SURESH KUMAR K TEK, MUMBAI V. ITO 19(1)(4), MUMBAI

ITA 5202/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100928 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 13-08-2014
• Court: TRIBUNAL
• Department Lawyers: G N MAKAWANA
• Section: 143(3); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI G.S. PANNU , ACCOUNTANT MEMBER ITA NO . 5 2 0 2 / MUM./ 2014 ( ASSESSMENT YEAR : 20 08 09 ) SURESH KUMAR K. TEK FLAT NO.1, 1 ST FLOOR AKASH DARSHAN SOCIETY VAKOLA MASJID ROAD SANTACRUZ (E), MUMBAI 4 00 055 PAN ADLPT0764E .. APPELLANT V/S INCOME TAX OFFICER WARD 1 9 ( 2 )(4), PIRAMAL CHAMBER MUMBAI 400 055 .... RESPONDENT ASSESSEE BY : SHRI RAJENDRA KUMAR JAIN REVENUE BY : SHRI G.N. MAKAWANA DATE OF HEARING 1 7 .0 7 .2015 DATE OF ORDER 31.08.2015 O R D E R PER G.S. PANNU, ACCOUNTANT MEMBER TH E PRESENT APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 29 TH JUNE 2012 , PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) 30 , MUMBAI, WHICH IN T URN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS THE ACT) DATED 22.12.2010 PERTAINING TO ASSESSMENT YEAR 2008 - 09. SURESH KUMAR K. TEK 2 2. DURING THE COURSE OF HEARING, IT WAS OBSERVED THAT THE PRESEN T APPEAL IS BARRED BY LIMITATION AND HAS BEEN FILED BELATEDLY BY 715 DAYS. THE AFFIDAVIT DULY SWORN BY THE ASSESSEE HAS BEEN FILED EXPLAINING THE DELAY IN FILING OF THE PRESENT APPEAL AND IT IS CONTENDED THAT THE DELAY IS FOR BONA FIDE AND COMPELLING CIRCU MSTANCES DUE TO MEDICAL ILLNESS , AS HE WAS THROUGHOUT SUFFERING FROM DIABETES AND DEPRESSION. HENCE, THE LEARNED COUNSEL FOR THE ASSESSEE PRAYED THAT THE DELAY IN FILING THE PRESENT APPEAL BE CONDONED. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT OBJE CT TO THE CONTENT S OF THE AFFIDAVIT FILED BY THE LEARNED COUNSEL FOR THE ASSESSEE FOR CONDONATION OF DELAY. 4. ON A PERUSAL OF THE CONTENTS OF AFFIDAVIT , WHOSE BONA FIDES HAVE NOT BEEN ASSAILED BY THE REVENUE, I AM OF THE CONSIDERED OPINION THAT THE ASSESSEE WA S PREVENTED BY SUFFICIENT CAUSE FROM FILING THE APPEAL I N TIME BEFORE THE TRIBUNAL , AND IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE DELAY INDEED DESERVES TO BE CONDONED . CONSEQUENTLY, I HEREBY CONDONE THE DELAY AND PROCEED TO DECIDE THE APPE AL ON MERIT S . 2. THE G ROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS : 1. THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCES OF CLAIM UNDER SECTION 54FC AMOUNTING TO RS. 10 ,91,121. SURESH KUMAR K. TEK 3 2. THE LEARNED CIT(A) ERRED IN CONFIRMING DISALLOWANCES OF BROKE RAGE FOR ` 2,16,000, AND LEGAL EXPENSES ` 20,000. 5. FACTS IN BRIEF : THE ASSESSEE HAD SOLD RESIDENTIAL FLAT (PROPERTY) FOR RS. 65 LAKH AND HAS EARNED LONG TERM CAPITAL GAIN OF RS. 54,89,041, AFTER CLAIMING INDEXATION IN RESPECT OF ACQUISITION OF FLAT AND COST OF TRANSFER OF FLAT. AGAINST THIS, THE ASSESSEE MADE INVESTMENT IN A PROPERTY AND CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT OF RS. 46,13,920 / - . IT WAS OBSERVED BY THE ASSESSING OFFICER THAT BALANCE CAPITAL GAIN OF RS. 8,75,121 / - HAS BEEN INVESTED IN CAPITAL GAIN SCHEME WITH CANARA BANK. THE ASSESSEE WAS SHOW CAUSED AS TO WHY THE EXEMPTION OF RS. 8,75,121 / - CLAIMED UNDER SECTION 54EC OF THE ACT BE NOT DENIED AS THE ASSESSEE HAS ALREADY PURCHASED ONE HOUSE PROPERTY AND CLAIMED EXEMPTION UNDER SECTIO N 54 OF THE ACT. THE ASSESSEE SUBMITTED THAT RS. 8,75,121 / - WAS DEPOSITED IN THE CAPITAL GAIN ACCOUNT ON 29 TH JULY 2008 I.E., BEFORE FILING THE RETURN OF INCOME AND THE INVESTMENT IS NOT RESTRICTED TO PURCHASE OF ONE HOUSE ONLY. AFTER CONSIDERING THE SUBMI SSIONS, THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS SOLD THE PROPERTY ON 1 ST APRIL 2007, FOR A CONSIDERATION OF RS. 65 LAKH AND THE ASSESSEE HAS PURCHASED NEW HOUSE ON 30 TH JANUARY 2008, FOR A CONSIDERATION OF RS. 43 LAKH AND SINCE THE ASSESSEE HAS SURESH KUMAR K. TEK 4 IN VESTED IN ONE PROPERTY, THE BALANCE CAPITAL GAIN OF RS. 8,75,121 / - SHOULD HAVE BEEN OFFERED FOR TAXATION AS UNUTILIZED CAPITAL GAIN. THE ASSESSING OFFICER FURTHER GAVE THE BENEFIT OF STAMP DUTY PAID AND REGISTRATION CHARGES PAID FOR THE ACQUISITION OF NEW PROPERTY AND BROUGHT TO TAX THE LONG TERM CAPITAL GAIN OF RS. 10,91,121/ - THE ASSESSING OFFICER ALSO DISALLOWED RS. 2,16,000 / - REPRESENTING BROKERAGE PAID AND ALSO ADVOCATE FEE OF RS. 20,000 / - PAID BY THE ASSESSEE AS NO EVIDENCE WAS PRODUCED TO SUBSTANTIAT E THE PAYMENT OF THESE EXPENSES. 6. BEING AGGRIEVED BY THE ORDER PASSED BY THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY AND CONTENDED THAT HE HAS INVESTED RS. 8,75,121 / - IN THE CAPITAL GAIN ACCOUNTS SCHEME WHICH HE CA N UTILIZE FOR ACQUISITION OF SECOND PROPERTY WITHIN A PERIOD OF THREE YEARS AS PROVIDED UNDER SECTION 54EC OF THE ACT. THE ASSESSEE ALSO CONTENDED THAT HE IS ENTITLED FOR DEDUCTION OF RS. 2,16,000 / - AS BROKERAGE AND RS. 20,000 / - FOR ADVOCATE FEE FOR SALE O F PROPERTY. THE CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE ON THE GROUND THAT THE ASSESSEE IS ENTITLED TO INVEST ONLY IN THE ONE PROPERTY AND THE DEDUCTION UNDER SECTION 54 OF THE ACT, FOR THE SAME WAS DULY ALLOWED . THE CIT(A) ALSO HELD THAT THE ASSESSEE HAS SURESH KUMAR K. TEK 5 ONCE AGAIN NOT PRODUCED ANY EVIDENCE WITH REGARD TO THE BROKERAGE CHARGES PAID OF RS. 2,16,000 / - AND ADVOCATE FEE OF RS 20 , 000 , AND HENCE, HE DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 7. BEFOR E ME, THE LEARNED COUNSEL FOR THE ASSESSEE STATED THAT THE ASSESSEE HAS ERRONEOUSLY REFERRED THE CLAIM OF DEDUCTION U/S 54EC OF THE ACT RATHER THE CLAIM IS MADE FOR DEDUCTION U/S 54(2) OF THE ACT , WHICH ALLOW S THE ASSESSEE TO DEPOSIT THE AMOUNT IN CAPITAL GAIN ACCOUNT MAINTAINED WITH BANK BEFORE THE DUE DATE OF FILING OF TAX RETURN. THE ASSESSEE HAS DEPOSITED THE UNUTILIZED CAPITAL GAIN OF RS 8 , 75 , 121 / - AFTER INVESTING IN ONE FLAT OF RS 43,00,000 / - . THE COUNSEL SUBMITTED THAT AS PER SECTION 54 , THERE IS NO BAR OF MAKING INVESTMENT OF CAPITAL GAIN IN RESIDENTIAL FL AT AS WELL AS PER SECTION 54(2) , THE BALANCE AMOUNT CAN BE DEPOSITED IN CAPITAL GAIN ACCOUNT MAINTAINED WITH BANK BEFORE THE DUE DATE OF FILING RETURN. HE REITERATED THE SUBMISSIONS AS MADE BEFORE THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ASSESSEE IS ENTITLED FOR THE DEDUCTION OF DEPOSIT OF RS. 8,75,121 / - , INVESTED IN CAPITAL GAIN ACCOUNT WITH CANARA BANK A S CLAIMED UNDER SECTION 54(2) OF THE ACT. THE ASSESSEE ALSO REITERATED THAT THE ASSESSEE IS ENTITLED FOR THE DEDUCTION ON ACCOUNT OF BROKERAGE OF RS. 2.16 LAKH AND ADVOCATE FEE OF RS. 20,000. SURESH KUMAR K. TEK 6 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 9. I HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE MATERIAL AVAILABLE ON RECORD. IN MY VIEW, AS PER THE STIPULATIONS OF SECTION 54(2) OF THE ACT, THERE IS NO BAR ON THE ASSESSEE FOR MAKING DEPOSIT OF UNUTILIZED CAPITAL GAIN IN PRESCRIBED BANK OR INSTITUTION BEFORE DUE DATE OF FILING TAX RETURN A S P ER SECTION 139(1) OF THE ACT , DESPITE THE FACT THAT THE ASSESSEE HAS ALREADY PURCHASED ONE RESIDENTIAL FLAT AS HELD IN CIT V KHOOBCHAND M MIKHYA 223 TAXMANN 0189 (2014) . HOWEVER, SECTION 54(2) OF THE ACT ALSO MANDATE S THAT THE SAID AMOUNT DEPOSITED WITH T HE CAPITAL GAIN ACCOUNT WITH BANK NEEDS TO BE UTILIZED FOR PURCHASE OR CONSTRUCTION OF THE NEW ASSET WITH IN THE PERIOD SPECIFIED IN SUB - SECTION (1) OF SECTION 54 OF THE ACT . IF THE AMOUNT DEPOSITED IS NOT SO UTILIZED, IT IS PRESCRIBED THAT IT SHALL BE CHAR GED U/S 45 OF THE ACT AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF THREE YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET EXPIRES. THEREFORE, THE ASSESSING OFFICER OUGHT TO HAVE VERIFIED WHETHER ASSESSEE HAS DULY COMPLIED WITH THE REQUIREMENTS OF SECTION 54 (2) OF THE ACT REGARDING INVESTMENT OF THE AMOUNT IN PURCHASE WITHIN TWO YEARS OR CONSTRUCTION OF ELIGIBLE RESIDENTIAL HOUSE PROPERTY WITHIN THREE YEARS OF THE DAT E OF TRANSFER OF ORIGINAL ASSET. SURESH KUMAR K. TEK 7 10. IN ANY CASE, DUE TO THE OPERATION OF THE MECHANIC S OF THE PROVISO BELOW SECTION 54(2) OF THE ACT, EVEN IF ASSESSEE HAS DEFAULTED, THE IMPUGNED SUM ( I.E. UNUTILIZED AMOUNT OF DEPOSIT IN BANK) CANNOT BE TAXED IN THE CURRENT YEAR. THEREFORE, I HEREBY DELETE THE ADDITION MADE BY ASSESSING OFFICER AND AS UPH ELD BY CIT(APPEAL ) WITH RESPECT TO THE DEPOSIT MADE BY ASSESSEE IN CAPITAL GAIN ACCOUNT WITH THE BANK . HOWEVER THE ASSESSING OFFICER SHALL BE COMPETENT TO VERIFY THE COMPLIANCE WITH THE REQUIREMENTS OF SECTION 54(2) READ WITH THE PROVISO THEREOF AND PROC EED AS PER LAW. THUS ON THIS ASPECT, ASSESSEE SUCCEEDS AS ABOVE. 11. R EGARDING PAYMENT OF BROKERAGE FOR PURCHASE AND SALE OF PROPERTY OF RS. 2,16,000 / - AND ADVOCATE FEE FOR RS. 20,000 / - EVEN BEFORE US THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE . HOWEVER , THE LD. REPRESENTATIVE SUBMITTED THAT THE MATTER BE REMITTED TO ALLOW THE ASSESSE E TO SUBSTANTIATE THE EXPENSES. ACCORDINGLY , I SET ASIDE THE IMPUGNED ADDITION MADE BY ASSESSING OFFICER AND AS UPHELD BY THE LEARNED CIT(A) , AND RESTORE TH E ISSUE B ACK TO THE FILE OF THE ASSESSING OFFICER FOR DENOVO ADJUDICATION AS PER LAW AFTER CLARIFICATION / VERIFICATION OF CLAIM OF PAYMENT OF BROKERAGE AND ADVOCATE FEE. NEEDLESS TO SAY, THE ASSESSING OFFICER SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BE ING HEARD BEFORE PASSING AN SURESH KUMAR K. TEK 8 ORDER AFRESH ON THIS ASPECT AS PER LAW. THE PLEA RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT O N SD/ - / - SD/ - G.S. PANNU ACCOUNTANT MEMBER MUMBAI, DATED : 31.08.2015 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER SKS SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI SURESH KUMAR K. TEK 9 DATE INITIAL ORIGINAL DICTATION PA D IS ENCLOSED AT THE E ND OF FILE 1. DRAFT DICTATED ON 10.7.2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 10.7.2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. DATE OF PRONOUNCEMENT SR.PS 7. FILE SENT TO THE BENCH CLERK 3 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER , / / / ` 42,352 TELEPHONE CHARGES ` 2,38,860