Smt. Roma Manohar Lakhani, Ahmedabad V. The Pr.CIT-I, Ahmedabad

ITA 525/AHD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9114 (ITAT-AHMEDABAD)
• Duration Of Justice: 11 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 08-02-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 03-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIBHA BHALLA
• Keywords: Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 54B; 54F; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI S. S. GODARA, JUDICIAL MEMBER) ITA. NO: 525/AHD/2016 (ASSESSMENT YEAR: 2011-12) SMT. ROMA MAHOHAR LAKHANI 38, SINDHI MARKET, REVDI BAZAR, AHMEDABAD380002 V/S PRINCIPAL CIT-1, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAUPL8711F APPELLANT BY : SHRI S.N. SOPARKAR, AR RESPONDENT BY : MS. VIBHA BHALLA, CIT/ D.R. ( )/ ORDER DATE OF HEARING : 08-02-2017 DATE OF PRONOUNCEMENT : 13 -02-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. WITH THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE C ORRECTNESS OF THE ORDER OF THE LD. PRINCIPAL CIT-I, AHMEDABAD DATED 27.01.2 016 MADE U/S. 263 OF THE ACT. ITA NO. 525/ AHD/2016 . A.Y.2011-12 2 2. THE ASSESSEE STRONGLY CONTENDS THAT THE LD. PRINCIP AL CIT HAS WRONGLY ASSUMED JURISDICTION U/S. 263 OF THE ACT, AND, THER EFORE, THE ORDER DATED 27.01.2016 MADE U/S. 263 OF THE ACT IS BAD IN LAW. 3. IN THIS CASE, ASSESSMENT WAS MADE VIDE ORDER DATED 30.10.2013 U/S. 143(3) OF THE ACT. RETURNED INCOME OF RS. 1,78,690/- WAS A SSESSED AT RS. 1,78,690/- AS UNDER:- INCOME FOR STCG RS. 24,051/- INCOME FROM LTCG RS. NIL/- INCOME FROM OTHER SOURCES RS. 2,39,642/- COMMODITY INCOME RS. 30,000/- DEDUCTION U/C. VIA RS. 1,15,000/- TOTAL INCOME 1,78,693/- ROUNDED OFF RS. 1,78,690/- 4. THE LD. PRINCIPAL CIT CALLED FOR AND EXAMINED THE A SSESSMENT ORDER. ACCORDING TO THE LD. PRINCIPAL CIT, THE ASSESSMENT ORDER WAS NOT ONLY ERRONEOUS BUT ALSO PREJUDICIAL TO THE INTEREST OF T HE REVENUE AS PER THE FACTS STATED BELOW:- 1. INCORRECT CLAIM OF DEDUCTION U/S. 54 OF THE ACT AMO UNTING TO RS. 63,03,311/- BEING DEPOSIT IN CAPITAL GAIN ACCOUNT SCHEME OUT OF SALE CONSIDERATION. HOWEVER, IT IS NOTICED THAT THE CAPITAL GAIN ACCOUNT SHOWN BY THE ASSESSEE IS ACTUALLY SAVING BANK ACCOUNT. THEREFORE, EXEMPTION CLAIMED U/S. 54F (4) IS NOT ALLOWABLE AND REQUIRED TO BE DISALLOWED. 2. INCORRECT ALLOWANCE OF EXPENDITURE FOR NEW HOUSE CO NSTRUCTION. IT IS NOTICED THAT THE EXPENSES RELATED TO CONSTRUCTION ARE CLAIMED HO WEVER NO PROOF OF PAYMENT MADE FOR ACQUIRING LAND IS ON RECORDS. THEREFORE, T HE CLAIM OF EXEMPTION ALLOWED U/S. 54 OF RS. 41,60,486/- IS NOT CORRECT. ITA NO. 525/ AHD/2016 . A.Y.2011-12 3 5. ACCORDINGLY, STATUTORY NOTICE WAS ISSUED AND SERVED UPON THE ASSESSEE. CALLING UPON THE ASSESSEE TO SHOW CAUSE WHY APPROPR IATE ORDER U/S. 263 OF THE ACT SHOULD NOT BE PASSED. 6. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. PRINCIPAL CIT HELD AS UNDER:- 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUB MISSIONS MADE BY THE AR OF THE ASSESSEE. ON VERIFICATION, IT IS SEEN THAT THE ACCOUNT PROVIDED AS 'CAPITAL GAIN ACCOUNT' IS ACTUALLY A SAVING BANK ACCOUNT NO.087820 81000019 OF ORIENTAL BANK OF COMMERCE, DRIVE-IN-ROAD. AHMEDABAD BRANCH OPENED ON 15-02-2011 BY DEPOSITING RS.1,000/-. THEREAFTER, THE SALE CONSIDE RATION AND OTHER AMOUNTS GETS CREDITED INTO THE ACCOUNT. THE AMOUNT OF RS.63,03,3 11/-CLAIMED AS DEDUCTION IS ACTUALLY THE BALANCE APPEARING ON 30-07-2011. IT IS HOWEVER, SEEN THAT SUBSEQUENTLY THE ASSESSEE HAS UTILIZED THIS BALANCE FOR MAKING OTHER INVESTMENT/DEPOSIT AND PAYMENTS E.G. THERE ARE 4 WI THDRAWALS ON 04-08-2011 (I) RS.20 LAC FOR INVESTING IN CDR (II) RS. 10 LAC FOR FDR, (III) RS.10 LAC FOR CDR AND (IV) RS.10 LAC BEING AMOUNT TRANSFERRED. AS PER THE CAPI TAL ACCOUNT SCHEME NOTIFICATION NO.G.S.R.724(E) DATED 22-06-1988, REFE R 172 ITR (ST.) 54/NO.S.NO.S.O.2553(E) DATED 25-10-2012 REFER 349 I TR (ST.) 18 HAS DEFINED THE DEPOSITOR, DEPOSIT OFFICE I.E. NOTIFIED BANK BY THE CENTRAL GOVERNMENT TO RECEIVE DEPOSIT AND MAINTAIN ACCOUNT FOR THE DEPOSITOR. HEN CE, THE ASSESSEE'S THIS ACCOUNT CANNOT BE REGARDED AS CAPITAL GAIN. THEREFO RE, THIS ACCOUNT OF THE ASSESSEE CANNOT BE TREATED AS CAPITAL GAIN ACCOUNT. FURTHER, THE ASSESSEE'S CLAIM FOR DEDUCTION U/S 54 OF THE ACT INCLUDES EXPENDITUR E OF RS.41,60,486/- CLAIMED TO HAVE BEEN SPENT FOR CONSTRUCTION OF NEW HOUSE. IT I S, HOWEVER, SEEN THAT THE EXPENSE PERTAIN TO CONSTRUCTION AND DOES NOT INCLUD E ANY PAYMENT MADE FOR ACQUIRING LAND. THE DETAILS OF EXPENSES OF RS.41.60 ,486/- PROVIDED SUGGEST THAT THE NEW PROPERTY IS NOT A READY BUILT FLAT OR PROPE RTY, THE CLAIM OF DEDUCTION IS TOWARDS A PROPERTY BEING CONSTRUCTED. AS PER THE EX EMPTION CLAIMED FOR CONSTRUCTION OF HOUSE, IT APPEARS THAT THE ASSESSEE HAS NOT FURNISHED PROOF OF LAND PURCHASED/OWNED BY HER. FURTHER, THE ASSESSEE HAS ALSO NOT FILED BUILDING USE PERMISSION. THEREFORE, IT IS NOT CERTAIN WHETHE R THE ASSESSEE HAS CONSTRUCTED THE HOUSE WITHIN TWO YEARS FROM THE DATE OF SALE OF THE RESIDENTIAL PROPERTY ON WHICH CAPITAL GAIN AROSE. ITA NO. 525/ AHD/2016 . A.Y.2011-12 4 6. FROM THE ABOVE DISCUSSION, IT IS EVIDENT THAT DE SIRED ENQUIRY INTO THE ENTIRE CLAIM OF THE ASSESSEE HAS NOT BEEN DONE BY THE ASSE SSING OFFICER. CONSEQUENTLY, THE ASSESSMENT ORDER IS ERRONEOUS AS WELL AS PREJUD ICIAL TO THE INTERESTS OF REVENUE. ACCORDINGLY, THE SAID ASSESSMENT IS HEREBY CANCELLED AND THE AO IS DIRECTED TO MAKE FRESH ASSESSMENT IN ACCORDANCE WIT H LAW AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE IN RESPECT OF BOTH THE ABOVE ISSUES. 7. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. SUBMI SSIONS FROM BOTH SIDES WERE HEARD AT LENGTH. HAVING HEARD THE RIVAL CONTEN TIONS, WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW WERE CA REFULLY PERUSED. THE FIRST THING WHICH HAS TO BE CONSIDERED IS WHETHER T HE LD. COMMISSIONER HAS RIGHTLY ASSUMED THE POWER U/S. 263 OF THE ACT. THE HONBLE SUPREME COURT IN MALABAR INDUSTRIAL CO. LTD. 243 ITR 83 HAS LAID DOWN THE FOLLOWING RATIO:- 'A BARE READING OF SECTION. 263 OF THE INCOME-TAX A CT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION B Y THE COMMISSIONER SUO MOTU UNDER II, IS THAT THE ORDER OF THE INCOME-TAX OFFIC ER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE CO MMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE AS SESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENTIF THE ORDER OF THE INCOME-TA X OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRO NEOUS HUT IS PREJUDICIAL TO THE REVENUE RECOURSE CANNOT BE HAD TO SECTION 263(1) O F THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPTION OF FACTS OR A N INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF THE ORDER BEING ERR ONEOUS' 8. NOW, LET US SEE IN THE LIGHT OF THE ABOVE RATIO WHE THER THE ASSESSMENT HAS BEEN MADE ON AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW. AS MENTIONED ELSEWHERE, THE FIRST REASON GI VEN BY THE LD. PRINCIPAL ITA NO. 525/ AHD/2016 . A.Y.2011-12 5 CIT IS THAT THE CAPITAL GAIN ACCOUNT SHOWN BY THE A SSESSEE IS ACTUALLY SAVING BANK ACCOUNT. ACCORDING TO THE LD. PRINCIPAL CIT, T HE ASSESSEE COULD NOT HAVE DEPOSITED THE AMOUNT IN A SAVINGS BANK ACCOUNT . THIS PROPOSITION OF THE LD. PRINCIPAL CIT IS INCORRECT AS PER THE CAPIT ALS GAINS ACCOUNTS SCHEME 1988 VIDE NOTIFICATION NO. G.S.R. 724 (E), DATED 22 ND JUNE, 1988 172 ITR (ST.) 54. THE RELEVANT PART OF WHICH READS AS UNDER:- 2 .DEFINITIONS.- IN THIS SCHEME, UNLESS THE CONTEXT OTHERWISE REQUIRES,- (A) ACCOUNT MEANS A DEPOSIT ACCOUNT UNDER THIS SC HEME; (B) ACCOUNT-A MEANS DEPOSIT ACCOUNT-A MENTIONED I N PARAGRAPH 4 OF THIS SCHEME; (C) ACCOUNT-B MEANS DEPOSIT ACCOUNT-B MENTIONED I N PARAGRAPH 4 OF THIS SCHEME; (D) ACT MEANS THE INCOME-TAX ACT, 1961 (43 OF 196 1); (E) DEPOSIT OFFICE MEANS ANY BRANCH OR BRANCH OFF ICE OF THE STATE BANK OF INDIA CONSTITUTED UNDER THE STATE BANK OF INDIA ACT, 1955 (23 OF 1955), OR OF A SUBSIDIARY BANK AS DEFINED IN THE STATE BANK OF IND IA (SUBSIDIARY BANKS) ACT, 1959 (38 OF 1959), OR OF A CORRESPONDING NEW BANK C ONSTITUTED UNDER SECTION 3 OF THE BANKING COMPANIES (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1970 (5 OF 1970) OR UNDER SECTION 3 OF THE BANKING COMPANIE S (ACQUISITION AND TRANSFER OF UNDERTAKINGS) ACT, 1980 (40 OF 1980), AUTHORIZED BY THE CENTRAL GOVERNMENT, BY NOTIFICATION IN THE OFFICIAL GAZETTE, TO RECEIVE DEPOSIT AND MAINTAIN ACCOUNT OF THE DEPOSITOR, UNDER THIS SCHEME; (F) DEPOSITOR- MEANS AN ASSESSEE WHO IS ELIGIBLE TO MAKE A DEPOSIT UNDER SECTION 54, 54B, 54D, 54F OR 54G OF THIS ACT: (G) ALL OTHER WORDS AND EXPRESSIONS USED HEREIN BUT NOT DEFINED AND DEFINED IN THE ACT SHALL HAVE THE MEANINGS RESPECTIVELY ASSIGNED T O THEM IN THE ACT. (H) FORM MEANS A FORM APPENDED TO THIS SCHEME. 3. DEPOSITS HOW TO BE MAKE- A DEPOSIT OR DEPOSITS M AY BE MADE UNDER THE PROVISIONS OF SECTION 54 OR SECTION 54B OR SECTION 54D OR SECTION 54F OR SECTION 54G OF THE ACT BY ANY DEPOSITOR INTENDING TO AVAIL OF THE BENEFIT UNDER THE SAID ITA NO. 525/ AHD/2016 . A.Y.2011-12 6 SECTION OR SECTIONS OF THE ACT, AS THE CASE MAY BE, IN ACCORDANCE WITH THE PROVISIONS OF THIS SCHEME. 4. TYPES OF DEPOSITS.- (1) THERE SHALL BE TWO TYPES OF DEPOSIT ACCOUNTS, NAMELY:- (I) DEPOSIT ACCOUNT-A AND (II) DEPOSIT ACCOUNT-B. (2) THE DEPOSIT MADE UNDER ACCOUNT-A SHALL BE IN TH E FORM OF SAVINGS DEPOSIT AND SUBJECT TO THE OTHER PROVISIONS OF THIS SCHEME, WIT HDRAWALS UNDER THIS ACCOUNT CAN BE MADE FROM TIME TO TIME BY THE DEPOSITOR. 9. AS PER THE AFOREMENTIONED NOTIFICATION, IT IS CLEAR THAT THE DEPOSIT SHALL BE IN THE FORM OF SAVINGS DEPOSIT, THEREFORE, THE PROP OSITION OF THE LD. PRINCIPAL CIT DO NOT TEST THE CBDT NOTIFICATION. 10. THE SECOND REASON GIVEN BY THE LD. PRINCIPAL CIT IS THAT NO PROOF OF PAYMENT MADE FOR ACQUIRING LAND IS ON RECORDS, THOUGH THE E XPENSES RELATE TO THE CONSTRUCTION OF A HOUSE PROPERTY. IN OUR CONSIDERE D OPINION TO CLAIM THE EXEMPTION U/S.54 OF THE ACT, THE ASSESSEE HAS TO CO NSTRUCT A HOUSE PROPERTY WITHIN THE STIPULATED PERIOD OF TIME. OBVI OUSLY, THE PURCHASE OF LAND WILL BE EITHER ANTECEDENT TO THE CONSTRUCTION OR SIMULTANEOUS TO THE CONSTRUCTION. IN ANY CASE, THE PURCHASES OF LAND DO NOT ENTITLE THE ASSESSEE FOR THE EXEMPTION U/S. 54 OF THE ACT. THEREFORE, WE FAIL TO UNDERSTAND WHEN THE LAND WAS PURCHASED EARLIER TO THE START OF CONS TRUCTION HOW THIS CAN TRIGGER THE PROVISIONS OF SECTION 263 OF THE ACT. 11. CONSIDERING THE AFOREMENTIONED FACTS IN TOTALITY IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT (SUPRA), WE DO NOT FIND ANY MERIT IN THE ORDER OF THE LD. PRINCIPAL CIT MADE U/S. 263 OF THE ACT. WE, ITA NO. 525/ AHD/2016 . A.Y.2011-12 7 ACCORDINGLY, SET ASIDE THE SAME AND RESTORE THAT OF THE A.O. MADE U/S. 143(3) OF THE ACT. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 13 - 02- 20 17 SD/- SD/- (S. S . GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 13/02/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD