Daya Ram Mittal, New Delhi V. JCIT, New Delhi

ITA 3054/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74193 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 31-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 18-06-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PARWINDER KAUR
• Assessee Lawyers: AMIT GOEL
• Keywords: Capital asset; Bonafide belief; Period of limitation; Time period of passing order; Condonation of delay; Bonafide mistake; Ignorance of law
• Section: 143(3); 54B; 54F; 54; 37; 12; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEM BER AND SHRI C. M. GARG, JUDICIAL MEMBER I.T.A .NO.-3054/DEL/2012 ASSESSMENT YEAR-2006-07 DAYA RAM MITTAL HOUSE NO. 77, BLOCK H, 4/5 SUVIDHA KUNJ, PITAMPURA NEW DELHI AAJPM1549F (APPELLANT) VS JCIT RANGE-25 NEW DELHI (RESPONDENT) APPELLANT BY SH. AMIT GOEL, CA. RESPONDENT BY SMT. PARWINDER KAUR, SR. DR ORDER PER C. M. GARG, JM THIS APPEAL BY THE ASSESSEE HAS BEEN DIRECTED AGAI NST THE ORDER OF THE LD. CIT(A)-XXIV, NEW DELHI, DATED 6/10/2010 IN APPEAL N O. 364/2008-09 FOR A.Y 2006-07. 2. THE SOLE GROUND RAISED BY THE ASSESSEE READS AS UNDER:- DATE OF HEARING 09.09.2015 DATE OF PRONOUNCEMENT 06 .11.2015 I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 2 1. ON THE FACTS AND CIRCUMSTANCES OF CASE AND IN L AW, THE COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN CONFIR MING THE ACTION OF ASSESSING OFFICER OF DISALLOWING THE CLAI M OF DEDUCTION OF RS.26,84,000/- U/S 54B OF INCOME TAX ACT, 1961. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMI SSIONER OF INCOME TAX SHOULD HAVE ALLOWED THE CLAIM OF EXEMPTION/DEDUCTION OF RS.26,84,000/- U/S 54B OF IN COME TAX ACT, 1961. APPLICATION OF THE ASSESSEE/APPELLANT FOR CONDONATI ON OF DELAY. 3. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDON ATION OF DELAY OF 533 DAYS BY STATING AS UNDER:- 3. THAT THE DOCUMENTS RELATING TO FILLING THE APP EAL WERE GIVEN TO THE COUNSEL WHO HAD EARLIER APPEARED BEFORE CIT (A) ON MY BEHALF. I WAS UNDER A BONAFIDE BELIEF THAT THE APPE AL HAS BEEN FILED BY THE COUNSEL. HOWEVER, SUBSEQUENTLY, IN AND AROUN D MARCH, 2012, I RECEIVED THE PENALTY ORDER U/S 271(1) (C). AT THAT TIME, I GOT THE KNOWLEDGE THAT THE QUANTUM APPEAL HAS NOT B EEN FILED BY THE EARLIER COUNSEL. THEREAFTER, I COLLECTED MY REC ORDS FROM THE OLD COUNSEL AND ENGAGED NEW COUNSEL AND CONSEQUENTLY TH E APPEAL BEFORE HONBLE INCOME TAX APPELLATE TRIBUNAL WAS FI LED. 4. THE ASSESSEE HAS ALSO FILED AN AFFIDAVIT OF SH. N. K. BANSAL, THE C.A WHO WAS NOTING AFTER THE CASE BEFORE THE LD. CIT(A) ALO NG HIM SH. HIMANSHU GOEL, CA, STATING AS UNDER:- I, NARESH KUMAR BANSAL S/O SH. MANI RAM BANSAL R/O D-503, WEMBLEY E STATE, ROSEWOOD CITY, SECTOR-49, G URGOAN, HARYANA, CA BY PROFESSION DO HEREBY SOLEMNLY DECLAR E AND AFFIRM AS UNDER:- I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 3 1. THAT I HAVE BEEN LOOKING AFTER THE INCOME TAX MATT ERS OF SH. DAYA RAM MITTAL S/O SH. BISHAMBER DAYAL MITTAL R/O HOUSE NO.77, BLOCK H- 4/5, SUVIDHA KUNJ PITAMPURA, NEW DE LHI. 2. THAT FOR THE A.Y. 2006-07, 1 HAD BEEN LOOKING AFTE R THE INCOME TAX ASSESSMENT AND APPEAL MATTER BEFORE CIT( A) ALONG- WITH C.A. HIMANSHU GOEL. THAT AFTER THE CIT(A) ORDE R, DUE TO INADVERTENCE, BONAFIDE OMISSION AND COMMUNICATION G AP, THE FURTHER APPEAL TO ITAT COULD NOT BE FILED. 5. THE LD. ASSESSEES REPRESENTATIVE (AR) SUBMITTED THAT THE ASSESSEE HAS ALSO FILED HIS AFFIDAVIT STATING THAT HE HAD GIVEN ALL T HE NECESSARY PAPERS FOR FILING APPEAL BEFORE TRIBUNAL AND HE WAS UNDER BONAFIDE BELIEF TH AT APPEAL HAS BEEN FILED. HE FURTHER STATED THAT SUBSEQUENTLY AROUND MARCH 2012 HE RECEIVED PENALTY ORDER U/S 271 (1) (C) OF THE ACT, THEN HE CAME TO KNOW THAT THE APPEAL AGAINST QUANTUM ORDER OF THE LD. CIT(A) HAS NOT BEEN FILED BEFORE LD. CIT (A). THEREAFTER, HE COLLECTED HIS RECORDS FROM HIS OLD COUNSEL AND ENGAGED NEW CO UNSEL AND CONSEQUENTLY THE APPEAL BEFORE ITAT WAS FILED BY 533 DAYS DELAY. TH E LD. A.R SUBMITTED THAT IN VIEW OF THE PROPOSITION LAID DOWN BY ITAT, MUMBAI I N THE ORDER DATED 7/1/2011 IN IT(SS) NO. 24/MUM/2009 FOR A.Y 2002-03 AND OTHER RE LATED APPEAL IN THE CASE OF M/S GREGORY & NICHOLAS VS ACIT, THE DELAY IN FILING APPEAL MAY BE CONDONED. 6. ON THE OTHER HAND, THE LD. DR PLACING RELIANCE O N THE ORDER OF THE ITAT A BENCH IN THE CASE OF DCIT V/S M/S BRIJWASI IMPEX PV T. LTD. IN ITA NO. 361/DEL/2011 DATED 3/9/2014 AND SUBMITTED THAT THE ASSESSEE CANNOT TAKE SHELTER OF I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 4 IGNORANCE OF LAW OR FAILURE TO SEEK LEGAL ADVICE AN D THESE ARE NOT SUFFICIENT AND GOOD CAUSES FOR CONDONATION OF DELAY. THE LD. DR S TRONGLY OPPOSED THE PRAYER OF THE ASSESSEE FOR CONDONATION OF DELAY. 7. THE LD. AR ALSO PLACED REJOINDER TO ABOVE CONTEN TIONS OF THE LD. DR AND SUBMITTED THAT AS PER RATIO OF THE HONBLE APEX COURT IN THE CASE OF COLLECTOR V/S MST. KATIJI & ORS 1987 AIR 1353 (SUPREME COURT) , THE LEGISLATURE HAS CONFERRED POWERS OF CONDONATION OF DELAY TO ENABLE THE COURT TO DO SUBSTANTIAL JUSTICE TO PARTIES BY DISPOSING MATTER ON MERITS AN D TO ENSURE THAT THE CASES HAVING MERITS MAY NOT BE DISMISSED AT THE THRESHOLD MERELY BECAUSE THE APPEAL HAS BEEN FILED BEYOND PRESCRIBED TIME LIMIT BECAUSE OF NON-D ELIBERATE DELAY. THE LD. AR VEHEMENTLY CONTENDED THAT IN THE CASE OF BRIJMASI I MPEX (SUPRA), THE CAUSE WAS SHOWN AS THE EARLIER COUNSEL DID NOT PROPERLY GUID E BUT NO AFFIDAVIT WAS FILED EITHER BY THE ASSESSEE OR BY THE EARLIER COUNSEL BU T IN THE PRESENT CASE, THE ASSESSEE AND HIS EARLIER COUNSEL HAS FILED THEIR RESPECTIVE AFFIDAVITS SUPPORTING THIS FACT THAT THE ASSESSEE HAS GIVEN ALL THE NECESSARY PAPERS FOR FILING APPEAL BEFORE THE TRIBUNAL AND HE WAS UNDER BONAFIDE BELIEF THAT APPEAL HAS BE EN FILED AND THIS FACT CAME TO HIS NOTICE WHEN (THE ASSESSEE) RECEIVED PENALTY ORD ER U/S 271 (1) (C) OF THE ACT. 8. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT THE PRAYER FOR CONDONATION OF DELA Y FALLS WITH THE AMBIT OF THE RATIO I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 5 OF THE ORDER OF THE TRIBUNAL IN THE CASE OF GREGORY & NICHOLAS V/S ACIT (SUPRA) WHERE IN PARA 8, REFERRING TO THE ORDER OF THE ITAT MUMBAI IN THE CASE OF PRIYANKA CHOPRA VS ACIT IN ITA NO. 4045/MUM/2009 DATED 10/12 /2010, IT HAS BEEN NOTED THAT THE MISTAKE ON THE PART OF THE COUNSEL MAY IN CERTAIN CIRCUMSTANCES BE TAKEN INTO ACCOUNT IN DEALING IN DELAY. 9. IN THE PRESENT CASE, THE ASSESSEE AS WELL AS HI S EARLIER COUNSEL HAVE FILED THEIR AFFIDAVITS SUPPORTING THE SUFFICIENT CAUSE AN D NO REBUTTAL HAVE BEEN FILED AGAINST THESE AFFIDAVITS, HENCE, FIRSTLY WE NOTE TH AT THERE IS NO GENERAL PROPOSITION THAT MISTAKE OF COUNSEL ITSELF IS ALWAYS A SUFFICIE NT CAUSE. THIS QUESTION WHEN POSED TO THE COURTS IS ALWAYS A QUESTION WHETHER TH E EXPLANATION AND REASON FOR DELAY WAS BONAFIDE OR WAS A MERE DEVICE TO COVER AN ULTERIOR PURPOSE SUCH AS WILLFUL OMISSION OR BONAFIDE MISTAKE OR DELIBERATE NEGLIGENCE OR AN ATTEMPT TO FLOUT STATUTORY PROVISIONS OF LIMITATION IN AN UNDE RHAND WAY. AT THE SAME TIME, WE CANNOT IGNORE THAT THE ASSESSEE HAS TO BELIEVE AND REPOSE FAITH IN THEIR COUNSEL HAVING SATISFIED HIS PROFESSIONAL REQUIREMENTS AND GIVEN NECESSARY PAPERS AND DOCUMENTS ALONG WITH REQUISITE INSTRUCTIONS TO HIS COUNSEL. THEREAFTER, THE LITIGANT MAY BE JUSTIFIED IN BELIEVING THAT HIS COUNSEL WOUL D DISCHARGE HIS PROFESSIONAL FUNCTIONS AND OBLIGATIONS AS PER HIS (ASSESSEES) I NSTRUCTIONS. IN THESE CASES, WHERE IT IS BROUGHT ON RECORD THAT THE PARTY HAS DONE EVE RYTHING WITHIN HIS POWERS, CAPACITY AND ABILITY WHICH IS NECESSARY FOR INITIAT ION OF LEGAL PROCEEDINGS OR APPEAL I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 6 BEFORE HIGHER FORUM, THE COURTS SHOULD BE LIBERAL I N CONSIDERING THE SUFFICIENCY OF THE CAUSE SHOWN BY THE ASSESSEE IN SUPPORT OF HIS P RAYER FOR CONDONATION OF DELAY AND SHOULD BE IN FAVOUR OF THE ASSESSEE. 10. IN VIEW OF ABOVE WELL SETTLED PROPOSITION WHEN WE ANALYZE THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE NOTE THAT TH E ASSESSEE AND HIS EARLIER COUNSEL HAS DEPOSED ON AFFIDAVIT, WHICH REMAINED UNREBUTTED BY THE REVENUE, BY COLLECTIVELY STATING THAT THE ASSESSEE HANDED OVER ALL NECESSARY PAPERS/DOCUMENTS WHICH WERE REQUIRED FOR FILING AN APPEAL BEFORE THI S TRIBUNAL AND SUBSEQUENTLY WHEN THE ASSESSEE RECEIVED PENALTY ORDER, HE CAME T O KNOW THAT THE COUNSEL HAS NOT FILED APPEAL AS PER HIS INSTRUCTIONS. THE COUNSEL OF THE ASSESSEE HAS ALSO SUPPORTED THIS EXPLANATION IN HIS UNREBUTTED AFFIDAVIT BY STA TING THAT DUE TO INADVERTENCE, BONAFIDE OMISSION AND COMMUNICATION GAP, FURTHER AP PEAL TO ITAT COULD NOT BE FILED. IN THIS SITUATION, IT CAN BE SAFELY INFERRE D THAT THE ASSESSEE MADE ALL NECESSARY EFFORTS TO FILE APPEAL WITHIN THE PRESCRIBED TIME B UT THE SAME COULD NOT BE FILED DUE TO BONAFIDE OMISSION AND INADVERTENT MISTAKE OF HIS COUNSEL AND IT WOULD NOT BE JUSTIFIED TO DISMISS THE APPEAL OF THE ASSESSEE IN LIMINE MERELY BECAUSE THERE WAS DELAY IN FILING APPEAL DUE TO MISTAKE OF HIS COUNSE L. HENCE, WE REACH TO A FORTIFIED CONCLUSION THAT THE ASSESSEE HAS SUCCEEDED IN ESTAB LISHING A BONAFIDE SUFFICIENT CAUSE WHICH CAUSED DELAY IN FILING APPEAL BEFORE TR IBUNAL WITHIN THE PRESCRIBED I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 7 LIMITATION PERIOD AND THUS WE CONDONE THE SAID DELA Y AND APPEAL OF THE ASSESSEE IS ADMITTED FOR HEARING ON MERITS. SOLE GROUND NO. 1 OF THE ASSESSEE 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US. LD. AR REITER ATED WRITTEN SUBMISSIONS OF THE ASSESSEE SPREAD OVER 10 PAGES WHICH ARE BEING REPRO DUCED BELOW FOR THE SAKE OF COMPLETENESS IN THIS ORDER AS FOLLOWS:- THE ASSESSEE FILED THE RETURN OF INCOME ON 30.03 .2007 DECLARING INCOME OF RS. 10939490/-. THE ASSESSMENT U/S 143(3) HAS BEEN COMPLETED AT IN COME OF RS. 13623490/-. WHILE COMPLETING THE ASSESSMENT THE ASS ESSING OFFICER WITHDRAWN DEDUCTION U/S 54B AMOUNTING TO RS .2648000/. 2. THE FACTS OF THE CASE ARE THAT DURING THE YEAR T HE APPELLANT SOLD ITS AGRICULTURAL LANDS ON 27.12.2005 FOR A CON SIDERATION OF RS. 12375000/-. AFTER EXCLUDING THE COST OF ACQUISI TION, EXPENSES ON TRANSFER, THE SALES RESULTED INTO NET C APITAL GAIN OF RS.11669958/- (AFTER INDEXATION). OUT OF THE SALES PROCEEDS THE APPELLANT INVESTED A SUM OF RS.2684000/- FOR PURCHA SE OF ANOTHER AGRICULTURAL LAND FROM SHRI DWARKADHISH TRU ST (A PUBLIC TRUST REGISTERED UNDER THE INDIAN TRUST ACT 1882) VIDE AN AGREEMENT TO SELL DATED 23.02.2007. IN ACCORDANCE W ITH THE PROVISIONS OF SECTION 54B OF THE ACT THE ASSESSEE C LAIMED DEDUCTION OF RS.2684000/-. THE PAYMENT OF RS.2684000/- INCLUDES A SUM OF RS 22 00000/- PAID VIDE PAY ORDER TO SHRI DWARKADHISH TRUST, RS.4 40000/- PAID FOR STAMP DUTY AND RS.44000/- FOR BROKERAGE. H OWEVER, I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 8 SINCE THERE WAS DELAY IN THE FINAL REGISTRY DUE TO PENDING COURT APPROVAL, THE ASSESSING OFFICER DENIED THE DEDUCTIO N U/S 54B. THE ORDER OF A.O. WAS CONFIRMED BY CIT(A). 3. THE PROVISIONS OF SECTION 54B ARE AS UNDER :- [SUBJECT TO THE PROVISIONS OF SUB-SECTION (2), WHER E THE CAPITAL GAIN ARISES] FROM THE TRANSFER OF A CAPITAL ASSET B EING LAND WHICH, IN THE TWO YEARS IMMEDIATELY PRECEDING THE D ATE ON WHICH THE TRANSFER TOOK PLACE, WAS BEING USED BY [T HE ASSESSEE BEING AN INDIVIDUAL OR HIS PARENT, OR A HINDU UNDIV IDED FAMILY] FOR AGRICULTURAL PURPOSES [(HEREINAFTER REFERRED TO AS THE ORIGINAL ASSET)], AND THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTER THAT DATE, PURCHASED ANY OTHER LAND FOR BEING USED FOR AGRICULTURAL PURPOSES, THEN, INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME-TAX AS INCOME OF THE PREVIO US YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT WI TH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SE CTION, THAT IS TO SAY, (I) IF THE AMOUNT OF THE CAPITAL GAIN IS GREATER THAN THE COST OF THE LAND SO PURCHASED (HEREINAFTER REFERRED TO A S THE NEW ASSET), THE DIFFERENCE BETWEEN THE AMOUNT OF THE CA PITAL GAIN AND THE COST OF THE NEW ASSET SHALL BE CHARGED UNDE R SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR; AND FOR THE PUR POSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL G AIN ARISING FROM ITS TRANSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHALL BE NIL; OR (II) IF THE AMOUNT OF THE CAPITAL GAIN IS EQUAL TO OR L ESS THAN THE COST OF THE NEW ASSET, THE CAPITAL GAIN SHALL N OT BE CHARGED UNDER SECTION 45; AND FOR THE PURPOSE OF COMPUTING IN RESPECT OF THE NEW ASSET ANY CAPITAL GAIN ARISING FROM ITS TRA NSFER WITHIN A PERIOD OF THREE YEARS OF ITS PURCHASE, THE COST SHA LL BE REDUCED, BY THE AMOUNT OF THE CAPITAL GAIN.] [(2) THE AMOUNT OF THE CAPITAL GAIN WHICH IS NOT UTILISED BY THE ASSESSEE FOR THE PURCHASE OF THE NEW ASSET BEFORE T HE DATE OF FURNISHING THE RETURN OF INCOME UNDER SECTION 139, SHALL BE DEPOSITED BY HIM BEFORE FURNISHING SUCH RETURN [SUC H DEPOSIT BEING MADE IN ANY CASE NOT LATER THAN THE DUE DATE APPLICABLE IN I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 9 THE CASE OF THE ASSESSEE FOR FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139] IN AN ACCOUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED IN, AND UTI LISED IN ACCORDANCE WITH, ANY SCHEME WHICH THE CENTRAL GOVER NMENT MAY, BY NOTIFICATION IN THE OFFICIAL GAZETTE, FRAME IN THIS BEHALF AND SUCH RETURN SHALL BE ACCOMPANIED BY PROOF OF SU CH DEPOSIT; AND, FOR THE PURPOSES OF SUB-SECTION (1), THE AMOUN T, IF ANY, ALREADY UTILISED BY THE ASSESSEE FOR THE PURCHASE O F THE NEW ASSET TOGETHER WITH THE AMOUNT SO DEPOSITED SHALL B E DEEMED TO BE THE COST OF THE NEW ASSET: PROVIDED THAT IF THE AMOUNT DEPOSITED UNDER THIS SU B-SECTION IS NOT UTILISED WHOLLY OR PARTLY FOR THE PURCHASE OF T HE NEW ASSET WITHIN THE PERIOD SPECIFIED IN SUBSECTION (1), THEN , THE AMOUNT NOT SO UTILISED SHALL BE CHARGED UNDER SECTION 45 AS THE INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF TWO YEARS FROM THE DATE OF THE TRANSFER OF THE ORIGINAL ASSET EXPIRES; AND THE ASSESSEE SHALL BE ENTITLED TO WITHDRAW SUCH AM OUNT IN ACCORDANCE WITH THE SCHEME AFORESAID. 4. FROM THE PERUSAL OF THE PROVISIONS OF AFORESA ID SECTION 54B IT IS EVIDENT THAT THE ASSESSEE IS REQUIRED TO PURC HASE ANOTHER AGRICULTURAL LAND WITHIN A PERIOD OF 2 YEARS FROM T HE DATE OF THE TRANSFER OF THE ASSETS. IN THE INSTANT CASE THE ASS ESSEE SOLD THE AGRICULTURAL LAND ON 27.12.2005. THUS THE INVESTMEN T IN NEW AGRICULTURAL LAND FOR CLAIMING DEDUCTION U/S 54B WA S REQUIRED TO BE MADE ON OR BEFORE 26.12.2007. THE APPELLANT I NVESTED THE AMOUNT OF RS.2684000/- VIDE AGREEMENT TO SELL DATED 23.02.2007 I.E. WELL BEFORE THE PRESCRIBED TIME LIM IT OF 2 YEARS. IT SHOULD FURTHER BE NOTED THAT AS PER PROVISIONS O F SUB-SECTION (2) OF SECTION 54B, THE AMOUNT OF CAPITAL GAIN WHIC H IS NOT UTILIZED BY THE ASSESSEE BEFORE THE DATE OF FURNISH ING OF RETURN OF I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 10 INCOME U/S 139, THE SAME IS REQUIRED TO BE DEPOSITE D IN A DESIGNATED CAPITAL GAIN ACCOUNT. HOWEVER, IN THE IN STANT CASE SINCE THE AMOUNT OF RS.2480000/- WAS UTILIZED WELL BEFORE THE DATE OF FILING OF RETURN U/S 139 (WHICH IS 31.03.20 08), THERE WAS NO NEED OF DEPOSIT OF AMOUNT IN CAPITAL GAIN ACCOUN T. RELIANCE IS PLACED ON MUMBAI ITAT JUDGEMENT IN CASE OF KISHORE H GALAIVA VS ITO. 5. THE AMOUNT INVESTED IS THROUGH BANKING CHANNEL . THE BONAFIDE OF THE TRANSACTION IS FURTHER PROVED FROM THE FACT THAT THE ASSESSEE PAID BROKERAGE OF RS.44000/- AND MOST IMPORTANTLY MADE PAYMENT OF RS.440000/- FOR STAMP PAPERS. THIS SHOWS THE BONAFIDE OF THE ASSESSEE OF GETTING THE PROPERTY RE GISTERED IN HIS NAME. HOWEVER, IT WAS DISCOVERED THAT THE VENDOR TR UST WAS REQUIRED TO OBTAIN PERMISSION FROM THE COURT FOR SE LLING THE PROPERTY. SINCE THE PERMISSION WAS RECEIVED LATE, T HEREFORE THE REGISTRY WAS FINALLY DONE ON 06.08.2010. IT HAS BEE N HELD IN NUMBER OF CASES THAT WHERE THE ASSESSEE HAS ACTUALL Y MADE THE INVESTMENT BUT DUE TO SOME REASON EITHER THE CONSTR UCTION OF THE HOUSE COULD NOT BE COMPLETED OR THE SALE DEED COULD NOT BE EXECUTED OR THE POSSESSION COULD NOT BE GIVEN BY TH E VENDOR, THE DEDUCTION U/S 54 / 54F / 54B CANNOT BE DENIED TO TH E ASSESSEE. RELIANCE IS PLACED ON THE MADRAS HIGH COURT JUDGEME NT IN THE CASE OF CIT VS SARDAR MAI KOTHARI (302 ITR 286) AND JODHPUR ITAT JUDGEMENT IN THE CASE OF JAGAN NATH SINGH LODH A VS ITO. 6. THE DELHI BENCH OF ITAT IN CASE OF ITO V.SMT. SAPANA DIMRI (2012) 19 TAXMANN.COM 15 (DELHI) IN PARA 10 OF ITS ORDER HELD AS UNDER :- 10. NOW, COMING TO SECOND ISSUE, THE HON'BLE PUNJ AB & HARYANA HIGH COURT IN THE CASE OF MS. JAGRITI AGGAR WAL (SUPRA) I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 11 HAS HELD THAT SUB-SEC. (4) OF SEC. 139 PROVIDES THE EXTENSION PERIOD OF LIMITATION AS AN EXCEPTION TO SUB-SEC.(1) OF SEC. 139 OF THE ACT. SUB-SEC. (4) WAS IN RELATION TO THE TIME A LLOWED TO AN ASSESSEE UNDER SUB-SEC.(1) TO FILE THE RETURN. THER EFORE, SUCH PROVISION WAS NOT AN INDEPENDENT PROVISION, BUT REL ATES TO THE TIME CONTEMPLATED UNDER SUB-SEC.(1) OF SEC. 139. TH EREFORE, SUB- SEC.(4) HAS TO BE READ ALONG WITH SUB-SEC.(1). THER EFORE, THE DUE DATE FOR FURNISHING THE RETURN OF INCOME UNDER SEC. 139(1) OF THE ACT WAS SUBJECT TO EXTENDED PERIOD PROVIDED UNDER S EC. 139(4) OF THE ACT. SIMILAR VIEW WAS TAKEN BY HON'BLE GUWAHATI HIGH COURT IN THE CASE OF RAJESH KUMAR JALAN (SUPRA). DURING T HE COURSE OF HEARING THE LEARNED SR. DR COULD NOT CITE A CONTRAR Y DECISION TO WHAT HAS BEEN HELD BY THE HON'BLE GUWAHATI HIGH COU RT AND HON'BLE PUNJAB & HARYANA HIGH COURT. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IT IS HELD THAT SINCE THE ASSESSEE HAD INVESTED IN THE NE W PROPERTY WITHIN THE TIME ALLOWED UNDER SEC. 139(4) OF THE AC T THE ASSESSEE WILL BE ENTITLED FOR EXEMPTION UNDER SEC. 54 OF THE ACT TO THE EXTENT THE AMOUNT INVESTED IN THE NEW PROPER TY. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE OR DER OF THE CIT(A) ALLOWING RELIEF IN RESPECT OF BOTH THE ISSUE S. 7. THE HEADNOTE OF JUDGEMENT IN CASE OF CIT V JAGRITI AGGARWAL (2011) 15 TAXMANN.COM 146 (PUNJ. & HAR.) HIGH COURT IS AS UNDER :- SECTION 54, READ WITH SECTION 139, OF THE INCOME-TA X ACT. 1961 - CAPITAL GAINS - PROFITS ON SALE OF PROPERTY USED FOR RESIDENCE - ASSESSMENT YEAR 2006-07 - ASSESSEE SOLD HER HOUSE PROPERTY ON 13-1-2006 WHILE FILED HER RETURN ON 28- 3-2007 CLAIMING DEDUCTION UNDER SECTION 54 ON GROUN D THAT SHE HAD PURCHASED ANOTHER PROPERTY JOINTLY ON 2-1-2 007 FOR HIGHER SUM - ASSESSING OFFICER DECLINED SAID CL AIM - ONE OF GROUNDS WAS THAT ASSESSEE HAD FAILED TO PURC HASE HOUSE PROPERTY BEFORE DUE DATE OF FILING RETURN OF INCOME UNDER SECTION 139(1), I.E.. PRIOR TO 31-7-2006 - AC CORDING TO ASSESSEE, DUE DATE OF FILING RETURN OF INCOME IN HER CASE WAS NOT AS SPECIFIED IN SECTION 139(1) BUT AS SPECI FIED IN I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 12 SECTION 139(4) I.E., 31-7-2007 - WHETHER DUE DATE F OR FURNISHING RETURN OF INCOME AS PER SECTION 139(1) I S SUBJECT TO EXTENDED PERIOD PROVIDED UNDER SUB-SECTION (4) O F SECTION 139 AND, IF A PERSON HAD NOT FURNISHED RETU RN OF PREVIOUS YEAR WITHIN TIME ALLOWED UNDER SUB-SECTION (1), ASSESSEE COULD FILE RETURN UNDER SUB-SECTION (4) BE FORE EXPIRY OF ONE YEAR FROM END OF RELEVANT ASSESSMENT YEAR - HELD, YES - WHETHER, THEREFORE, SECTION 54 DEDUCTIO N COULD NOT BE DENIED TO ASSESSEE ON THIS COUNT - HELD, YES [IN FAVOUR OF ASSESSEE] 8.THE HONBLE MUMBAI BENCH OF ITAT IN CASE OF KISHORE H. GALAIVA V. ITO (2012) 24 TAXMANN. COM 11(MUM) IN PARA 6.4 OF THE ORDER HELD AS UNDER:- 6.4 THE ASSESSEE HAS ALSO MADE A POINT THAT TH E DUE DATE OF FILING OF THE RETURN OF INCOME U/S 139(1) FOR THE P URPOSE OF UTILIZATION OF THE AMOUNT FOR PURCHASE/CONSTRUCTION OF RESIDENTIAL HOUSE HAS TO BE CONSTRUED WITH RESPECT TO THE DUE D ATE PRESCRIBED FOR FILING OF THE RETURN U/S 139(4) OF THE ACT. THE POINT MADE BY THE ASSESSEE IS SUPPORTED BY THE JUDGMENT OF THE HO N'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF MS.JAGRITI AG GARWAL (SUPRA).IN THE SAID CASE, THE HON'BLE HIGH COURT OB SERVED THAT SECTION 139(4) PROVIDES THE EXTENDEDPERIOD OF LIMIT ATION AS AN EXCEPTION TO THE PERIOD PROVIDED U/S 139(1). THEREF ORE, THE HON'BLE HIGH COURT HELD THAT THE PROVISION OF SECTI ON 139(4) IS NOT AN INDEPENDENT PROVISION BUT IS RELATED TO THE TIME CONTEMPLATED UNDER THE PROVISIONS OF SECTION 139(1) OF THE ACT. ACCORDINGLY, THE HON'BLE HIGH COURT HELD THAT SUB-S ECTION (4) TO SECTION 139 HAD TO BE READ ALONG WITH SUB-SECTION ( 1) AND THE DUE DATE FOR FURNISHING THE RETURN OF INCOME U/S 13 9(1) IS SUBJECT TO THE EXTENDED PERIOD PROVIDED U/S 139(4) AND HENC E THE EXTENDED PERIOD U/S 139(4) HAS TO BE CONSIDERED FOR THE PURPOSES OF UTILIZATION OF THE CAPITAL GAIN AMOUNT. IN THAT CASE, THE ASSESSEE HAD SOLD THE OLD FLAT ON 13.1.2006 AND THE NEW I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 13 RESIDENTIAL HOUSE WAS PURCHASED BY THE ASSESSEE ON 2.1.2007 WHICH WAS WITHIN THE EXTENDED TIME LIMIT TILL 31.3. 2007 U/S 139(4) FOR ASSESSMENT YEAR 2006-07 AND THEREFORE TH E CLAIM WAS ALLOWED EVEN THOUGH THE AMOUNT HAD NOT BEEN DEPOSIT ED IN THE CAPITAL GAIN ACCOUNT. THE SAID JUDGMENT HAS BEEN FO LLOWED BY THE DELHI BENCH OF THE TRIBUNAL IN THE CASE OF JAGT AR SINGH CHAWLA V. ACIT [IT APPEAL NO.4923/DELHI/2010 (AY-20 07-08), ORDER DATED 30.6.2011], IN WHICH CASE THE TRIBUNAL HELD THAT SINCE THE ASSESSEE HAD INVESTED THE WHOLE AMOUNT BY 23.4.2008 WHICH WAS WITHIN THE EXTENDED PERIOD OF FILING THE RETURN OF INCOME U/S 139(4) TILL 31.3.2009 AND THEREFORE, THE ASSESSEE WAS ENTITLED TO CLAIM EXEMPTION U/S 54(F). IN THE PRESE NT CASE, THE CAPITAL GAIN EARNED BY THE ASSESSEE WAS RS.9,98,411 /- AND THE ASSESSEE HAD UTILIZED A SUM OF RS. 13.50 LAKHS TOWA RDS THE CONSTRUCTION OF RESIDENTIAL HOUSE BY 5.7.2007 WHICH WAS WITHIN THE EXTENDED PERIOD OF FILING OF THE RETURN U/S 139 (4) TILL 31.3.2008 FOR THE ASSESSMENT YEAR 2006-07. THE ASSE SSEE HAD THUS UTILIZED THE AMOUNT WHICH WAS MORE THAN CAPITA L GAIN EARNED TOWARDS CONSTRUCTION OF NEW RESIDENTIAL HOUS E WITHIN EXTENDED PERIOD U/S 139 (4) AND THEREFORE THE THERE WAS NO DEFAULT IN NOT DEPOSITING THE AMOUNT UNDER THE CAPI TAL GAIN ACCOUNT SCHEME. THEREFORE, THE CLAIM MADE BY ASSESS EE CANNOT BE DENIED FOLLOWING THE JUDGMENTS CITED (SUPRA). THE HEAD NOTE OF JUDGMENT IN THE CASE OF CIT V RAIESH KUMAR JALAN (157 TAXMAN 398)(GAU) IS AS UNDER:- SECTION 54 OF THE INCOME-TAX ACT, 1961 - CAPITAL GA INS - PROFIT ON SALE OF PROPERTY USED FOR RESIDENTIAL PURPOSE - ASS ESSMENT YEAR 1996-97 - ASSESSEE SOLD HIS RESIDENTIAL PROPERTY ON 21-12-1995 AND EARNED CAPITAL GAIN - SUBSEQUENTLY, IN MAY, 199 6, HE PURCHASED RESIDENTIAL PROPERTY - ASSESSING OFFICER REJECTED ASSESSEES CLAIM OF EXEMPTION UNDER SECTION 54 ON G ROUND THAT ASSESSEE HAD NOT COMPLIED WITH PROVISIONS OF SECTIO N 54(2) BY NOT DEPOSITING UNAPPROPRIATED AMOUNT OF CAPITAL GAIN IN CAPITAL GAINS DEPOSIT SCHEME, 1988 WITHIN STIPULATED TIME O F FURNISHING RETURN OF INCOME-TAX UNDER SECTION 139(1) - ASSESSE ES CASE WAS THAT SINCE RETURN FOR ASSESSMENT YEAR 1996-97 COULD BE FURNISHED BEFORE EXPIRY OF ONE YEAR FROM END OF RELEVANT ASSE SSMENT YEAR OR BEFORE COMPLETION OF ASSESSMENT, WHICHEVER IS EA RLIER, UNDER I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 14 SUB-SECTION (4) OF SECTION 139, HE COULD FULFIL REQ UIREMENT UNDER SECTION 54 FOR EXEMPTION OF CAPITAL GAIN FROM BEING CHARGED TO INCOME-TAX ON SALE OF PROPERTY USED FOR RESIDENCE U P TO 30-3- 1998 - WHETHER ASSESSEE WAS ENTITLED TO CLAIM BENEF IT UNDER SECTION 54 ON ENTIRE AMOUNT OF CAPITAL GAINS - HELD , YES 9. THE HEAD NOTE OF JUDGMENT IN THE CASE OF SANJEEV LAI V CIT (SC) [2014] 46 TAXMANN.COM 300 (SC) IS AS UNDER:- SECTION 54, READ WITH SECTION 2(47), OF THE INCOME- TAX ACT, 1961 - CAPITAL GAINS - EXEMPTION OF, PROFITS OR SALE OF RE SIDENTIAL HOUSE PROPERTY (PURCHASE OF NEW PROPERTY) - ASSESSMENT YE AR 2005-06 - WHETHER WHERE ASSESSEE HAVING EXECUTED AN AGREEME NT TO SELL IN RESPECT OF A HOUSE PROPERTY, PURCHASED A NEW RES IDENTIAL PROPERTY WITHIN ONE YEAR FROM DATE OF AGREEMENT TO SELL AND SUBSEQUENTLY SALE DEED COULD NOT BE EXECUTED WITHIN PRESCRIBED TIME DUE TO AN ORDER PASSED BY COMPETENT COURT, IN SUCH PECULIAR FACTS, A VALID TRANSFER TOOK PLACE WITHIN MEANING O F SECTION 2(47) BY EVEN EXECUTING AGREEMENT TO SELL AND, CONSEQUENT LY, RELIEF UNDER SECTION 54 WAS TO BE GRANTED TO ASSESSEE IN R ESPECT OF PURCHASE OF NEW RESIDENTIAL PROPERTY SUBJECT TO FUL FILMENT OF OTHER CONDITIONS - HELD, YES [PARAS 20 AND 26] [IN FAVOUR OF ASSESSEE] 12. REPLYING TO THE ABOVE, LD. DR ALSO DEALT WITH S TAND OF THE REVENUE AND FILED WRITTEN SUBMISSIONS WHICH ARE ALSO BEING REPRODUCED BELOW:- 1. RETURN OF INCOME FOR A.Y. 2006-07 WAS FILED BY ASSESSEE ON 30.03.2007. (NOT UNDER SECTION 139 (1) OF THE IT AC T). AS PER THE RETURN ASSESSEE HAS EARNED CAPITAL GAIN ON SALE OF LAND SOLD ON 27.12.2005, AMOUNTING TO RS. 1.16 /- CRORES. IN THE RETURN ASSESSEE CLAIMED DEDUCTION U/S 54B AMOUNTING TO RS. 26,84000 /-. I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 15 2. THE ASSESSING OFFICER HAS OBSERVED THAT THE ASS ESSEE ENTERED INTO AGREEMENT TO SALE ON 23.02.2007 WITH DAWARKADHEESH TRUST FOR THE PURCHASE OF LAND. SINCE THE REQUIRED PERMISSION TO SALE WAS NOT GRANTED BY DISTRICT SESSION JUDGE, CONVEYANCE DEED FOR THE PURCHASE OF LAND WAS NOT EXECUTED IN FAVOUR OF THE ASSESSEE TILL THE CONCLUSION OF ASSESSMENT PROCEEDINGS. 3. (SHRI DWARKADHEESH TRUST) IS A TRUST REGISTERED UNDER THE INDIAN TRUST ACT, 1882. THEREFORE, BEFORE SELLING ITS PROP ERTY, PERMISSION NEEDS TO BE OBTAINED FROM THE COURT U/S 34 & 37 OF INDIAN TRUST ACT. IN FACT, THE PERMISSION WAS MANDATORY FOR FACILITAT ING REGISTRATION OF THE PROPERTY. 4. APPLYING PROVISIONS OF SECTION 54B ASSESSEE SHO ULD HAVE PURCHASED A 'NEW ASSET' BEING ANY OTHER LAND FOR BE ING USED FOR AGRICULTURAL PURPOSE (NOT FOR NON- AGRICULTURAL PUR POSE). THE ASSESSEE HAS TO PURCHASE THE SAID LAND WITHIN A PERIOD OF 2 YEARS FOR THE DATE OF TRANSFER OF THE 'ORIGINAL ASSET, I.E. BY 27.12.2007 . THE AMOUNT OF CAPITAL GAINS ARISING ON TRANSFER OF 'ORIGINAL ASSE T' TO THE EXTENT IT IS NOT UTILIZED BY THE ASSESSEE FOR THE PURPOSE OF 'NE W ASSET' BEFORE THE DUE DATE OF FURNISHING RETURN OF INCOME UNDER SECTI ON 139(1), SHOULD BE DEPOSITED IN THE SCHEME OF DEPOSIT FOR CAPITAL G AINS. 5. THE LD. CIT(A) HAS HELD THAT THE ASSESSEE DOE S NOT FULFILL THE TERMS AND CONDITIONS PRESCRIBED IN SECTION 54B(2) O F THE IT ACT AND DID NOT DEPOSIT THE UNUTILIZED CAPITAL GAIN IN THE CAPITAL GAINS DEPOSIT SCHEME BEFORE THE DATE OF FILLING OF RETURN FOR THE RELEVANT ASSESSMENT YEAR UNDER SECTION 139(1) OF THE IT ACT. I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 16 6. ASSESSEE HAS SUBMITTED A LIST OF A NUMBER OF C ASE LAWS WHEREIN THE ASSESSEE RETAINED THE UNUTILIZED FUNDS WITH HIM AND THERE WAS NO DEPOSIT AT ALL IN CAPITAL GAIN SCHEME, HOWEVER, FUNDS WERE SOMEHOW UTILIZED FOR PURCHASE/CONSTRUCTI ON OF NEW ASSET BEFORE EXTENDED PERIOD ALLOWED BY SECTION 139 (4). ACCORDINGLY, EXEMPTION U/S 54/54F WAS ALLOWED. IN N ONE OF THESE CASES COURT HAD AN OCCASION TO DEAL WITH A SI TUATION THAT ASSESSEE DEPOSITED FUNDS IN CAPITAL GAIN SCHEME AFT ER DUE DATE SPECIFIED U/S 139(1). 7. RELIANCE IS MADE IN THE CASE OF ITO VS. SMT. R OSAMMA KORAH [2014] 45 TAXMANN.COM 153 (COCHIN - TRIB.) IN THIS CASE, ASSESSEE'S CLAIM OF EXEMPTION UNDER SECTION 5 4F WAS DENIED ON GROUND THAT ASSESSEE HAD NOT DEPOSITED UN UTILIZED CAPITAL GAIN ACCOUNT SCHEME WITHIN DUE DATE FOR FIL ING RETURN OF INCOME UNDER SECTION 139(1) - ASSESSEE CLAIMED THAT DUE DATE PROVIDED UNDER SECTION 139(4) SHOULD BE CONSIDERED. ITAT APPLIED THE RATION OF HON'BLE APEX COURT IN PRAKASH NATH KHANNA V. CIT [2004] 266 ITR 1 WHEREIN IT WAS HELD THAT 'DUE DATE' MEANS DATE FOR FILING RETURN UNDER SECTION 13 9(1) AND NOT UNDER SECTION 139(4). IT WAS FURTHER OBSERVED THAT HAD THE INTENTIONS OF THE LEGISLATURE WAS TO PERMIT THE ASS ESSEE TO DEPOSIT IN TO CAPITAL GAIN SCHEME UP TO TIME LIMIT PRESCRIBE U/ S 139(4) ALSO, THE USE OF THE EXPRESSION 'SECTION 139 ' ALONE WOULD HAVE BEEN SUFFICED. 13. THE LD. AR ALSO PLACED ORAL REJOINDER TO THE A BOVE SUBMISSIONS OF THE LD. DR AND SUBMITTED THAT THE AO HAS NOT BROUGHT OUT AN Y ALLEGATION TO CONTROVERT THESE FACTS THAT THE ASSESSEE SOLD HIS AGRICULTURAL LAND ON 27.12.2005 AND OUT OF I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 17 SALE PROCEEDS THE ASSESSEE INVESTED A SUM OF RS. 26 ,84,000/- FOR PURCHASE OF ANOTHER AGRICULTURE LAND FROM SHRI DWARKADHIS TRUST VIDE AGREEMENT DATED 23.2.2007 AND THUS THE ASSESSEES CLAIM U/S 54B OF THE ACT WAS PLACED AS PER STATUTORY PROVISIONS OF THE ACT. THE LD. AR ALSO PO INTED OUT THAT THE ASSESSEE UTILISED SAID AMOUNT FOR THE PURCHASE OF AGRICULTUR E LAND WITHIN TWO YEARS FROM THE TRANSFER OF HIS EARLIER ASSETS, HENCE, THE ASSESSEE WAS ELIGIBLE FOR DEDUCTION U/S 54B OF THE ACT. 14. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUB MISSIONS OF BOTH THE SIDES, AT THE OUTSET, WE NOTE THAT ADMITTEDLY THE ASSESSEE USED R S. 26,84,000/- TOWARDS PURCHASE OF AGRICULTURE LAND UNDER AGREEMENT DATED 23.2.200 7 AND THIS AMOUNT WAS THE SALES PROCEEDS WHICH WAS RECEIVED BY THE ASSESSEE ON ACCO UNT OF SALE OF AGRICULTURE LAND ON 27.12.2005. AS PER SECTION 54B OF THE ACT IF THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTER THE DATE, ON WHICH TRANSFER TOOK PL ACE, PURCHASED ANY OTHER LAND FOR BEING USED FOR AGRICULTURE PURPOSE, THEN INSTEAD OF THE CAPITAL GAIN BEING CHARGED TO INCOME TAX AS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE, IT SHALL BE DEALT IN ACCORDANCE WITH PROVISIONS OF SECTION 54B(1)(I) OF THE ACT WHICH MANDATES THAT IF THE AMOUNT OF CAPITAL GAIN IS GREA TER THAN COST OF LAND SO PURCHASED, THEN THE DIFFERENCE BETWEEN AMOUNT OF CA PITAL GAIN AND COST OF NEW ASSETS SHALL BE CHARGED TO TAX U/S 45 OF THE ACT AS INCOME OF THE PREVIOUS YEAR. MEANING THEREBY IF THE ASSESEEE HAS PURCHASED NEW A SSETS VIZ. AGRICULTURAL LAND I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 18 WITHIN TWO YEARS FROM THE DATE OF TRANSFER OF CAPIT AL ASSET BEING LAND, THEN THE ASSESSEE SHALL BE ENTITLED FOR DEDUCTION EITHER ON AMOUNT OF CAPITAL GAIN OR COST OF PURCHASED LAND, WHICHEVER IS LESSER. 15. IN THE PRESENT CASE, THE ASSESSEE SOLD LAND ON 27.12.2005 AND ENTERED INTO AN AGREEMENT OF PURCHASE OF AGRICULTURE LAND VIDE AGRE EMENT DATED 23.3.2007 I.E. WELL BEFORE THE EXPIRY OF TWO YEARS PERIOD FROM THE SA LE OF LAND OUT OF WHICH CAPITAL GAIN ACCRUED TO THE ASSESSEE. THE AO ACCEPTED THE F ACT THAT THE ASSESSEE ENTERED INTO AN AGREEMENT TO PURCHASE THE LAND ON 23.2.3007 AND THE AO HAS ALSO NOT CONTROVERTED THE FACT THAT THE ASSESSEE USED RS. 26 ,84,000/- TOWARDS PAYMENT OF SALE CONSIDERATION OF LAND, REGISTRATION, STAMP DUT Y AND BROKERAGE PERTINENT TO PURCHASE OF LAND. HOWEVER, THE AO DENIED CLAIM OF D EDUCTION TO THE ASSESSEE U/S 54B OF THE ACT BY OBSERVING THAT THERE IS NO REGIST ERED SALE DEED AND EXECUTION OF THE SAME WAS CONTINGENT UPON PERMISSION OF THE COUR T UNDER THE PROVISIONS OF THE INDIAN TRUST ACT. THEREFORE, ON THE CRUCIAL DATE I. E. 27.12.2007 THERE WAS NO CONCLUDED CONTRACT EITHER FOR PURCHASE OR SALE. THE AO ALSO ALLEGED THAT AS ON 27.12.2007, THE ASSESSEE WAS NOT IN POSSESSION OF T HE SAID PROPERTY FOR WHICH THE ASSESSEE ENTERED INTO AN AGREEMENT WITH THE TRUST. 16. IN THE FIRST APPEAL, THE ORDER OF THE AO WAS UP HELD REJECTING THE CLAIM OF THE ASSESSEE BY OBSERVING AS FOLLOWS :- I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 19 4 . I HAVE CAREFULLY GONE THROUGH THE IMPUGNED ORDER AND CONSIDERED THE SUBMISSIONS OF THE AR. IT IS PERTINE NT TO BRING OUT THE MATERIAL FACTS OF THE ISSUE BEFORE EMBARKING UP ON THE DECISION WHETHER THE AO WAS JUSTIFIED IN DISALLOWIN G DEDUCTION U/S 54B OF THE ACT. THE UNDISPUTED FACTS OF THE CAS E ARE THAT THE APPELLANT HAD SOLD HIS AGRICULTURAL LAND AT KHADIPU R FOR A TOTAL CONSIDERATION OF RS. 1,23,75,000/- ON 27.12.2005 (H E INCURRED AN AMOUNT OF RS.2,25,000/- ON ACCOUNT OF TRANSFER E XPENSES). THE SAID LAND WAS PURCHASED BY HIM IN THREE LOTS IN THE FINANCIAL YEARS 1988- 89(01.06.1988),1997-98(24.06.97) AND 19 97- 98(31.07.97). THE SAID TRANSACTION RESULTED INTO A NET CAPITAL GAIN OF RS.1,16,69,958/- (AFTER INDEXATION). THE AP PELLANT ENTERED INTO PURCHASE AGREEMENT FOR ANOTHER AGRICULTURAL LA ND MEASURING 15 BIGHAS AT VILLAGE PALLA OF DISTRICT DELHI FOR A CONSIDERATION OF RS.26,84,000/- WITH SHRI DWARKADHISH TRUST (A PUBLI C TRUST REGISTERED UNDER THE INDIAN TRUST ACT, 1882) VIDE A N 'AGREEMENT TO SELL' DATED 23.02.2007. THE APPELLANT CLAIMED DE DUCTION OF RS. 26,84,000/- U/S 54B OF THE ACT ON THE CAPITAL GAIN ARISING FROM THE ABOVE STATED TRANSACTION. OUT OF THE SAID 'SALE CONSIDERATION' OF RS.26,84,000/- AN AMOUNT OF RS.22,00,000/- WAS P AID TO SHRI DWARKADHISH TRUST (VIDE PAY ORDER NUMBER 003009 DAT ED 22.01.2007 FOR RS.2,00,000/- AND PAY ORDER NUMBER 0 03205 DATED 30.03.2007 FOR RS.20,00,000/- DRAWN ON HDFC B ANK, ADARSH NAGAR, NEW DELHI) AND AN AMOUNT OF RS. 4,40, 000/- WAS PAID TO STATE BANK OF INDIA, VIDE BANKERS CHEQUE NO .003206 FOR PURCHASE OF STAMP PAPER FOR CONVEYANCE DEED. IT HAS BEEN CLAIMED THAT THE POSSESSION OF THE SAID LAND WAS GI VEN TO THE APPELLANT BY THE SELLER BUT THE SAME WAS NOT REGIST ERED IN THE NAME OF THE APPELLANT AS THE SAID SELLER I.E. THE T RUST HAD TO TAKE PERMISSION IN THIS RESPECT FROM DISTRICT SESSIONS J UDGE WHICH WAS PENDING TILL THE LAST DAY OF THE YEAR UNDER CON SIDERATION. 4.1 FROM THE ABOVE MENTIONED FACTS, IT IS CLEAR THA T NEITHER ANY AGRICULTURAL LAND WAS ACQUIRED BY THE APPELLANT NOR THE UNUTILIZED CAPITAL GAINS WAS DEPOSITED IN THE NOTIF IED SCHEME IN I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 20 ACCORDANCE WITH THE SECTION 54B(2) OF THE ACT BEFOR E THE DUE DATE OF FILING OF THE RETURN FOR THE RELEVANT ASSESSMENT YEAR U/S 139(1) OF THE ACT, THEREFORE THE SECTION 54B(1), WHICH STA RTS WITH THE PHRASE 'SUBJECT TO THE PROVISIONS OF SUB SECTION (2 ) ' DOES NOT PROVIDE TIME PERIOD OF TWO YEARS TO THE APPELLA NT TO ACQUIRE THE NEW ASSET/AGRICULTURAL LAND. THUS IT IS HELD TH AT THE APPELLANT DOES NOT FULFILL THE TERMS AND CONDITIONS PRESCRIBE D IN SECTION 54B(2) OF THE ACT. HENCE, THE QUESTION OF DEPOSITIN G THE UNUTILIZED CAPITAL GAINS IN THE CAPITAL GAIN DEPOSI T SCHEME BEFORE FILING THE RETURN FOR THE RELEVANT ASSESSMENT YEAR U/S 139(1) OF THE ACT DOES ARISE AS THE APPELLANT HAS NOT UTILIZED TH E GAINS IN THE ACQUISITION OF THE NEW ASSET WITH IN THE DUE DATE T HOUGH THE AO ERRED IN NOT GIVING SUCH FINDINGS AND HOLD THAT THE NEW ASSET/AGRICULTURAL LAND WAS REQUIRED TO BE ACQUIRED WITH IN THE PERIOD OF TWO YEARS. EVEN FOR THE SAKE OF DISCUSSIO N, IF IT IS ADMITTED THAT THE NEW ASSET/AGRICULTURAL LAND WAS P URCHASED ON 23.02.2007, THEN ALSO THE EXEMPTION U/S 54B OF THE ACT IS NOT ALLOWABLE AT ALL IN THE RELEVANT YEAR AS THE APPELL ANT DOES NOT FULFILL THE TERMS AND CONDITIONS PRESCRIBED IN SECT ION 54B(2) OF THE ACT. ON THE BASIS OF ABOVE MENTIONED FACTS AND PROVISIONS OF THE LAW, IT IS HELD THAT THE CLAIM OF THE EXEMPTION U/S 54B OF THE ACT IS UNJUSTIFIED AND CONTRARY TO THE LAW. THUS TH E BASIS OF DISALLOWANCE OF EXEMPTION U/S 54B OF THE ACT BY THE AO THEREFORE, STANDS MODIFIED ACCORDINGLY. THE GROUNDS NUMBERED 2 AND 3 HAVE NO MERIT AND THUS FAIL.' 17. AT THIS JUNCTURE, BEFORE WE PROCEED TO APPRECIA TE FACTS OF THE CASE AND TO ADJUDICATE THE ALLOWABILITY OF THE CLAIM OF THE ASS ESSEE IN THE LIGHT OF CONCLUSION OF THE AUTHORITIES BELOW, WE FIND IT RELEVANT AND APPR OPRIATE TO CONSIDER THE RATIO/DICTA/PROPOSITION OF THE ORDERS/JUDGMENTS REL IED BY BOTH THE PARTIES. THE I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 21 LD. DR HAS PLACED HER RELIANCE ON THE ORDER OF ITAT - COCHIN-IN THE CASE OF I TO VS. SMT. ROSAMMA KORAH (2014) 45 TAXMAN.COM 153 (CO CHIN TRIBUNAL) WHEREIN REFERRING TO THE DICTA OF HONBLE SUPREME COURT IN THE CASE OF P.N. KHANNA VS. CIT 266 ITR 01 (SC), IT HAS BEEN HELD THAT THE DUE DATE MEANS DATE FOR FILING RETURN U/S 139 (1) OF THE ACT. IT WAS FURTHER OBSERVED BY THE TRIBUNAL IN THIS ORDER THAT HAD THE INTENTION OF TH E LEGISLATURE WAS TO PERMIT THE ASSESSEE TO DEPOSIT INTO CAPITAL SCHEME UP TO TIME LIMIT PRESCRIBED U/S 139(4) OF THE ACT ALSO, THEN THE USE OF EXPRESSION SECTION 139, I NSTEAD OF SECTION 139 (1) ALONE WOULD HAVE SUFFICED. THE LD. AR HAS CONTENDED THAT THE CIT(A) HIMSELF IN PARA 4.1, AS REPRODUCED HEREINABOVE, HAS HELD THAT THE QUESTION OF DEPOSITING THE UNUTILIZED CAPITAL GAINS IN THE CAPITAL GAIN DEPOSI T SCHEME BEFORE FILING RETURN OF THE RELEVANT ASSESSMENT YEAR U/S 139 (1) OF THE ACT DOES NOT ARISE AS THE APPELLANT HAS NOT UTILIZED THE GAINS IN THE ACQUISITION OF NE W ASSET WITHIN DUE DATE. 18. ON CAREFUL CONSIDERATION OF NOTED FACTS, WE ARE OF THE OPINION THAT CONTENTIONS OF THE LD. AR ARE SUSTAINABLE THAT WHEN THE ASSESSEE CHOOSES TO UTILIZE THE CAPITAL GAINS IN THE ACQUISITION OF NEW ASSETS, THE QUESTION OF DEPOSITING THE UNUTILISED CAPITAL GAINS IN THE CAPITAL GAINS DEPOS IT SCHEME DOES NOT ARISE AND THE CONTENTIONS OF THE LD. AR IN THIS REGARD ARE IRRELE VANT AND THE SAME DOES NOT CALL FOR ANY ADJUDICATION IN THIS CASE AT OUR END. I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 22 19. HOWEVER, CONTROVERSY REMAINED WHEN AUTHORIT IES BELOW DENIED THE CLAIM OF THE ASSESSEE U/S 54B OF THE ACT. WE FURTHER NOTE THAT IN THE CASE OF SANJEEV LAL VS CIT (SUPRA) AS RELIED BY THE ASSESSEE, IT HAS BEEN HELD BY THE HONBLE APEX COURT THAT WHERE THE ASSESSEE HAVING EXECUTED AN AGREEMEN T TO SELL IN RESPECT OF A HOUSE PROPERTY, PURCHASED A NEW RESIDENTIAL PROPERTY WITH IN ONE YEAR FROM THE DATE OF AGREEMENT TO SELL AND SUBSEQUENTLY SALE DEED COULD NOT BE EXECUTED WITHIN PRESCRIBED TIME DUE TO AN ORDER PASSED BY COMPETENT COURT, A VALID TRANSFER DID TAKE PLACE WITHIN MEANING OF SECTION 2(47) OF THE ACT BY EVEN EXECUTING AGREEMENT TO SELL WAS TO BE GRANTED BY THE ASSESSEE. IN THE ORDE R OF THE ITAT JODHPUR, AS RELIED BY THE ASSESSEE, IN THE CASE OF JAGAN NATH SINGH LODHA VS ITO (2005) 148 TAXMAN 1 (JODHPUR TRIBUNAL) , IT WAS HELD THAT IF THE ASSESSEE HAD INVESTED A SUM THEN INTENTION OF THE ASSESSEE FROM THE VERY B EGINNING WAS TO PURCHASE A PROPERTY (FLAT) AND WHEN DUE TO CERTAIN UNAVOIDABL E CIRCUMSTANCES, THE CONTRACT COULD NOT MATERIALIZE, IT COULD NOT BE SAID THAT TH ERE WAS ANY HANKY PANKY ON THE PART OF THE ASSESSEE TO AVOID PAYMENT OF TAX. FURTH ERMORE, IN THE CASE OF KISHORE H GALAIYA VS ITO (2012) 14 TAXMAN.COM 11 (MUM), IT WAS HELD BY THE ITAT MUMBAI BENCH THAT BOOKING OF FLAT WITH A BUILDER FO R PURPOSE OF CLAIMING EXEMPTION U/S 54 OF THE ACT, IF CONSTRUCTION IS COM PLETE WITHIN THREE YEARS, EXEMPTION U/S 54 OF THE ACT WOULD BE AVAILABLE EVEN IF POSSESSION WAS NOT TAKEN. I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 23 20. IN THE LIGHT OF PROPOSITIONS OR RATIO, SET O UT BY HONBLE SUPREME COURT AND ORDER OF THE TRIBUNAL, AS NOTED ABOVE, WHEN WE ANAL YSE THE FACTS OF THE PRESENT CASE, WE NOTE THAT THE AO AND FIRST APPELLATE AUTHO RITY HAVE NOT DISPUTED THIS FACT THAT THE ASSESSEE USED AND INVESTED RS. 26,84,000/- BEFORE EXPIRY OF PRESCRIBED TIME LIMIT OF TWO YEARS VIZ. BEFORE 26.12.2007. THE MAIN ALLEGATION OF THE AUTHORITIES BELOW IS THAT THE SALE DEED COULD NOT B E EXECUTED IN THE NAME OF THE ASSESSEE AND THE ASSESSEE COULD NOT GET POSSESSION OF SAID PURCHASED PROPERTY WITHIN PRESCRIBED TIME LIMIT, HENCE, HE IS NOT ENTI TLED FOR DEDUCTION U/S 54B OF THE ACT. IN THE LIGHT OF PREPOSITION LAID DOWN BY HONB LE APEX COURT IN THE CASE OF SANJEEV LAL VS CIT (SUPRA) IT IS CLEAR THAT THE EXECUTION OF SALE DEED IN FAVOUR OF ASSESSEE IS NOT A SOLE CRITERIA TO ALLOW DEDUCTION U/S 54B OF THE ACT. IN THE PRESENT CASE, AS THE PROPERTY WAS PURCHASED FROM A PUBLIC T RUST, HENCE, THE SALE DEED COULD NOT BE EXECUTED IN FAVOUR OF THE ASSESSEE WITHIN PR ESCRIBED TIME LIMIT AS EXPECTED BY THE REVENUE AUTHORITIES. IT IS ALSO PERTINENT TO NOTE THAT AS PER RATIO OF THE ORDER OF THE MUMBAI TRIBUNAL IN THE CASE OF KISHORE H GAL AIYA (SUPRA), THE POSSESSION OF PURCHASED PROPERTY IS ALSO NOT A CRITERIA FOR GRANT OF DEDUCTION U/S 54B OF THE ACT. 21. ON VIGILANT AND CAREFUL READING OF SECTION 54B OF THE ACT, WE NOTE THAT THE LEGISLATION HAS USED WORD PURCHASED DENOTES THAT FOR AVAILING DEDUCTION U/S 54B OF THE ACT, IT IS REQUIRED THAT THE ASSESSEE IS REQ UIRED TO PURCHASE ANY OTHER LAND FOR BEING USED FOR AGRICULTURE PURPOSES WITHIN TWO YEAR S OF SALE OF ASSETS BEING LAND I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 24 WHICH IN THE TWO YEARS IMMEDIATELY PRECEDING THE DA TE ON WHICH TRANSFER TOOK PLACE WAS BEING USED BY THE ASSESSEE FOR AGRICULTUR E PURPOSES. IN THE PRESENT CASE, THE ASSESSEE SOLD HIS AGRICULTURE LAND ON 27.12.200 5 AND ON 23.2.2007, HE ENTERED INTO AN AGREEMENT TO PURCHASE AGRICULTURE LAND WITH IN A TRUST AND PAID ENTIRE CONSIDERATION OF RS.22,00,000, (RS. 2,00,000/- AT T HE TIME OF EXECUTION OF PURCHASE AGREEMENT AND 20,00,000 SUBSEQUENTLY) PAID RS. 4,40 ,000/- FOR PURCHASE OF STAMP DUTY FOR REGISTRATION OF SALE DEED AND RS. 44,000/- FOR BROKERAGE OF PROPERTY PURCHASED. THIS TOTAL AMOUNT VIZ. 26,84,000/- (RS. 22,00,000 + 4,40,000 + 44,000) HAS BEEN SHOWN BY THE ASSESSEE AS CLAIM U/S 54B OF THE ACT. WHEN WE LOGICALLY ANALYSE THE REQUIREMENT OF ELIGIBLE DEDUCTION U/S 5 4B OF THE ACT, COUPLED WITH CONDUCT OF PRESENT ASSESSEE, WE NOTE THAT FROM THE VERY BEGINNING THE INTENTION OF THE ASSESSEE WAS TO PURCHASE AGRICULTURE LAND WITH A CONSCIOUS DECISION AND LEGAL STRATEGY TO CLAIM DEDUCTION U/S 54B OF THE ACT AND IN PURSUANCE TO THE SAME BONAFIDE INTENTION, THE ASSESSEE ENTERED INTO AN AG REEMENT TO PURCHASE ON 23.2.2007 AND USED RS. 26,84,000/- OUT OF AMOUNT OF CAPITAL GAINS ACCRUED TO HIM FROM SALE OF AGRICULTURE LAND ON 27.12.2005. THE AS SESSEE ALSO MADE AN EFFORT TO GET THE SALE DEED REGISTERED IN HIS NAME AND PAID R S. 4,40,000/- FOR PURCHASE OF STAMP DUTY AND ALSO PAID RS. 44,000/- AS BROKERAGE AND TOTAL AMOUNT OF RS. 26,84,00/- USED/INVESTED WAS CLAIMED U/S 54B OF THE ACT. THE ASSESSEE MADE ALL EFFORTS AND ENDEAVOURS TO ENSURE COMPLIANCE OF REQU IREMENT OF SECTION 54B OF THE I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 25 ACT WHICH REQUIRE PURCHASE OF AGRICULTURE LAND WITH IN TWO YEARS FROM THE SALE OF ASSET OUT OF WHICH CAPITAL GAINS ACCRUED TO THE ASS ESSEE. IN OUR HUMBLE OPINION, WE ARE IN AGREEMENT WITH THE RATIO LAID DOWN BY ITAT M UMBAI IN THE CASE OF KISHORE H. GALAIYA (SUPRA) WHEREIN IT WAS HELD THAT ACQUISI TION OF POSSESSION OF PURCHASED LAND IS NOT AN ESSENTIAL AND SOLE CRITERIA FOR ELIG IBILITY OF CLAIM OF DEDUCTION U/S 54B OF THE ACT. IN THE PRESENT CASE, ALTHOUGH THE ASSES SEE COULD NOT GET THE SALE DEED EXECUTED IN HIS NAME AND ALSO COULD NOT GET POSSESS ION OF THE PURCHASED LAND BUT IT WAS BEYOND CONTROL AND POWERS OF THE ASSESSEE AS TH ERE WAS A REQUIREMENT OF PERMISSION OF COURT BECAUSE THE LAND WAS PURCHASED FROM A PUBLIC TRUST. AT THE SAME TIME, WE CANNOT IGNORE THE CONDUCT AND INTENTI ON OF THE ASSESSEE WHEREIN HE PAYS ENTIRE SALE CONSIDERATION, MAKES PAYMENT FOR P URCHASE OF STAMPS FOR EXECUTION OF SALE DEED AND ALSO PAYS BROKERAGE AND FROM THIS, WE CAN SAFELY AND FIRMLY INFER THAT IN FACT THE ASSESSEE HAD A BONAFI DE AND TRUE INTENTION TO PURCHASE AGRICULTURE LAND WITHIN PRESCRIBED PERIOD OF TWO YE ARS AND HE USED RS. 26,84,000/- TOWARDS THIS INTENTION OF PURCHASE AND IF THE SALE DEED COULD NOT BE EXECUTED IN HIS NAME AND HE COULD NOT GET POSSESSION OF THE PURCHAS ED LAND DUE TO THE REASON BEYOND HIS CONTROL, THEN HE CANNOT BE DEBARRED FROM CLAIMING DEDUCTION U/S 54B OF THE ACT. HENCE, ON THE BASIS OF OUR FOREGOING DISCU SSION ON THIS ISSUE, WE ARE INCLINED TO HELD THAT THE ASSESSEE IS ENTITLED FOR CLAIM OF DEDUCTION U/S 54B OF THE ACT PERTAINING TO RS. 26,84,000/- WHICH WAS USED / INVESTED TOWARDS PURCHASE OF I.T.A. NO. 3054/DEL/2012 ASSESSMENT YEAR 2006-07 26 AGRICULTURE LAND WITHIN PRESCRIBED TIME LIMIT OF TW O YEARS FROM THE DATE OF SALE OF AGRICULTURE LAND OUT OF WHICH CAPITAL GAIN ACCRUED TO THE ASSESSEE. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOWED. 22. IN THE RESULT APPEAL OF THE ASSESSEE IS ALL OWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 8.11. 2015. SD/- SD/- (N.K. SAINI) (C. M . GARG) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED:- 06 /11/2015 GS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR