THE ASSESSEE WAS AS UNDER : I) THE ASSESSEE HAS, IN ORDER TO FULFILL THE REQUIREMENTS AS LAID DOWN UNDER SECTION 54F, MADE AGREEMENT WITH HIS OWN MOTHER IN PURCHASE OF ABOVE RESIDENTIAL PROPERTY. II) THE RESIDENTIAL PROPERTY IS OWNED BY MOTHER OF THE ASSESSEE FOR A LONG TIME IN WHICH ENTIRE FAMILY ARE RESIDING. III) IN ORDER TO DEFRAUD THE REVENUE, ASSESSEE EXECUTED A TRANSFER DEED WITH HER MOTHER WHICH IS WITHOUT CONSIDERATION FOR CLAIMING EXEMPTION. 5. THE ASSESSING OFFICER, THEREFORE, ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE WHY THE EXEMPTION UNDER SECT ION 54F MAY NOT BE WITHDRAWN WHICH WAS GRANTED IN ASSESSMENT YEAR 2006-07 AND TREAT THE SAME AS TAXAB LE INCOME IN ASSESSMENT YEAR UNDER APPEAL I.E. 2009-10 UNDER SECTION 45 OF THE INCOME TAX ACT. IN THE SHO W CAUSE NOTICE, THE ASSESSING OFFICER NOTED THE SAME FACTS AND ALSO NOTED THAT ASSESSEE HAS TAKEN OVER THE LOA N LIABILITY OF HIS OTHER IN RESPECT OF THE LOAN OF RS . 25 LACS TAKEN BY HER FROM HDFC BANK FOR REPAIRS AND RENOVAT ION OF THE SAID HOUSE. IT WAS ALSO NOTED THAT ASSESSEE HAS 5 RECEIVED UNSECURED LOANS OF RS.1.92 CR INTEREST FRE E FROM SMT. SATWANT KAUR ON 13.12.2007. THE EXPLANATION O F THE ASSESSEE WAS THEREFORE, CALLED FOR. THE REPLY OF THE ASSESSEE IS REPRODUCED IN THE ASSESSMENT ORDER IN W HICH THE ASSESSEE BRIEFLY EXPLAINED THAT ASSESSEE HAD LO NG TERM CAPITAL GAIN ON SALE OF SHARES WHICH WERE DEPO SITED IN THE CAPITAL GAIN ACCOUNT, COPY OF THE STATEMENT WAS FILED. THE ASSESSEE PURCHASED THE ABOVE PROPERTY F ROM HIS MOTHER FOR A CONSIDERATION OF RS. 3.48 CR AND A MOUNT WAS PAID THROUGH BANKING CHANNEL. THE AGREEMENT CLAUSES WERE REFERRED TO IN WHICH IT WAS NOTED THAT THE PROPERTY SHALL BE TRANSFERRED IN THE NAME OF PURCHA SER AND ALL THE REGISTRATION FEE ETC. SHALL BE BORNE BY THE PURCHASER. THE SELLER SHALL OBTAIN NOC FOR THIS TRANSACTION FROM HDFC LTD. FOR REPAYMENT AND SQUARE D UP OF THE LOAN. THE TRANSFEROR SHALL CLEAR ALL THE DUES. THERE IS NO BAR IN TAKING LOANS FROM THE SELLER. A LL THE RIGHTS IN THE PROPERTY WERE TRANSFERRED TO THE ASSE SSEE. THEREFORE, ASSESSEE ENTERED INTO GENUINE AGREEMENT AND TRANSFER DEED, THEREFORE, NO WITHDRAWAL IS JUSTIFIE D IN ASSESSMENT YEAR UNDER APPEAL. 6. THE ASSESSING OFFICER CONSIDERED THE REPLY OF THE ASSESSEE BUT DID NOT FOUND TENABLE FOR THE FOLLOWIN G REASONS : I) THE ASSESSEE USED TO RESIDE WITH HIS FAMILY MEMB ERS INCLUDING HER MOTHER SMT. SATWANT KAUR IN HOUSE NO. 114, SEC-18/A, CHANDIGARH PRIOR TO THE TRANSFER OF THE SAI D HOUSE IN 6 HIS OWN NAME. EVEN AFTER THE SO CALLED PURCHASE OF THE SAID HOUSE BY THE ASSESSEE FROM HER MOTHER, THEY ARE LIV ING TOGETHER IN THE SAME HOUSE. HENCE, THERE IS NO PURCH ASE OF NEW HOUSE AS STIPULATED IN SECTION54F OF THE I. T. A CT'61. THEREFORE, THE AGREEMENT TO SALE ON WHICH THE ASSES SEE HAS CLAIMED EXEMPTION U/S 54F IS A SHAM TRANSACTION IN ORDER TO DEFRAUD THE REVENUE. II) IN THE TRANSFER DEED EXECUTED ON 05.02.2008, TH ERE IS NO MENTION OF ANY CONSIDERATION MONEY. THE STAMP DUTY IS EXEMPT ONLY IN CASE OF TRANSFER AMONG BLOOD RELATIONS ONLY WHEN THE TRANSFER DOES NOT INVOLVE ANY CONSIDERATION MONEY F OR TRANSFER OF THE PROPERTY. THE ASSESSEE IN HIS SUBMISSION DATED 0 8.02.2013 HAS ALSO SUBMITTED THAT THE STAMP DUTY WAS EXEMPTED IN THE FAMILY TRANSFER. IT IS BECAUSE IN FAMILY TRANSFER TH ERE IS NO INVOLVEMENT OF ANY CONSIDERATION MONEY TO BE PAID B Y THE TRANSFEREE TO THE TRANSFEROR. III) THE ASSESSEE MIGHT SAY THAT THIS IS A TAX PLANN ING BUT THE MODUS OPERAND! DISCUSSED IN THE PARA 4.3 CLEARLY EST ABLISHES THAT IT IS A TAX AVOIDANCE. IF WE GO INTO THE INTEN TION OF THE LEGISLATION , IT WAS TO ENCOURAGE PEOPLE FOR BUYING OW N HOUSES AND IN NO WAY IT WAS MEANT FOR SUCH KIND OF TRANSACTI ON. IV) THE ASSESSEE HAD ALSO CLAIMED THAT HE HAD TAKEN OVER THE LOAN LIABILITY OF HER MOTHER SMT. SATWANT KAUR IN RESPE CT BF LOAN OF RS.25 LAKHS TAKEN BY HER FROM HDFC FOR REPAIRS AN D RENOVATION OF THE SAID HOUSE. BUT A PERUSAL OF THE DE TAILS FILED IN THIS REGARD BY THE ASSESSEE REVEALS THAT THE NAMES OF THE APPLICANT AND THE CO-APPLICANT HAVE BEEN ONLY INTERCHA NGED. EARLIER SMT. SATWANT KAUR WAS THE MAIN APPLICANT AND SH. HARMOHINDER SINGH WAS THE CO-APPLICANT. NOW, SH. HARM OHINDER SINGH GHADHA IS THE MAIN APPLICANT AND SMT. SATWANT KAUR IS THE CO APPLICANT. IN HIS SUBMISSION THE ASSESSEE HAD NOT FU RNISHED ANY EXPLANATION OR CLARIFICATION ON THIS POINT. IT THE REFORE, IMPLIES THAT THE TRANSFEROR SMT. SATWANT KAUR HAD NOT EXTIN GUISHED INTEREST IN THE PROPERTY EVEN AFTER THE TRANSFER OF THE PROPERTY IN THE NAME OF HER SON. 7 V) SUB SECTION (47) OF SECTION 2 OF THE L.T. ACT' 61 D EFINES THE TRANSFER OF A CAPITAL ASSET. AS PER THE PROVISIONS O F SEC. 2 (47) OF THE IT ACT'61, THE TRANSFER INCLUDES SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET OR EXTINGUISHMENT OF AN Y RIGHTS THEREIN. BUT IN THE CASE, SMT. SATWANT KAUR, THE MOTHER OF THE ASSESSEE. SH. H. S. CHADHA, WHO IS RESIDING IN THE SAME HOUSE HAS NOT EXTINGUISHED HER RIGHTS IN THE SAID PROPERTY. VI) THE ASSESSEE HAS RIGHTLY POINTED OUT THAT THERE IS NO BAR TO RAISE A LOAN FROM A PERSON FROM WHOM THE PROPERTY WA S PURCHASED. BUT THE FACTS OF THE CASE OF THE ASSESSEE A RE DIFFERENT. IN THIS CASE THE ASSESSEE ENTERS INTO AN AGREEMENT WIT H HER MOTHER TO TRANSFER THE HOUSE NO. 114, SEC-18A, CHANDIGARH IN HIS OWN NAME AND PAYS CONSIDERATION MONEY FOR THAT. LATER, THE BU LK OF THE CONSIDERATION MONEY PAID BY THE ASSESSEE TO HER MOTHE R IS RECEIVED BY HIM EITHER IN THE FORM OF UNSECURED LOAN OR GIFT . THE ASSESSEE ENTERS INTO AN AGREEMENT WITH HER MOTHER SMT. SATWA NT KAUR FOR PURCHASE OF HOUSE NO. 114, SECTOR-18/A, CHANDIGARH ON 13.12.2007 FOR A CONSIDERATION OF RS. 3,48,00,000/- AND PAYS HER AN ADVANCE OF RS. 2,50,00,000/- VIDE CHEQUE NO. 139661 DA TED 13.12.2007 DRAWN ON UNION BANK OF INDIA. ON THE VER Y SAME DAY SMT. SATWANT KAUR RETURNS BACK THE ASSESSEE A SUM O F RS. 1,92,00,000/- VIDE CHEQUE NO. 127012 DATED 13.12.20 07 DRAWN ON UNION BANK OF INDIA TO THE ASSESSEE SH. H.S CHAD HA. AGAIN, SMT. SATWANT KUAR HAS GIVEN A GIFT OF RS. 22,77,010/ - VIDE CHEQUE NO. 136072 DATED 19.02.2008 DRAWN ON UNION BANK OF IN DIA. IT IMPLIES THAT IN REAL TERMS THERE WAS NO ACTUAL PAYMEN T OF ANY CONSIDERATION MONEY AND THE TRANSFER WAS ARRANGED O NLY FOR THE PURPOSE TO EVADE THE TAX ON CAPITAL GAINS ON SALE SHA RES OF PRAGATI NIRMAN PRIVATE LIMITED. VII) THE ASSESSEE HAD SUBMITTED IN COURSE OF ASSESSM ENT PROCEEDINGS THAT THE CAPITAL GAIN ON SALE OF HOUSE N O. 114, SEC- 18A, CHANDIGARH WAS DEPOSITED BY HER MOTHER IN CAPI TAL GAIN ACCOUNT WITH UNION BANK OF INDIA. THE COPY OF THE BA NK STATEMENT REVEALS THAT THE SAID CAPITAL GAIN ACCOUNT WAS IN T HE JOINT NAMES OF SMT. SATWANT KAUR AND THE ASSESSEE HIMSELF. FURTHER THE PERUSAL OF THE SAID BANK STATEMENTS REVEAL THAT THE FIXED D EPOSITS OF RS. 8 2,35,90,000/- WERE MADE OUT OF THE DEPOSITS MADE IN THE SAID BANK ACCOUNT ON 28.07.2008. ALL THE FIXED DEPOSITS WERE MADE IN THE JOINT NAMES OF SMT. SATWANT KAUR AND SH. H. S CHA DHA ON EITHER OR SURVIVOR BASIS. VIII) THE ASSESSEE IN HIS SUBMISSION DATED 08.02.201 3 HAS CITED VARIOUS CASE LAWS TO CORROBORATE HIS CLAIM OF EXEMPT ION U/S 54F. BUT THE FACTS OF ALL THE JUDGMENTS CITED BY THE ASSES SEE ARE ENTIRELY DIFFERENT FROM THE FACTS OF HIS CASE. IX) ALL THESE THINGS POINT TOWARDS THE FACT THAT T HE TRANSFER OF HOUSE NO. 114, SEC-18A., CHANDIGARH BY THE ASSESSEE IN H IS OWN NAME WAS ONLY A PLOY TO EVADE TAX ON LONG TERM CAPIT AL GAIN IN THE GUISE OF PROVISIONS OF SEC. 54F. THE ENTIRE TRANSACTI ON WAS A SHAM. THE ASSESSEE IN THIS CASE HAD NOT PURCHASED ANY PRO PERTY TO CLAIM EXEMPTION FROM LONG TERM] CAPITAL GAIN AS PER THE P ROVISIONS OF SECTION 54F OF THE I. T. ACT, 1961 X) THE OBSERVATIONS OF THE REVENUE ARE NOT BASED ON CONJECTURES, SUPPOSITION AND SUSPICION BUT IT IS BAS ED ON FACTS AND EVIDENCES WHICH HAVE BEEN ELABORATELY DISCUSSED A BOVE. 7. THE ASSESSING OFFICER, THEREFORE, CONSIDERED THE TRANSACTION OF PURCHASE OF THE PROPERTY NO. 114 SEC TOR 18, CHANDIGARH AS SHAM TRANSACTION JUST TO EVADE TA X ON ACCOUNT OF LONG TERM CAPITAL GAIN AND ACCORDINGLY EXEMPTION OF RS. 3,29,29,364/- ALLOWED UNDER SECTIO N 54F IN ASSESSMENT YEAR 2006-07 WAS WITHDRAWN AND TH E SAME WAS TAXED AS LONG TERM CAPITAL GAIN IN ASSESSM ENT YEAR UNDER APPEAL I.E. 2009-10 AS PER PROVISIONS OF SECTION 45 OF THE ACT. 8. THE ASSESSEE CHALLENGED THE WITHDRAWAL OF THE EXEMPTION BEFORE LD. CIT(APPEALS) AND WRITTEN SUBMI SSION 9 OF THE ASSESSEE IS REPRODUCED IN THE APPELLATE ORDE R IN WHICH THE ASSESSEE SIMILARLY REITERATED THE SUBMISS IONS MADE BEFORE ASSESSING OFFICER AND SUBMITTED THAT ASSESSEE ENTERED INTO GENUINE AGREEMENT TO SELL DAT ED 13.12.2007 SUBJECT TO CONSIDERATION AND POSSESSION OF PROPERTY WAS ALSO TAKEN BY HIM. THEREFORE, ACCORDI NG TO SECTION 2(47) OF THE ACT, THERE WAS A TRANSFER OF C APITAL ASSET AND AS SUCH, ASSESSEE HAS PURCHASED A HOUSE A S PER REQUIREMENT OF LAW WITHIN THE STIPULATED TIME. THE TRANSACTION OF PURCHASE WAS COMPLETED ON 05.02.2008 , THEREFORE, THE TRANSACTION OF PURCHASE AND WITHDRAW ALS FROM THE BANK WAS COMPLETED IN THE PERIOD RELEVANT TO ASSESSMENT YEAR 2008-09. THEREFORE, NO ADDITION CA N BE MADE IN ASSESSMENT YEAR UNDER APPEAL I.E. 2009-10. THE ESTATE OFFICER, U.T. CHANDIGARH MUTATED THE PROPERT Y IN THE NAME OF ASSESSEE. IN THE ASSESSMENT YEAR 2008- 09, THE ASSESSING OFFICER ISSUED QUESTIONNAIRE AND CONSIDERED THE IDENTICAL ISSUE OF PURCHASE OF PROPE RTY AFTER CONSIDERING REPLY OF THE ASSESSEE AND MATERIA L ON RECORD AND COMPLETED THE ASSESSMENT UNDER SECTION 143(3), THEREFORE, SAME TRANSACTION WOULD NOT FALL IN ASSESSMENT YEAR 2009-10 UNDER APPEAL. THE ASSESSEE SUBMITTED THAT ENTIRE CONSIDERATION OF PURCHASE OF PROPERTY WAS MADE THROUGH BANKING CHANNEL WHICH IS NOT IN DISPUTE AND IS SUPPORTED BY BANK STATEMENT. THE ASSESSEE RELIED UPON SEVERAL DECISIONS IN SUPPORT O F HIS CONTENTION. IT WAS ALSO SUBMITTED THAT THERE IS NO BAR UNDER INCOME TAX ACT FOR TAKING LOAN FROM THE SELLE R. 10 9. THE LD. CIT(APPEALS), CONSIDERING THE SUBMISSION S OF THE ASSESSEE, MATERIAL ON RECORD AND ASSESSMENT COMPLETED IN PRECEDING ASSESSMENT YEAR 2008-09 HELD THAT THE TRANSACTION OF PURCHASE OF PROPERTY RELATE S TO PRECEDING ASSESSMENT YEAR 2008-09 THEREFORE, WITHDR AWAL OF EXEMPTION PERTAIN TO THE SAME YEAR AND AS SUCH, SAME CANNOT BE WITHDRAWN IN ASSESSMENT YEAR 2009-10 AND ACCORDINGLY, ALLOWED THE APPEAL OF THE ASSESSEE. HI S FINDINGS IN PARA 5.1 AND 6 OF THE APPELLATE ORDER A RE REPRODUCED AS UNDER : 5.1 I HAVE CONSIDERED THE ASSESSEE'S SUBMISSIO NS AND THE IMPUGNED ORDER. IT EMERGES THAT ASSESSEE SOLD O F SHARES OF M/S PRAGATI NIRMAN PVT LTD DURING FY 2005-06 AND EA RNED LTCG OF RS.5,5,3,38,219/-. OUT OF THE SAME RS.3,47,49,000 /- WAS DEPOSITED IN THE CAPITAL GAIN ACCOUNT AND ASSESSEE WA S THEREFORE ALLOWED EXEMPTION TO THE EXTENT OF RS.3,29,29,364/- U /S 54F IN AY 2006-07. VIDE THIS IMPUGNED ORDER THE AO HAS HELD THAT THE PUR CHASE OF RESIDENTIAL HOUSE [HOUSE NO:114, SEC 18/A, CHANDIGARH) VIDE AGREEMENT TO SELL DATED 13.12.2007 ENTERED INTO WITH HI S MOTHER SMT. SATWANT KAUR WHICH WHOM HE HAS BEEN LIVING FROM THE VERY BEGINNING, WAS MERELY AN ARRANGEMENT TO AVOID TAXATION ON LTCG. THE AO ALSO OBSERVED THAT NEITHER WAS THE SAL E CONSIDERATION MENTIONED IN THE TRANSFER DEED EXECUTED ON 05.02.2008NOR ANY STAMP DUTY PAID FOR THE TRANSFER. THE CLAIM OF THE ASSESSEE HAVING TAKEN OVER THE BANK LOAN (FOR RE NOVATION) WAS NOTED TO BE A MERE INTERCHANGE OF THE NAMES FROM CO-APPLIC ANT TO THE MAIN APPLICANT. MOREOVER, THE BULK OF THE CONSIDERAT ION PAID BY THE ASSESSEE WAS RECEIVED BACK AS UNSECURED LOAN AND GI FT. ALL THESE OBSERVATIONS CONVINCED THE AO THAT THE TRANSFER WAS MERELY EYEWASH. CONSEQUENTLY AS THE ASSESSEE FAILED TO EITHE R PURCHASE A RESIDENTIAL PROPERTY WITHIN TWO YEARS OF THE TRANSFE R OF THE 11 ORIGINAL ASSET OR CONSTRUCT A RESIDENTIAL HOUSE WITHIN THE THREE YEARS STIPULATED IN SEC 54F, THE AO WITHDREW THE EXEM PTION ALLOWED IN AY 2006-07 OF RS.3,29,29,364/-. IT WAS AND IS THE CONTENTION OF THE ASSESSEE THAT TH E TRANSFER WAS AS PER LAW AND THAT THE ENTIRE CONSIDERATION OF RS. 3.48 CRS WAS PAID ON 13.12.2007 OF RS 2.50 CRS AND ON 05.2.2008 OF RS. 9 8 LAKHS BY WAY OF CHEQUES. IT WAS ALSO CLARIFIED THAT NO STAMP D UTY WAS PAYABLE IN CASE OF TRANSFERS WITHIN THE FAMILY AND FU RNISHED COPY OF NOTIFICATION DATED 07.06.2007 OF THE ESTATE OFFICE, CHANDIGARH. THAT AFTER THE EXECUTION OF THE TRANSFER DEED DATED 15.2.2008 THE ASSESSEE BECAME THE ABSOLUTE OWNER OF THE PROPERTY AS SUBSTANTIATED BY THE TRANSFER LETTER DATED 15.2.2008 OF THE ESTATE OFFICER. IN OTHER WORDS, THE ASSESSEE HAS NOT CHANG ED ANY OF ITS EXPLANATIONS FURNISHED DURING THE ASSESSMENT PROCEE DINGS TO PUT FORTH THAT THE TRANSFER OF THE PROPERTY WAS GENUINE AND THE CONDITIONS AS STIPULATED IN SEC 54F WERE FULFILLED. TO REITERATE, NEITHER THE DATE OF TRANSFER OF THE ORIGINAL ASSET ON 15.2.2006 (AY 2006-07) NOR THE ALLOWANCE OF EXEMPTI ON U/S 54F ARE IN DISPUTE. THE SUPPOSED PURCHASE OF THE RESIDE NTIAL HOUSE I.E. THE NEW ASSET FOR PURPOSES OF SEC 54F, AS PER THE A GREEMENT TO SELL AND TRANSFER DEED ARE DATED 13.12.2007 AND 05.2.2008 RESPECTIVELY. THESE DATES ARE ALSO NOT IN DISPUTE. WH AT IS IN DISPUTE IS THE GENUINENESS OF THE TRANSFER. IT IS THEREFORE C LEAR THAT THE TRANSACTIONS RELATING TO THE TRANSFER HAPPENED DURIN G THE YEAR RELEVANT TO AY 2008-09. FROM THE COPY OF ASSESSMENT O RDER U/S 153A W 143(3) FOR AY 2008-09 DATED 22.2.2013 AND COMPUTATION OF INCOME (COPIES FURNISHED IN PB PAGES 25-30) THE INCOME AS RETURNED WAS ACCEPTED. THUS, PRIMA FACIE, IT IS EVIDENT THAT THE ISSUE OF WITHDRAWAL OF THE EXEMPTI ON PERTAINED TO AY 2008-09 AS THE CAPITAL GAINS ACCOUNT WAS DEBI TED THEN. SO THE QUESTION OF GOING INTO THE THIRD YEAR DID NO T ARISE. HENCE WITHOUT GOING INTO THE MERITS OF THE CASE, I AM STR ONGLY INCLINED TO HOLD THAT THE ACTION OF THE A.O. IN WITHDRAWING THE EXEMPTION IN THE A.Y. 2009-10 CANNOT BE SUSTAINED. 12 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 10. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LD . DR RELIED UPON ORDER OF THE ASSESSING OFFICER AND SUBM ITTED THAT IT WAS A SHAM TRANSACTION AND ORDER OF THE LD. CIT(APPEALS) IS NON SPEAKING. THERE WAS NO MENTION OF SALE CONSIDERATION IN THE TRANSFER DEED. THE TRANS ACTION WAS CLEARLY FALLING IN ASSESSMENT YEAR 2009-10. THEREFORE, ORDER OF THE LD. CIT(APPEALS) IS LIABLE TO BE SET ASIDE. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSE SSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND PLACED COPY OF THE COMPUTATION OF INCOME FOR PRECEDING ASSESSMENT YEAR 2008-09, QUESTIONNAIRE RA ISED BY THE ASSESSING OFFICER AND REPLIES OF THE ASSESSE E IN ASSESSMENT YEAR 2008-09 AND COPY OF THE ASSESSMENT ORDER UNDER SECTION 153A/143(3) DATED 22.02.2013 FO R ASSESSMENT YEAR 2008-09 AND SUBMITTED THAT THE TRANSACTION FALL IN ASSESSMENT YEAR 2008-09 WHICH W AS ACCEPTED BY ASSESSING OFFICER IN REGULAR ASSESSMENT ORDER, THEREFORE, WITHDRAWAL OF EXEMPTION IN ASSESS MENT YEAR 2009-10 IS WHOLLY JUSTIFIED. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ASSESSEE HAS FILED COPY OF THE AGREEMENT TO SELL DA TED 13.12.2007 THROUGH WHICH SMT. SATWANT KAUR, MOTHER OF THE ASSESSEE ENTERED INTO AGREEMENT WITH ASSESSEE F OR SALE OF HOUSE NO. 114 SECTOR 18-A, CHANDIGARH FOR A TOTAL CONSIDERATION OF RS.3.48 CR. ADVANCE OF RS. 2.5 CR WAS 13 GIVEN BY THE ASSESSEE A THE TIME OF EXECUTION OF TH E AGREEMENT TO SELL. ACCORDING TO THE AGREEMENT TO SE LL, THE SELLER SHALL HAVE TO CLEAR ALL THE DU3ES/ARREAR S OF THE PROPERTY UNDER SALE AND SHALL ALSO OBTAIN NOC. THE NOC WILL BE OBTAINED BY SELLER FOR THE TRANSACTION FROM HDFC BANK. THE SELLER SHALL EITHER REPAY AND SQUARE THE LOAN OF HDFC OR REIMBURSE THE BALANCE LOAN AMOUNT TO THE PURCHASER IF HE TAKES OVER THE LIABILITY OF HDFC AN D GETS THE LOAN TRANSFERRED IN HIS NAME. THE SELLER SHALL DELIVER VACANT AND PHYSICAL POSSESSION ON COMPLETION OF THE TRANSACTION. IN THE SAME AGREEMENT TO SELL, THE RE CEIPT OF THE BALANCE AMOUNT OF RS. 98 LACS HAVE BEEN MENTIONED TO HAVE BEEN RECEIVED BY THE SELLER FROM THE ASSESSEE ON 05.02.2008 AND POSSESSION WAS GIVEN TO THE ASSESSEE. THIS AGREEMENT TO SELL IS FOLLOWED BY REG ISTERED TRANSFER DEED DATED 05.02.2008. THESE FACTS WOULD CLEARLY SHOW THAT THE ENTIRE TRANSACTION OF PURCHAS E AND SALE OF THE PROPERTY IN QUESTION WAS COMPLETED IN PRECEDING ASSESSMENT YEAR 2008-09. THE CONSIDERATIO N OF SALE OF PROPERTY PASSED THROUGH BANKING CHANNEL, WH ICH IS NOT IN DISPUTE. THE TERMS AND CONDITIONS OF AGR EEMENT TO SELL DATED 13.12.2007 HAVE BEEN COMPLIED BY BOTH THE PARTIES, THEREFORE, THERE COULD NOT BE ANY DISPUTE THAT PROPERTY WAS SOLD SUBJECT TO CONSIDERATION. THUS, T HE SALE OF THE PROPERTY IN QUESTION SUBJECT TO CONSIDE RATION HAS BEEN COMPLETED IN ASSESSMENT YEAR 2008-09. THE CAPITAL GAIN AMOUNT WAS WITHDRAWN FROM THE CAPITAL GAIN ACCOUNT FROM THE SAME BANK IN ASSESSMENT YEAR 2008- 09. 14 MOTHER OF THE ASSESSEE DEPOSITED THE SALE CONSIDERA TION ON TRANSFER OF THE PROPERTY IN QUESTION IN CAPITAL GAIN ACCOUNT IS ALSO NOT IN DISPUTE IN ASSESSMENT YEAR 2 008- 09. ENTIRE TRANSACTION WAS COMPLETED THROUGH BANKI NG CHANNEL WHICH ARE NOT IN DISPUTE. SELLER HAS RECEI VED CONSIDERATION AND HANDED OVER THE OWNERSHIP AND POSSESSION OF THE PROPERTY IN QUESTION TO THE ASSES SEE IN PRECEDING ASSESSMENT YEAR 2008-09 AND MUTATION OF T HE PROPERTY IN THE NAME OF THE ASSESSEE WAS ALSO COMPL ETED BY OFFICE OF ESTATE OFFICER, UT, CHANDIGARH ON 15.0 2.2008 I.E. IN ASSESSMENT YEAR 2008-09. THUS, THE TRANSFE R OF THE CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(2 7) WAS COMPLETED IN PRECEDING ASSESSMENT YEAR 2008-09. TH US, THE ASSESSEE SATISFIED THE CONDITIONS OF TRANSFER I N RELATION TO CAPITAL ASSET WITHIN THE MEANING OF SEC TION 2(47) OF THE ACT. 12. IT MAY BE NOTED HERE THAT THE ASSESSEE IN ASSESSMENT YEAR 2008-09 DISCLOSED THE PURCHASE OF T HE PROPERTY IN COMPUTATION OF INCOME AS WELL AS IN THE RETURN OF INCOME. COMPUTATION OF INCOME IS FILED ON RECORD WHICH DESCRIBED THE PROPERTY NO. 114, SECTOR 18- A, CHANDIGARH IS SELF OCCUPIED PROPERTY OF THE ASSE SSEE AND ASSESSEE CLAIMED DEDUCTION OF INTEREST UNDER SE CTION 24(B) OF THE ACT. THE ASSESSING OFFICER, AT THE ASSESSMENT STAGE ISSUED A QUERY LETTER DATED 22.02. 2012 AND ASKED FOR THE COMPLETE DETAILS OF TRANSACTION I N IMMOVABLE PROPERTY MADE BY THE ASSESSEE OR HIS FAMI LY 15 MEMBERS IN PRESCRIBED FORMAT. THE ASSESSEE FILED A REPLY BEFORE ASSESSING OFFICER ON 16.08.2012 IN ASSESSMEN T YEAR 2008-09 IN RESPONSE TO THE ABOVE QUERY AND THE ASSESSEE REPLIED BEFORE ASSESSING OFFICER THROUGH T HIS LETTER THAT ASSESSEE PURCHASED 100% SHARE OF PROPER TY NO. 114, SECTOR 18-A, CHANDIGARH FROM MRS. SATWANT KAUR FOR A SUM OF RS.3.48 CR ON 05.02.2008, THE COP Y OF THE SALE DEED WAS FILED. THIS TOTAL AMOUNT WAS WITH DRAWN FROM CAPITAL GAIN ACCOUNT OUT OF SALE OF SHARES OF M/S PRAGATI NIRMAL (P) LTD. NO OTHER INVESTMENT WAS MA DE BY ASSESSEE DURING THE PERIOD. THE ASSESSING OFFICER I SSUED FURTHER QUERY TO THE ASSESSEE WHICH WAS REPLIED BY ASSESSEE ON 26.11.2012 AND THE CONSIDERATION PASSED TO THE SELLER WAS EXPLAINED AND IT WAS ALSO EXPLAINED THAT OUTSTANDING LOAN ON THE PROPERTY OF RS. 22,77,010/- PAYABLE BY SMT. SATWANT KAUR WAS TAKEN OVER BY ASSESSEE WHICH WAS LATER ON REIMBURSED BY THE SELLE R. THE ASSESSEE VIDE REPLY DATED 10.12.2012 ALSO EXPLA INED THAT LOAN LIABILITY OF HDFC WAS CLEARED BY ASSESSEE . 12(I) THE ASSESSING OFFICER AFTER RAISING SPECIFI C QUERY WITH REGARD TO PURCHASE OF THE PROPERTY IN QUESTION AND CONSIDERING REPLY OF THE ASSESSEE AND MATERIAL ON R ECORD WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE THAT ASSESSEE GENUINELY PURCHASED THE PROPERTY IN QUESTI ON THROUGH THE AGREEMENT TO SELL DATED 13.12.2007 FOLL OWED BY TRANSFER DEED DATED 05.02.2008. THE ASSESSING OFFICER, THEREFORE, ACCEPTED THE RETURNED INCOME AN D 16 PASSED THE ORDER UNDER SECTION 153A READ WITH SECTI ON 143(3) ON 22.02.2013 FOR ASSESSMENT YEAR 2008-09. IT WOULD, THEREFORE, CLEARLY SHOW THAT THE TRANSACTION OF THE SALE OF PROPERTY WAS COMPLETED IN ASSESSMENT YEAR 2008-09 AND ASSESSING OFFICER AFTER RAISING SPECIFI C QUERY TO THE ASSESSEE ACCEPTED THE CLAIM OF ASSESSE E IN ASSESSMENT YEAR 2008-09 THAT ASSESSEE HAS UTILIZED WHOLE OF THE AMOUNT OUT OF CAPITAL GAIN ACCOUNT FOR PURCHASE OF PROPERTY IN ASSESSMENT YEAR 2008-09. T HE ASSESSEE DISCLOSED COMPLETE FACTS IN ASSESSMENT YEA R 2008-09 INCLUDING THE INTEREST PAID ON THE LOAN AFT ER SATISFYING THE LIABILITY OF HDFC. UNLESS THE ORDER FOR ASSESSMENT YEAR 2008-09 HAVE BEEN WITHDRAWN, THE FINDINGS GIVEN IN THAT YEAR COULD NOT BE BRUSHED AS IDE BY THE ASSESSING OFFICER. IT WOULD, THEREFORE, MAKE I T CLEAR THAT THE REVENUE DEPARTMENT ACCEPTED THE CLAIM OF ASSESSEE IN ASSESSMENT YEAR 2008-09 REGARDING UTILIZATION OF THE CAPITAL GAIN AMOUNT IN ASSESSMEN T YEAR 2008-09. THE ASSESSING OFFICER, THUS, CONSIDERED T HE ISSUE OF UTILIZATION OF CAPITAL GAIN IN ASSESSMENT YEAR 2008-09 AND ACCEPTED THE SIMILAR CLAIM OF ASSESSEE. THERE IS NO BAR IN ASSESSEE TAKING ANY LOAN FROM HI S MOTHER BEING A SELLER. THERE IS ALSO NO BAR IF THE MOTHER OF ASSESSEE BEING SELLER WAS RESIDING WITH THE ASSE SSEE IN THE SAME PROPERTY. SINCE THE AGREEMENT TO SELL DAT ED 13.12.2007 FIND MENTION CONSIDERATION OF TRANSFER O F THE PROPERTY, THEREFORE, THERE IS NO NEED TO MENTION SA ME THINGS IN THE TRANSFER DEED. THE SAME THUS, COULD N OT BE 17 ADVERSE IN NATURE AGAINST THE ASSESSEE. THERE IS A LSO NO BAR IN TAKING OVER THE LOAN BY ASSESSEE IN SATISFYI NG THE DUES OF HDFC ON BEHALF OF THE SELLER. ON EXECUTION OF THE AGREEMENT TO SELL FOLLOWED BY TRANSFER DEED, TH E RIGHTS IN THE PROPERTY WOULD VEST IN THE ASSESSEE. THE ASSESSING OFFICER ALSO DID NOT ACCEPT CONTENTION OF THE ASSESSEE THAT THE CAPITAL GAIN AMOUNT BY MOTHER OF THE ASSESSEE WAS KEPT IN JOINT ACCOUNT WITH SMT. SATWAN T KAUR AND THE ASSESSEE. MAY BE THE ASSESSEE IS SON OF THE SELLER AND DUE TO OLD AGE, IF THE AMOUNT IS KEPT IN JOINT CAPITAL GAIN ACCOUNT, THERE IS NO WRONG TO SAY THAT TRANSACTION WAS SHAM. 13. SINCE THE CAPITAL GAIN AMOUNT WAS UTILIZED IN ASSESSMENT YEAR 2008-09 FOR PURCHASE OF PROPERTY, THEREFORE, THERE IS NO QUESTION OF THE SAME TRANSAC TION GOING FOR A THIRD YEAR. THE LD. DR CONTENDED THAT ORDER OF THE LD. CIT(APPEALS) IS NON SPEAKING. WE DO NOT AGREE WITH VIEW OF THE LD. DR. THE LD. CIT(APPEALS), ACC ORDING TO SECTION 250(6), IS REQUIRED TO PASS A REASONED O RDER. THE LD. CIT(APPEALS) IN THE IMPUGNED ORDER HAS MENTIONED ALL THE RELEVANT FACTS, SUBMISSIONS OF BO TH THE PARTIES AND HAS CAME TO THE CONCLUSION ON THE BASIS OF THE ORDERS OF ASSESSMENT YEAR 2008-09 AND MATERIAL ON RECORD THAT THE ENTIRE TRANSACTION RELATING TO TRAN SFER HAPPENED DURING THE RELEVANT ASSESSMENT YEAR 2008-0 9. THEREFORE, LD. CIT(APPEALS) WAS JUSTIFIED IN HOLDIN G THAT ASSESSING OFFICER COULD NOT WITHDRAW THE EXEMPTION IN 18 ASSESSMENT YEAR 2009-10. WE, THEREFORE, DO NOT FIN D ANY ERROR IN THE ORDER OF THE LD. CIT(APPEALS) TO TERM THE SAME AS NON-SPEAKING ORDER AS IS ARGUED BY LD. DR. THUS, THERE IS NO VIOLATION OF SECTION 250(6) OF TH E INCOME TAX ACT. SINCE THE ASSESSEES CLAIM OF EXEM PTION HAS BEEN CONSIDERED IN ASSESSMENT YEAR 2008-09 BY T HE ASSESSING OFFICER AND ACCEPTED THE CLAIM OF ASSESSE E, THEREFORE, THE FACTS AND CIRCUMSTANCES CLEARLY JUST IFY THE FINDINGS OF LD. CIT(APPEALS) THAT THE TRANSACTION P ERTAIN TO ASSESSMENT YEAR 2008-09 AND AS SUCH, SAME CANNOT BE WITHDRAWN IN ASSESSMENT YEAR 2009-10 UNDER APPEAL. 14. CONSIDERING THE ABOVE DISCUSSION, WE FIND THAT THERE IS NO ERROR IN THE ORDER OF LD. CIT(APPEALS) IN ALLOWING THE APPEAL OF ASSESSEE. IN THE RESULT, TH ERE IS NO MERIT IN THE DEPARTMENTAL APPEAL AND THE SAME IS DISMISSED. 15. IN THE RESULT, DEPARTMENTAL APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA MEHROTRA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 18 TH NOV ., 2015. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD