Hardev Singh, Chandigarh V. ITO, Chandigarh

ITA 683/CHANDI/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73531 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-01-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 19-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Keywords: Salary income; Revised return
• Section: 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI T.R.SOOD ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.683/CHD/2012 ASSESSMENT YEAR : 2008-09 SHRI HARDEV SINGH, VS THE INCOME TAX OFFICER, PLOT NO. 2-A, WARD 4(2), SECTOR 28-A, CHANDIGARH. CHANDIGARH. PAN : ABXPS6647K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEEPAK AGGARWAL RESPONDENT BY : SHRI J.S.NAGAR DATE OF HEARING : 30.01.2014 DATE OF PRONOUNCEMENT : 25.02.2014 O R D E R PER SUSHMA CHOWLA, JM THE APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) CHANDIGARH DAT ED 01.05.2012 RELATING TO ASSESSMENT YEAR 2008-09 AGAINST THE ORD ER PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 ( 'THE A CT' FOR SHORT). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL : 1. THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONCURRI NG WITH THE ACTION OF LD. A.O. DENYING THE STATUTORY CLAIM OF EXEMPTION U/S 54F OF I.T. ACT, 1961 TO THE ASSESSEE FOR THE CAPITAL GAINS EARNED BY THE ASSESS EE ON THE PLOT DURING THE IMPUGNED YEAR, WHEREAS AS PER THE ASSESSEE THE SALE PROCEEDS OF THE PLOT WERE REINVESTED ALONGWITH THE LOAN RAISED FROM BANK IN THE RESIDENTIAL UNIT AND ITS RENOVATION. (B) THAT ALTERNATIVELY AND WITHOUT PREJUDICE TO T HE AFORESAID THE ASSESSEE ALSO DISPUTES THE QUANTUM OF EXEMPTION DENIED BY TH E ASSESSING OFFICER. 2. THAT THE ASSESSEE PRAYS FOR ANY CONSEQUENTIAL RELIE F AND/OR LEGAL CLAIM ARISING OUT OF THIS APPEAL BEFORE THE DISPOSAL OF T HE SAME. 3. THAT THE ASSESSEE PRAYS FOR ANY ADDITION, DELETION, AMENDMENT AND MODIFICATION IN THE GROUNDS OF APPEAL BEFORE THE DI SPOSAL OF THE SAME IN 2 THE INTEREST OF SUBSTANTIAL JUSTICE TO THE ASSESSEE . 4. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAI NST THE DENIAL OF EXEMPTION UNDER SECTION 54F OF THE INCOME TAX AC T. 5. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AD FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,44,250/- ON 18.07.2008. THE ASSESSEE HAD DECLARED INCOME FROM SALARY FOR TH E YEAR UNDER CONSIDERATION. THE CASE OF THE ASSESSEE WAS SELECTE D FOR SCRUTINY ON THE BASIS OF THE LIST GENERATED THROUGH CASS SYSTEM OF INCOME TAX DEPARTMENT. THE ASSESSEE WAS ASKED TO FILE THE BAN K STATEMENTS FOR THE YEAR UNDER CONSIDERATION AND ALSO TO GIVE THE D ETAILS OF INVESTMENT MADE FOR PURCHASE OF MOVABLE AND IMMOVAB LE ASSETS AND SOURCES THEREOF. IN REPLY, IT WAS STATED BY THE AS SESSEE THAT HE HAD PURCHASED RESIDENTIAL HOUSE NO. MIG-2101, GROUND FL OOR, SECTOR 66, MOHALI FOR RS.9,81,000/- AND INCURRED COST OF CONST RUCTION/RENOVATION FOR RS. 8,50,000/-. IN THE CASE OF THE ASSESSEE, T HERE WAS AN AIR INFORMATION THAT THE ASSESSEE HAD DEPOSITED RS.11,9 0,000/- IN CASH IN HIS SAVING BANK ACCOUNT WITH HDFC BANK DURING THE Y EAR AND THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF THE SAI D CASH DEPOSIT AND ALSO THE SOURCE OF INVESTMENTS IN THE PROPERTY. VA RIOUS EXPLANATIONS WERE GIVEN BY THE ASSESSEE IN RESPECT OF THE SOURCE S OF THE CASH AND ALSO THE SOURCE OF INVESTMENTS IN THE SAID FLAT AND ALSO IN THE ADDITIONAL CONSTRUCTION. HOWEVER, THE ASSESSEE WAS UNABLE TO FURNISH SATISFACTORY EVIDENCE IN RESPECT OF THE SOURCE OF D EPOSIT. FURTHER, IT WAS NOTED BY THE ASSESSING OFFICER THAT THE LAND SO LD BY THE ASSESSEE WAS AGRICULTURAL LAND AT ZIRAKPUR WHICH WAS PURCHAS ED ON 04.05.1999 FOR RS. 25,806/- IN THE NAME OF HIS WIFE. THE ASSE SSEE HAD FURNISHED HIS PERSONAL BANK ACCOUNT TO ESTABLISH THE SOURCE O F PAYMENT OF THE SAID RS. 25,806/-. THE SALE PROCEEDS OF THE SAID LA ND WERE DEPOSITED 3 IN THE ACCOUNT OF THE ASSESSEE. THE ASSESSING OFFI CER NOTED THAT THE ASSESSEE HAD TAKEN BANK LOAN FOR THE PURCHASE OF NE W ASSET AND/OR FOR THE RENOVATION OF THE FLAT BUT THE ASSESSEE FAILED TO PROVE/JUSTIFY HIS CLAIM. FURTHER, AS THE ASSESSEE HAD FAILED TO CLAIM ANY DEDUCTION UNDER SECTION 54F OF THE ACT IN THE RETURN OF INCOM E, THE ASSESSEE WAS ASKED TO JUSTIFY THE SAME. IN REPLY, THE ASSESSEE FURNISHED COMPUTATION OF LONG TERM CAPITAL GAINS BY CLAIMING EXEMPTION UNDER SECTION 54F OF THE ACT, THE ASSESSING OFFICER NOTED THAT THE PROPERTY SOLD IN QUESTION WAS IN THE NAME OF MRS. PARAMJIT K AUR, WIFE OF THE ASSESSEE AND THE FLAT IN MOHALI WAS PURCHASED IN TH E NAME OF THE ASSESSEE HIMSELF. FURTHER THE ASSESSEE HAD FAILED TO DECLARE ANY INCOME FROM CAPITAL GAINS AND/OR CLAIMED ANY EXEMPT ION UNDER SECTION 54F OF THE ACT IN THE RETURN OF INCOME. TH E ASSESSING OFFICER IN VIEW THEREOF OBSERVED THAT THE SAME WAS AN AFTER THOUGHT AND A CONCOCTED STORY JUST TO JUSTIFY THE CASH DEPO SITS. THEREAFTER, THERE WAS CHANGE IN COUNSEL WHO FILED FINAL REPLY D ATED 09.12.2010 BEFORE THE ASSESSING OFFICER. IN THE SAID LETTER, THERE WAS AN ADMISSION BY THE LD. AR FOR THE ASSESSEE THAT, WE HAVE NOW BEEN GIVEN TO UNDERSTAND THAT THE BENEFIT OF PURCHASE US 54F IS NOT AVAILABLE AS THE ASSESSEE HAD PURCHASED THE PROPERT Y AFTER RAISING THE HOUSE BUILDING LOAN. SIMILARLY THE BENEFIT THAT THE INVESTMENT WILL BE COVERED BY THE PROVISIONS OF SECTION 54F BEING T HE REAL OWNER OF THE PROPERTY AS THE WIFE HAS NO SOURCE OF INCOME. T O BUY PEACE WITH THE DEPARTMENT, THE ASSESSEE IS WILLING TO TREAT TH IS INCOME FROM LTCG AS HIS INCOME SUBJECT TO NO PENAL ACTION UNDER SECTION 271(1)(C) OF THE INCOME TAX ACT. 6. THE COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE ASSESSING OFFICER HAS COME TO A FINDING THAT THE SA LE PURCHASE HAD NOT BEEN USED FOR THE PURCHASE OF NEW ASSET AND IN FACT THE ASSESSEE 4 HAD TAKEN LOAN FOR THE PURCHASE OF NEW ASSET AND HE NCE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 54F OF THE ACT . IN VIEW THEREOF, WHERE THE ASSESSEE FAILED TO EXPLAIN THAT THE SALE PRODUCE AND PROFITS HAD BEEN USED FOR THE PURCHASE OF NEW ASSET AND REN OVATION THEREOF, THE COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE ASSESSING OFFICER WAS RIGHT IN DENYING THE DEDUCTION UNDER SE CTION 54F OF THE ACT. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS). 7. THE LD. AR FOR THE ASSESSEE POINTED OUT THAT THE SA LE TRANSACTION HAS BEEN ACCEPTED IN THE HANDS OF THE ASSESSEE AND ASSESSED UNDER THE HEAD INCOME FROM LONG TERM CAPITAL GAINS. THE AS SESSEE, DURING THE YEAR UNDER CONSIDERATION HAD PURCHASED THE MIG FLAT AT MOHALI ON 27.12.2007 FOR RS. 9,50,000/-. THEREAFTER, THE ASS ESSEE HAD INVESTED RS. 8,46,250/- I.E. ON ACCOUNT OF RENOVATION RS. 5, 41,000/- AND ADDITIONAL CONSTRUCTION AT RS. 2,95,250/-. IT WAS P OINTED OUT BY THE LD. AR FOR THE ASSESSEE THAT AS THE ASSESSEE HAD SO LD ONE PROPERTY AND PURCHASED ANOTHER PROPERTY AND SINCE THE CAPITAL GA INS AS PER THE ASSESSEE HAD TO BE SET OFF AGAINST THE NEW INVESTME NT, AND THE RESULTANT CAPITAL GAIN BEING NIL, NO DECLARATION OF THE SAME WAS MADE IN THE RETURN OF INCOME. 8. THE NEXT PLEA OF THE ASSESSEE WAS THAT THE INVESTME NT IN THE ORIGINAL ASSET I.E. THE AGRICULTURAL LAND WAS THOUG H MADE IN THE NAME OF WIFE OF THE ASSESSEE BUT THE SAID ASSET BELONGED TO THE ASSESSEE AND THE CAPITAL GAIN ARISING FROM ITS SALE HAD TO BE AS SESSED IN THE HANDS OF THE ASSESSEE. 9. THE LD. AR FOR THE ASSESSEE, THEREAFTER SUBMITTED T HAT HE WAS NOT PRESSING THE CLAIM OF DEDUCTION UNDER SECTION 5 4F OF THE ACT ON ACCOUNT OF RENOVATION OF RS. 5,41,000/- AND ON ACCO UNT OF COST OF 5 CONSTRUCTION OF ADDITIONAL AREA OF RS. 2,95,250/-, BOTH OF WHICH WERE NOT ALLOWED TO THE ASSESSEE BECAUSE OF LACK OF EVID ENCE. FURTHER RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE H ON'BLE PUNJAB & HARYANA HIGH COURT IN CIT VS REMCO INTERNATIONAL 33 2 ITR 306 (P&H) FOR THE PROPOSITION THAT WHERE NO CLAIM WAS M ADE IN THE RETURN OF INCOME, CLAIM MADE DURING THE COURSE OF ASSESSME NT PROCEEDINGS MERITS TO BE ACCEPTED. THERE WAS NO REQUIREMENT FO R FILING ANY REVISED RETURN FOR MAKING THE SAID CLAIM. THE LD. AR FOR THE ASSESSEE FURTHER PLACED RELIANCE ON THE RATIO LAID DOWN IN A CIT VS GURMIT SINGH ITA NO. 1018 & 1005/CHD/2010 ORDER DATED 17.0 5.2013 FOR THE PROPOSITION THAT WHERE ADDITIONAL CONSTRUCTION HAD BEEN MADE BY THE ASSESSEE, THE SAME WOULD AMOUNT TO CONSTRUCTION OF NEW RESIDENTIAL HOUSE. 10. THE LD. DR FOR THE REVENUE POINTED OUT THAT DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD VOLUNTARIL Y SURRENDERED ITS CLAIM VIS--VIS THE DEDUCTION UNDER SECTION 54F OF THE ACT. OUR ATTENTION WAS DRAWN TO THE ASSESSMENT ORDER IN THIS REGARD AND IT WAS POINTED OUT THAT THE ASSESSEE HAD CATEGORICALLY AGR EED TO THE ADDITION ON ACCOUNT OF INCOME FROM CAPITAL GAINS IN THE HAND S OF THE ASSESSEE AND THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT WAS WITHDRAWN BY THE ASSESSEE. 11. THE LD. AR FOR THE ASSESSEE, IN REJOINDER POINTED O UT THAT THERE WAS NO STOPPEL AGAINST LAW AND THE ADMISSION MADE B Y THE ASSESSEE BEING AGAINST LAW HAD NO RELEVANCE. 6 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELAT ION TO THE DEDUCTION CLAIMED UNDER SECTION 54F OF THE ACT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SOLD AGRICULTURAL LAND AT Z IRAKPUR BUT HAD FAILED TO DECLARE THE INCOME FROM LONG TERM CAPITAL GAINS IN THE RETURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEED INGS, THE PLEA OF THE ASSESSEE WAS THAT IT HAD NIL INCOME FROM LONG TERM CAPITAL GAINS AS ON SALE OF THE AGRICULTURAL LAND AT ZIRAKPUR, TH E ASSESSEE HAD MADE AN INVESTMENT IN FLAT AT MOHALI ON WHICH IT HAD ALS O INCURRED ADDITIONAL COST OF CONSTRUCTION/RENOVATION. THE AS SESSING OFFICER ALSO NOTED THAT THERE WERE CASH DEPOSITS IN THE BAN K ACCOUNT AND FURTHER THE ASSESSEE HAD TAKEN HOME LOAN FROM THE B ANK FOR THE PURPOSE OF INVESTMENT IN THE NEW PROPERTY. WHILE C OMPLETING THE ASSESSMENT, THE ASSESSING OFFICER INCLUDED THE INCO ME FROM LONG TERM CAPITAL GAINS ON SALE OF THE AGRICULTURAL LAND IN T HE HANDS OF THE ASSESSEE AND DENIED THE EXEMPTION CLAIMED UNDER SEC TION 54F OF THE ACT. ONE OF THE POINTS RAISED BY THE ASSESSING OFFI CER WAS THAT THE AGRICULTURAL LAND WAS IN THE NAME OF THE WIFE OF TH E ASSESSEE AND THE NEW PROPERTY WAS IN THE NAME OF THE ASSESSEE HIMSEL F. HOWEVER, WE FIND NO MERIT IN THE SAID POINT RAISED BY THE ASSES SING OFFICER IN VIEW OF THE FACT THAT THE PROFIT ARISING ON SALE OF THE AGRICULTURAL LAND HELD IN THE NAME OF THE WIFE OF THE ASSESSEE HAS BE EN ASSESSED IN THE HANDS OF THE ASSESSEE. THE ONLY ISSUE REMAINING FO R ADJUDICATION IS WHETHER THE ASSESSEE IS ENTITLED TO THE BENEFIT OF DEDUCTION CLAIMED UNDER SECTION 54F OF THE ACT. THE ASSESSEE CLAIMS THAT IT HAD INVESTED RS.9,81,000/- FOR THE PURCHASE OF THE FLAT NO. MIG-2101 GROUND FLOOR, SECTOR 66, MOHALI. 13. THE SECOND CLAIM OF THE ASSESSEE VIS--VIS THE ADD ITIONAL COST OF CONSTRUCTION AND RENOVATION HAS NOT BEEN PRESSED BY THE LD. AR FOR 7 THE ASSESSEE DURING THE COURSE OF ARGUMENTS BEFORE THE TRIBUNAL AND CONSEQUENTLY, THE DEDUCTION UNDER SECTION 54F OF TH E ACT IS LIMITED TO RS.9,81,000/- ONLY I.E. THE COST OF THE FLAT PURCHA SED IN MOHALI. THE ASSESSEE HAS FURNISHED ON RECORD VARIOUS DOCUMENTS IN THIS REGARD. HOWEVER, IN THE INTEREST OF JUSTICE WE DEEM IT FIT TO RESTORE THE ISSUE OF VERIFICATION OF THE CLAIM OF THE ASSESSEE TO THE FILE OF ASSESSING OFFICER WHO SHALL RECORD A FINDING IN RESPECT OF TH E CLAIM OF PURCHASE OF THE FLAT BY THE ASSESSEE IN MOHALI AND COMPUTE T HE DEDUCTION UNDER SECTION 54F OF THE ACT ACCORDINGLY. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS THUS, PARTLY ALLOWED. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH FEBRUARY,2014. SD/- SD/- ( T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED: 25 TH FEBRUARY,2014 POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR. ASSISTANT REGISTRAR ITAT,CHD.