ACIT RG 9(1), MUMBAI V. SMITA P. NARAM, MUMBAI

ITA 7751/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75540 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 05-02-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 17-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Keywords: Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 54F; 147; 148; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E , MUMBAI . . , , , BEFORE SHRI N.K.SAINI , AM AND SHRI AMIT SHUKLA , JM ITA N O. 7751 /MUM/20 1 1 : ASST.YEAR 200 3 - 200 4 THE ASST.COMMISSIONER OF INCOME - TAX RANGE 9(1) MUMBAI. / VS. SMT.SMITA P.NARAM 1 ST FLOOR, PRAVASI INDUSTRIAL ESTATE GOREGAON (EAST), OFF AAREY ROAD MUMBAI 400 063. PAN : AAAPN6313R. ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI PITAMBARDAS / RESPONDENT BY : SHRI BHUPENDRA SHAH / DATE OF HEARING : 05 . 02 .201 4 / DATE OF PRONOUNCEMENT : 12 .0 2 .20 1 4 / O R D E R PE R N.K.SAINI (AM) : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 02.07.2011 OF THE COMMISSIONER OF INCOME - TAX (APPEALS) - 19 , MUMBAI. 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN DELETING THE ADDITION ON ACCOUNT OF CLAIM OF EXEMPTION U/S 54 OF THE I.T.ACT IN THE LIGHT OF DECISION OF GUJARAT HIGH COURT IN THE CASE OF CHANDABEN MAGANLAL [246 ITR 182] THAT EXEMPTION U/S 54 IS ADMISSIBLE WHERE ASSE SSEE SOLD A HOUSE AND FROM THE SALE PROCEEDS PURCHASED 15% INDIVIDUAL SHARE IN A HOUSE PROPERTY FROM HER HUSBAND AND HER SON. ITA NO. 7751 /MUM/201 1 . SMT.SMITA P. NARAM. 2 2. THE APPELLANT PRAYS THAT THE GROUND BE DECIDED IN THE LIGHT OF DECISION OF HON BLE HIGH COURT OF BOMBAY, NAGPUR BENCH AND [200 8] 173 TAXMAN 311 (BOM) IN THE CASE OF ITO, WARD NO.1(5) VS. ANOOP V.MEHTA AND C.L.PANGARKAR, I.T.APPEAL NO.15 OF 2002 WRIT PETITION NO.2197 OF 2002 DATED 12.09.2008 WHEREIN SECTION 45F OF THE I.T.ACT, 1961 CAPITAL GAINS EXEMPTION OF, IN CASE OF INVEST MENT IN RESIDENTIAL HOUSE ORDER ASSESSMENT YEAR 1983 - 84 WHETHER FOR QUALIFYING FOR EXEMPTION UNDER SECTION 54F, IT IS NECESSARY AND OBLIGATORY TO HAVE INVESTMENT MADE IN RESIDENTIAL HOUSE IN NAME OF ASSESSEE ONLY AND NOT IN NAME OF ANY OTHER PERSON H ELD, YES. IN THE INSTANT CASE, ASSESSEE IS HOLDING THE RESIDENTIAL PROPERTY AND DOES NOT HAVE ABSOLUTE OWNERSHIP RIGHT ON WHOLE PROPERTY. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSMENT IN THIS CASE WAS ORIGINALLY COMPLETED U/S 143(3) OF THE INCOME - TAX ACT, 1961 [ HEREINAFTER REFERRED TO AS THE ACT ] ON 22.03.2006DETERMINING INCOME AT RS.23,26,661. SUBSEQUENTLY NOTICE WAS ISSUED U/S 148 DATED 26.03.2010 FOR INITIATING THE PROCEEDINGS U/S 147 SINCE THE ASSESSING OFFICER [ AO FOR SHORT] HAD A REASON TO BELIEVE THAT THE INCOME HAD ESCAPED ASSESSMENT ON ACCOUNT OF EXEMPTION CLAIMED AND ALLOWED U/S 54 OF THE ACT. THE AO THERE AFTER , REASSESSED THE INCOME BY WITHDRAWING THE EXEMPTION EARLIER ALLOWED U/S 54 OF THE ACT ON THE GROUND THAT THE ASSESSEE WAS NOT THE ABSOLUTE OWNER OF THE PROPERTY CONSTRUCTED. 4 . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) AND SUBMITTED THAT THE REOPENING PROCEEDINGS INITIATED WAS NOT ON ACCOUNT OF ANY FAILURE ON THE PART OF ITA NO. 7751 /MUM/201 1 . SMT.SMITA P. NARAM. 3 THE ASSESSEE TO DISCLOSE FULLY ALL MATERIAL FACTS. IT WAS FURTHER STATED THAT THE RETURN WAS SUBJECTED TO SCRUTINY AND THE ORDER WAS PASSED AFTER EX AMINING THE ATTENDANT DOCUMENTS AND THE DEDUCTION U/S 54 OF THE ACT HAD BEEN ALLOWED. IT WAS ALSO STATED THAT THE ASSESSM ENT FRAMED WAS FURTHER SUBJECTED TO THE ORDER OF THE CIT(A) DATED 13.11.2006 AND THE ORDER OF THE ITAT DATED 28.08.2009 . THEREFORE, THE REOPENING PROCEEDINGS INITIATED WAS NOT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY ALL MATERIAL FACTS AND IF THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE, THE CLAIM OF THE AO COULD BE CONSTRUED AS CHANGE OF OPINION. IT WAS FURTHER STATED THAT THE AO WAS NOT JUSTIFIED IN DISALLOWING THE DEDUCTION OF RS.24,09,500 U/S 54 OF THE ACT BY STATING THAT THE INVESTMENT IN RESIDENTIAL HOUSE PROPERTY WAS IN JOINT OWNERSHIP OF THE ASSESSEE WITH HER HUSBAND AND THAT THE ASSESSEE WAS NOT THE ABSOLUTE OWNER OF THE SAID PROPERTY. IT WAS STATED THAT THERE WAS NO RESTRICTION IN SECTION 54 OF THE ACT THAT THE AMOUNT INVESTED IN THE CONSTRUCTION OF A RESIDENTIAL HOUSE SHOULD BE SINGLE OWNERSHIP OR ABSOLUTE OWNERSHIP OF ONLY ONE ASSESSEE. RELIANCE WAS PLACED ON THE JUDGMENT OF THE HON BLE CALCUTTA HIGH COURT IN THE CASE OF B.B.SARKAR V. CIT [ (198 1 ) 132 ITR 150 (CAL.)] AND THE JUDGMENT OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. CHANDA N BEN MAGANLAL [ (2000) 245 ITR 182 (GUJ.)] . 5. THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, OBSERVED THAT THE FACT WAS THAT THE ASSESSEE HAS SOLD HER R ESIDENTIAL HOUSE FOR A CONSIDERATION OF RS.54 LAKH AND HAD EARNED LONG TERM CAPITAL GAIN OF RS.24,09, 5 00 / - AND CONSTRUCTED A RESIDENTIAL ITA NO. 7751 /MUM/201 1 . SMT.SMITA P. NARAM. 4 HOUSE WITHIN THE STIPULATED PERIOD, THE SAID PROPERTY WAS JOINTLY REGISTER ED WITH HER HUSBAND AND THE ASSESSEE CLAIMED EXEMPTION U/S 54 OF THE ACT FROM THE PROFIT OF RS.24,09,500 / - . THE LEARNED CIT(A) POINTED OUT THAT ALL THE CONDITIONS STIPULATED IN SECTION 5 4 OF THE ACT WERE SATISFIED BY THE ASSESSEE AND THERE IS NO SUCH STIPULATION IN THE SAID SECTION THAT THE AMOUNT IN VESTED IN RESIDENTIAL HOUSE SHOULD BE UNDER SINGLE OWNERSHIP OR ABSOLUTE OWNERSHIP. THE LEARNED CIT(A) HELD THAT IF THE BENEFIT WAS NOT GIVEN TO THE ASSESSEE, THEN THE SALE PROCEED HAD BEEN INVESTED IN A HOUSE WHI CH WAS ALSO CONSTRUCTED FOR HER, T HE SAID V IEW WOULD NOT BE IN CONFORMITY BEHIND THE OBJECT PURPOSE OF THE SAID PROVISION. THE LEARNED CIT(A) WAS ALSO OF THE VIEW THAT THE PURPOSE BEHIND THE EXEMPTION U/S 54 OF THE ACT WAS THAT WHEN AN ASSESSEE SELLS A RESIDENTIAL HOUSE AND PURCHASES A NEW HOUSE AG AINST THE SALE CONSIDERATION, THE CAPITAL GAIN ARISING OUT OF THE SALE PROCEEDS WAS NOT TO BE TAXED AND IT WOULD NOT MAKE A DIFFERENCE WHETHER THE HOUSE SO CONSTRUCTED WAS UNDER SINGLE OWNERSHIP OR JOINT OWNERSHIP. THE LEARNED CIT(A) CATEGORICALLY STATED T HAT THE ORIGINAL RETURN WAS SUBJECTED TO SCRUTINY ASSESSMENT AFTER EXAMINING ALL THE DOCUMENTS AND CALLING FOR VARIOUS DETAILS. THEREFORE, IT COULD NOT BE SAID THAT THERE HAD BEEN ANY FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ALL FACTS MATERIAL TO TH E ASSESSMENT. HE ACCORDINGLY SET ASIDE THE REASSESSMENT ORDER PASSED BY THE AO AND DIRECTED HIM TO GRANT EXEMPTION TO THE ASSESSEE U/S 54 OF THE ACT. 6 . NOW THE DEPARTMENT IS IN APPEAL. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE A O AND THE LEARNED ITA NO. 7751 /MUM/201 1 . SMT.SMITA P. NARAM. 5 COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND R ELIANCE WAS ALSO PLACED ON THE FOLLOWING CASE LAWS: - (I) CIT V. GURNAM SINGH [(2010) 327 ITR 278 (P&H)] (II) CIT V. V.NATRAJAN [(2006) 287 ITR 2 71 (MAD.)] (III) DIT(IT) V. MRS.JENNIFER BHIDE [ (2012) 349 ITR 80 (KAR) ] (IV) CIT V. RAVINDER KUMAR ARORA [(2012) 342 ITR 38 (DEL) ] (V) ITO V. SMT.SARASWATI RAMANATHAN [(2009) 116 ITD 234 (DEL)] (VI) JCIT V. SMT.ARMEDA BHAYA [(2005) 95 ITD 313 (MUM.)] 7 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL ON THE RECORD. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT THE ASSESSEE INVESTED THE LONG TERM CAPITAL GAIN IN THE CONSTRUCTION OF HOUSE AND HAD CLAIMED EXEMPTION U/S 54 OF THE A CT, WHICH WAS ALLOWED BY THE AO W HILE FAMING THE ASSESSMENT U/S 143(3) OF THE ACT . L ATER ON, THE AO REO PENED THE ASSESSMENT ONLY ON THIS BASIS THAT THE INVESTMENT WAS IN THE JOINT NAME OF THE ASSESSEE AND HER HUSBAND. T HEREFORE, E XEMPTION U/S 54F OF THE ACT WAS NOT AVAILABLE TO THE ASSESSEE AND ACCORDINGLY THE CASE WAS REOPENED U/S 147 OF THE ACT BY ISSUING NOTICE U/S 148 OF THE ACT. HOWEVER, NOTHING IS BROUGHT ON RECORD TO SUBSTANTIATE THAT THE ASSESSEE DID NOT DISCLOSE ALL THE MA TERIAL FACTS IN HER RETURN OF INCOME OR THOSE DOCUMENTS AND THE FACTS WERE NOT CONSIDERED BY THE AO WHILE FRAMING THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT. AS REGARDS THE EXEMPTION U/S 54 F OF THE ACT IS CONCERNED, THE ONLY ITA NO. 7751 /MUM/201 1 . SMT.SMITA P. NARAM. 6 CONDITION IS THAT THE ASSESS EE HAS , WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASE, OR HAS WITHIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, A RESIDENTIAL HOUSE, THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WIT H THE FOLLOWING PROVISIONS : - (A) IF THE COST OF THE NEW ASSET IS NOT LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, THE WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45; (B) IF THE COST OF THE NEW ASSET IS LESS THAN THE NET CONSIDERATION IN RESPECT OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF THE NEW ASSET BEARS TO THE NET CONSIDERATION, SHALL NOT BE CHARGED UNDER SECTION 45. 8 . IN THE PRESENT CASE, IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAD NOT CONSTRUCTED A NEW RESIDENTIAL HOUSE OUT OF THE CAPITAL GAIN RECEIVED BY HER. THE ONLY OBJECTION WAS THAT THE HOUSE CONSTRUCTED WAS IN THE JOINT OWNERSHIP WITH HER HUSBAND. HOWEVER, N O SUCH CONDITION IS PRESCRIBED IN SECTION 54F OF THE ACT, THEREFORE, THE LEARNED CIT(A) WAS FULLY JUSTIFIED IN HOLDING THAT THE REASSESSMENT PROCEEDINGS INITIATED BY THE AO WAS NOT JUSTIFIED. HE, THEREFORE, RIGHTLY DIRECTED T HE AO TO GRANT EXEMPTION U/S 54 OF THE ACT. AS REGARDS TO THE DECISION RELIED BY THE DEPARTMENT IN THE CASE OF ITO, WARD NO.1(5) V. ANOOP V. MEHTA AND C.L.PANGARKAR (SUPRA) IS CONCERNED, IN THE SAID CASE THE ASSESSEE WAS NOT THE OWNER OF THE ITA NO. 7751 /MUM/201 1 . SMT.SMITA P. NARAM. 7 PROPERTY WHILE IN THE PRESENT CASE THE ASSESS EE IS THE JOINT OWNER OF THE PROPERTY SO THE FACTS OF THE CASE RELIED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE ARE DISTIN G UISHABLE FROM THE FACTS OF THE ASSESSEE S CASE. WE, THEREFORE, BY C ONSIDERING THE TOTALITY OF THE FACTS AS DISCUSSED HEREINABOVE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A). 9 . IN THE RESULT, REVENUE S APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF FEBRUARY , 201 4 . , 2014 S D/ - SD/ - ( AMIT SHUKLA ) ( N.K.SAINI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 12 TH FEBRUARY , 201 4 . DEVDAS* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT , MUMBAI. 4. / CIT(A) - 19 , MUMBAI. 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI