Assistant Commissioner of Income-tax, Circle - 6, Pune V. Ghanshyam M Kachi, Pune

ITA 2127/PUN/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5119 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2022
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 10-09-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 143(3); 54F; 54EC; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.2127/PUN/2017 िनधाᭅरण वषᭅ / Assessment Year: 2014-15 ACIT, Circle- 6, Pune. Vs. Ghanshyam M. Kachi, 1101, Raviwar Peth, Pune-411002. PAN : AQWPK4253H Appellant Respondent C.O. No.11/PUN/2021 (Arising out of ITA No.2127/PUN/2017) िनधाᭅरण वषᭅ / Assessment Year: 2014-15 Ghanshyam M. Kachi, 1101, Raviwar Peth, Pune-411002. PAN : AQWPK4253H Vs. ACIT, Circle- 6, Pune. Appellant Respondent आदेश / ORDER PER INTURI RAMA RAO, AM: The appeal filed by the Revenue is directed against the order of ld. Commissioner of Income Tax (Appeals)- 4, Pune [‘CIT(A)’ for short] dated 25.05.2017 for the assessment year 2014-15. The Cross Objection filed by the assessee against the appeal of the Revenue. Revenue by : Shri Piyushkumar Singh Yadav Assessee by : None Date of hearing : 11.03.2022 Date of pronouncement : 06.04.2022 ITA No.2127/PUN/2017 C.O. No.11/PUN/2021 2 ITA No.2127/PUN/2017 – By Revenue : 2. First, we shall take up the Revenue’s appeal in ITA No.2127/PUN/2017 for the assessment year 2014-15 for adjudication. 3. The Revenue raised the following grounds of appeal :- “1. On the facts and in the circumstances of the case the Ld CIT(A) has erred in allowing Rs. 17,00,000/- being amount of commission paid by the assessee which were not supported by evidence and confirmation. 2. On the facts and in the circumstances of the case the Ld CIT(A) has erred in deleting the addition of Rs. 35,40,600/- made by the Assessing officer on account of Indexed Cost of Improvement which was not proved by genuine evidence or bills. 3. On the facts and in the circumstances of the case the Ld CIT(A) has erred in deleting the addition of Rs. 2,94,79,600/- made by the Assessing officer on account of disallowance of claim u/s 54F of the Act though the appellant did not qualify for conditions laid down there under. 4. On the facts and in the circumstances of the case the Ld CIT(A) has erred in deleting the addition of Rs. 50,00,000/- made by the Assessing Officer on account of disallowance of deduction u/s 54EC of the Act, though the proviso under specify the upper limit of 50 lakh. 5. For these and such other grounds as may be urged at the time of hearing, the order of the Ld. CIT(A) may be vacated and that of the Assessing Officer be restored. 6. The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon’ble Tribunal.” 4. Briefly, the facts of the case are as under : The assessee is an individual. The return of income for the assessment year 2014-15 was filed on 31.07.2014 declaring total income of Rs.10,64,14,400/-. Against the said return of income, the ITA No.2127/PUN/2017 C.O. No.11/PUN/2021 3 assessment was completed by the Dy. Commissioner of Income Tax, Circle-6, Pune (‘the Assessing Officer’) vide order dated 29.08.2016 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at total income of Rs.14,11,34,600/-. While doing so, the Assessing Officer made several disallowances. The brief background of the disallowances is as under :- During the previous year relevant to the assessment year under consideration, the assessee had sold immovable property being land admeasuring 2 acres situated at S.No.59/1/3 to one Mr. Valiullah Rahmen Shariff for a consideration of Rs.14,64,48,000/- which was received in the form of Rs.10 crores by cheque and 26000 sq.fts. built-up constructed area. While computing the capital gains, the assessee claimed (i) commission expenses of Rs.17,00,000/- as cost of sale, (ii) indexed cost of improvement of Rs.35,40,600/-, (iii) deduction u/s 54F of Rs.2,94,79,600/- and (iv) deduction u/s 54EC of Rs.50,00,000/-. While completing the assessment, the Assessing Officer disallowed the commission expenses of Rs.17,00,000/- for want of confirmations from the person to whom the commission payment was stated to have been made. Similarly, in respect of indexed cost of improvement of Rs.35,40,600/-, the Assessing Officer had disallowed the same for want of proof, as the assessee ITA No.2127/PUN/2017 C.O. No.11/PUN/2021 4 produced Xerox copy of the bills which are self-made and no proof of payment and source of payment was filed. As regards to the claim for deduction u/s 54F amounting to Rs.2,94,79,600/-, the Assessing Officer had denied the benefit on the ground that there is no agreement to purchase the property as well as the housing project had not commenced. As regards to the claim for exemption u/s 54EC amounting to Rs.50,00,000/-, the Assessing Officer disallowed the claim for exemption u/s 54EC in respect of second instalment of Rs.50,00,000/- made on 27.08.2014 by holding that the assessee is entitled for deduction u/s 54EC only to the extent of Rs.50,00,000/-. 5. Being aggrieved by the above order of assessment, an appeal was filed before the ld. CIT(A), who vide impugned order deleted all the disallowances. 6. Being aggrieved by the above decision of the ld. CIT(A), the Revenue is in appeal before us. 7. None appeared on behalf of the assessee despite due service of notice of hearing on several occasions. Even on earlier occasion, the notice of hearing was served through RPAD, but none appeared on behalf of the assessee. Therefore, since the appeal is a very old, ITA No.2127/PUN/2017 C.O. No.11/PUN/2021 5 we proceed to dispose of the same, in the absence of the assessee, on merits of case. 8. Ground of appeal no.1 challenges the decision of the ld. CIT(A) deleting the disallowance of commissions of Rs.17,00,000/- claimed as deduction while computing the cost of sales of land. The Assessing Officer disallowed the same for want of details and confirmations of the payments. However, before the ld. CIT(A) the assessee submitted that the expenses being share of stamp duty expenses as borne by the assessee which came to be accepted by the ld. CIT(A) without examining any evidence etc. The ld. CIT(A) also failed to give reasons as to how share of stamp duty expenses are allowable while computing the capital gains. In these circumstances, we reverse the findings of the ld. CIT(A) on this issue and restore the addition of Rs.17,00,000/- made by the Assessing Officer. Thus, the ground of appeal no.1 filed by the Revenue stands allowed. 9. Ground of appeal no.2 challenges the decision of the ld. CIT(A) allowing the indexed cost of improvement of Rs.35,40,600/- while computing the capital gains. The Assessing Officer disallowed the same on the ground that only Xerox copy of self- made vouchers of the expenditure and no proof of payment and ITA No.2127/PUN/2017 C.O. No.11/PUN/2021 6 source of payment was filed before the Assessing Officer. However, the ld. CIT(A) deleted the addition by holding that the addition was made by Assessing Officer merely on the suspicions, doubts and surmises without bringing any concrete evidence while rejecting the explanation of the assessee. The findings of the ld. CIT(A) cannot be upheld for the reasons that onus always lies upon the assessee who sought the deduction of expenses to prove the genuineness of the expenditure claimed towards indexed cost of improvement. Admittedly, the assessee has failed to prove the genuineness of the expenditure and, therefore, ld. CIT(A) is not justified in allowing the indexed cost of improvement made to the asset sold. Thus, the findings of the ld. CIT(A) are reversed. Therefore, we do not find any merit in the findings of the ld. CIT(A) and, accordingly, the ground of appeal no.2 filed by the Revenue stands allowed. 10. As regard to the allowing of exemption u/s 54F, we do not find any merit in the findings of the ld. CIT(A) allowing the benefit of exemption u/s 54F of the Act. Accordingly, the ground of appeal no.3 filed by the Revenue is allowed. 11. As regard to the deduction u/s 54EC, the issue is covered by the Hon’ble Madras High Court in the case of CIT vs. Coromandal ITA No.2127/PUN/2017 C.O. No.11/PUN/2021 7 Industries Limited in Tax Case Appeal No.443 of 2014 dated 16.12.2014, wherein, the Hon’ble Madras High Court has held as under :- “7. On a plain reading of the above said provision, we are of the view that Section 54EC(1) of the Act restricts the time limit for the period of investment after the property has been sold to six months. There is no cap on the investment to be made in bonds. The first proviso to Section 54EC(1) of the Act specifies the quantum of investment and it states that the investment so made on or after 1.4.2007 in the long-term specified asset by an assessee during any financial year does not exceed fifty lakh rupees. In other words, as per the mandate of Section 54EC(1) of the Act, the time limit for investment is six months and the benefit that flows from the first proviso is that if the assessee makes the investment of Rs.50,00,000/- in any financial year, it would have the benefit of Section 54EC(1) of the Act. 8. The legislature noticing the ambiguity in the above said provision, by Finance (No.2) Act, 2014, with effect from 1.4.2015, inserted after the existing proviso to sub-section (1) of Section 54EC of the Act, a second proviso, which reads as under: Provided further that the investment made by an assessee in the long- term specified asset, from capital gains arising from transfer of one or more original assets, during the financial year in which the original asset or assets are transferred and in the subsequent financial year does not exceed fifty lakh rupees. ......... 10. The legislature has chosen to remove the ambiguity in the proviso to Section 54EC(1) of the Act by inserting a second proviso with effect from 1.4.2015. The memorandum explaining the provisions in the Finance (No.2) Bill, 2014 also states that the same will be applicable from 1.4.2015 in relation to assessment year 2015-16 and the subsequent years. The intention of the legislature probably appears to be that this amendment should be for the assessment year 2015-2016 to avoid unwanted litigations of the previous years. Even otherwise, we do not wish to read anything more into the first proviso to Section 54EC(1) of the Act, as it stood in relation to the assessees. 11. In any event, from a reading of Section 54EC(1) and the first proviso, it is clear that the time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied. It would have made a difference, if the restriction on the investment in bonds to Rs.50,00,000/- is incorporated in Section 54EC(1) of the Act ITA No.2127/PUN/2017 C.O. No.11/PUN/2021 8 itself. However, the ambiguity has been removed by the legislature with effect from 1.4.2015 in relation to the assessment year 2015-16 and the subsequent years. For the foregoing reasons, we find no infirmity in the orders passed by the Tribunal warranting interference by this Court. The substantial questions of law are answered against the Revenue and these appeals are dismissed. (emphasis supplied)” 12. Thus, in the light of the decision of the Hon’ble Madras High Court (supra), we do not find any reason to interfere with the order of the ld. CIT(A). Accordingly, this ground of appeal no.4 filed by the Revenue stands dismissed. 13. Ground of appeal no.5 and 6 general in nature are dismissed. 14. In the result, the appeal of the Revenue in ITA No.2127/PUN/2017 sands partly allowed. C.O. No.11/PUN/2011 – By Assessee : 15. The cross objection filed by the assessee with a delay of 22 months. The assessee has filed an affidavit seeking the condonation of delay in filing the cross objection. On careful perusal of the affidavit, we find no cogent reasons have been given as to how the delay had occurred in filing the present cross objection. Hence, we do not find any sufficient/reasonable reason to condone the delay. In the circumstances, the cross objection filed by the assessee stands dismissed. ITA No.2127/PUN/2017 C.O. No.11/PUN/2021 9 16. In the result, the Cross Objection filed by the assessee in C.O. No.11/PUN/2021 stands dismissed. 17. Resultantly, the appeal filed by the Revenue stands partly allowed and the Cross Objection filed by the assessee stands dismissed. Order pronounced on this 06 th day of April, 2022. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 06 th April, 2022. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-4, Pune. 4. The Pr. CIT-3, Pune. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.