Shiva Satva Gavali, Jalgaon V. Income-tax Officer,

ITA 340/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2645 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-01-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 24-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASEEM SHARMA
• Keywords: Capital asset; Cost of acquisition
• Section: 54B; 54F; 142(1); 131; 148; 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E , , !'#'' $ , % & BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO. 340/PN/2014 %' ( ')( / ASSESSMENT YEAR : 2007-08 SHRI SHIVA SATVA GAVALI, AT POST : MOHADI, TAL. & DISTT. : JALGAON, PIN : 425001 PAN : BDNPG4487N ....... / APPELLANT ' / V/S. INCOME TAX OFFICER, WARD 2(3), JALGAON / RESPONDENT ASSESSEE BY : SHRI ABHAY AVCHAT REVENUE BY : SHRI ASEEM SHARMA / DATE OF HEARING : 05-01-2016 / DATE OF PRONOUNCEMENT : 04-03-2016 * / ORDER PER VIKAS AWASTHY, JM : THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE OR DER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, NASHIK DATED 11-12 -2013 FOR THE ASSESSMENT YEAR 2007-08. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RE CORDS ARE: THE ASSESSEE IS AN AGRICULTURALIST. THE ASSESSEE SOLD HIS AGR ICULTURAL LAND 2 ITA NO. 340/PN/2014, A.Y. 2007-08 MEASURING 4 H 77R, COMPRISING IN GAT NO. 99 SITUATED AT VILLA GE MOHADI, TAL. AND DISTT.-JALGAON IN THE YEAR 2006 FOR A CO NSIDERATION OF ` 31,32,000/-. THE SAID LAND WAS SITUATED WITHIN 8 KMS. OF CO RPORATION LIMITS OF JALGAON. THE ASSESSEE HAD NOT FILED ANY RETURN O F INCOME. IN THE FINANCIAL YEAR 2009-10, THE INCOME TAX OFFICER, WARD 2(3), JALGAON (HEREINAFTER REFERRED TO A.O.) HAD CALLED INFORMATION FROM THE A SSESSEE REGARDING INVESTMENT IN RBI BONDS. NOTICE U/S. 148 OF TH E INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSU ED TO THE ASSESSEE ON 12-04-2010. SINCE, NO RETURN OF INCOME WAS FILED BY THE ASSESSEE, THE ASSESSING OFFICER ISSUED SUMMONS U/S. 131 OF THE ACT. SHRI PUNA SHIVA GAVALI, SON OF THE ASSESSEE APPEARED BEFO RE THE ASSESSING OFFICER AND SUBMITTED THAT THE ASSESSEE HAD SO LD TWO PARCEL OF AGRICULTURAL LAND AND HAVE INVESTED THE SALE PROCEEDS IN PURCHASE OF AGRICULTURAL LAND AND CONSTRUCTION OF A NEW RESIDENTIAL HOUS E. THEREAFTER, NEITHER THE ASSESSEE NOR ANY OF HIS AUTHORIZ ED REPRESENTATIVE PARTICIPATED IN THE PROCEEDINGS BEFORE THE ASSESSING OFFICER DESPITE ISSUANCE OF SEVERAL NOTICE U/S. 142(1) OF THE ACT. THE ASSESSING OFFICER WAS CONSTRAINED TO MAKE ASSESSMENT U/S . 144 OF THE ACT. THE ASSESSING OFFICER DETERMINED LONG TERM CAPITAL GA IN OF ` 30,07,296/- IN RESPECT OF SURPLUS ARISING FROM SALE OF AGRICU LTURAL LAND. AGGRIEVED BY THE ASSESSMENT ORDER DATED 29-12-2011, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF I NCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) AFTER CO NSIDERING THE DETAILED SUBMISSIONS OF THE ASSESSEE AND THE REMAN D REPORT, PARTIALLY ACCEPTED THE APPEAL OF THE ASSESSEE BY GRANT ING EXEMPTION U/S. 54 OF THE ACT TO THE EXTENT OF 60% OF THE AMOUNT P URPORTEDLY UTILIZED BY ASSESSEE FOR CONSTRUCTION OF NEW RESIDENTIAL HOU SE. 3 ITA NO. 340/PN/2014, A.Y. 2007-08 HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CLAIM OF THE ASSESSEE IN RESPECT OF EXPENDITURE CLAIMED TOWARDS PAYMENT OF COMMISSION AND EXEMPTION CLAIMED U/S. 54BOF THE ACT. AGAIN ST THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS), THE ASS ESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. SHRI ABHAY AVCHAT APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A FARMER AND AN ILLITERATE PERSON O F MORE THAN 68 YEARS OF AGE. THE ASSESSEE SOLD HIS AGRICULTURAL LAND FOR A CONSIDERAT ION OF ` 31,32,000/- AND INVESTED THE AMOUNT TOWARDS THE PURCHA SE OF AGRICULTURAL LAND AND CONSTRUCTION OF A NEW RESIDENTIAL HOUS E. THEREFORE, THE ASSESSEE IS ELIGIBLE TO CLAIM EXEMPTION U/S. 54 F AND 54B OF THE ACT. THE ASSESSEE HAS NOT INVESTED THE SURPLUS ARISING FROM SALE OF LAND TOWARDS PURCHASE OF RBI BONDS. THE LD. AR SUBMIT TED THAT ADMITTEDLY THE ASSESSEE DID NOT FILE HIS RETURN OF INCOME. SINCE, THE ASSESSEE IS AN ILLITERATE PERSON FROM RURAL AREA, THE ASSES SEE IS NOT AWARE ABOUT THE INCOME TAX LAWS AND THE PROCEEDINGS T HEREIN. DUE TO IGNORANCE OF ASSESSEE HE COULD NOT PROPERLY EXPLAIN THE FACTS BEFORE THE ASSESSING OFFICER AND WAS NOT PROPERLY REPRESENTED AT T HE TIME OF ASSESSMENT PROCEEDINGS. THE ASSESSEE HAD FURNISHED AN AFFIDAVIT BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) STATING THA T HE HAD PAID ` 43,200/- AS COMMISSION TO HIS FATHER SHRI DHARMA MURAJI GA VALI, WHO IS IN THE BUSINESS OF SALE AND PURCHASE OF LAND. HOWEV ER, THE SAID AFFIDAVIT OF THE ASSESSEE WAS REJECTED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AR FURTHER SUBMITTED THAT THE ASSES SEE HAD CLAIMED EXEMPTION U/S. 54F OF THE ACT IN RESPECT OF ` 23,07,000/- UTILIZED TOWARDS THE CONSTRUCTION OF NEW HOUSE. THE COM MISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN RESTRICTING THE EXEMP TION TO 60%. THE ASSESSEE HAD ALSO PURCHASED AGRICULTURAL LAND IN THE NAME OF HIS 4 ITA NO. 340/PN/2014, A.Y. 2007-08 SONS AND HAD CLAIMED EXEMPTION U/S. 54B. HOWEVER, THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CLAIM OF T HE ASSESSEE IN RESPECT OF EXEMPTION U/S. 54B. THE LD. AR SUB MITTED THAT THE TRIBUNAL HAS BEEN ALLOWING EXEMPTION U/S. 54 WHERE TH E INVESTMENT HAS BEEN MADE IN THE NAME OF SONS OR WIFE. I N SUPPORT OF HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE DECISION O F PUNE BENCH OF THE TRIBUNAL IN THE CASE OF M/S. CHAKRABARTY MED ICAL CENTRE VS. TAX RECOVERY OFFICER IN ITA NO. 2277/PN/2012 FOR ASSES SMENT YEAR 2008-09 DECIDED ON 30-01-2015. 4. SHRI ASEEM SHARMA REPRESENTING THE DEPARTMENT VEHE MENTLY SUPPORTED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEA LS). THE LD. DR SUBMITTED THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IS WELL REASONED AND JUSTIFIED. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS GRANTED RELIEF TO THE ASSESSEE U/S. 54F OF THE ACT TO THE EXTENT OF 60% OF THE AMOUNT ALLEGEDLY INVESTED FOR C ONSTRUCTION OF HOUSE. THE ASSESSEE WAS NOT ABLE TO PRODUCE EVIDENCE OF THE EXACT AMOUNT UTILIZED TOWARDS THE CONSTRUCTION OF HOUSE. FURT HER, THE AGRICULTURAL LAND PURCHASED BY THE ASSESSEE IS NOT IN THE NAME OF ASSESSEE, THEREFORE, THE COMMISSIONER OF INCOME TAX (APPEA LS) HAS RIGHTLY DENIED THE EXEMPTION CLAIMED BY THE ASSESSEE U/S . 54B OF THE ACT. IN SO FAR AS THE CLAIM OF EXPENDITURE TOWARDS THE PAYMENT OF COMMISSION IS CONCERNED, EXCEPT FOR THE AFFIDAVIT THERE IS N O OTHER DOCUMENT TO SHOW THAT THE COMMISSION WAS PAID BY THE A SSESSEE. THE ALLEGED COMMISSION IS PAID BY THE ASSESSEE TO HIS FATHER. T HE AFFIDAVIT IS A SELF SERVING DOCUMENT. THEREFORE, IT HAS BEEN RIGHTLY REJECTED BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE LD. DR PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. 5 ITA NO. 340/PN/2014, A.Y. 2007-08 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESEN TATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIE S BELOW. IN THE PRESENT APPEAL, THE ASSESSEE HAS MADE THREE FOLD SUBMISSIONS. 6. THE FIRST SUBMISSION IN THE APPEAL IS WITH REGARD TO DISA LLOWANCE OF COMMISSION PAID ` 43,200/-. THE ASSESSEE HAD SOLD THE LAND FOR A CONSIDERATION OF ` 31,32,000/-. TO ARRIVE AT LONG TERM CAPITAL GAINS, APART FROM THE COST OF ACQUISITION, THE ASSESSEE HAS CLAIM ED 1% COMMISSION AMOUNTING TO ` 43,200/- PAID TO HIS FATHER SHRI DHARMA MURAJI GAVALI WHO WAS ALLEGEDLY DEALING IN SALE PURCHASE O F LAND. EXCEPT FOR THE AFFIDAVIT, NO OTHER DOCUMENT WAS PLACED ON RECORD TO SUBSTANTIATE THAT THE ASSESSEE HAD PAID COMMISSION FOR T HE SALE TRANSACTIONS. IN FIRST APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CLAIM OF THE ASSESSEE BY OBSERVING THAT THE AFFIDAVIT IS A SELF GENERATED DOCUMENT AND THERE IS NO OTHE R DOCUMENT TO SUBSTANTIATE SUCH CLAIM. WE AGREE WITH THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. THE FATH ER OF THE ASSESSEE TO WHOM THE ALLEGED COMMISSION WAS PAID EXPIRED ON 08-12-2010. THEREFORE, THE PAYMENT OF COMMISSION COULD NO T BE VERIFIED. WE DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE ASSESSEE AS NEITHER THE CLAIM OF THE ASSESSEE IS VERIFIABLE NOR THERE IS ANY COGENT EVIDENCE TO SUBSTANTIATE SUCH CLAIM. RELIANCE CANNOT BE P LACED ON AFFIDAVIT OF THE ASSESSEE WHICH IS A SELF SERVING EVIDENCE. TH EREFORE, THE FIRST GROUND RAISED IN THE APPEAL IS DISMISSED. 7. IN THE SECOND GROUND THE ASSESSEE HAS ASSAILED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN GRANTING PARTIAL DE DUCTION (60%) U/S. 54F OF THE ACT. THE ASSESSEE HAD CLAIMED EXEM PTION U/S. 54F ON ACCOUNT OF CONSTRUCTION OF RESIDENTIAL HOUSE FROM T HE SALE 6 ITA NO. 340/PN/2014, A.Y. 2007-08 PROCEEDS OF AGRICULTURAL LAND. THE COMMISSIONER OF INCOME T AX (APPEALS) IN HIS ORDER HAS OBSERVED THAT THE ASSESSEE ST ARTED CONSTRUCTION OF RESIDENTIAL HOUSE ON 22-07-2006 AND THE SAME WAS COMPLETED ON 30-08-2008. THE DUE DATE FOR FILING OF RETURN WAS 31-07- 2007. SINCE, THE ASSESSEE HAD NOT DEPOSITED THE AMOUNT IN BANK, HE IS NOT ENTITLED TO FULL EXEMPTION. THE COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVED THAT NO EVIDENCE OF EXACT AMOU NT UTILIZED UPTO 31-07-2007 WAS PRODUCED BY THE ASSESSEE. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD INVESTED THE AMOUNT OF SALE PROCEEDS TOWARDS THE CONSTRUCTION OF A N EW RESIDENTIAL HOUSE. AS PER THE PROVISIONS OF SECTION 54F THE ASSESSE E IS ELIGIBLE TO CLAIM RELIEF U/S. 54F, IF THE CAPITAL GAIN ARISING FROM THE TRANSFE R OF ANY LONG TERM CAPITAL ASSET NOT BEING A RESIDENTIAL HOUSE IS INVESTED WITHIN THE PERIOD OF 1 YEAR OR TWO YEARS AFTER THE DATE OF TRANSFER TOWARDS THE PURCHASE OR WITHIN THE PERIOD OF THREE YEAR S AFTER THE DATE OF TRANSFER TOWARDS THE CONSTRUCTION OF A RESIDENTIAL HOUS E. THE CONTENTION OF THE ASSESSEE IS THAT THE AMOUNT OF ` 23,07,000/- HAS BEEN UTILIZED TOWARDS THE CONSTRUCTION OF A NEW HOUSE AND THE NEW HOUSE WAS COMPLETED ON 30-08-2008. THE LAND WAS SOLD IN 2006. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ELIGIB LE TO CLAIM EXEMPTION U/S. 54F. SINCE, THE ASSESSEE WAS NOT ABLE TO SHOW FROM RECORDS THE EXTENT TO INVESTMENT MADE IN NEW HOUSE, CO MMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE EXEMPTION TO 60% OF THE AMOUNT CLAIMED. EVEN BEFORE THE TRIBUNAL THE ASSESSEE HAS NOT S UBSTANTIATED THE INVESTMENT MADE IN THE NEW HOUSE. WE ARE OF THE CO NSIDERED VIEW THAT DISALLOWANCE OF 40% OF EXEMPTION CLAIMED IS ON HIGHER SID E. TO MEET THE ENDS OF JUSTICE, WE RESTRICT THE DISALLOWANCE TO 15%. THUS, THE ASSESSEE IS ALLOWED EXEMPTION U/S. 54F TO THE EXTENT OF 8 5% OF 7 ITA NO. 340/PN/2014, A.Y. 2007-08 ` 23,07,000/- I.E. ` 19,60,950/-. ACCORDINGLY, THE SECOND GROUND OF THE APPEAL IS PARTLY ACCEPTED. 8. THE THIRD GROUND RAISED IN THE APPEAL RELATES TO THE CLAIM OF ASSESSEE U/S. 54B IN RESPECT OF THE AMOUNT UTILIZED FROM T HE SALE OF AGRICULTURAL LAND TOWARDS THE PURCHASE OF AGRICULTURAL LAND. OSTENSIBLY, THE ASSESSEE HAS PURCHASED AGRICULTURAL LAND IN THE NAME OF HIS SONS. THE AUTHORITIES BELOW HAVE DENIED EXEMPTION U/S. 54B ONLY ON THE GROUND THAT THE AGRICULTURAL LAND HAS NOT B EEN PURCHASED BY ASSESSEE IN HIS OWN NAME. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. RAVINDE R KUMAR ARORA REPORTED AS 15 TAXMANN.COM 307 (DELHI) : 342 ITR 38 HAS HELD THAT THE PROVISIONS OF SECTION 54F OF THE ACT ARE TH E BENEFICIAL PROVISION WHICH SHOULD BE INTERPRETED LIBERALLY IN FAVOUR OF T HE DEDUCTION TO THE TAXPAYER AND DEDUCTION SHOULD NOT BE DENIED ON HYPER TECHNICAL GROUND. THE WORD 'ASSESSEE' MUST BE GIVEN W IDE AND LIBERAL INTERPRETATION SO AS TO INCLUDE HIS LEGAL HEIRS ALSO. THERE IS NO WARRANT FOR GIVING TOO STRICT AN INTERPRETATION TO THE WORD 'ASSE SSEE' AS THAT WOULD FRUSTRATE THE OBJECT OF GRANTING EXEMPTION. THE HO N'BLE HIGH COURT AFTER PLACING RELIANCE ON THE DECISION OF HON'BLE MADR AS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. V. N ATARAJAN REPORTED AS 287 ITR 271 (MAD) AND THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. GURNAM SINGH R EPORTED AS 327 ITR 278 ALLOWED EXEMPTION U/S. 54F CLAIMED BY THE ASS ESSEE, WHERE THE ASSESSEE HAD PURCHASED A RESIDENTIAL HOUSE IN THE NAME OF HIS WIFE. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE DELHI HIG H COURT WE HOLD THAT THE ASSESSEE IS ELIGIBLE TO CLAIM EXEMP TION U/S. 54B WHERE THE AGRICULTURAL LAND HAS BEEN PURCHASED BY THE A SSESSEE IN THE 8 ITA NO. 340/PN/2014, A.Y. 2007-08 NAME OF HIS SONS. AFTER PERUSAL OF THE IMPUGNED ORDER IT IS NOT EVIDENT AS TO WHAT AMOUNT WAS CLAIMED BY THE ASSESSEE AS EXEM PTION U/S. 54B. ACCORDINGLY, WE DEEM IT APPROPRIATE TO REMIT THIS IS SUE BACK TO THE FILE OF ASSESSING OFFICER TO DETERMINE THE EXEMPTION U/S. 54B AFTER VERIFYING THE INVESTMENT MADE BY THE ASSESSEE TOWARDS THE PURCHASE OF AGRICULTURAL LAND. THIS GROUND OF APPEAL IS ALLOWED FOR THE ST ATISTICAL PURPOSE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON FRIDAY, THE 04 TH DAY OF MARCH, 2016. SD/- SD/- ( . . / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' / ACCOUNTANT MEMBER $ % #' / JUDICIAL MEMBER / PUNE; &# / DATED : 04 TH MARCH, 2016 RK *+,%-.#/#)- / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ' () / THE CIT(A)-2, NASHIK 4. ' / THE CIT-2, NASHIK 5. !*+ %%,- , ,- , . ./0 , / DR, ITAT, B BENCH, PUNE. 6. + 1 23 / GUARD FILE. // ! % // TRUE COPY// #4 / BY ORDER, %5 ,0 / PRIVATE SECRETARY, ,- , / ITAT, PUNE