DCIT 20(2), MUMBAI V. PRABAL GANGULY, MUMBAI

ITA 3024/MUM/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2637 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C W ANGOLKAR
• Keywords: Unexplained investment; Capital asset; Gift
• Section: 69; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI SHAILENDRA KUMAR YADAV, JM AND SHRI RAMIT KOCHAR , AM ./ ITA NO. 3024/MUM/2014 ( / ASSESSMENT YEAR: 2009 - 10 ) D C I T - 20(2) /APPELLANT ANDHERI (W), MUMBAI 400053 612, PIRAMAL CHAMBERS LALBAUG, MUMBAI 40012 / VS. SHRI PRABAL GANGULY / RESPONDENT 3A, 1203/1204, GREEN ACRE LOKHANDWALA COMPLEX ./ PAN - ACWPG8432A / APPELLANT BY: SHRI C.W. ANGOLKAR / RESPONDENT BY : NONE / DATE OF HEARING : 26.10. 2015 / DATE OF PRONOUNCEMENT : 30 .10.2015 / O R D E R PER SHAILENDRA KUMAR YADAV, JM THIS APPEAL BY THE ASSESSEE FILED AGAINST THE ORDER OF THE CIT(A) ON FOLLOWING GROUNDS: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING THE DEDUCTION U/S.54 OF THE I.T. ACT, 1961 TOWARDS THE PURCHASE OF NEW PROPERTY OUT OF SALE PROCEED OF OLD PR OPERTY IN THE JOINT NAME WITH THE WIFE, IN WHICH WHILE NAME IN NEW PROPERTY AS THE FIRST JOINT HOLDER OF THE PROPERTY AND THE ASSESSEES 2 ITA NO. 3024/MUM/2014 SHRI PRABAL GANGULY NAME IS SECOND JOINT HOLDER AND ALSO IGNORING THE FACT THAT THE PROPERTY SOLD WAS SOLELY HELD BY THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE HOLDING PERCENTAGE OF THE ASSESSEE AND HIS WIFE IN THE PROPERTY ACQUIRED ARE NOT DEFINED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN IGNORING THE FACT THAT THE ACCOUNTING TREATMENT IN THE BOOKS OF ASSESSEE AND HIS WIFE ARE NOT PLACED ON RECORD. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING D EDUCTION U/S. 54 OF THE ACT TO THE ASSESSEE AT 100% IN THE ABSENCE OF SPECIFIC SHARE HELD BY THE ASSESSEE. THE ASSESSEE AT THE MOST WOULD HAVE BEEN ALLOWED DEDUCTION U/S. 54 A T 50%. 2. ASSESSING OFFICER IN THE ASSESSMENT ORDER OBSERVED AS UNDER: I. THE AO RECEIVED AIR INFORMATION WHICH INDICATED THE INVESTMENT OF RS.50 LAKHS IN THE PROPERTY BY THE APPELLANT. II. THE AO OBSERVED THAT THE ASSESSEE HAD NOT SHOWN ANY INVESTMENT IN THE RETURN OF INCOME, AND AS THERE WAS NO COMPLIANCE FROM THE ASSESSEE DURING TH E ASSESSMENT PROCEEDINGS, THE AO ADDED SUCH SUM OF RS.50 LAKHS AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT. 2.1 THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF OF THE ASSESSEE AND HAVING CONS IDERED THE SAME CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE. SAME HAS BEEN OPPOSED ON BEHALF OF REVENUE, INTER ALIA, SUBMITTING THAT CIT(A) ERRED IN ALLOWING DEDUCTION UNDER SECTION 54 OF THE ACT TOWARDS PURCHASE OF NEW PROPERTY OUT OF SALE PROCEED S OF OLD PROPERTY IN THE JOINT NAME WITH WIFE IN WHICH WIFE NAME IN NEW PROPERTY AS THE FIRST JOINT HOLDER OF THE PROPERTY AND THE ASSESSEES 3 ITA NO. 3024/MUM/2014 SHRI PRABAL GANGULY NAME IS SECOND JOINT HOLDER WHICH WAS NOT FOUND JUSTIFIED. IN VIEW OF THIS THE CIT(A) WAS NOT JUSTIFIED IN ALONG TH E APPEAL OF THE ASSESSEE. THEREFORE THE ORDER OF THE CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND THE LEARNED COUNSEL OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 2.2 AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND M ATERIAL ON RECORD WE FIND THAT DURING THE YEAR UNDER CONSIDERATION THERE WAS NO PURCHASE OF PROPERTY OF ` 50,00,000/ - BY ASSESSEE. ON THE CONTRARY THE SAME WAS SALE CONSIDERATION OF THE PROPERTY RECEIVED BY ASSESSEE IN HIS BANK ACCOUNT. IN FACT ASSESSEE, DU RING THE YEAR UNDER CONSIDERATION HAD PURCHASED PROPERTY AT GOA FOR WHICH ` 45,00,000/ - HAS BEEN PAID FROM BANK ACCOUNT. THIS PROPERTY AT GOA HAD BEEN PURCHASED IN THE JOINT NAME AND AGREEMENT IN RESPECT OF PURCHASE OF SAID PROPERTY AT GOA, THE NAME OF ASSE SSEES WIFE APPEARS FIRST AND ASSESSEES NAME AS CO - OWNER. ASSESSING OFFICER STATED THAT THE PROPERTY HAS BEEN PRIMARILY PURCHASED IN THE NAME OF ASSESSEES WIFE AND THIS WAS OBVIOUSLY THE MONEY GIFTED BY THE ASSESSEE TO HIS WIFE WHICH WAS USED FOR PURCHAS E OF PROPERTY. IN THIS REGARD THE STAND OF THE ASSESSEE HAS BEEN THAT IN EITHER OF THE SITUATIONS, IT HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER THAT SALE CONSIDERATION OF THE OLD PROPERTY RECEIVED BY THE ASSESSEE WAS USED FOR ACQUISITION OF NEW PROPER TY IN THE NAME OF ASSESSEES WIFE AND HIMSELF. AS LONG AS THE 4 ITA NO. 3024/MUM/2014 SHRI PRABAL GANGULY SALE PROCEEDS OF OLD PROPERTY HAS BEEN USED BY ASSESSEE FOR ACQUISITION OF ANOTHER HOUSE PROPERTY EITHER IN HIS NAME OF IN THE NAME OF WIFE OR IN THE JOINT NAME THE BENEFIT OF SECTION 54 TO THE ASSESSEE CANNOT BE DENIED. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF JENNIFER BHIDE (ITA NO. 169 OF 2011) HAS OBSERVED THAT SECTION 54 OF THE ACT ONLY PROVIDES THAT LONG TERM CAPITAL GAIN ARISING OUT OF THE LONG TERM CAPITAL ASSETS IS EXEMPT IF THE CONSIDERATION IS USED FOR PURCHASE OF RESIDENTIAL PROPERTY OR INVESTED IN SPECIFIED ASSETS OR DEPOSITS. IT WAS FURTHER OBSERVED THAT THERE IS NO STIPULATION IN THE SAID PROVISION THAT THE ASSESSEE SHALL NOT PURCHASE PROPERTY ALONG WITH ANOTHER CO - OWNER. AS LONG AS THE ASSESSEE HAS INVESTED THE LONG TERM CAPITAL GAINS IN THE PURCHASE OF ANOTHER RESIDENTIAL PROPERTY AND THE INTEREST IS PROPORTIONATE TO THE INVESTMENT MADE BY THE PERSON, EXEMPTION CANNOT BE DENIED. IT IS SEEN THAT IN THE ASSESSMENT ORDER ` 50,0 0,000/ - HAVE BEEN ADDED AS UNEXPLAINED INVESTMENT IN THE PROPERTY WHERE AS THERE IS NO SUCH INVESTMENT DURING THE YEAR. ACCORDINGLY THE ADDITION MADE BY ASSESSING OFFICER UNDER SECTION 54 OF ` 50,00,000/ - WAS FACTUALLY INCORRECT AND WHICH HAS BEEN ACCEPTED I N THE REMAND REPORT BY THE ASSESSING OFFICER. ACCORDINGLY THE ADDITION OF ` 50,00,000 UNDER SECTION 69 WAS NOT HELD JUSTIFIED. FURTHER, ASSESSING OFFICER WAS RIGHTLY DIRECTED TO MAKE THE ADDITION TO CONSEQUENTIAL CAPITAL GAIN 5 ITA NO. 3024/MUM/2014 SHRI PRABAL GANGULY AFTER ALONG DEDUCTION UNDER SEC TION 54 OF THE ACT. THIS REASONED FINDING OF THE CIT(A) DOES NOT REQUIRE ANY INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 3. IN THE RESULT, APPEAL FILED BY REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH OCTOBER, 2015. 30.10.2 015 SD/ - SD/ - ( RAMIT KOCHAR ) ( SHAILENDRA KUMAR YADAV ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI , DATED 30 TH OCTOBER, 2015 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) - 32 , MUMBAI 4. / THE CIT - 20 , MUMBAI 5. , , / DR, C BENCH ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER //TRUE COPY// /ASSTT. REGISTRAR) , /ITAT, MUMBAI