Shri Rajnish Dilipbhai Thakkar, Banaskantha V. The Income Tax Officer, Ward-3, Banaskantha

ITA 2096/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1350 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 30-05-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 15-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B P K
• Assessee Lawyers: M K PATEL
• Keywords: Capital asset; Assessment record; Revised return
• Section: 143(3); 54F; 54; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMEDABAD BEFORE SHRI R. P. TOLANI, JM, & SHRI MANISH BORAD , AM. ITA NO.2096 /AHD/2015 ASST. YEAR: 2011-12 RAJNISH DILIPBHAI THAKKER PROP. M/S D. M. HIRANI, MARKET YARD, DHANERA, DIST. BANASKANTHA. VS. ITO, WARD-3, PALANPUR. APPELLANT RESPONDENT PAN ADHPT 9495Q APPELLANT BY SHRI M. K. PATEL, AR RESPONDENT BY SHRI B.P.K. PANDA, SR.DR DATE OF HEARING: 30/5/2016 DATE OF PRONOUNCEMENT: 03/6/2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THIS APPEAL OF THE ASSESSEE IS DIRECTED AT THE INS TANCE OF ASSESSEE AGAINST THE ORDER OF LD. CIT(A) -4, AHMEDA BAD, DATED 19 TH MAY,2015 IN APPEAL NO.CIT(A)-4/281/ITO/WD-3/PALANPU R/14-15 PASSED AGAINST THE ORDER U/S 143(3) OF THE IT ACT, 1961 (IN SHORT THE ACT) FOR ASST. YEAR 2011-12 FRAMED ON 13.3.2014 BY ITO, WD-3, PALANPUR. ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL :- 1) THE LEARNED CIT (A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ADDITION OF RS. 3,06,250/- MADE BY A.O. ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 2 2) THE LEARNED CIT (A) HAS ERRED IN HOLDING THAT TH E APPELLANT HAS NOT FILED RELEVANT DETAILS AND FAILED TO APPRECIATE THE FACT THAT APPELLANT HAS FILED ALL NECESSARY DETAILS TO SUBSTANTIATE HIS CONTENTION IN FORM OF PAPER BOOK ALONG WITH THE WRITTEN SUBMISSION DATED : 27/04/2015 AND 18/05/2015. 3) THE LEARNED CIT (A) HAS ERRED IN DISMISSI NG THE GROUND OF APPEAL FOR CHARGING OF INTEREST U/S. 234 B OF THE I.T. ACT, 1961. 4) THE LEARNED CIT (A) HAS ERRED IN DISMISSING THE GROUND OF APPEAL FOR INITIATION OF PENALTY U/S. 271(L)(C) OF THE I.T. ACT, 1961. 5) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE ADDITION CONFIRMED BY THE LEARNED CIT (A) NEEDS TO BE DELETED. 6) THE APPELLANT CRAVE LEAVE TO ADD, AMEND, ALTER, EDIT, WITHDRAW, MODIFY OR CHANGE ALL OR ANY OF THE GROUNDS OF APPEAL AT THE T IME OR BEFORE THE HEARING OF THE APPEAL. 2. BRIEFLY STATED THE FACTS OF THE CASE AS CULLED O UT FROM THE ASSESSMENT RECORDS ARE THAT THE ASSESSEE IS AN INDI VIDUAL ENGAGED IN THE BUSINESS OF TRADING OF GRAINS UNDER SOME PROPRI ETARY CONCERN IN THE NAME OF M/S D. M. HIRANI. E-RETURN OF INCOME WA S FILED ON 21.9.2011 DECLARING TOTAL INCOME AT RS.2,63,310/-. IT WAS FURTHER REVISED ON 23.9.2011 DECLARING INCOME AT RS.6,55,53 0/- AFTER INCLUDING LONG TERM CAPITAL GAIN OF RS.4,05,359/-. THE ONLY ADDITION WAS DISALLOWANCE OF DEDUCTION CLAIMED U/S 54F OF TH E ACT AT RS.3,06,250/- AS THE LD. ASSESSING OFFICER WAS OF T HE VIEW THAT ASSESSEE WAS UNABLE TO PROVE THAT INVESTMENT OF RS. 3,06,250/- WAS MADE IN THE RESIDENTIAL PROPERTY. 3. APPEAL OF THE ASSESSEE BEFORE LD. CIT(A) WAS DIS MISSED. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 3 5. LD. AR SUBMITTED THAT ASSESSEE RECEIVED 1/6 TH SHARE OF SALE CONSIDERATION AT RS.7,50,000/- AND AFTER REDUCING T HE INDEX COST AT RS.38391/-, LONG TERM CAPITAL GAIN WORKED OUT AT RS .7,11,609/-. AGAINST THE LONG TERM CAPITAL GAIN OF RS.7,11,609/- , DEDUCTION U/S 54F OF THE ACT WAS CLAIMED FOR INVESTMENT IN A RESIDENT IAL PROPERTY VIDE AGREEMENT DATED 31.3.2011 AT RS.3,06,250/- TOWARDS PURCHASED RESIDENCE FROM ASSESSEES BROTHER AND GRAND MOTHER AND LD. AR FURTHER SUBMITTED THAT THE SAID PURCHASE DEED COULD NOT BE REGISTERED DUE TO THE DEATH OF ASSESSEES FATHER AND, THEREFOR E, ASSESSEE SHOULD HAVE BEEN ALLOWED THE CLAIM U/S 54F OF THE A CT. 6. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDERS O F LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. ASSESSEE HAS RAISED VARIOUS GROUNDS OF A PPEAL RANGING FROM 1 TO 6 BUT THE SOLITARY GRIEVANCE REVOLVES AGA INST THE ACTION OF LD. CIT(A) FOR CONFIRMING THE ADDITION OF RS.3,06,250/- MADE BY LD. ASSESSING OFFICER BY NOT ALLOWING DEDUCTION 54F OF THE ACT FOR INVESTMENT IN RESIDENTIAL HOUSE. FROM GOING THROUGH THE SUBMISSIONS OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES WE OBS ERVE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN ORDER TO RI GHTLY JUSTIFY THE CLAIM U/S 54F OF THE ACT FOLLOWING SUBMISSIONS WERE MADE BEFORE LD. ASSESSING OFFICER :- '/ HAVE SOLD PLOT FOR RS.7 : 50.000/- SAID PLOT WAS PURCHASED ON 16.05.03 FOR RS.25,000/- & EARNED PROFIT OF RS.7,25,000/- I HAVE PURCHASED RESIDENCE FOR RS.306250/- FROM MY BROTHER & GRAND MOTHER ON 31.03 .11.. I HAVE CLAIMED ABOVE ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 4 INVESTMENT U/S.54F OF THE L. T. ACT 1961, TO SAVE CAP ITA! GAIN TAX. BECAUSE OF MY FATHER'S DEATH PURCHASE DEED OF RESIDENCE PROPERTY COULD NOT BE REGISTERED. I HAVE ALREADY TAKEN OWNERSHIP OF SAID PROPERTY ON 31.03.11 , I HAVE ALREADY PAID FULL AMOUNT FOR PURCHASE OF PROPERTY, ONLY REGISTRATION O F WAS NOT COMPLETED. COPY OF SALE DEED WITHOUT REGISTRATION IS ALREADY SUBMITTED TO YOUR HONOUR. YOU ARE REQUESTED TO ALLOW MY INVESTMENT U/S.54F OF THE I. T. ACT 1961'. 8. WE OBSERVE THAT WHEN THE MATTER CAME UP BEFORE F IRST APPELLATE AUTHORITY I.E. LD. CIT(A), THE ASSESSEE MADE DIFFER ENT SUBMISSIONS WHICH READS AS UNDER :- 4. DURING APPEAL PROCEEDINGS, APPELLANT FILED FOLLO WING SUBMISSION: '2. AT THE OUTSET, IT IS RESPECT/ALLY SUBMITT ED THAT IT IS NOT THE CASE FOR CLAIM FOR PURCHASE OF NEW RESIDENTIAL HOUSE BUT IT IS THE AMO UNT GIVEN TO THE PARTIES WHO HAVE CONSTRUCTED THE GUEST HOUSE ON THE LAND, WHICH IS T HE SUBJECT MATTER OF LONG TERM CAPITA! GAIN. 3. THE APPELLANT ALONG WITH OTHER FIVE CO-OWNERS PU RCHASED THE VARIOUS PLOTS FROM NO. 88 TO 252 TOTALING 165 PLOTS SITUATED AT REV. SUR. NO 142/1 PAIKI (142/1 + 143 PAIKI + 144 PAIKI) FROM JAYRAMDAS PREMCHAND THAKKER ON VARI OUS DATES. THE DETAILS OF PURCHASE IS AS UNDER; SL. NO. NAME OF PURCHASER DATE OF PURCHASE PURCHAS E DEED SR.NO. PLOT NO. SCHEDULE- A OF SALE DEED PAGE OF PAPER BOOK 1 CHANDRABE N VISHUBHAI HIRANI 15/12/2003 5479 88 TO 125 7 2 MAHENDRAKUMAR D. THAKKER WITH 15/12/2003 1999 126 TO 169 7 3 RAVIKUMAR VISHNUBHAI THAKKER 4 RAJNISHKUMAR D. HIRANI THAKKER WITH 16/05/2003 1947 170 TO 212 8 5 HARDESHKUMAR V. HIRANI 6 KA VITABEN HARDESHKUMAR HIRANI 23/06/2003 2663 213 TO 252 8 4. THE COPY OF THE PURCHASE DEED OF THE APP ELLANT BEARING NO. 1947 DATED CONSIDERATION OF RS.25000/-IS FURNISHED HEREWITH. (PAGE 38 TO 42) , ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 5 5. THE APPELLANT ALONG WITH OTHER CO-OWNERS WERE' G RANTED .PERMISSION FOR CONSTRUCTION ON THE SAID PLOTS BEARING NO. FROM 88 TO 252 BY DHANER A MUNICIPALITY ON 22/07/20.05 VIDE PERMISSION NO,27 AND COMPLETION CERTIFICATE FROM DH ANERA MUNICIPALITY WAS ALSO, OBTAINED ON 20/04/2006. (PAGE 8) 6. THE APPELLANT AND OTHER CO-OWNERS CONSTRUCTED GU EST HOUSE (GROUND & 1ST FLOOR), KITCHEN, RESTAURANT SHOP AND TUBEWELL ETC. ON THE SAID LAND. (PAGE I TO 13.) 7. THE TOTAL AREA OF PLOT I.E. 6160.87 SQ.MT. AND C ONSTRUCTION OF 650 SQ.MT. CONSTRUCTED ON THE ABOVE SAID 165 PLOTS WERE SOLD FOR RS.60,00,000/- T O SEVEN PERSONS AND DETAILS OF THE PAYMENT GIVEN BY PURCHASERS TO VARIOUS SELLERS IS MENTIONED ON PAGE 24 TO 26 OF SALE DEED. (PAGE NO.24 TO 26 OF PAPER BOOK). THE APPELLANT HAS ALSO RECEIVED RS.7,50,000/- TOWARDS COST OF LAND AND CONSTRUCTION. (PAGE 24 TO 26) 8. THE PLOT OF LAND WAS PURCHASED BY SIX PERSONS AS MENTIONED IN PARA~3 BUT THE COST OF CONSTRUCTION WAS MET BY MITHIBEN MOHANLAI THAKKER & MAHENDRAKUMAR DILIPHHAI THAKKER. THEREFORE ON ACCOUNT OF SALE CF PLOT WITH CONSTRUCT ION, THE COST OF CONSTRUCTION MET BY MITHIBEN MOHANLAI THAKKER & MAHENDRAKUMAR DILIPBHAI THAKKER (HIRANI) WAS PAID BACK TO THEM BY THE OTHER CO-OWNERS. 9. THE DETAILS OF CONTRIBUTION, GIVEN BY ALL THE SE LLERS TO MITHIBEN MOHANIAI THAKKOR & MAHENDRAKUMAR DILIPBHAI THAKKER, TOWARDS THE COST O F CONSTRUCTION IS AS UNDER. COPY OF IMMOVABLE PROPERTY A/C. STATEMENT OF INCOME AND RET URN RECEIPT OF ALL THE SELLER IS FURNISHED HEREWITH; (PAGE 43 TO 47- RAJR.ISH D THAKKER, PAGE 48 TO 51- RAVIKUMAR V THAKKER, PAGE 52 TO 55-CHANDRABEN V HIRANI, PAGE 56 TO 59 KAVIIABEN H HIRANI, PAGE 60 T O 63- MAHENDRAKUMAR D THAKKAR, PAGE 64 TO 67- HARDESH V HIRANI) SL. NO. NAME OF SELLER % SALES PRICE CONSTRUCTION TOWARDS COST OF CONSTRUCTION GIVEN TO TOTAL CONSTRUCTION CONTRIBUTION PAGE MITHIBAI M. THAKKER MAHENDRA D. THAKKER 1 RAJNISH D. HIRANI (APPELLANT) 12.50 RS.750000 RS.181250 RS.125000 RS.306250 47 2 RAVIKUMAR V. THAKKER 12.50 RS.750000 RS.187500 125000 RS.312500 51 3 CHANDRABEN V. HIRANI 25.00 RS.1500000 RS.375000 RS.225000 RS.60000 55 4 KAVITABEN H. HIRANI 25.00 RS.1500000 RS.362500 RS.225000 RS.587500 59 5 MAHENDRAKUMAR D. THAKKER 12.50 RS.750000 RS.187500 RS.187500 63 6 HARDESH V. HIRANI 12.50 RS.750000 RS.187500 RS.125000 RS.312500 67 100 RS.50,00,000 RS.14,81,250 RS.8225000 RS.23,06 250 ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 6 10) SMT. MITHIBEN MOHANLA! THAKKER AND MAHENDRAKUAM R D HIRANI HAVE CREDITED THE ABOVE AMOUNT RECEIVED TOWARDS COST OF CONSTRUCTION FROM V ARIOUS SELLERS AND REMAINING AMOUNT IS SHOWN AS THEIR INCOME. COPY OF THEIR PROPERTY A/C, STATEMENT OF INCOME AND RETURN RECEIPT FOR A.Y.2011-12 IS ALSO FURNISHED HEREWITH. (MITHIBEN - PAGE 68 TO 70; (MAHENDRABHAI PAGE 60 TO 63) 11. ALL THE SELLERS EXCEPT THE APPELLANT HAS SHOWN THE AMOUNT GIVEN TOWARDS COST OF CONSTRUCTION AS COST OF TRANSFER IN THEIR STATEMENT OF INCOME AND RETURN AND SAME IS ACCEPTED BY THE DEPARTMENT. 12. THE APPELLANT HAS ALSO MENTIONED IN THE ST ATEMENT OF INCOME AS CONSTRUCTION INSTEAD OF COST OF CONSTRUCTION. SMT. MKHSBEN MOHANLAL THAKKER & MAHENDRAKUMAR DILIPBHAI THAKKER HAS CLEARLY GIVEN IN WRITING THAT THEY BOTH HAVE IN TOTAL RECEIVED RS,306250/- FROM APPELLANT TOWARDS THEIR COST OF CONSTRUCTION. (PAGE 71-72) THE CONSTRUCTION IS ALREADY INCLUDED IN THE SAIS PRICE OFRS.60,00,000/-(PAGE 1) 13. THE APPELLANT HAS NEVER PURCHASED OR MADE ANY I NVESTMENT IN ANY RESIDENTIAL PROPERTY FOR WHICH ANY SALE DEED IS REQUIRED TO BE EXECUTED. THE AMOUNT IS GIVEN AS REIMBURSEMENT FOR THE-COST OF CONSTRUCTION MET BY SMT. MITHIBEN MOHAN LAL THAKKER & MAHENDRAKUMAR DILIPBHAI THAKKER AND FOR WHICH APPELLANT HAS RECEI VED RS.7,50,000/- (12.5%) TO HIS SHARE TOWARDS SALE OF PLOT AND CONSTRUCTION STANDING ON T HE SAID PLOT OF LAND. 14. IN VIEW OF THE ABOVE FACTS AND IN THE CIRCUMSTA NCES OF THE CASE, THE DISALLOWANCE OF RS.3,06,250/- NEEDS TO BE DELETED AS THE SAID AMOUN T IS NOT FOR PURCHASE OR INVESTMENT IN ANY RESIDENTIAL PROPERTY BUT THE SAME IS GIVEN TOWARDS REIMBURSEMENT OF COST OF CONSTRUCTION AS MENTIONED ABOVE AND ALSO ALLOWED IN ALL THE OTHER F IVE CO-OWNERS. 9. WE FURTHER OBSERVE THAT ASSESSEE MADE THIRD SUBM ISSION BEFORE LD. CIT(A) ON 18.5.2015 WHICH IS AS FOLLOWS :- 4.1 ANOTHER SUBMISSION IS FILED BY THE APPELLANT ON 18/05/2015, RELEVANT PORTION IS AS BELOW: 1. THE PLOT WAS PURCHASED BY SIX PERSONS AS P ER THE DETAILS GIVEN AT SR. NO. 9 OF THE SUBMISSION DATED 27-04-2015. ON THE SAID PLOT OF LA ND SML. MITHIBCN MOHANLAL THAKKER & MAHENDRAKUMAR D THAKKER CONSTRUCTED GUEST HOUSE (GR OUND AND 1ST FLOOR, KITCHEN, RESTAURANT, SHOP &TUBE WELL ETC. THE PLOT \VAS SOLD ALONG WITH THE ABOVE REFERRED CONSTRUCTION BY THE SIX GO -' OWNERS FOR RS, 6000000/- 2. AS THE CONSTRUCTION COST WAS BORNE BY THE MITHIB EN M THAKKER & MAHENDRAKUMAR D THAKKER, THE APPELLANT HAS TO PAY RS. 181250 TO SIN T. MITHIBEN M THAKKER AND RS. 12500 TO MAHENDRAKUMAR D THAKKER AS PER HIS SHARE OF 12.50% ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 7 3. THE APPELLANT WAS HAVING ACCOUNT WITH SMT. MITH IBEN M THAKKER FROM, SO MANY .YEARS. THERE WAS A DEBIT BALANCE OF RS. 187967.60 OF SMT. MITHIBEN M THAKKER IN THE BOOKS OF THE APPELLANT. THE OUTSTANDING DEBIT BALANCE OF SMT. MITHIBEN M THAKKER IS AS UNDER: AS ON OUTSTANDING DEBIT BALANCE 31-3-08 187967.60 (PAGE 1) 31-3-09 187967.60 (PAGE 2) 31-3-10 187967.60 (PAGE3) IN AY 2011-12, THE OUTSTANDING BALANCE OF RS. 18796 7.60 WAS ADJUSTED BY THE APPELLANT TOWARDS HIS COST OF CONSTRUCTION TO BE PAID TO SMT. MITHIBEN M THAKKER BY PASSING JOURNAL ENTRY. THERE BEING OUTSTANDING DEBIT BALANCE OF SMT. MITHI BEN M THAKKER, THERE WAS NO NEED TO MAKE THE PAYMENT BY CASH OR CHEQUE TOR CONTRIBUTION TOWARDS COST OF CONSTRUCTION, (PAGE 4) COPY OF MITHIBEN M THAKKEFS ACCOUNT FROM BOOKS OF A PPELLANT (PAGE 1 TO 4) AND COPY OF APPELLANT'S ACCOUNT FROM BOOKS OF MILHIBEN M THAKKE R IS FURNISHED HEREWITH FOR YOUR KIND REFERENCE (PAGE 5 TO 8) 4. WITH REGARD TO PAYMENT TO MAHENDRAKUMAR DILIPBHAI, IT IS TO SUBMIT THAT APPELLANT HAS TAKEN UNSECURED LOAN FROM MAHENDRAKUMAR DILIPBH AI & THE ENTIRE OUTSTANDING LOAN INCLUDING CONTRIBUTION FOR CONSTRUCTION OF RS. 1250 00 TOTALING RS 908450 IS PAID BY ACCOUNT PAYEE CHEQUE COPY OF BANK STATEMENT OF APPELLANT & MAHENDRAKUMAR DILIPBHAI IS FURNISHED HEREWITH (PAGE 9-10) THE DETAILS OF OUTSTANDING LOAN OF MAHENDRAKUMAR DI LIPBHAI IN BOOKS OF APPELLANT IS AS UNDER: DATE OUTSTANDING LOAN RS. 31.03.2009 79386 (PAGE 11) 31.03.2009 64175 (PAGE 12) 31.03.2010 699509 (PAGE 13) 31.03.2011 783450 + 125000 =TOTAL 908450 (PAGE 14-15) JOURNAL ENTRY FOR CONTRIBUTION FOR COMMISSION 31.03.2012 908450 (PAGE 16) 31.03.2013 NIL (PAGE 17) -AS THE ENTIRE OUTSTANDING PAYMENT OF RS.908450 IS PAID BY ACCOUNT PAYEE CHEQUE OF HDFC BANK BEARING NO.416262 ON 20.12.2012 (PAGE 9-10) ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 8 THUS THE APPELLANT HAS PAID THE CONTRIBUTION FOR CO ST OF CONSTRUCTION OF RS.125000 TO MAHENDRAKUMAR DILIPBHAI BY ACCOUNT PAYEE CHEQUE. THE COPY OF ACCOUNT OF MAHENDRAKUMAR DILIPBHAI FROM BOOKS OF APPELLANT FROM FY 2007-08 TO FY 2012-13 (PAGE 11 TO 17) AND COPY OF A PPELLANTS ACCOUNT FROM BOOKS OF MAHENDRAKUMAR DILIPBHAI FROM FY 2007-08 TO FY 2012- 13 (PAGE 18-24) ALONG WITH BANK STATEMENT OF BOTH THE PARTIES ARE ALSO FURNISH ED HEREWITH (PAGE 9-10). THE BALANCE SHEET OF MAHENDRAKUMAR DILIPBHAI AS ON 31.3.2011, S HOWS THESE TWO AMOUNT OF RS.783450 & RS.125000 AS DUE FROM APPELLANT (PAGE 2 5-27). 10. GOING THROUGH THE VARIOUS SUBMISSIONS OF ASSESS EE WE OBSERVE THAT DIFFERENT TYPE OF STORIES ARE BEING MA DE BY THE ASSESSEE FOR CLAIMING DEDUCTION U/S 54F OF THE ACT. PROVISIO NS OF SECTION 54FON CAPITAL GAIN ON TRANSFER OF CERTAIN CAPITAL ASSETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE READ AS UND ER :- [CAPITAL GAIN ON TRANSFER OF CERTAIN CAPITAL ASSETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE. 54F. (1) [SUBJECT TO THE PROVISIONS OF SUB-SECTION (4) , WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED FAMILY], T HE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL ASSET, NOT BEING A RESIDEN TIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSE E HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR [TWO YEARS] AFTER THE DATE ON WHICH THE TRANSFE R TOOK PLACE PURCHASED, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE [ CONSTRUCTED, A RESIDENTIAL HOUSE ] (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY, ( A ) IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHAL L NOT BE CHARGED UNDER SECTION 45 ; ( B ) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO TH E NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45 : [ PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL A PPLY WHERE ( A ) THE ASSESSEE, ( I ) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR ( II ) PURCHASES ANY RESIDENTIAL HOUSE, OTHER THAN THE N EW ASSET, WITHIN A PERIOD OF ONE YEAR AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASS ET; OR ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 9 ( III ) CONSTRUCTS ANY RESIDENTIAL HOUSE, OTHER THAN THE NEW ASSET, WITHIN A PERIOD OF THREE YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL AS SET; AND ( B ) THE INCOME FROM SUCH RESIDENTIAL HOUSE, OTHER THA N THE ONE RESIDENTIAL HOUSE OWNED ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET, IS CHAR GEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY .] EXPLANATION. FOR THE PURPOSES OF THIS SECTION, [***] [***] NET CONSIDERATION, IN RELATION TO THE TRAN SFER OF A CAPITAL ASSET, MEANS THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET AS REDUCED BY ANY EXPENDITURE INCURRE D WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER. (2) WHERE THE ASSESSEE PURCHASES, WITHIN THE PERIOD OF [TWO YEARS] AFTER THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET, OR CONSTRUCTS, WITH IN THE PERIOD OF THREE YEARS AFTER SUCH DATE, ANY RESIDENTIAL HOUSE, THE INCOME FROM WHICH IS CHARGEABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY, OTHER THAN THE NEW ASSET, THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDE R SECTION 45 ON THE BASIS OF THE COST OF SUCH NEW ASSET AS PROVIDED IN CLAUSE ( A ), OR, AS THE CASE MAY BE, CLAUSE ( B ), OF SUB-SECTION (1), SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS RELATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOUS YEAR IN WH ICH SUCH RESIDENTIAL HOUSE IS PURCHASED OR CONSTRUCTED. (3) WHERE THE NEW ASSET IS TRANSFERRED WITHIN A PER IOD OF THREE YEARS FROM THE DATE OF ITS PURCHASE OR, AS THE CASE MAY BE, ITS CONSTRUCTION, THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET NOT CHARGED UNDE R SECTION 45 ON THE BASIS OF THE COST OF SUCH NEW ASSET AS PROVIDED IN CLAUSE ( A ) OR, AS THE CASE MAY BE, CLAUSE ( B ), OF SUB-SECTION (1) SHALL BE DEEMED TO BE INCOME CHARGEABLE UNDER T HE HEAD CAPITAL GAINS RELATING TO LONG-TERM CAPITAL ASSETS OF THE PREVIOUS YEAR IN WH ICH SUCH NEW ASSET IS TRANSFERRED.] [(4) THE AMOUNT OF THE NET CONSIDERATION WHICH IS NOT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF THE NEW ASSET MADE WITHIN O NE YEAR BEFORE THE DATE ON WHICH THE TRANSFER OF THE ORIGINAL ASSET TOOK PLACE, OR WHICH IS NOT UTILISED BY HIM FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139 , SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURN [SUCH DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLICABLE IN THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTI ON (1) OF SECTION 139 ] IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN , AND UTILISED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVERNMENT MAY, BY NOTIFIC ATION IN THE OFFICIAL GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SUCH DEPOSIT ; AND, FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUNT, IF ANY, AL READY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL BE DEEMED TO BE THE COST OF THE NEW ASSET : PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SUB-SECTIO N IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB- SECTION (1), THEN, ( I ) THE AMOUNT BY WHICH ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 10 ( A ) THE AMOUNT OF CAPITAL GAIN ARISING FROM THE TRANS FER OF THE ORIGINAL ASSET NOT CHARGED UNDER SECTION 45 ON THE BASIS OF THE COST OF THE NEW ASSET AS PROVIDED IN CLAUSE ( A ) OR, AS THE CASE MAY BE, CLAUSE ( B ) OF SUB-SECTION (1), EXCEEDS ( B ) THE AMOUNT THAT WOULD NOT HAVE BEEN SO CHARGED HA D THE AMOUNT ACTUALLY UTILISED BY THE ASSESSEE FOR THE PURCHASE OR CONSTR UCTION OF THE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUB-SECTION (1) BEEN THE COST OF THE NEW ASSET, SHALL BE CHARGED UNDER SECTION 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF THE TRANSFER OF THE OR IGINAL ASSET EXPIRES ; AND ( II ) THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW THE UN UTILISED AMOUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. EXPLANATION. [ OMITTED BY THE FINANCE ACT, 1992, W.E.F. 1-4-1993. ]] 11. AFTER GOING THROUGH THE PROVISIONS OF SECTION 5 4 F OF THE ACT WE OBSERVE THAT BASIC INTENT OF THIS SECTION IS THAT I F AN ASSESSEE TRANSFERS ANY CAPITAL ASSET NOT BEING A RESIDENTIAL HOUSE THEN IF INVESTMENT IS MADE IN A RESIDENTIAL HOUSE SUBJECT T O FULFILLMENT OF CERTAIN CONDITIONS AS ENVISAGED IN SECTION 54F OF T HE ACT THEN DEDUCTION IS ALLOWABLE AS PER THE CALCULATION OF AM OUNT WITH RESPECT TO PROVISIONS OF SECTION 54F OF THE ACT FOR SUCH IN VESTMENT IN RESIDENTIAL HOUSE. NOW EXAMINING THE FACTS OF THE C ASE OF ASSESSEE WITH RESPECT TO THE PROVISIONS OF SECTION 54F OF TH E ACT IT SEEMS THAT ASSESSEE IS TRYING TO TAKE BENEFIT OF SECTION 54F O F THE ACT BY ONE WAY OR THE OTHER WITHOUT PLACING ON RECORD ANY SATI SFACTORY EVIDENCE TO PROVE THAT INVESTMENT HAS BEEN MADE IN RESIDENTI AL HOUSE AND IS ONLY BENDING TO AN AGREEMENT THAT TOO MADE ON THE L AST DAY OF THE ASST. YEAR WHICH HAS NOT ATTAINED FINALITY IN THE S UBSEQUENT PERIOD. WE FURTHER OBSERVE THAT LD. CIT(A) HAS EXAMINED THE ISSUE IN DETAIL BY OBSERVING AS UNDER :- ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 11 5. I HAVE CONSIDERED THE FACTS REPORTED IN THE ASSE SSMENT ORDER AND VARIOUS SUBMISSIONS FILED BY THE APPELLANT. IT IS SEEN THAT INITIALLY, BEFORE THE AO DURING ASSESSMENT PROCEEDINGS, APPELLANT CLAIMED T HAT HE HAS PURCHASED A RESIDENTIAL PROPERTY FROM HIS GRANDMOTHER AND BROTH ER FOR WHICH AGREEMENT COULD NOT BE MADE BECAUSE OF HIS FATHER'S DEATH BUT ALL THE PAYMENTS WERE MADE. AS AGAINST THIS, DURING APPEAL PROCEEDINGS, A PPELLANT CAME UP WITH A NEW STAND. NOW, IT IS CLAIMED THAT HIS GRANDMOTHER AND BROTHER HAVE CONSTRUCTED A GUESTHOUSE ON THE SAME PLOT OF LAND W HICH WAS SOLD BY APPELLANT AND OTHER CO-OWNERS. IT IS CLAIMED THAT HIS GRANDMO THER HAS INVESTED RS. 1,81,250/- AND HIS BROTHER HAS INVESTED RS. 1,25,00 0/- AND THESE AMOUNTS WERE CREDITED TO THEIR RESPECTIVE ACCOUNTS IN THE BOOKS OF APPELLANT BY PASSING JOURNAL ENTRY AS ON 31/03/2011. THUS, NOW IT IS CLA IMED THAT ACTUALLY NO RESIDENTIAL PROPERTY WAS PURCHASED BY THE APPELLANT WHICH WAS ELIGIBLE FOR CLAIMING EXEMPTION UNDER SECTION 54F BUT RS, 3,06,2 50/- ACTUALLY REPRESENTED COST OF CONSTRUCTION INVESTED BY HIS GRANDMOTHER AN D BROTHER WHICH WAS SUBSEQUENTLY REPAID BY THE APPELLANT AND THEREFORE APPELLANT HAS CLAIMED THESE EXPENSES OF RS. 3,06,250/- AGAINST THE CAPITAL GAIN EARNED ON THE SALE OF PLOT OF LAND. NO SUCH EXPLANATION WAS GIVEN BY THE APPELLAN T BEFORE THE AC AND IN FACT IT WAS CLAIMED THAT HE HAS ACTUALLY PURCHASED A NEW RESIDENTIAL PROPERTY FROM HIS GRANDMOTHER AND BROTHER. APPELLANT EVEN PRODUCE D AN AGREEMENT ON RS.100 STAMP PAPER. BEFORE THE AO, APPELLANT GAVE THE EXPLANATION FOR EXPLAINING HIS ELIGIBILITY FOR EXEMPTION UNDER SECTION 54F OF THE ACT. NOW, ONCE IT IS PROVED BY THE AO THAT APPELLANT HAS ACTUALLY NOT MADE ANY INVESTMENT IN NEW RESIDENTIAL PROPERTY, HE HAS COME UP WITH A NEW STO RY OF INVESTMENT BY HIS RELATIVES: APPELLANT HIMSELF HAS CLAIMED EXEMPTION UNDER SECTION 54F OF THE ACT WHICH IS ALLOWABLE ONLY IF PART OF SALE CONSIDE RATION IS INVESTED FOR PURCHASE OF NEW RESIDENTIAL PROPERTY. FROM THE FACT S OF THE CASE, IT IS CLEAR THAT APPELLANT HAS NOT INVESTED ANY PART OF THE SALE CON SIDERATION FOR PURCHASING NEW RESIDENTIAL HOUSE. STILL, IN ORDER TO ENSURE NATURA L JUSTICE, BY ORDER SHEET NOTING DATED 27/4/15, AR OF THE APPELLANT WAS DIRECTED TO FURNISH PROOF OF INVESTMENTS BY THE RELATIVES AND ALSO PROOF OF PAYMENT CF THE A MOUNTS TO THE RELATIVES BY THE APPELLANT. AFTER CONSIDERING DETAILS FILED BY THE A PPELLANT, IT IS SEEN THAT APPELLANT DID NOT MAKE ANY PAYMENT TO THE RELATIVES DURING THE RELEVANT PREVIOUS YEAR AND ONLY JOURNAL ENTRIES WERE PASSED CREDITING THEIR ACCOUNTS, THAT TOO ON THE LAST DAY OF THE ACCOUNTING YEAR I.E. 31/ 3/2011. NO DETAILS OF ANY PAYMENTS MADE BY HIS GRANDMOTHER OF BROTHER IN THE CONSTRUCTION OF THE GUESTHOUSE COULD BE SUBMITTED BY THE APPELLANT. APP ELLANT HAD FILED COPIES OF ACCOUNTS IN THIS REGARD BUT NO COPIES OF RETURNS OF INCOME NAVE BEEN FILED IN ORDER TO PROVE THAT SUCH ENTRIES WERE REFLECTED IN THEIR RESPECTIVE RETURNS. THEREFORE, APPELLANT HAS NOT BEEN ABLE TO PROVE BY SUBSTANTIATING EVIDENCES THAT CONSTRUCTION EXPENSES WERE ACTUALLY INCURRED BY HIS RELATIVES WHICH WERE ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 12 SUBSEQUENTLY REIMBURSED BY HIM. IN THE CASE OF HIS GRANDMOTHER, ONLY JOURNAL ENTRIES HAVE BEEN PASSED WITHOUT ANY ACTUAL PAYMENT THROUGH BANK. IN THE CASE OF HIS BROTHER, APPELLANT HAS CLAIMED THAT DURING T HE YEAR, JOURNAL ENTRY WAS PASSED CREDITING HIS ACCOUNT AND ENTIRE AMOUNT, ALO NG WITH UNSECURED LOAN TAKEN FROM HIM, WAS PAID ON 20/12/12 TOTALING TO RS . 908,450/-. APPELLANT HAS FILED COPY OF BANK ACCOUNT FROM WHICH IT IS SEEN TH AT ABOVE AMOUNT WAS PAID TO KHUSHIL ENTERPRISE, IT IS CLAIMED THAT HIS BROTHER MAHENDRA DILIP HIRANI IS PROPRIETOR OF KHUSHIL ENTERPRISE. APPELLANT HAS GIV EN A COPY OF BALANCE SHEET OF HIS BROTHER AS ON 31/3/2011, INTERESTINGLY, KHUS HIL ENTERPRISE HAS BEEN SHOWN AS SUNDRY CREDITORS OF RS. 4,64,131/- IN THIS BALANCE SHEET. THESE FACTS RAISE DOUBT ABOUT THE FACT THAT BROTHER OF THE APPE LLANT WAS PROPRIETOR OF KHUSHIL ENTERPRISE TO WHICH PAYMENT OF RS. 908.450/ - WAS MADE BY THE APPELLANT. 5,1 IN VIEW OF ALL THE ABOVE FACTS, VARIOUS CONTENT IONS RAISED BY THE APPELLANT IN THE SUBMISSIONS CANNOT BE ACCEPTED. THEREFORE, IT I S HELD THAT AO WAS JUSTIFIED IN DENYING EXEMPTION OF RS, 3,06,250/- CLAIMED BY T HE APPELLANT UNDER SECTION 54F OF THE ACT THE THEORY OF THE APPELLANT OF INVES TMENT BY RELATIVES AND SUBSEQUENT REIMBURSEMENT IS ALSO REJECTED. GROUND N UMBERS 1 TO 3 ARE HEREBY DISMISSED. 12. FROM GOING THROUGH THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LOWER AUTHORITIES AND THE OBSERVATIONS O F LD. CIT(A) WE FIND THAT AT THE TIME OF FILING REVISED RETURN OF INCOME ASSESSEE HAS CLAIMED DEDUCTION U/S 54F OF THE ACT FOR RS.3,06,25 0/- CLAIMING THE SAME AS INVESTMENT IN RESIDENTIAL HOUSE BUT WHEN TH E MATTER CAME UP BEFORE LD. CIT(A) THE FACTS RELATING TO THE IMPU GNED CLAIM OF RS.3,06,250/- WERE PUT FORTH BY THE ASSESSEE THROUG H WHICH IT WAS MADE CLEAR THAT RS.3,06,250/- WAS ACTUALLY THE COST OF IMPROVEMENT WHICH THE ASSESSEE WAS ENTITLED TO DEDUCTION FROM T HE SALE CONSIDERATION. THIS FACT GETS FURTHER PROVED WHEN W E LOOKED INTO THE INCOME-TAX RETURN OF OTHER CO-OWNERS WHO HAVE CLAIM ED DEDUCTION AS COST OF IMPROVEMENT INCURRED TOWARDS CONSTRUCTION O F THE IMMOVABLE PROPERTY WHICH HAS BEEN SOLD THEREAFTER. HOWEVER, A SSESSEE FAILED TO ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 13 CLAIM THE DEDUCTION OF RS.3,06,250/- AS COST ON IMP ROVEMENT RATHER IT WAS CLAIMED AS DEDUCTION U/S 54F OF THE ACT AT THE TIME OF FILING OF REVISED RETURN. IT WAS INCUMBENT ON THE ASSESSEE TH AT IF THE CLAIM OF DEDUCTION U/S 54F WAS NOT CORRECT THEN HE COULD HAV E REVISED THE RETURN BEFORE COMPLETION OF ASSESSMENT PROCEEDINGS TO PUT FORTH HIS CLAIM UNDER THE RIGHT PROVISIONS OF THE ACT WHICH H E FAILED. MORE SO EVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS AL SO, ASSESSEE SUBMITTED THAT THE DEDUCTION U/S 54F CLAIMED BY HIM WAS GENUINE AND, THEREFORE, HE EVEN PLACED ON RECORD COPY OF AG REEMENT DATED 31.3.2011 IN SUPPORT OF PURCHASE OF RESIDENCE FOR R S.3,06,250/-. 13. IN THESE CIRCUMSTANCES, WE ARE OF THE CONSIDERE D VIEW THAT ASSESSEE IS NOT ELIGIBLE FOR ANY DEDUCTION U/S 54F OF THE ACT AS THERE HAS BEEN NO INVESTMENT IN A RESIDENTIAL PROPERTY AN D ALSO THE CLAIM OF THE ASSESSEE FOR GETTING DEDUCTION OF RS.306,250/- INCURRED TOWARDS COST OF CONSTRUCTION, TO BE REDUCED FROM THE SALE C ONSIDERATION OF RS.7,50,000/- SHOWN, CANNOT BE ENTERTAINED AS IT WA S NOT CLAIMED IN THE RETURN OF INCOME AND CERTAINLY ONE CANNOT GET T HE BENEFIT OF RIGHTFUL CLAIM IF IT HAS NOT BEEN PUT FORTH IN THE RETURN OF INCOME AND IN THE GIVEN CASE ASSESSEE HAS CHANGED THE STORIES FOR GETTING DEDUCTION OF RS.3,06,250/- AND HAS MISERABLY FAILE D TO MAKE PROPER CLAIM AT THE RIGHT PLACE. ACCORDINGLY, THE GROUND R AISED BY THE ASSESSEE IS DISMISSED. 14. GROUND NO.2, 5 & 6 ARE GENERAL IN NATURE, HENCE NEED NO ADJUDICATION. ITA NO. 2096/AHD/2015 ASST. YEAR 2001-12 14 15. GROUND NO.3 IS CONSEQUENTIAL. 16. GROUND NO.4 IS PREMATURE, HENCE NEEDS NO ADJUDI CATION. ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD JUNE, 2016 SD/- SD/- (R. P. TOLANI) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 3/6/2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 31/05/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 2/6/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK:3 /6/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: