Rajiv Kumar Nandlal Varma, Mumbai V. Asstt. Commissioner of Income Tax -23(3), Mumbai

ITA 3241/MUM/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 9247 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: D
• Next Hearing Date: 01-01-2024
• Assessment Year: 2013-2014
• Appeal Filed On: 11-09-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay; Set aside
• Section: 54; 143(3); 54EC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI PRASHANT MAHARISHI, AM AND SHRI RAHUL CHAUDHARY, JM ITA No. 3241/Mum/2023 (Assessment Year: 2013-14) Raj i v Kum ar Nandl al Varm a C/o.Man ga ldas D S hah & Co 506, 5 th Floo r, Lotus Ho use 33-A, New Marine Lines, Mumbai-400020 Vs. Asst. Commissioner of Income Tax-23(3) Room No.104, Matru Mandir Mumbai-400007 (Appellant) (Respondent) PAN No. AAJPV8710G Assessee by : Shri Tej Mohan Singh, AR Revenue by : Shri Mahita Nair, Sr. DR Date of hearing: 02.01.2024 Date of pronouncement : 05.01.2024 O R D E R PER PRASHANT MAHARISHI, AM: 01. ITA No 3241/Mum/2023 is filed by the assessee for A.Y. 2013- 14 against the appellate order passed on 28 th August, 2023, wherein the appeal against the assessment order dated 23 rd March, 2016 under Section 143(3) of the Income-tax Act, 1961 (the Act) passed by the Asst. Commissioner of Income Tax, Circle 23(3), Mumbai, was dismissed for non-compliance. 02. Assessee is aggrieved with that and is in appeal before us raising following grounds of appeal:- Page | 2 ITA No. 3241/Mum/2023 Rajiv Kumar Nandlal Varma; A.Y. 13-14 “1. (a) On the Fact and in the circumstances of the case the leaned CIT(A) erred in rejecting appeal on the ground that there is delay in filling the appeal and there is non-compliance and non-perusing of the appeal. 1 (b) The learned CIT(A) erred in observing the appeal is filed late by 2 years and 11 months. 1 (c) The learned CIT(A) erred in observing that there is non-compliance to the deficiency letter issued 04- 03-2020, and failed to consider the fact that the appellant has filed letter dt 04-03-2020 which was E filling on 07-03-2020 and it was also physically filed in Tapal CIT (A) 34 Mumbai duly acknowledged on 09-03-2020. 1 (d) The learned CIT(A) erred in not considering the letter dated 22/08/2023 asking clarification as to the "appeal filed beyond time and application of delay not filed and time of seven days given". The appellant complied with this letter and filed explanation vide letter dated 28/08/2023 acknowledgement no 211339651280823. The learned CIT (A) erred in not considering this letter submissions and erred in observing that there is no compliance. 1 (e) The learned CIT (A) has heard the appeal several times and after submitting the petition for condonation of delay. Page | 3 ITA No. 3241/Mum/2023 Rajiv Kumar Nandlal Varma; A.Y. 13-14 1. (f) The Appellant prays that the order passed by the learned CIT(A) be cancelled and appeal be heard on merits and legal grounds. 2. On the facts and in the circumstances of the case, the learned assessing officer erred in not allowing deduction u/s.54 of the Income Tax Act being investment made in acquisition of the new flat. 3. (a) The learned assessing officer erred in stating that, the agreement dt: 18th October, 2012 did not confer right to the appellant in the new residential flat which is contrary to the facts and evidence on record. The appellant prays that it had acquired right of ownership to the flat purchase being Flat No.1001, 11th Floor, C wing Gurgaon 3. (b) The learned assessing officer also failed to appreciate that, the payment for the purchase of the new flat was made out of the deposit from Capital Gain Deposit Scheme wherein the amount received on sale of old flat was deposited. Thus the appellant had purchase new flat by paying for it. 3 (c) The appellant prays that, the provision of section 54 are applicable and hence the capital gain being exempt. The addition made rejecting the deduction u/s.54 be allowed in full. 4. The learned assessing officer erred in not allowing deduction on account of transfer fees and donation of Rs.2,75,000/-which deduction be allowed in full since the expenses incurred is wholly and exclusively in connection with such transfer. Page | 4 ITA No. 3241/Mum/2023 Rajiv Kumar Nandlal Varma; A.Y. 13-14 5. (a) On the facts and in the circumstances of the learned A.O erred in not allowing deduction of Rs.1,00,00,000/- (Rs. One Crore only) made in NIHAI Bonds which deduction should be allowed as per the provisions of Section 54EC. 5. (b) The learned A.O erred in stating that, both bonds totaling to value of Rs. 1,00,00,000/-(Rs. One Crore Only) have not been place on record. 5. (c) The learned A.O erred in stating that, deduction u/s 54EC cannot be allowed in full and restricted to Rs.50,00,000/- 5. (d) The appellant prays that, the entire deduction of Rs.1,00,00,000/-(Rs.One Crore only) be allowed since the investment is made as per the provisions of Section S4EC. 6. The appellant craves leave to add amend or alter any or all of the grounds of appeal.” 03. The brief facts of the case show that assessee is a non-resident individual being resident of Abu Dhabi/ Dubai. He owned a flat at Mumbai, which was sold on 9 th October, 2012. The assessee claimed deduction under Section 54 as well as under Section 54 EC of the Act. The assessee filed return of income on 19 th February, 2014, declaring total income of ₹58,13,533/-. The return was picked up for scrutiny and notice under Section 143(2) of the Act was issued on 3 rd September, 2014, the assessee has shown income from other sources and long term capital gain. Page | 5 ITA No. 3241/Mum/2023 Rajiv Kumar Nandlal Varma; A.Y. 13-14 04. The learned Assessing Officer noted that assessee has claimed deduction under Section 54 of the Act. On verification, he found that apartment buyer’s agreement was entered into in the name of some third party and not in the name of assessee. The assessee categorically submitted that apartment buyer’s agreement was entered in to by the third party originally and later on transferred in the name of the assessee and therefore, deduction under Section 54 of the Act is allowable. The assessee also submitted dates of the payment made to the buyers. However, as the agreement was not registered as per Section 17 of the Registration Act, 1908, the deduction under Section 54 of the Act was denied. Further, the deduction under Section 54EC of the Act is claimed of ₹ 1crores by deposit of ₹50 lacs in two different financial years, the learned Assessing Officer held that amendment made to Section 54EC of the Act by the Finance Act, 2014, applies retrospectively and allowed the deduction under Section 54EC of the Act of ₹50 lacs only. Accordingly, the assessment order under Section 143(3) of the Act was passed on 23 rd March, 2015, determining the total taxable capital gain of ₹5,34,74,362/- and net taxable income of ₹5,55,31,630/-. Therefore, the assessee was denied deduction under Section 54 of ₹4,62,89,300/- and restricted the deduction under Section 54EC of the Act of ₹1,00,00,000 to Rs 50,00,000/-. 05. The assessee preferred the appeal before the learned Commissioner of Income-tax (Appeals).The learned CIT (A) noted that there is a delay in filing of the appeal by two years and 11 months and therefore, deficiency letter was issued to the assessee on 4 th March, 2020, however, as per ld CIT (A), assessee did not file any communication for condonation of delay, he dismissed the appeal for non-compliance, non- Page | 6 ITA No. 3241/Mum/2023 Rajiv Kumar Nandlal Varma; A.Y. 13-14 pursuing of the appeal. Against this appellate order, the assessee is in appeal before us. 06. Before us, the learned Authorized Representative submitted that against deficiency letter dated 4 th March, 2020, issued by the learned CIT (A), assessee filed its response electronically on 7 th March, 2020 and further furnished physically to learned CIT (A)-13, Mumbai on 9 th March, 2020. The assessee also submitted a letter dated 28 th August, 2023, in response to letter dated 22 nd August, 2023, on this issue. The National Faceless Appeal Centre, Delhi [the learned CIT (A)], ignored both these letters and dismissed the appeal of the assessee for non-prosecution. He referred to his paper book containing 44 pages to show these respective letters. He therefore submitted that without considering the explanation of the assessee regarding delay in filing of the appeal and further clarification, the appeal was disposed off against the assessee. Further, on the merits of the case, he submitted that with respect to the deduction under Section 54 of the Act is covered in favour of the assessee as there is endorsement in the name of the assessee coupled with payment to the buyer. He also submitted that the learned Assessing Officer has wrongly relied upon the decision of the Hon'ble Supreme Court in case of Suraj Lamp & Industries (P.) Ltd. vs. State of Haryana 14 taxmann.com 103 (SC) rendered in respect of Section 54 of the Transfer of Property Act and applied thereto for denial of deduction under Section 54 of the Act. He submit that Hon'ble Delhi High Court, after considering the above decision has held that even where the assessee acquired property by provisional booking, he was eligible for deduction under Section 54 of the Act. He also submitted that assessee can also draw a support from the decision of the Hon'ble Supreme Court in case of Page | 7 ITA No. 3241/Mum/2023 Rajiv Kumar Nandlal Varma; A.Y. 13-14 Sanjeev Lal Vs. CIT 46 taxmann.com 300 (SC). With respect to deduction under Section 54EC of the Act, he submitted that amendment is not applicable retrospectively but prospectively. Therefore, on merit issue is covered in favour of the assessee. 07. The learned Departmental Representative supported the order of the learned lower authorities. 08. We have carefully considered the rival contentions and perused the orders of the lower authorities. We find that the a. assessment order in this case was passed by the learned Assessing Officer on 23 rd March, 2016. b. Against which the assessee filed an appeal before the learned CIT (A)- 34 in manual form on 21 st April, 2016. c. The learned CIT (A)-34 passed an order on 12 th March, 2019, stating that assessee is required to file the appeal in electronic mode mandatorily with effect from 1 st March, 2016 and therefore, the paper appeal filed by the assessee was not valid. d. As the assessee was to file appeal in electronic mode up to 15 th June, 2016, this appeal was disposed off as not maintainable vide Para no.5.3 of the order of the learned CIT (A). e. It was held that the assessee is at liberty to file the appeal electronically as per provision of Rule and seek condonation of delay in filing of appeal which may be examined at the appropriate time. f. Meanwhile on 8 th March 2019, itself the assessee filed appeal in form no.35 electronically. Page | 8 ITA No. 3241/Mum/2023 Rajiv Kumar Nandlal Varma; A.Y. 13-14 g. When the appeal was migrated to National Faceless Appeal Centre letter dated 28 February 2023, was issued to the assessee stating that the appeal filed beyond time and application for condonation of delay was not filed. h. The assessee responded on 28 August 2023, stating that assessee has already filed application for condonation of delay before learned CIT (A)-34 on 4 March 2020, before the appeal was migrated to the Faceless Appeal Centre. It also enclosed the letter dated 4 March 2020, in the form of petition for condonation of delay stating above facts. i. Despite the same, the learned CIT (A) has held that assessee has not filed any request for condonation of delay. j. In fact, the assessee has filed appeal electronically on 8 March 2019 and on 4 March 2020, the petition for condonation of delay. k. This fact was also pointed out to the National Faceless Appeal Centre, vide letter dated 28 August 2023. The learned CIT (A) did not consider the same and dismissed the appeal as delayed and hence not maintainable. We find that even when the petition for condonation of delay was filed, same was not considered by the learned CIT (A) and therefore, the order of the learned CIT (A) without considering the petition for condonation of delay and held that assessee has not filed any such petition is not sustainable in law. Therefore, we set aside the whole appeal back to the file of the learned CIT (A) with a direction to consider the condonation petition dated 4 th March, 2020 also to consider the communication dated 28 th August, 2022 Page | 9 ITA No. 3241/Mum/2023 Rajiv Kumar Nandlal Varma; A.Y. 13-14 and then decide the issue of delayed filing of the appeal after giving assessee a proper opportunity of hearing. If the learned CIT (A) decides to condone the delay, the matter should be decided on the merits of the case by giving assessee a proper opportunity of hearing. 09. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 05.01. 2024. Sd/- Sd/- (RAHUL CHAUDHARY) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated:05.01.2024 Sudip Sarkar, Sr.PS Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai