The ITO, Ward-6(1), Surat V. Shri Arjunbhai Dolat Desai,HUF, Surat

ITA 2799/AHD/2010

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5344 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 11-03-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 04-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C MATHEWS
• Assessee Lawyers: S B VAIDYA
• Keywords: Additional evidence; Reason to believe
• Section: 54B; 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIA L MEMBER INCOME TAX OFFICER WARD-6(1), SURAT ROOM NO. 614, 6 TH FLOOR, AAYAKAR BHAVAN, MAJURA GATE, SURAT (APPELLANT) VS SHRI ARJUNDBHAI DOLAT DESAI, (HUF) NANAVAT FALIA, MOTA VARACHHA, SURAT PAN: AABHA9165P (RESPONDENT) REVENUE BY: SRI K.C. MATHEWS, SR.D.R. ASSESSEE BY: SRI S.B. VAIDYA, A.R. DATE OF HEARING : 11-03-2014 DATE OF PRONOUNCEMENT : 13-03-20 14 / ORDER PER : N.S. SAINI, ACCOUNTANT MEMBER:- THIS IS A APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)- IV SURAT DATED 01-07-2010 BY TAKING THE FOLLOWING G ROUNDS OF APPEAL:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE DISALLOWANCES OF C LAIM OF EXEMPTION U/S. 54 B OF THE ACT OF RS. 66,72,750/- ITA NO. 2799/AHD/2010 ASSESSMENT YEAR 2007-08 I.T.A NO. 2799 /AHD/20 A.Y. 2007-08 PAGE NO ITO VS. ARJUNDBHAI DOLAT DESAI, (HUF) 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW , THE LD. CIT(A) HAS ERRED IN ACCEPTING THE ADDITIONAL EVIDEN CES FURNISHED DURING THE APPELLATE STAGE WITHOUT REMANDING THE SA ME TO AO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, AND IN LAW, THE LD. CIT(A), SURAT OUGHT TO HAVE UPHELD THE ORDE R OF THE ASSESSING OFFICER. 4. IT IS, THEREFORE, PRAYED THAT THE ORDER OF LD. C IT(A)-IV, SURAT MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED. 2. THE BRIEF FACTS OF CASE ARE THAT THE ASSESSEE SO LD NON-AGRICULTURAL PLOTS AT VILLAGE MOTA VARACHHA AND DERIVED NET SALE CONSI DERATION OF RS. 66,72,750/- AFTER EXEMPTION OF PROPORTIONATE NON-AG RICULTURAL EXPENSES OF RS. 3,84,100/- FROM THE TOTAL CONSIDERATION OF RS.7 0,56,850/-. THE ASSESSEE HAS INVESTED 38,69,000/- IN PLOT OF LAND AND RS. 28 ,10,000/- IN CAPITAL GAIN SCHEME, 1988. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE AO OBSERVED THAT THE ASSESSEE HAD SOLD THE LAND WHICH WAS CONVERTED INTO NON- AGRICULTURAL STATUS BEFORE THE SAME WAS SOLD AND AL SO PURCHASED THE NEW LAND IN ATHWA AREA SURAT CITY WHICH WAS FALLING IN TOWN PLANNING SCHEME ON WHICH NON-AGRICULTURAL ACTIVITIES COULD BE CARRIED OUT AND THE ASSESSEE HAD CLAIMED EXEMPTION U/S. 54B OF THE ACT AMOUNTING TO RS. 66,72,750/-. ON A QUERY FROM THE AO THE ASSESSEE CLARIFIED THAT IT WA S A TYPOGRAPHICAL ERROR IN MENTIONING SECTION 54B INSTEAD OF 54F AND THE CLAIM WAS MEANT TO BE U/S. 54F OF THE ACT FOR SELLING NON-AGRICULTURAL LAND SI TUATED WITHIN 10 KILOMETERS OF BOUNDARY OF SURAT CITY. THE AO DID NOT ACCEPT T HE CONTENTION AND CLARIFICATION OF THE ASSESSEE ON THE GROUND THAT TH E ASSESSEE HAD CLAIMED EXEMPTION U/S. 54B IN THE COMPUTATION AND ALSO IN T HE ASSESSMENT PROCEEDINGS. THE AO OBSERVED THAT WHEN THE FAULT WAS FOUND BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS WHICH LE D TO CHANGE IN THE CLAIM I.T.A NO. 2799 /AHD/20 A.Y. 2007-08 PAGE NO ITO VS. ARJUNDBHAI DOLAT DESAI, (HUF) 3 WHICH WAS NOTHING BUT AN AFTERTHOUGHT. THE AO STAT ED THAT THE ASSESSEE NEITHER SOLD NOR PURCHASED AGRICULTURAL LAND AND UN LESS THESE REQUIREMENTS ARE SATISFIED, THE ASSESSEE COULD NOT CLAIM THE BEN EFITS OF PROVISIONS OF SECTION 54B. THE ASSESSING OFFICER OBSERVED THAT A LTERNATIVELY IF THE ASSESSEES CONTENTION IS CONSIDERED REGARDING THE C LAIM OF SECTION 54F, IT WAS GATHERED IN INQUIRY MADE THROUGH AN INSPECTOR T HAT NO NEW HOUSE WAS CONSTRUCTED ON THE NEWLY PURCHASED LAND IN THE LAST 3 YEARS AND IF THE FIELD REPORT CONTRADICTED THE CLAIM OF THE ASSESSEE THAT CONSTRUCTION OF RESIDENTIAL HOUSE ON THE SAID LAND WAS COMPLETE AND THEREFORE T HE AO REJECTED THE CLAIM FOR EXEMPTION U/S. 54F ALSO TO THE ASSESSEE. 3. ON APPEAL, THE LD. CIT(A) ALLOWED THE CLAIM OF T HE ASSESSEE BY OBSERVING AS UNDER:- I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL A S THE CONTENTIONS OF THE AR. IT IS OBSERVED FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER MAINLY REJECTED THE CLAIM OF THE APPELLANT ON TWO GROUNDS VIZ. THAT THE APPELLANT INTENDED TO CLAIM EXEMPTION U/S. 54B BUT LATER ON DURING ASSESSMENT PROCEEDINGS, CLAIMED THE EXEMPTIO N U/S. 54F AND ACCORDING TO AO, THERE WAS NO TYPOGRAPHICAL MISTAKE BUT IT WAS AN AFTER THOUGHT CLAIM. THE OTHER GROUND OF REJECTING THE CLAIM WAS THE INQUIRY REPORT OF THE INSPECTOR WHO REPORTED THAT T HERE WAS NO CONSTRUCTION ON THE SITE. NOW COMING ON TO THE FIRS T ARGUMENT OF THE AO THAT THE CLAIM WAS MADE U/S. 54B AND NOT U/S . 54F, IT IS OBSERVED FROM THE ASSESSMENT ORDER ITSELF VIDE PARA 4.4 THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AR OF THE APPELLANT CLARIFIED THE TYPOGRAPHICAL ERROR IN MENTIONING SECTION 54B INSTE AD OF SECTION 54F. IT APPEARS THAT IT WAS A BONAFIDE TYPOGRAPHICAL ERR OR ON THE PART OF THE AR WHO FILED THE RETURN OF INCOME AND REPRESENT ED THE CASE BECAUSE THE EVIDENCES ON RECORD SUGGESTED THAT THE APPELLANT HAD OPENED A SPECIAL BANK ACCOUNT UNDER CAPITAL GAINS A CCOUNT SCHEME WITH STATE BANK OF INDIA, NANPURA, SURAT ON 23-07-2 007 BEFORE THE RETURN WAS FILED ON 31-07-2007 AND IT STARTED APPLY ING THE FUNDS FROM THE SAID BANK ACCOUNT FROM THE VERY NEXT MONTH FOR CONSTRUCTION ACTIVITIES. THE APPELLANT HAD ALSO PURCHASED A PLOT OF LAND DURING THE I.T.A NO. 2799 /AHD/20 A.Y. 2007-08 PAGE NO ITO VS. ARJUNDBHAI DOLAT DESAI, (HUF) 4 FINANCIAL YEAR RELEVANT TO ASSESSMENT UNDER APPEAL. THESE FACTS CLEARLY SHOWED THE INTENTION OF THE APPELLANT OF CO NSTRUCTING A RESIDENTIAL HOUSE OUT OF SALES PROCEEDS OF NON AGRI CULTURAL LAND SOLD BY IT. I ALSO FOUND FORCE IN THE ARGUMENT OF THE AR THAT IF THERE WAS ANY INTENTION OF CLAIMING EXEMPTION U/S, 54B OF THE ACT THEN THE APPELLANT WOULD NOT HAVE UTILIZED THE AMOUNT FROM T HE CAPITAL GAIN SCHEME ACCOUNT FOR THE PURPOSE OF CONSTRUCTION ACTI VITIES OF RESIDENTIAL HOUSE IMMEDIATELY AFTER OPENING THE SAI D ACCOUNT. THE DEVELOPMENT PERMISSION ISSUED BY THE SURAT MUNICIPA L CORPORATION SHOWS THAT THE SAME WAS ISSUED ON 21-07-2007 WHICH WAS BEFORE THE RETURN OF INCOME FILED BY THE APPELLANT. THEREFORE, 1 AM INCLINED TO BELIEVE THAT IT WAS A CLEAR CASE OF TYPOGRAPHICAL E RROR IN MENTIONING SECTION 54B INSTEAD OF SECTION 54F AS ALL CORROBORA TIVE EVIDENCES SUGGESTED THAT THE APPELLANT INTENDED TO CLAIM EXEM PTION U/S. 54F. MOREOVER THE APPELLANT'S AUTHORIZED REPRESENTATIVE HAD ALREADY CLARIFIED THE MISTAKE DURING THE COURSE OF ASSESSME NT PROCEEDINGS ITSELF AND THEREFORE, THE ASSESSING OFFICER WAS DUT Y BOUND TO ALLOW THE LEGITIMATE CLAIM OF THE APPELLANT WITHIN THE PROVIS IONS OF THE LAW. NOW COMING TO THE OTHER CONTENTION OF THE AO THAT T HE APPELLANT'S CLAIM EVEN UNDER SECTION 54F WAS NOT CO RRECT AS THE INSPECTORIAL INQUIRY SUGGESTED THAT NO HOUSE WAS CO NSTRUCTED ON THE SAID LAND. IT IS OBSERVED THAT THE SAID REPORT OF T HE INSPECTOR APPEARED TO BE CONTRARY TO THE FACTS OF THE CASE. THE ASSESS ING OFFICER DID NOT SEEK ANY CLARIFICATION ON THIS ISSUE DURING THE ASS ESSMENT PROCEEDINGS. ALL THE EVIDENCES PUT BEFORE ME WERE GOVERNMENT DOC UMENTS LIKE REGISTERED PURCHASE DEED OF LAND, DEVELOPMENT PERMI SSION AND BUILDING USE CERTIFICATE ISSUED BY THE SURAT MUNICI PAL CORPORATION WHERE THERE IS NO REASON OF RAISING ANY DOUBT AGAIN ST SUCH EVIDENCES. THE BUILDING USE CERTIFICATE SUGGESTED THAT THE PER MISSION FOR CONSTRUCTION WORK WAS SOUGHT ON 22-03-2007, THE PER MISSION WAS GRANTED ON 22-07-2007 AND THE SAME WAS COMPLETED ON 25-08-2008 AND THE SAID CERTIFICATE WAS ISSUED ON 27-10-2008. ALL THESE FACTS SUGGESTED THAT THE APPELLANT HAD COMPLETED THE RESI DENTIAL WORK OF RESIDENTIAL HOUSE WITHIN THE TIME LIMIT PRESCRIBED U/S. 54F OF THE ACT. A COPY OF PASS BOOK OF CAPITAL GAINS SCHEME ACCOUNT ALSO SHOWED THE APPLICATION OF THE ENTIRE DEPOSITED AMOUNT TOWA RDS CONSTRUCTION WORK AND THEREFORE, I HAVE NO REASON TO BELIEVE THE FACT OF INSPECTOR'S REPORT THAT THERE WAS NO EXISTENCE OF ANY CONSTRUCT ION OF A BUILDING ON THE PLOT OF LAND. THUS, ALL THE FACTS AND EVIDENCES CLEARLY PROVED THAT I.T.A NO. 2799 /AHD/20 A.Y. 2007-08 PAGE NO ITO VS. ARJUNDBHAI DOLAT DESAI, (HUF) 5 THE APPELLANT HAD LEGITIMATELY CLAIMED EXEMPTION U/ S. 54F OF THE ACT AND THEREFORE, THE ASSESSING OFFICER IS NOT JUSTIFI ED IN REJECTING THE CLAIM OF EXEMPTION OF RS. 66,72,750/-. 4. LD. DR SUBMITTED BEFORE US THAT THE REVENUE IN T HE APPEAL FILED BEFORE THE TRIBUNAL BY WAY OF GROUND NO. 2 AS RAISED A GRO UND OF APPEAL THAT THE LD. CIT(A) HAS ERRED IN ACCEPTING THE ADDITIONAL EVIDEN CES FURNISHED DURING THE APPELLATE STAGE WITHOUT REMANDING THE SAME TO THE A O. HE POINTED OUT FROM THE ORDER OF LD. CIT(A) THAT THE ADDITIONAL EVIDENC ES FILED BY THE ASSESSEE WERE REGISTERED PURCHASE DEED OF LAND, DEVELOPMENT PERMISSION AND BUILDING USE PERMISSION CERTIFICATE ISSUED BY THE SURAT MUNI CIPAL CORPORATION IT WAS THEREFORE HIS PRAYER THAT THE MATTER SHOULD BE REST ORED BACK TO THE FILE OF AO FOR ADJUDICATION OF THE ISSUE AFRESH AFTER CONSIDER ING THE ADDITIONAL EVIDENCES WHICH WERE FILED BEFORE THE LD. CIT(A) FOR THE FIRS T TIME. 5. ON THE OTHER HAND THE LD. AR OF THE ASSESSEE SUB MITTED THAT COPY OF INSPECTORS REPORT WAS NEVER GIVEN TO THE ASSESSEE. HE ALSO ARGUED THAT EVEN OTHERWISE ASSESSEE IS ELIGIBLE FOR CLAIM U/S. 54F B ECAUSE THE ASSESSEE INVESTED THE SALE CONSIDERATION OF RS. 38,69,000/- IN PURCHASE OF ANOTHER PLOT OF LAND AND RS. 28,10,000/- IN CAPITAL GAIN ACCOUNT SCHEME 1998. HE HOWEVER AGREED THAT HE HAS NO OBJECTION IF THE SUBM ISSION OF THE LD. DR ARE ACCEPTED BY THE TRIBUNAL AND THE MATTER IS RESTORED BACK TO THE FILE OF AO FOR ADJUDICATION OF THE ISSUE AFRESH AFTER CONSIDERING ALL THE EVIDENCES WHICH THE ASSESSEE MAY FILE AT THE TIME OF SET ASIDE PROCEEDI NGS BEFORE THE AO. I.T.A NO. 2799 /AHD/20 A.Y. 2007-08 PAGE NO ITO VS. ARJUNDBHAI DOLAT DESAI, (HUF) 6 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE MATERIAL ON RECORD AS BOTH THE PARTIES HAVE AGREED THAT THE ISS UE SHOULD BE RESTORED BACK TO THE FILE OF AO FOR ADJUDICATION OF THE ISSUE AFR ESH AFTER EXAMINING ALL THE EVIDENCES IN CONNECTION WITH THE CLAIM OF THE DEDUC TION U/S. 54F TO THE ASSESSEE, WE SET ASIDE THE ORDERS OF LOWER AUTHORIT IES AND REMAND THE MATTER BACK TO THE FILE OF AO TO ADJUDICATE THE ISSUE AFRE SH AFTER EXAMINING ALL THE EVIDENCES IN CONNECTION WITH THE CLAIM OF THE ASSES SEE FOR DEDUCTION U/S. 54F OF THE ACT. NEEDLESS TO MENTION HE SHALL ALLOW REA SONABLE AND PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE ADJUD ICATING THE ISSUE AFRESH AS PER LAW. THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (KUL BHARAT) ( N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 13/03/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,