Shri. D. Muthukumar, Bangalore V. ITO, Bangalore

ITA 863/BANG/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95256 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 14-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V NARENDRA SHARMA
• Keywords: Capital asset
• Section: 54F; 234B; 6; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH C BEFORE SHRI VIJAYPAL RAO, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.863 /BANG/2014 (ASST. YEAR 2009-10) SHRI D MUTHUKUMAR, NO.3-J, III KRISTAL JAPER, KASAVANAHALLI, OFF SARJAPUR ROAD, BANGALORE. . APPELLANT VS. THE INCOME-TAX OFFICER, WARD-15(3), BANGALORE. . RESPONDENT APPELLANT BY : SHRI V NARENDRA SHARMA, ADVOCA TE RESPONDENT BY : SHRI SUNIL KUMAR AGARWALA, JCIT DATE OF HEARING : 14-9-2015 DATE OF PRONOUNCEMENT : 24-9-2015 O R D E R PER SHRI VIJAYPAL RAO, JUDICIAL MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 17/2/2014 OF COMMISSIONER OF INCOME-TAX (APPEALS), MYSORE, FOR THE ASSESSMENT YEAR 2009-10. ITA NO.863/B/14 2 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS IN THIS APPEAL. HOWEVER, THE ONLY EFFECTIVE ISSUE ARISES FROM THE G ROUNDS RAISED BY THE ASSESSEE IS WHETHER IN THE FACTS AND CIRCUMSTAN CES OF THE CASE, THE CIT(A) IS JUSTIFIED IN CONFIRMING THE DENIAL OF EXE MPTION U/S 54F OF THE ACT IN RESPECT OF THE CAPITAL GAIN. 3. THE ASSESSEE IS AN INDIVIDUAL AND SALARIED EMPLO YEE. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FILED HIS RE TURN OF INCOME DECLARING A TOTAL INCOME OF RS.7,59,059/-. DURING T HE COURSE OF SCRUTINY ASSESSMENT, THE AO NOTICED THAT THE ASSESS EE HAS NOT DISCLOSED CAPITAL GAIN ARISEN FROM SALE OF PROPERTY TO THE TUNE OF RS.5,00,32,923/-. ACCORDINGLY, THE AO ISSUED SHOW CAUSE NOTICE FOR ASSESSMENT OF THE CAPITAL GAIN FROM THE SALE OF PRO PERTY OF RS.4,99,00,000/-. SINCE THE ASSESSEE DID NOT RESPO ND TO THE NOTICE OF THE AO, THE ASSESSMENT ORDER WAS PASSED U/S 144 OF THE INCOME-TAX ACT WHEREBY THE AO MADE AN ADDITION OF RS.4,99,00,0 00/- TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE CHALLE NGED THE ACTION OF THE AO BEFORE THE CIT(A) AND SUBMITTED THAT DUE TO THE CHANGE OF ADDRESS AND CHANGE OF THE EMPLOYMENT, THE ASSESSEE COULD NOT RECEIVE THE NOTICE ISSUED BY THE AO AND, THEREFORE, THERE WAS NON- APPEARANCE BEFORE THE AO. FURTHER THE ASSESSEE SUB MITTED THAT THE ITA NO.863/B/14 3 ASSESSEES SHARE IN THE PROPERTY IN QUESTION IS ONL Y 1/12 TH AS THE PROPERTY IN QUESTION IS A ANCESTRAL PROPERTY OF HU F AND THE SHARE OF THE ASSESSEE IN THE SALE PROCEEDS COMES TO 41,51,33 3/-. THE CIT(A) ISSUED A REMAND ORDER AND AFTER CONSIDERATION REMA ND REPORT OF THE AO FOUND THAT THE BROTHER AND FATHER OF THE ASSESSE E HAD ALREADY DISCLOSED THE SHARE IN THE SALE PROCEEDS OF THE PRO PERTY IN THEIR RESPECTIVE RETURN OF INCOME, THEREFORE, THE CIT(A) DIRECTED THE AO TO MAKE THE ADDITION IN THE HAND OF THE ASSESSEE ONLY TO THE EXTENT OF RS.41,58,334/-. THE CIT(A) HAS REJECTED THE CLAIM OF EXEMPTION U/S 54F OF THE ACT ON THE GROUND THAT ASSESSEE HAS PURC HASED A FLAT ON 15/1/2010, WHEREAS THE ASSESSEE HAS NOT DEPOSITED T HE SALE PROCEEDS IN THE PRESCRIBED BANK OR INSTITUTION AS SPECIFICALLY UNDER THE PROVISION OF THE ACT BEFORE THE DATE OF FURNISHING THE RETURN U/S 139(1). 4. BEFORE US, THE LEARNED AR OF THE ASSESSEE HAS SU BMITTED THAT THE ASSESSEE INVESTED THE ENTIRE SALE PROCEEDS FOR PURC HASE OF THE NEW HOUSE PROPERTY FOR RS.42 LAKHS VIDE AGREEMENT DATED 23/6/2009 AND THEREAFTER A SALE DEED WAS EXECUTED ON 15/1/2010. SINCE THE ASSESSEE HAS PURCHASED THE NEW HOUSE PROPERTY BEFORE THE DUE DATE OF FILING OF RETURN U/S 139(4) OF THE ACT, THEREFORE, IN VIEW OF THE JUDGMENT OF ITA NO.863/B/14 4 HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF FA THIMA BAI VS. ITO, 32 ITR 243, THE DEDUCTION U/S 54F CANNOT BE DENIED . 5. ON THE OTHER HAND LEARNED DR HAS RELIED UPON THE ORDER OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN THE ASSES SEE HAS NOT FILED THE RETURN OF INCOME AND ALSO NOT DISCLOSED THE SAL E PROCEEDS OF THE PROPERTY IN QUESTION THEN THE ASSESSEE CANNOT CLAIM THE EXEMPTION U/S 54F ON THE GROUND THAT THE INVESTMENT WAS MADE BY T HE ASSESSEE IN THE NEW HOUSE PROPERTY BEFORE DUE DATE OF FILING OF RETURN U/S 139(4) OF THE ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION AS WELL AS RELEVANT MATERIAL ON RECORD. THE AO HAS MADE THE ADDITION O F RS.499,00,000/- IN THE TOTAL INCOME OF THE ASSESSEE FOR WANT OF EX PLANATION AND REPLY TO THE NOTICE ISSUED U/S 142(1). THE ASSESSMENT WA S COMPLETED U/S 144 OF THE ACT. BEFORE THE CIT(A), THE ASSESSEE HA S EXPLAINED THE REASON FOR NON APPEARANCE BEFORE THE AO AND ALSO SU BMITTED THAT THE ASSESSEE IS HAVING ONLY 1/12 TH OF SHARE IN THE PROPERTY IN QUESTION AND, THEREFORE, THE ASSESSEE SHARE COMES TO RS.41,58,333 /-. THE CIT(A) ISSUED A REMAND ORDER AND AFTER CONSIDERING THE RE MAND REPORT, IT WAS FOUND THAT THE ASSESSEES SHARE IN THE SALE CONSIDE RATION FOR THE ITA NO.863/B/14 5 PROPERTY IN QUESTION IS 1/12 TH AMOUNTING TO RS.41,28,333/-. THE CIT(A) HAS ALSO NOTED THE FACT THAT THE BROTHER AND FATHER OF THE ASSESSEE HAVE ALSO DISCLOSED THEIR RESPECTIVE SHARE S IN THE SALE CONSIDERATION OF THE PROPERTY. THEREFORE, SO FAR AS THE QUESTION TO THE SHARE OF THE ASSESSEE IS CONCERNED, THE CIT(A) HAS ACCEPTED THE FACT THAT THE ASSESSEE IS HAVING 1/12 TH SHARE IN THE CAPITAL ASSET IN QUESTION. HOWEVER, THE CLAIM OF EXEMPTION U/S 54F WAS DENIED ON THE GROUND THAT THE ASSESSEE HAS INVESTED SALE PROCEEDS IN THE NEW HOUSE PROPERTY VIDE SALE DEED DATED 15/1/2010 WHICH IS BEYOND THE FURNISHING OF RETURN U/S 139(1) AND SINCE THE ASSESSEE HAS NOT DE POSITED THE SALE PROCEEDINGS IN THE PRESCRIBED BANK ACCOUNT, THEREFO RE THE ASSESSEE IS NOT ENTITLED FOR DEDUCTION U/S 54F. 7. THIS ISSUE NO LONGER RESINTIGRA, AS THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF FATHIMA BAI (SUPRA) HAS H ELD AS UNDER: 7. THE S. 54(1) DECLARES THAT WHEN THE ASSESSEE SELLS ANY LONG-TERM CAPITAL ASSET, THE ASSESSEE SHOULD PURCHA SE THE BUILDING WITHIN ONE YEAR BEFORE THE TRANSFER OR WIT HIN TWO YEARS AFTER THE TRANSFER BY INVESTING CAPITAL GAINS . IN WHICH EVENT THE ASSESSEE WILL NOT BE LIABLE FOR CAPITAL G AIN TAX. ITA NO.863/B/14 6 8. THE S. 54(2) DECLARES THAT WITHIN ONE YEAR FROM TH E DATE OF TRANSFER IF THE CAPITAL GAIN IS NOT INVESTED IN PURCHASE OF BUILDING, HE SHOULD DEPOSIT THE AMOUNT IN THE 'CAPI TAL GAIN ACCOUNT SCHEME OR ELSE THE ASSESSEE SHOULD INVEST THE CAPITAL GAINS BEFORE FILING OF RETURN WITHIN THE PE RMITTED PERIOD UNDER S. 139. IN WHICH EVENT, THE ASSESSEE W ILL NOT BE LIABLE TO PAY CAPITAL GAIN TAX. 9. THE S. 139(4) DECLARES THAT THE ASSESSEE SHOULD FI LE RETURNS WITHIN THE TIME PRESCRIBED, IF HE FAILS TO FILE RETURNS, HE MAY FILE RETURNS FOR ANY PREVIOUS YEAR AT ANY TI ME BEFORE EXPIRY OF ONE YEAR FROM THE END OF RELEVANT ASSESSMENT YEAR. 10. IN THE INSTANT CASE, THE DUE DATE FOR FILING OF RE TURN IS 30TH JULY, 1988. UNDER S. 139(4) THE ASSESSEE WAS E NTITLED TO FILE RETURN IN THE EXTENDED TIME, WHICH IS WITHI N 31ST MARCH, 1990. 11. THE EXTENDED DUE DATE UNDER S. 139(4) WOULD BE 31S T MARCH, 1990. THE ASSESSEE DID NOT FILE THE RETURN W ITHIN THE EXTENDED DUE DATE, BUT FILED THE RETURN ON 27TH FEB., 2000. HOWEVER, THE ASSESSEE HAD UTILISED THE ENTIRE CAPITAL GAINS BY PURCHASE OF A HOUSE PROPERTY WITHIN THE ST IPULATED PERIOD OF S. 54(2) I.E., BEFORE THE EXTENDED DUE DA TE FOR RETURN UNDER S. 139. THE ASSESSEE TECHNICALLY MAY H AVE DEFAULTED IN NOT FILING THE RETURN UNDER S. 139(4). BUT, HOWEVER, UTILISED THE CAPITAL GAINS FOR PURCHASE OF PROPERTY BEFORE THE EXTENDED DUE DATE UNDER S. 139( 4). THE ITA NO.863/B/14 7 CONTENTION OF THE REVENUE THAT THE DEPOSIT IN THE S CHEME SHOULD HAVE BEEN MADE BEFORE THE INITIAL DUE DATE A ND NOT THE EXTENDED DUE DATE IS AN UNTENABLE CONTENTION. 12. THE GAUHATI HIGH COURT IN CIT VS. RAJESH KUMAR JALAN (2006) 206 CTR (GAU) 361 : (2006) 286 ITR 274 (GAU) HAS TAKEN A SIMILAR VIEW THAT THE TIME-LIMIT FOR DEPOSIT UNDER THE SCHEME OR UTILISATION CAN BE MADE BEFORE THE DUE DATE FOR FILING OF RETURNS UNDER S. 139(4). 8. THUS, IN VIEW OF THE DECISION OF HONBLE HIGH CO URT IF THE ASSESSEE HAS INVESTED THE SALE PROCEEDS IN NEW RESI DENTIAL HOUSE, WITHIN THE PERIOD OF FILING THE RETURN OF INCOME U /S 139(4) THEN THE CLAIM OF EXEMPTION U/S 54F CANNOT BE DENIED ON THE GROUND THAT THE ASSESSEE HAS FAILED TO DEPOSIT THE SALE PROCEEDS IN THE PRESCRIBED BANK ACCOUNT. IN THE CASE IN HAND ADMITTEDLY THE ASSESS EE HAS INVESTED THE SALE PROCEEDS IN PURCHASE OF NEW HOUSE PROPERTY VI DE SALE DEED DATED 15/1/2010 AS REFERRED IN CIT(A) APPEAL IN PARA 7 OF THE IMPUGNED ORDER AS UNDER: REGARDING EXEMPTION CLAIMED U/S 54F THE APPELLANT CLAIMS TO HAVE PURCHASED A FLAT VIDE AGRE EMENT OF SALE DATED 23.6.2009 AND ABSOLUTE SALE DEED DATED 15.1.2010. ITA NO.863/B/14 8 9. ONCE THE ASSESSEE HAS INVESTED THE SALE PROCEEDS IN THE PURCHASE OF THE NEW RESIDENTIAL HOUSE WITHIN THE PERIOD PRES CRIBED U/S 54F THEN IN VIEW OF THE JUDGMENT OF THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF FATHIMA BAI (SUPRA), THE CLAIM OF EXEMP TION U/S 54F CANNOT BE DENIED TO THE ASSESSEE. ACCORDINGLY, WE H ELD THAT THE ASSESSEE IS ENTITLED FOR THE CLAIM OF EXEMPTION U/S 54F. 10. THE NEXT ISSUE IS REGARDING LEVY OF INTEREST U/ S 234B AND 234C. SINCE LEVY OF INTEREST U/S 234B AND 234C IS MANDATO RY AND CONSEQUENTIAL IN NATURE, NO SEPARATE FINDING IS REQ UIRED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH SEPT, 2015. SD/- SD/- (JASON P BOAZ) (VIJAYPAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER VMS. BANGALORE DATED : 24/9/2015 COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER ASST. REGISTRAR, I TAT, BANGALORE.