Kantialal Ramlal Chungede, Aurangabad V. Income-tax Officer, Ward - 3(2), Aurangabad

ITA 1993/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3501 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-11-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 23-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Section: 54B; 191; 147; 148; 139; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO, AM AND SHRI S. S. VISWANETHRA RAVI, JM . / ITA NO.1993/PUN/2017 / ASSESSMENT YEAR : 2012-13 KANTILAL RAMLAL CHUNGEDE, GUT NO.16, GOLWADI, PAITHAN ROAD, AURANGABAD. PAN : AVZPR3079A ....... / APPELLANT / V/S. ITO, WARD- 3(2), AURANGABAD. / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI S. P. WALIMBE / DATE OF HEARING : 10.11.2020 / DATE OF PRONOUNCEMENT : 10.11.2020 / ORDER PER INTURI RAMA RAO, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, AURANGABAD (CIT(A) FOR SHORT) DATED 02.05.2017 FOR THE ASSESSMENT YEAR 2012-13. 2. THE APPELLANT RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONORABLE THE COMMISSIONER OF INCOME TAX- APPEAL 2 AURANGABAD IS NOT JUSTIFIED IN CONFIRMING ORDER OF THE AO DISALLOWING OUR CLAIM IN RESPECT OF SECTION U/S 54 B RS 31,50,160 AND COST OF IMPROVEMENT OF RS 448474 IT IS PRAYED THAT THE CLAIM MAY KINDLY BE ALLOWED TO THE APPELLANT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE HONORABLE THE COMMISSIONER OF INCOME TAX- APPEAL 2 AURANGABAD HAS ERRED IN NOT CONSIDERING THE INVESTMENT MADE BY WAY OF PURCHASE OF NEW AGRICULTURAL LAND ON SALE OF AGRICULTURAL LAND FOR CLAIM OF SECTION 54 B. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE HONORABLE THE COMMISSIONER OF INCOME TAX APPEAL 2 AURANGABAD HAS NOT APPRECIATED THE SUBMISSION ESTABLISHING THE PAYMENT DETAILS TO ESTABLISH THE NEXUS BETWEEN THE ADVANCE RECEIVED AND THE AMOUNT GIVEN FOR PURCHASE OF NEW PROPERTY. 2 ITA NO.1993/PUN/2017 4. THE APPELLANT HAS FURNISHED ALL DETAILS AND INFORMATION BEFORE THE ASSESSING OFFICER AND FILED HIS RETURN OF INCOME IN RESPONSE TO NOTICE U/S 148 CONSIDERING THE JOINT PROCEEDS OF PROPERTY SALE AND PAID TAXES THERE ON BEING AN AGRICULTURIST. THOUGH ALL THE QUERIES RAISED BY THE AO WERE SATISFACTORILY EXPLAINED, THE AO HAS PASSED THE ORDER AND ERRED IN APPRECIATING THE SUBMISSION TOWARDS THE CLAIM OF THE APPELLANT. 5. THE APPELLANT RESERVES THE RIGHT TO OMIT, ALTER, CHANGE AND ADD ANY ADDITIONAL GROUND AT THE TIME OF HEARING OR BEFORE THE HEARING. IN VIEW OF THE ABOVE THE ORDER PASSED BY THE CIT APPEAL - 2 AURANGABAD MAY KINDLY BE ANNULLED. THE APPELLATE CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE AND DELETE ANY OR ALL GROUND OF APPEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER :- THE APPELLANT IS AN INDIVIDUAL. THE APPELLANT HAD NOT FILED ANY RETURN OF INCOME VOLUNTARILY UNDER THE PROVISIONS OF SECTION 139 OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHORT). THE ASSESSING OFFICER ON RECEIPT OF THE INFORMATION THAT THE APPELLANT ALONG WITH TWO OTHERS HAD SOLD LAND TO M/S SAMYAK CREATIONS, AURANGABAD FOR THE TOTAL CONSIDERATION OF RS.1,42,00,000/- BELIEVED THAT THE INCOME CHARGEABLE TO TAX TO THE EXTENT OF RS.47,33,333/- HAD ESCAPED ASSESSMENT TO TAX WITHIN THE MEANING OF SECTION 147 OF THE ACT. ACCORDINGLY, A NOTICE U/S 148 OF THE ACT DATED 21.03.2016 WAS ISSUED. IN RESPONSE, THE ASSESSEE FILED THE RETURN OF INCOME DISCLOSING TOTAL INCOME OF RS.85,176/-. THE ASSESSMENT WAS COMPLETED BY THE INCOME TAX OFFICER, WARD- 3(2), AURANGABAD VIDE ORDER DATED 22.12.2016 AT THE TOTAL INCOME OF RS.38,37,933/-. WHILE DOING SO, THE ASSESSING OFFICER MADE AN ADDITION OF RS.31,50,160/- BY DISALLOWING THE CLAIM FOR EXEMPTION U/S 54B OF THE ACT PRIMARILY ON THE GROUND THAT THE INVESTMENT IN NEW AGRICULTURAL LAND WAS MADE MUCH PRIOR TO THE SALE OF OLD AGRICULTURAL LAND. 4. BEING AGGRIEVED AN APPEAL WAS PREFERRED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER CONFIRMED THE ADDITION FOR DIFFERENT REASON THAT THERE WAS NO NEXUS OF SOURCE OF INVESTMENT INTO NEW AGRICULTURAL LAND AND THE SALE PROCEEDS RECEIVED ON SALE OF OLD AGRICULTURAL LAND. THE RELEVANT REASONS ARE FOUND AT PARA 10 OF THE IMPUGNED ORDER OF THE LD. CIT(A). 3 ITA NO.1993/PUN/2017 5. BEING AGGRIEVED BY THE ABOVE DECISION OF THE LD. CIT(A), THE APPELLANT IS BEFORE US IN THE PRESENT APPEAL. 6. BEFORE US, WHEN THE MATTER WAS CALLED ON FOR HEARING TODAY, NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE DUAL SERVICE OF NOTICE. WE NOTE FROM THE ORDER-SHEET ENTRIES THAT IN THE PREVIOUS OCCASIONS NO ONE HAS APPEARED, IN THESE CIRCUMSTANCES, WE PROCEED TO DISPOSE THE MATTER AFTER HEARING THE LD. CIT-DR. THE LD. CIT-DR PLACED HEAVILY RELIANCE ON THE ORDER OF THE LD. CIT(A). 7. WE HEARD THE LD. CIT-DR AND PERUSED THE MATERIAL ON RECORD. IT APPEARS THAT THE CLAIM FOR EXEMPTION U/S 54B OF THE ACT WAS DISALLOWED BY THE ASSESSING OFFICER PRIMARILY ON THE GROUND THAT THE INVESTMENT IN NEW AGRICULTURAL LAND WAS MADE MUCH PRIOR TO THE SALE OF OLD AGRICULTURAL LAND. THE SAID REASONING OF THE ASSESSING OFFICER WAS REJECTED BY THE CIT(A) BY HOLDING AS UNDER :- 9. IN THE DECISION IN RAMESH NARHARI JAKHADI (SUPRA) THE HONBLE ITAT, PUNE HAS APPLIED THE CIRCULAR IN THE CONTEXT OF SECTION 54B AND HAVE HELD THAT BENEFITS OF SECTION 54B WILL ENURE IN CASES WHERE EARNEST MONEY/ADVANCE RECEIVED ON AGREEMENT TO SALE IS INVESTED IN ANOTHER LAND EVEN BEFORE THE AGREEMENT TO SALE IS FORMALISED. IN VIEW OF THIS DECISION, INVESTMENT MADE PRIOR TO THE DATE OF TRANSFER OF THE ORIGINAL ASSET WOULD ALSO BE ELIGIBLE AND SHOULD BE CONSIDERED AS INVESTMENT MADE OUT OF SALE PROCEEDS. THE INVESTMENTS MADE EARLIER TO THE DATE OF TRANSFER OUT OF THE EARNED MONEY OR ADVANCES WILL HAVE TO BE CONSIDERED TO FALL WITHIN TWO YEARS TIME LIMIT PERIOD AND WHICH WOULD BE THE INNER LIMIT. HENCE, I HOLD THAT THE INVESTMENT MADE BY THE ASSESSEE IN THE LAND PRIOR TO REGISTRATION OF THE SALE DEED SHOULD BE CONSIDERED AS AN INVESTMENT MADE OUT OF SALE PROCEEDS ON WHICH DEDUCTION U/S. 54B WOULD BE ALLOWED TO THE ASSESSEE PROVIDED THAT THE ASSESSEE IS ABLE TO ESTABLISH THAT PURCHASE IS MADE OUT OF THE ADVANCES RECEIVED BY THE ASSESSEE. 8. HOWEVER, THE LD. CIT(A) PROCEEDED TO DISALLOW THE CLAIM CONSIDERING THE FACT THAT THERE IS NO NEXUS BETWEEN THE SALE PROCEEDS OF OLD AGRICULTURAL LAND AND SOURCE OF INVESTMENT MADE IN THE NEW AGRICULTURAL LAND. ON PERUSAL OF THE IMPUGNED ORDER, WE ARE UNABLE TO DISCERN WHETHER AN OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO EXPLAIN AS TO WHY THE ADDITION CANNOT BE MADE FOR 4 ITA NO.1993/PUN/2017 THIS REASON. HOWEVER, THE REASONING OF THE LD. CIT(A) IS UNTENABLE IN LAW. AS ON MERE READING OF THE PROVISIONS OF SECTION 54B OF THE ACT, IT WOULD BE CRYSTAL CLEAR THAT THE PROVISIONS OF THE SAID SECTION DOES NOT ENVISAGE ANY SUCH CONDITION THAT THE SALE CONSIDERATION OBTAINED BY AN ASSESSEE ON THE SALE OF ORIGINAL ASSETS SHOULD MANDATORILY REQUIRED TO BE UTILIZED FOR THE PURPOSE OF MEETING THE COST OF NEW AGRICULTURAL LAND. IT IS SETTLED PRINCIPLE OF CONSTRUCTION OF PROVISIONS OF STATUTE THAT THE COURTS CAN NEITHER IMPOSE NOR READ INTO A NEW CONDITION NOT STIPULATED IN THE STATUTE. THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE KAPIL KUMAR AGARWAL, 66 TAXMAN.COM 191 (P&H) IN THE CONTEXT OF SECTION 54 OF THE ACT HAS ADOPTED THE SAME REASONING. IN THE LIGHT OF THIS LEGAL POSITION, THE ORDER OF THE LD. CIT(A) CANNOT BE SUSTAINED IN THE EYE OF LAW. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO ALLOW THE EXEMPTION U/S 54B OF THE ACT OF RS.31,50,160/-. THUS, THE GROUNDS OF APPEAL FILED BY THE ASSESSEE STAND ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON THIS 10 TH DAY OF NOVEMBER, 2020. SD/- SD/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; / DATED : 10 TH NOVEMBER, 2020. SUJEET / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-2, AURANGABAD. 4. THE PR. CIT-2, AURANGABAD. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE.