K.Nagesh , Bangalore V. The Deputy Commissioner of Income Tax Circle-7(2)(1), Bangalore

ITA 864/BANG/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 3766 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 18-04-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUZAFFAR HUSSAIN
• Assessee Lawyers: RAMESH
• Keywords: Invalid notice; Gift; Search and seizure; Period of limitation; Cost of acquisition; Assessment record; Capital Gains
• Section: 54F; 234B; 292BB; 143(2); 139(1); 139(4); 113; 13; 22; 54; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI. B. R. BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.864/BANG/2017 ASSESSMENT YEAR : 2013 14 SHRI K NAGESH, NO.487, 1 ST FLOOR, 5 TH CROSS, PWD ROAD, BANASHANKARI 3 RD STAGE, 3 RD PHASE, KATHRIGUPPE, BENGALURU. PAN ABMPN9499 B VS. THE DY. COMMISSIONER OF INCOME-TAX, CIRCLE-7(2)(1), BENGALURU. APPELLANT RESPONDENT APPELLANT BY : SHRI RAMESH, C.A RESPONDENT BY : SHRI MUZAFFAR HUSSAIN, ADDL. CIT DATE OF HEARING : 08-10-2020 DATE OF PRONOUNCEMENT : -11-2020 ORDER PER BEENA PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGA INST ORDER DATED 30/01/2017 PASSED BY LD.CIT(A)-7, BANGALORE F OR ASSESSMENT YEAR 2013-14 ON FOLLOWING GROUNDS OF APP EAL: CONCISE GROUNDS OF APPEAL : PAGE 2 OF 23 ITA NO.864/BANG/2017 1. THE ORDER OF THE LEARNED CIT(A) IS OPPOSED TO T HE FACTS OF THE CASE AND LAW APPLICABLE TO IT. 2. THE LEARNED CIT(A) ERRED IN NOT ALLOWING EXEMPTI ON U/S.54F OF THE ACT AS CLAIMED. 3. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE DEPOSIT OF RS.44,00,000/- IN THE CGAS AND INVESTMENT OF RS.4,8 4,020/- BEING ADVANCE FOR PURCHASE OF SITE FOR COMPUTING EX EMPTION U/S.54F OF THE ACT. 4. THE LEARNED CIT(A) ERRED IN GIVING A FINDING THA T, THE ASSESSING OFFICER HAS ALLOWED AN EXEMPTION OF RS.24,88,408/- UNDER THE PROVISIONS OF SECTION 54F OF THE ACT IGNORING THE FACT THAT, THE LEARNED ASSESSING OFFIC ER INFACT HAS NOT ALLOWED ANY SUCH EXEMPTION IN THE ASSESSMENT. 5. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE AMOUNT OF RS.55 LAKHS WHICH WAS RETAINED BY THE COMMISSIONER IN THE PD ACCOUNT DESPITE AN APPLICATION MADE BY THE APPEL LANT U/S.132B OF THE ACT, THEREBY PREVENTING THE APPELLA NT FROM MAKING ANY INVESTMENT, FOR EXEMPTION UNDER SECTION 54F OF THE ACT AND THEREFORE SUCH AMOUNT RETAINED BY THE COMMISSIONER SHOULD ALSO HAVE BEEN CONSIDERED FOR E XEMPTION U/S.54F OF THE ACT. 6. THE LEARNED 011(A) ERRED IGNORING THE POSITION O F LAW THAT UNLESS A VALID NOTICE IS ISSUED UNDER THE PROVISION S OF SECTION 143(2) OF THE ACT THERE BE AN ASSESSMENT S.143(3) O F THE ACT AND THEREFORE THE PRESENT ASSESSMENT WHEREIN NO NOT ICE HAS BEEN ISSUED ON THE RETURN FILED FOR THE A.Y.2013-14 IS BAD IN LAW. 7. THE LEARNED CIT(A) ERRED IN IGNORING THE POSITIO N OF LAW THAT ONCE THE APPELLANT OBJECTS TO AN INVALID NOTICE, NO SHELTER CAN BE TAKEN UNDER THE PROVISIONS OF SECTION 292BB OF T HE ACT. 8. THE LEARNED CIT(A) ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 234B OF RS.5,03,880/- IGNORING THE FACT THAT CA SH OF RS.55 LAKHS SEIZED WAS LAYING WITH THE DEPARTMENT A ND AVAILABLE FOR ADJUSTMENT TOWARDS ADVANCE TAX. 9. THE APPELLANT CRAVES PERMISSION TO ADD, DELETE, ALTER ANY OF THE GROUNDS OF APPEAL OF ANY TIME DURING THE COU RSE OF HEARING. BRIEF FACTS OF THE CASE ARE AS UNDER: 2. ASSESSEE FILED RETURN OF INCOME FOR YEAR UNDER CONSIDERATION ON 31/07/2013 DECLARING TOTAL INCOME OF RS.2,42,990/-UNDER SECTION 139 OF THE ACT. THERE WA S ACTION PAGE 3 OF 23 ITA NO.864/BANG/2017 UNDER SECTION 132 OF THE ACT ON SHRI. PRAKASHANCHAN D JAIN) ON 17/10/2012. DURING COURSE OF SEARCH, IT CAME TO NOTICE THAT, ASSESSEE SOLD IMMOVABLE PROPERTY BEING A VACA NT SITE LOCATED AT NO.11A, AHIMSA MARG, II STAGE, SIDDHARTH A LAYOUT, NARASIPURA ROAD, MYSORE FOR A VALUE OF RS.1,04,00,0 00/- DURING THE PREVIOUS YEAR RELEVANT TO YEAR UNDER CONSIDERATION. BOTH ASSESSEE AND THE PURCHASERS ADM ITTED THAT ACTUAL SALE CONSIDERATION WAS RS.1.04 CRORES. IT WAS ALSO STATED BY ASSESSEE THAT HE FURTHER RECEIVED A SUM OF RS.55 LAKH ON 14/10/2012 (THE DATE OF ENTERING INTO SALE AGREEMENT) AND THE SAME WAS KEPT IN LOCKER. IN VIEW OF THE AFORESAID INFORMATION, REVENUE CONDUCTED SEARCH OPE RATION IN THE HANDS OF ASSESSEE UNDER SECTION 132 OF THE A CT, AND SEIZED THE ABOVE SAID AMOUNT OF RS.55 LAKH IN THE B ANK LOCKER. 2.1. CONSEQUENTIALLY, ASSESSEE FILED ITS RETURN OF INCOM E FOR ASSESSMENT YEAR 2013-14 ON 30/07/2013 AND COMPUTED LONG TERM CAPITAL GAIN ON SALE OF THE ABOVE SAID VA CANT SITE AS UNDER: SALE CONSIDERATION RECEIVED 1,04,00,000/- ACQUIRED DURING THE FINANCIAL YEAR 2009-10 BY WAY OF GIFT LESS: INDEXED COST OF ACQUISITION AS ON 01/04/1981 (RS. 30/-PER SQ.FT.) 81,000 X 852/100 6,90,120 97,09,880 LESS: EXEMPTION UNDER SECTION 54 97,09,880 NIL ASSESSEE THUS DECLARED NIL CAPITAL GAINS. PAGE 4 OF 23 ITA NO.864/BANG/2017 3. LD.AO, THEREAFTER CALLED UPON ASSESSEE TO FURNISH DETAILS OF PROPERTY SOLD. FROM DETAILS FURNISHED, LD.AO NOT ED THAT, ASSESSEE DEDUCTED EXPENSES AND INDEXATION AND DETER MINED LONG-TERM CAPITAL GAIN AT RS.97,09,800/-. IT WAS S UBMITTED BY ASSESSEE THAT, IT CLAIMED ENTIRE LONG TERM CAPI TAL GAINS AS EXEMPT BY STATING THAT, SUM OF RS.99,00,000/-(44,0 0,000/- +55,00,000/- WAS DEPOSITED IN CAPITAL GAINS ACCOUNT SCHEME, WHICH INCLUDED AMOUNT SEIZED BY DEPARTMENT. 4. ASSESSEE WAS CALLED UPON TO SUBSTANTIATE THE CLAIM UNDER SECTION 54F MADE TO THE EXTENT OF RS.97,09,880/-. F ROM DETAILS FILED, LD.AO NOTICED THAT ASSESSEE ENTERED INTO FOLLOWING TRANSACTIONS: ASSESSEE DEPOSITED RS.44 LAKH ON 06/11/2012 ON THE VERY SAME DAY THE ENTIRE AMOUNT OF RS.44 LAK H WAS TRANSFERRED TO A FIXED DEPOSIT ACCOUNT THE ABOVE FIXED DEPOSIT WAS CLOSED ON 04/06/2013 AN D THE MATURITY PROCEEDS OF RS.45,71,038/- WAS DEPOSIT ED IN THE CAPITAL GAINS ACCOUNT SCHEME. ON 04/06/2013, ASSESSEE WITHDREW SUM OF RS.20,00,025/-AND AGAIN ON 10/06/2013 ANOTHER SUM OF RS.19,005/-WAS WITHDRAWN. 5. ASSESSEE CLAIMED TO HAVE DEPOSITED RS.44,00,000/- IN CAPITAL GAINS ACCOUNT SCHEME, IN SUPPORT OF WHICH, COPIES OF PASSBOOK WERE FILED. LD.AO SUBMITTED THAT PASSBOOK REVEALD WITHDRAWAL OF THE SAID AMOUNT AND KEPT IN FD ON SAM E DATE OF DEPOSIT. LD.AO NOTICED THAT, SUBSEQUENTLY ON 04/ 06/2013 ASSESSEE DEPOSITED A SUM OF RS.45,17,038/- IN HIS B ANK PAGE 5 OF 23 ITA NO.864/BANG/2017 ACCOUNT AND ON SAME DATE WITHDREW RS.20,00,025/-. L D.AO NOTICED THAT ASSESSEE AGAIN WITHDREW SUM OF RS.90,0 05/- ON 10/06/2030. 6. LD.AO, THUS CONCLUDED THAT, ASSESSEE WAS NOT INTEND ING TO UTILISE THE AMOUNT FOR PURPOSE OF PURCHASE/CONST RUCTION OF RESIDENTIAL PROPERTY DUE TO FREQUENT TRANSFERRIN G OF AMOUNT FROM ONE ACCOUNT TO ANOTHER THROUGH TRANSFER . THE LD.AO OBSERVED THAT IN THE INSTANT CASE ASSESSEE FR EQUENTLY TRANSFERRED AMOUNT FROM ONE ACCOUNT TO ANOTHER, AND THAT, AS ON DATE OF FILING OF RETURN FOR YEAR UNDER CONSI DERATION ONLY SUM OF RS.24,81,008/- WAS LYING IN CAPITAL GAI NS ACCOUNT.LD.AO THUS REJECTED THE CLAIM OF DEDUCTION OF RS.44,00,000/-. 7. IN RESPECT OF RS.55 LACS SEIZED AND LYING IN PD AC COUNT, LD.AO OBSERVED THAT, ASSESSEE KEPT SAID AMOUNT IN BANK LOCKER TO SUPPRESS RECEIPT, AND HAD NO INTENTION T O PAY LEGITIMATE TAXES ON SUCH AMOUNT. LD.AO NOTED THAT, AMOUNT SEIZED AND LYING IN PD ACCOUNT CANNOT PARTAKE CHARA CTER OF DEPOSITS MADE IN CAPITAL GAINS ACCOUNT SCHEME, AND REJECTED CLAIM OF DEDUCTION UNDER SECTION 54F OF THE SAID AM OUNT FOR FOLLOWING REASONS: ASSESSEE KEPT THE CASH IN BANK LOCKER AND IT WAS ON LY AFTER DETECTION BY INCOME TAX DEPARTMENT, THAT IT W AS OFFERED FOR TAXATION. AMOUNT SEIZED AND LYING IN PD A/C CANNOT PARTAKE TH E CHARACTER OF DEPOSITS MADE IN THE CAPITAL GAINS ACC OUNT SCHEME. PAGE 6 OF 23 ITA NO.864/BANG/2017 LD.AO THUS REJECTED ASSESSEES CLAIM OF DEDUCTION O F RS.55 LAKH UNDER SECTION 54F(4) OF THE ACT. 8. LD.AO NOTED THAT, ASSESSEE OBTAINED THE PROPERTY S OLD BY WAY OF GIFT FROM HIS FATHER VIDE GIFT DEED DATED 21 /01/2010. HE ALSO NOTICED THAT ASSESSEES FATHER PURCHASED TH E PROPERTY ON 29/04/1974 AND ASSESSEE HAD COMPUTED INDEXATION BENEFIT FROM FINANCIAL YEAR 1981-82. LD. AO WAS THUS OF THE OPINION THAT ASSESSEE DID NOT ADOPT COS T OF INFLATION INDEX IN ACCORDANCE WITH LAW. LD.AO WAS O F OPINION THAT, ASSESSEE BECAME OWNER OF PROPERTY FOR FIRST T IME DURING FINANCIAL YEAR 2009-10, BY VIRTUE OF GIFT DEED EXEC UTED BY HIS FATHER ON 21/01/2010. LD.AO WAS OF OPINION THAT, CO ST INFLATION INDEX APPLICABLE FOR FINANCIAL YEAR 2009- 10 SHOULD BE ADOPTED FOR COMPUTING LONG TERM CAPITAL GAINS. 9. HE THUS COMPUTED LONG TERM CAPITAL GAINS AT RS.1,02,90,804/- IN THE HANDS OF ASSESSEE. AGGRIEVED BY ORDER OF LD.AO, ASSESSEE FILED APPEAL BEFORE LD.CIT(A). 10. BEFORE LD.CIT (A) ASSESSEE RAISED LEGAL ISSUE THAT , LD.AO HAD NOT ISSUED NOTICE UNDER SECTION 143(2) OF THE A CT, DURING ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT, NOTI CE HAS TO BE SERVED WITHIN 6 MONTHS FROM END OF YEAR IN WH ICH THE RETURN IS FILED, AND SINCE NO NOTICE WAS ISSUED UND ER SECTION 143(2) OF THE ACT, ASSESSMENT PROCEEDINGS ARE BAD I N LAW. ASSESSEE PLACED RELIANCE ON DECISION OF HONBLE SUPREME COURT IN CASE OF ACIT VS HOTLE BLUEMOON REPORTED IN (2010) 188 TAXMANN 113. LD.CIT (A) AFTER PERUSAL OF ASSESSMENT RECORDS OBSERVED AS UNDER: PAGE 7 OF 23 ITA NO.864/BANG/2017 8.4 IN THE INSTANT CASE THE NOTICE U/S 143(2) OF I T ACT WAS ISSUEON 19.11.2013 FOR THE A.Y. 3 3-14. THE ONLY ERROR IN T HE NOTICE WAS THAT THE AO HAS MENTIONED THE DATE OF FILING OF INCOME T AX RETURN AS 3 1.07.2013 WHICH OUGHT TO HAVE BEEN ON 31.07.2012. T HE PROVISO OF SECTION 143(2) OF IT ACT PROVIDES THAT NO NOTICE UN DER CLAUSE (II) SHALL BE SERVED ON THE ASSESSEE AFTER THE EXPIRY OF 6 MON THS FROM THE END OF FINANCIAL YEAR IN WHICH THE RETURN IS FURNISHED IDENTICAL ISSUES WERE ADJUDICATED IN THE APPELLANT'S OWN CASE FOR TH E A.Y' 2007-08, A.Y. 08-09, A.Y.0910, A.Y. 2010-11 & A.Y. 2011-12. 11 . ON MERITS, ASSESSEE SUBMITTED BEFORE LD.CIT(A) TH AT, RS.44 LACS WAS DEPOSITED IN CAPITAL GAINS ACCOUNT SCHEME ON 06/11/2012 AND WAS CONVERTED INTO FIXED DEPOSIT. ASSESSEE SUBMITTED THAT, SAID CAPITAL GAINS FD ACCO UNT WAS CLOSED AND SUM OF RS.20,00,025/- WAS WITHDRAWN THRO UGH NEFT ON 04/06/2013 AND SUM OF RS.90,005/- WAS WITHDRAWN ON 10/06/2013. ASSESSEE SUBMITTED THAT, WITHDRAWALS WERE MEANT FOR GIVING ADVANCE FOR PURCH ASE OF SITE, THAT DID NOT MATERIALIZE, AND THAT MAJOR PORT ION OF WITHDRAWAL, AMOUNTING TO RS.19 LAKH, WAS DEPOSITED IN CAPITAL GAIN ACCOUNT ON 24/10/2013 AND 28/10/2013. 12. LD.CIT(A) DID NOT APPRECIATE SUBMISSIONS OF ASSESS EE, AS NO EVIDENCES WERE FILED TO SHOW WITHDRAWALS FROM CA PITAL GAINS ACCOUNT, FOR GIVING ADVANCE FOR PURCHASE OF S ITE. HE ACCORDINGLY REJECTED CLAIM OF ASSESSEE AND HELD THA T, EXEMPTION ONLY TO THE EXTENT OF RS.24,88,408/- THAT WAS LYING IN CAPITAL GAIN ACCOUNT AS ON DATE OF FILING OF RETURN, HAS ALREADY BEEN ALLOWED. 13. LD.CIT(A) REJECTED SUBMISSION OF ASSESSEE THAT, AS A SUM OF RS.55 LAKH WAS SEIZED BY REVENUE, AND WAS LYING IN PD ACCOUNT, IT SHOULD BE TREATED AS BEING DEPOSITED IN CAPITAL PAGE 8 OF 23 ITA NO.864/BANG/2017 GAINS ACCOUNT SCHEME. LD.CIT(A) WAS OF OPINION THAT , THERE IS NO PROVISION, EITHER IN CAPITAL GAINS ACCOUNT SC HEME OR UNDER SECTION 132B OF THE ACT, TO CONSIDER IT MUTUA LLY, AND THEREFORE, UPHELD DISALLOWANCE MADE BY LD.AO. BEFOR E LD.CIT(A) ASSESSEE CONTENDED THAT INTEREST UNDER SE CTION 234B OF THE ACT SHOULD BE COMPUTED AFTER GIVING CRE DIT OF RS.55 LAKH SEIZED BY REVENUE AND KEPT IN PD ACCOUNT . LD.CIT(A) REJECTED THIS ARGUMENT ADVANCED BY ASSESS EE LD.CIT(A) THUS OBSERVED AS UNDER: 6.2 THERE IS NO PROVISION EITHER IN THE CAPITAL GA IN ACCOUNT SCHEME OR IN THE SECTION 132B OF THE ACT TO CONSIDER IT MU TUALLY. IN THE INSTANT CASE, THIS AMOUNT OF RS. 55 LAKH WAS SEIZED FROM THE BANK LOCKER OF THE APPELLANT AND IT WAS NEVER BE A PART OF CONSIDERATION OF SALE OF PROPERTY MENTIONED IN THE SALE AGREEMENT . UNDOUBTEDLY , IT WAS A UNEXPLAINED INCOME OF THE APPELLANT AND TH E APPELLANT WAS HAVING NO INTENTION EVER TO DEPOSIT IT INTO CG ACCOUNT AS I) IT WAS NOT .A PART OF SALE CONSIDERATION IN THE SALE D EED AND RECEIVED IN CASH, AND II) IT WAS KEPT IN BANK LOCKER BUT-NOT IN THE BANK ACCOUNT. ACCORDINGLY , I DO NOT FIND IN THE MERIT O F APPEAL IN THIS ISSUE, HENCE REJECTED. 14. LD.CIT(A) HOWEVER ALLOWED COST OF INDEXATION TO BE CONSIDERED AS ON DATE OF ACQUISITION BY PREVIOUS O WNER FOR PURPOSE OF COMPUTING CAPITAL GAINS. AGGRIEVED BY OBSERVATIONS OF LD.CIT(A), ASSESSEE IS IN APPEAL BEFORE US NOW. 15. LD.AR SUBMITTED THAT, GROUND NO.1-2 ARE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ADJUDICATION. 16. LD.AR SUBMITTED THAT, LEGAL ISSUE HAS BEEN RAISED BY ASSESSEE IN GROUND NO.7-8, WHEREIN ASSESSMENT ORDER PASSED BY LD.AO HAS BEEN CHALLENGED FOR NON ISSUANC E OF NOTICE UNDER SECTION 143(2). AS THIS ISSUE LEADS TO ROOT CAUSE PAGE 9 OF 23 ITA NO.864/BANG/2017 OF THIS APPEAL, IT IS NECESSARY TO ADJUDICATE IT BE FORE DECIDING MERITS OF THE CASE. GROUND NO.6-7: 17. LD.AR SUBMITTED THAT, ASSESSEE FILED ITS RETURN OF INCOME FOR YEAR UNDER CONSIDERATION ON 30/07/2013, AND ACCORDINGLY, ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 143(2) OF THE ACT, ON 19/11/2013 WITH WRONG DATE OF FILING OF RETURN. HE PLACED RELIANCE ON PAGE 55 OF PAPER BOOK WHEREIN, IMPUGNED NOTICE HAS BEEN PLACED. LD.AR SUB MITTED THAT, THIS NOTICE REFERS TO RETURN OF INCOME DATED 31/07/2012 FOR ASSESSMENT YEAR 2013-14, THEREFORE, IS NOT A PROPER NOTICE. LD.AR SUBMITTED THAT, SCRUTINY ASS ESSMENT WAS COMPLETED FOR ASSESSMENT YEAR 2012-13, UNDER SE CTION 143(3). THE LD.AR THUS SUBMITTED THAT, NO NOTICE UN DER SECTION 143(2) WAS ISSUED FOR RETURN OF INCOME FILE D ON 13/07/2013 PERTAINING TO YEAR UNDER CONSIDERATION. IT WAS SUBMITTED THAT 143(2) NOTICE ISSUED IN RESPECT OF N ON EXISTING RETURN FOR YEAR UNDER CONSIDERATION IS LIA BLE TO BE QUASHED. HE PLACED RELIANCE ON DECISION OF ORDERABL E SUPREME COURT IN CASE OF HONBLE SUPREME COURT IN CASE OF HOTEL BLUEMOON REPORTED IN (2010) 188 TAXMANN.COM 113 . 18. ON THE CONTRARY, LD.CIT.DR SUBMITTED THAT, IT IS TYPOGRAPHIC MISTAKE, WHICH AUTOMATICALLY STANDS COV ERED UNDER SECTION 292B OF THE ACT. IT HAS BEEN SUBMITTE D THAT, EXCEPT FOR DATE OF RETURN OF INCOME MENTIONED IN NO TICE DATED 19/11/2013, OTHER DETAILS PERTAINS TO RELEVAN T YEAR. LD.CIR DR, SUBMITTED THAT, MERELY FOR TYPOGRAPHIC M ISTAKE OF MENTIONING DATE OF RETURN, WILL NOT INVALIDATE N OTICE ISSUED PAGE 10 OF 23 ITA NO.864/BANG/2017 DATED 19/11/2013. HOWEVER HE SUBMITTED THAT LD.AO SUBSEQUENTLY ISSUED NOTICE ON 4/9/2014 WITH IN THE PERIOD OF LIMITATION. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 19. LD.AR PLACED RELIANCE ON DECISION OF HONBLE SUPREME COURT IN CASE OF HOTEL BLUEMOON (SUPRA), IN SUPPORT OF HIS CLAIM. 20. WE NOTE THAT, ASSESSEE FILED ITS ORIGINAL RETURN O F INCOME UNDER SECTION 139 OF THE ACT ON 30/07/2013, AND NO TICE UNDER SECTION 143(2) OF THE ACT, WAS ISSUED TO ASSE SSEE ON 19/11/2013. IN THE NOTICE, DATE OF RETURN FILED BY ASSESSEE FOR YEAR UNDER CONSIDERATION IS MENTIONED TO BE 31/ 07/2012 AS AGAINST 30/07/2013. IT IS CONTENDED BY LD.AR THA T, NO NOTICE UNDER SECTION 143(2) OF THE ACT, WAS ISSUED, IN RELATION TO RETURN OF INCOME DATED 30/07/2013 FILED BY ASSESSEE FOR YEAR UNDER CONSIDERATION. ON ANALYSING THE ARGUMENT ADVANCED BY LD.AR HAVING REGARD TO THE NOT ICES ISSUED PLACED AT PAGE 55 OF PAPER BOOK, IT IS A FAC T THAT RETURN OF INCOME FOR ASSESSMENT YEAR UNDER CONSIDER ATION COULD NOT HAVE BEEN FILED ON 31/07/2012. AND THEREF ORE IN OUR VIEW DATE OF FILING OF RETURN FOR ASSESSMENT YE AR 2013-14 MENTIONED IN NOTICE ISSUED UNDER SECTION 143 (2) OF THE ACT ON 19/11/2013 COULD ONLY BE A TYPOGRAPHIC MISTAKE. THEREFORE, CONTENTIONS OF LD.AR CANNOT BE APPRECIAT ED. IN OUR VIEW THE ERROR HAS OCCURRED DUE TO TYPOGRAPHICA L MISTAKE AND HENCE IT IS CURABLE AS PER PROVISIONS O F SECTION 292B OF THE ACT. PAGE 11 OF 23 ITA NO.864/BANG/2017 21. WE NOTE THAT, LIMITATION FOR ISSUING NOTICE UNDER S ECTION 143(2) OF THE ACT FOR YEAR UNDER CONSIDERATION EXPI RES ON 30/09/2014. WE ALSO NOTE THAT, LD.AO ISSUED NOTICE AGAIN UNDER SECTION 143(2) OF THE ACT, ON 04/09/2014, PLA CED AT PAGE 56 OF PAPER BOOK WITHIN PERIOD OF LIMITATION. WE ALSO NOTE THAT, SAID NOTICE WAS RECEIVED BY ASSESSEE ON 10/09/2014, THEREBY COMPLYING WITH REQUIREMENTS FOR ASSUMING JURISDICTION BY LD.AO, WITHIN PERIOD OF LI MITATION, AS OBSERVED BY HONBLE SUPREME COURT IN CASE OF HOTEL BLUEMOON (SUPRA) . IN OUR VIEW, DECISION OF HONBLE SUPREME COURT IN CASE OF HOTEL BLUEMOON WILL NOT COME IN SUPPORT OF ASSESSEE IN THE PRESENT FACTS. ACCORDINGLY GROUNDS 6-7 RAISED BY ASSESSEE STANDS DISMISSED. 22. GROUND NO.3-5 ARE IN RESPECT OF NOT CONSIDERING DEPOSIT OF RS.44,00,000/- IN CAPITAL GAINS ACCOUNT SCHEME. 23. LD.AR SUBMITTED THAT, DURING YEAR UNDER CONSIDERAT ION, ASSESSEE SOLD PROPERTY FOR SUM OF RS.1,04,00,000/-. HE SUBMITTED THAT, PURCHASER REGISTERED SALE DEED FO R A SUM OF RS.44,00,000/- AS PER SUB REGISTRAR VALUE BUT PAID ENTIRE CONSIDERATION OF RS,1,04,00,000/- AS MENTIONED IN AGREEMENT TO SELL DATED, 14/10/2012 IN FOLLOWING M ANNER: RS. 1 LAKH BY CHEQUE ON 01/09/2012 RS. 1 LAKH BY CHEQUE ON 14/10/2012 RS. 55 LAKH BY CASH ON 14/10/2012 RS. 5 LAKH BY CASH ON 17/10/2012 RS. 42 LAKH BY DD ON 17/10/2012 PAGE 12 OF 23 ITA NO.864/BANG/2017 24. LD.AR SUBMITTED THAT, ASSESSEE DECLARED LONG TERM CAPITAL GAIN AT NIL, AFTER CLAIMING INDEXED COST OF ACQUISITION OF RS.6,90,120/- AND CLAIMED EXEMPTION OF RS.97,09, 800/- UNDER SECTION 54F, CONSISTING OF RS. 44 LAKH KEPT I N CAPITAL GAINS ACCOUNT AND 55 LAKH HELD IN PD ACCOUNT BY INC OME TAX DEPARTMENT. 25. THE LD.AR SUBMITTED THAT, SALE DEED WAS REGISTERED ON 17/10/2012, AND ON SAME DATE SEARCH WAS CONDUCTED A T PREMISES OF ASSESSEE. PURSUANT TO SEARCH, STATEMENT OF ASSESSEE WAS RECORDED, IN WHICH ASSESSEE ADMITTED T O THE FACT THAT, SALE CONSIDERATION OF RS.1,04,00,000/- W AS RECEIVED FROM PURCHASER OUT OF WHICH SUM OF RS.60 LAKH RECEIVED IN CASH, OUT OF WHICH RS.55 LAKH WAS KEPT IN THE BANK LOCKER WHICH WAS SEIZED BY THE DEPARTMENT DURI NG THE COURSE OF SEARCH OPERATION. DEPARTMENT KEPT THE AMO UNT SEIZED FROM BANK LOCKER UNDER PD ACCOUNT. 26. LD.AR SUBMITTED THAT, ASSESSEE INTENDED TO INVEST E NTIRE SALE CONSIDERATION IN CONSTRUCTION OF RESIDENTIAL P ROPERTY, AND THEREFORE SUM OF RS.44 LAKH WAS KEPT IN CAPITAL GAINS ACCOUNT SCHEME ON 06/11/2012. LD.AR SUBMITTED THAT, ASSESSEE PAID SUM OF RS.4,84,020/- TO TELECOM EMPLO YEES CO-OPERATIVE HOUSING SOCIETY, WITH INTENTION OF PU RCHASING SITE, AND CONSTRUCTING RESIDENTIAL BUILDING, WHICH WAS SUBSEQUENTLY, REFUNDED BY BDA SINCE SITE WAS NOT A LLOTTED. 27. LD.AR SUBMITTED THAT, ASSESSEE THEREAFTER, INTENDE D TO BUY RESIDENTIAL PROPERTY AND ENTERED INTO AGREEMENT FOR PURCHASE, FOR SALE CONSIDERATION AT RS.1,45,00,000/ - SITUATED AT NO.1740, 98 CROSS, 2 ND STAGE KUMARASWAMY PAGE 13 OF 23 ITA NO.864/BANG/2017 LAYOUT, TOGETHER WITH RESIDENTIAL BUILDING CONSTRUC TED OF 45 SQUARES. ASSESSEE ACCORDINGLY PAID ADVANCE OF RS.21,00,000/- ON 02/06/2013, WHICH WAS DIRECTLY TRANSFERRED FROM CAPITAL GAIN ACCOUNT TO THE VENDOR . LD.AR SUBMITTED THAT, THIS PURCHASE DID NOT MATERIALISE D UE TO DISPUTE ON ILLEGALITY OF TITLES AND ACCORDINGLY, TH E SAME WAS CANCELLED. ON 18/07/2013, CANCELLATION DEED WAS REG ISTERED WITH SUB REGISTRAR OF BASWANGUDI, BANGALORE. ASSESS EE RECEIVED AMOUNT PAID AS ADVANCE TO VENDOR, WHICH W AS DEPOSITED INTO CAPITAL GAINS ACCOUNT ON 24/10/2013, BEFORE DUE DATE OF FILING OF RETURN UNDER SECTION 139(4) O F THE ACT, BEING 31/03/2014. IT WAS SUBMITTED THAT, AS ON LAST DATE OF FILING OF RETURN U/S 139(4), SUM OF RS.44,52,777/- WAS LYING IN CAPITAL GAINS ACCOUNT. 28. LD.AR SUBMITTED THAT, SUBSEQUENTLY, ASSESSEE ENTERE D INTO PURCHASE OF SITE ON 17/10/2015 AND SUM OF RS.45,86,305/- BY UTILISING CAPITAL GAINS ACCOUNT S CHEME, AS PER PROVISIONS OF SECTION 54F. LD.AR SUBMITTED THAT , SINCE ASSESSEE DID NOT RECEIVE SUM OF RS.55LAKH, HELD IN PD ACCOUNT, HE COULD NOT CARRY OUT CONSTRUCTION, AS TH ERE WAS NO MONEY LEFT. 29. LD.AR SUBMITTED THAT, ASSESSEE FILED ALL RELEVANT D ETAILS IN RELATION TO EXEMPTION CLAIMED BY ASSESSEE U/S.54 F, AND SUBSEQUENT WITHDRAWALS AND DEPOSITS OF MONIES INTO CAPITAL GAINS ACCOUNT SCHEME, DUE TO MULTIPLE CANCELLATIONS OF AGREEMENTS. LD.AR SUBMITTED THAT, ASSESSEE HAD GOOD INTENTION OF INVESTING IN RESIDENTIAL PLOT FOR CONS TRUCTION, BUT FAILURE ON BEHALF OF VENDORS TO WHOM, IN GOOD FAITH , ASSESSEE PAGE 14 OF 23 ITA NO.864/BANG/2017 PAID MONEY FOR ACQUIRING PLOT, COULD NOT BE ATTRIBU TED TO ASSESSEE, FOR DENYING LEGITIMATE CLAIM OF EXEMPTION UNDER SECTION 54F. 30. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT, ALL CONTENTIONS ARGUED BY LD.AR HAS NOT BEEN SUBSTANTIA TED BEFORE AUTHORITIES BELOW, AS HAS BEEN OBSERVED BY L D.CIT(A). WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 31. DATE ON WHICH CAPITAL GAIN WAS EFFECTED WAS 17/10/2012. AS PER SECTION 54F, TIME PERIOD ALLOWED FOR MAKING PURCHASE, IF IT IS DONE AFTER THE DATE OF TR ANSFER IS 2 YEARS, AND IF IT IS CONSTRUCTION, WOULD BE 3 YEARS. ASSESSEE ADMITTEDLY PURCHASED VACANT SITE ON 17/10/015 IN TH E PRESENT FACTS AND AS PER SECTION 54F, TIME LIMIT PR ESCRIBED FOR CONSTRUCTION OF A HOUSE IS WITHIN A PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER. 32. BEFORE US LD.AR SUBMITTED THAT ASSESSEE ENTERED INT O PURCHASE DEEDS, WHICH LED TO WITHDRAWAL OF CERTAIN AMOUNT PAYABLE AS ADVANCE FROM CAPITAL GAINS ACCOUNT. HOWE VER MONIES WERE RE-DEPOSITED INTO THE ACCOUNT, DUE TO CANCELLATION ON SUBSEQUENT DATES. ADMITTEDLY, ASSES SEE MADE ALL THESE PAYMENTS THOUGH BANK DIRECTLY. BEFOR E US, ASSESSEE SUFFICIENTLY DEMONSTRATED HIS INTENTION TO INVEST CAPITAL GAINS EARNED IN RESIDENTIAL PLOT AND CONSTR UCTION THEREAFTER. A CAREFUL PERUSAL OF PROVISIONS OF SECT ION 54 WE NOTE THAT DEDUCTION IS ALLOWED FOR AMOUNT DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME SPECIFIE D UNDER SECTION 139 OF THE ACT IN THE CAPITAL GAINS ACCOUNT SCHEME. PAGE 15 OF 23 ITA NO.864/BANG/2017 PROVISO TO SECTION 54F (4) OF THE ACT, DEALS WITH A SITUATION WHEN THE AMOUNT SO DEPOSITED IS NOT UTILISED FOR PU RCHASE OR CONSTRUCTION OF NEW ASSET. 34. ACCORDING TO THE PROVISO, THE AMOUNT SO NOT UTILISE D IS CHARGEABLE TO TAX UNDER SECTION 45 AS INCOME OF THE PREVIOUS YEAR IN WHICH THE PERIOD OF 3 YEARS FROM THE DATE O F TRANSFER OF ORIGINAL ASSET EXPIRES. IN OUR VIEW PROVISIONS O F SECTION 54F(4) ALLOWS DEDUCTION UNDER SECTION 54F(1) BY A D EEMING FICTION THAT AN AMOUNT DEPOSITED IN CAPITAL GAINS A CCOUNT SCHEME AS COST OF NEW ASSET. AND IF THE AMOUNT SO D EPOSITED IS NOT UTILISED FOR PURCHASE OR CONSTRUCTION OF NEW ASSET, THEN THE SAME BECOMES TAXABLE ONLY IN THE PREVIOUS YEAR IN WHICH THE PERIOD OF 3 YEARS FROM THE DATE OF TRANSF ER OF ORIGINAL ASSET EXPIRES. THUS, THE ISSUE THAT NEEDS TO BE EXAMINED IS AS TO WHETHER, THE AMOUNT SO DEPOSITED WAS UTILISED FOR PURCHASE OR CONSTRUCTION OF ASSET SHAL L ARISE ONLY IN THE PREVIOUS YEAR IN WHICH THE PERIOD OF 3 YEARS FROM THE DATE OF TRANSFER OF ORIGINAL ASSET EXPIRES. 35. IN THE PRESENT FACTS OF THE CASE, ADMITEDLY, ASSESS EE DEPOSITED RS.44 LAKH IN CAPITAL GAINS ACCOUNT SCHEM E ON 06/11/2012 AND DUE DATE FOR FILING RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS 31/07/2013. THUS ASSES SEE HAS MADE DEPOSIT IN CAPITAL GAINS ACCOUNT SCHEME BE FORE THE DUE DATE PRESCRIBED UNDER SECTION 139(1) OF THE ACT AND AS PER PROVISIONS OF SECTION 54F (4) THE AMOUNT SO DEP OSITED SHALL BE DEEMED TO BE THE COST OF NEW ASSET ELIGIBL E FOR DEDUCTION UNDER SECTION 54F(1) OF THE ACT. HENCE TH E QUESTION OF EXAMINING AS TO WHETHER THE AMOUNT SO PAGE 16 OF 23 ITA NO.864/BANG/2017 DEPOSITED HAS BEEN UTILISED FOR CONSTRUCTION OR PUR CHASE OF HOUSE WOULD ARISE ONLY IN ASSESSMENT YEAR 2016-17. 36. IN THE PRESENT FACTS OF THE CASE, WE NOTE THAT ASSE SSING OFFICER HAS EXAMINED THE WITHDRAWALS/DEPOSITS FOUND IN THE CAPITAL GAINS ACCOUNT SCHEME DURING THE YEAR UNDER CONSIDERATION. IN OUR VIEW SUCH ACTION BY LD.AO IS NOT IN ACCORDANCE WITH PROVISIONS OF SECTION 54F(4) AS DIS CUSSED HEREINABOVE. WE ARE THEREFORE OF THE OPINION THAT, ASSESSEE IS ELIGIBLE TO CLAIM EXEMPTION UNDER SECTION 54F, T O THE EXTENT THE AMOUNT WAS DEPOSITED AS ON 31/03/2013 I. E BEFORE THE END OF FINANCIAL YEAR RELEVANT TO ASSESS MENT YEAR UNDER CONSIDERATION I.E RS.44,00,000/-. 37. WE ALSO NOTE THAT ASSESSEE HAS CLAIMED THAT ADVANCE OF RS.4,84,020/- WAS PAID TO TELECOM EMPLOYEES CO-OPER ATIVE SOCIETY WITH AN INTENTION TO PURCHASE SITE, AND THA T, SAID AMOUNT WAS REFUNDED BACK, SINCE BDA DID NOT ALLOT T HE SITE. LD.AR BROUGHT TO OUR NOTICE SPECIFIC GROUND NO.3, R AISED IN RESPECT OF THE SAME, AS ASSESSEE IS DENIED SAID AMO UNT AS DEDUCTION UNDER SECTION 54F. WE NOTE THAT LD.CIT(A) REJECTED ASSESSEES CONTENTION ONLY ON THE GROUND T HAT NO DETAILS WERE FILED IN RESPECT OF CANCELLATION OF DE ED WITH BDA. WE NOTE THAT THIS CLAIM WAS MADE BEFORE LD.AO DURIN G ASSESSMENT PROCEEDINGS. AT THE OUTSET WE ALSO NOTE THAT LD.AR FAIRLY ADMITT ED THAT ASSESSEE IS NOT ELIGIBLE FOR DEDUCTION OF RS.44,00, 000/-. HOWEVER, HE SUBMITTED THAT THE ADVANCE GIVEN PROVES THAT ASSESSEE WAS GENUINELY PERUSING INVESTMENT IN A NEW ASSET AS REQUIRED UNDER THE LAW. PAGE 17 OF 23 ITA NO.864/BANG/2017 ACCORDINGLY, GROUND NO.3-4 RAISED BY ASSESSEE STAND S PARTLY ALLOWED. 38. GROUND NO.8 IS IN RESPECT OF RS.55 LACS SEIZED BY REVENUE LYING IN PD ACCOUNT. 39. LD.AR SUBMITTED THAT RS.55 LACS WAS SEIZED FROM BA NK LOCKER AND WAS LYING WITH DEPARTMENT AND WAS CONSID ERED AS PART OF SALE CONSIDERATION. LD.AR SUBMITTED THAT AUTHORITIES BELOW PROCEEDED ON WRONG FOOTING AS SAL E CONSIDERATION OF RS.1,04,00,000/- COMPRISED OF RS.4 4 LAKHS AND RS.55LACS. IT WAS SUBMITTED THAT, ENTIRE SALE CONSIDERATION WAS TO BE UTILISED FOR PURCHASE OF PL OT AND CONSTRUCTION OF RESIDENTIAL HOUSE. LD.AR SUBMITTED THAT, ASSESSEE RECEIVED CASH OF RS.55LACS ON THE DATE OF REGISTRATION OF AGREEMENT, WHICH WAS KEPT IN THE BA NK LOCKER. AND IMMEDIATELY ON 25/10/2012 BY INVOKING PROVISIONS OF SECTION 132 OF THE ACT, REVENUE SEIZE D THE SAID AMOUNT. HE SUBMITTED THAT, ASSESSEE HAD NO INTENTIO N TO EVADE TAX AS THE SAID AMOUNT, ARE DECLARED AS PART OF SALE CONSIDERATION ON THE STATEMENT RECORDED AS WELL AS THE AGREEMENT. 40. LD.AR SUBMITTED THAT, ASSESSEE HAD NO INTENTION TO EVADE ANY TAX ON RS.55 LACS. HE SUBMITTED THAT, SAI D SUM WAS SEPARATELY KEPT IN THE LOCKER FOR UTILISING IT FOR CONSTRUCTION. LD.AR SUBMITTED THAT, ASSESSEE WHEN F ILED ORIGINAL RETURN OF INCOME CONSIDERED ENTIRE SALE CONSIDERATION TO BE EXEMPT UNDER SECTION 54F AND TH EREFORE ALLEGATION CASTED BY REVENUE IS BASELESS. HE SUBMIT TED THAT, AS SAID AMOUNT WAS SEIZED IMMEDIATELY AFTER SEARCH, WHICH PAGE 18 OF 23 ITA NO.864/BANG/2017 TOOK PLACE DURING THE YEAR, AFTER FILING ORIGINAL R ETURN OF INCOME, ASSESSEE COULD NOT UTILISE THIS MONIES, WHE N PLOT WAS PURCHASED FOR CONSTRUCTION. HE THUS SUBMITTED T HAT, SINCE THE SUM WAS LYING IN PD ACCOUNT WITH REVENUE, IT MAY BE TREATED AS HAVING DEPOSITED IN CAPITAL GAINS ACC OUNT SCHEME. LD.AR URGED THAT, SUM OF RS.55 LACS CANNOT BE CONSIDERED AS UNDISCLOSED INCOME FOR THE ABOVE REAS ONS. LD.AR REFERRING TO PAGE 44-51 OF PAPER BOOK WHEREIN , LETTERS WERE FILED BY ASSESSEE REQUESTING TO RELEASE THE SA ID AMOUNT. 41. ON THE CONTRARY, LD.SR.DR SUBMITTED THAT, HAD THE SEARCH NOT BEEN TAKEN PLACE, SAID SUM WOULD NOT HAV E BEEN DISCLOSED BY ASSESSEE. HE THEREFORE PLACED RELIANCE ON OBSERVATIONS OF LD.CIT(A). WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 42. WE NOTE THAT LD.CIT(A) REJECTED ASSESSEES SUBMISS IONS BY OBSERVING AS UNDER: 6.1. SECTION 132B OF THE I T ACT LAYS DOWN THE PROCEDURE FOR APPLICATION AND RELEASE OF ASSETS SEIZED UNDER SECTION 132 OR REQUISITION UNDER SECTI ON 132A OF THE ACT. AS PER THE PROVISIONS OF CLAUSE (I ) OF SECTION 132B(1), SUCH ASSETS HAVE TO BE APPLIED FOR RECOVERY OF ANY EXISTING LIABILITY UNDER THE INCOME TAX ACT, THE EXPENDITURE TAX ACT, THE WEALTH TAX ACT, T HE GIFT TAX ACT AND THE INTEREST TAX ACT AND THE LIABI LITY DETERMINED ON COMPLETION OF THE SEARCH AND SEIZURE ASSESSMENT, INCLUDING ANY PENALTY LEVIED INTEREST PAYABLE IN CONNECTION WITH SUCH ASSESSMENT. THE BALANCE, IF ANY, REMAINING AFTER SUCH ADJUSTMENT, HAS TO BE FORTHWITH RELEASED TO THE PERSON FROM WHOSE CUSTODY SUCH ASSET WAS SEIZED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 132B(3). ON SUCH RELEASE OF MONEY (LYING IN PD ACCOUNT), THE PAGE 19 OF 23 ITA NO.864/BANG/2017 GOVERNMENT IS ALSO UNDER OBLIGATION TO PAY INTEREST IN ACCORDANCE WITH THE PROVISIONS OF SECTION 132B (4). 6.2 THERE IS NO PROVISION EITHER IN THE CAPITAL GAI NS ACCOUNT SCHEME OR IN THE SECTION 132B OF THE ACT TO CONSIDER IT MUTUALLY. IN THE INSTANT CASE, THIS AMO UNT OF RS. 55 LAKH WAS SEIZED FROM THE BANK LOCKER OF T HE APPELLANT AND IT WAS NEVER TO BE PART OF CONSIDERATION OF THE SALE PROPERTY MENTIONED IN THE SALE AGREEMENT. UNDOUBTEDLY, IT WAS AN UNEXPLAINED INCOME OF APPELLANT AND THE APPELLANT WAS HAVING NO INTENTION EVER TO DEPOSITED INTO CG ACCOUNT AS (I) IT WAS NOT A PART OF SALE CONSIDERATION IN THE SALE DE ED AND RECEIVED IN CASH AND (II) IT WAS KEPT IN BANK LOCKER BUT NOT IN BANK ACCOUNT. ACCORDINGLY, I DO N OT FIND IN THE MERIT OF APPEAL IN THIS ISSUE, HENCE REJECTED. 43. ASSESSEE HAS PLACED SALE AGREEMENT AT PAGE 13-70 OF PAPER BOOK. WE NOTE THAT, AT PAGE 15 OF PAPER BOOK, TOTAL CONSIDERATION MENTIONED THEREIN, RECEIVED BY ASSESS EE IS RS.1,04,00,000/-. CLAUSE 2 OF TERMS AND CONDITION A T PAGE 15, SHOWS BIFURCATION OF AMOUNTS RECEIVED BY ASSESS EE WHICH INCLUDES SUM OF RS. 55 LACS IN CASH. THEREFORE WE REJECT THIS OBSERVATION OF LD.CIT(A) O F RS.55 LACS TO BE UNDISCLOSED. 44. THE SEIZURE OF CASH AND KEEPING IN PD ACCOUNT IS A SEPARATE PROCEDURE PRESCRIBED IN THE ACT WHICH IS D IFFERENT FROM DEPOSITS MADE INTO CAPITAL GAINS ACCOUNT SCHEM E. AS OBSERVED BY LD.CIT(A) IN PARA 6.1 OF IMPUGNED ORDER , REPRODUCED HEREINABOVE, AMOUNT KEPT IN PD ACCOUNT I S UNDER THE CONTROL OF DEPARTMENT, WHILE AMOUNT KEPT IN CAPITAL GAINS ACCOUNT SCHEME IS UNDER THE CONTROL O F ASSESSEE. THERE IS NO PROVISION UNDER THE ACT, TO L INK BOTH PAGE 20 OF 23 ITA NO.864/BANG/2017 THE TYPES OF DEPOSITS. ASSESSEE COULD AVAIL DEDUCTI ON UNDER SECTION 54F(1) OF THE ACT, ONLY IF THE DEPOSIT IS A CTUALLY MADE IN THE CAPITAL GAINS ACCOUNT SCHEME. ACCORDINGLY, W E ARE OF THE VIEW THAT LD.CIT(A) RIGHTLY REJECTED THE CLAIM OF DEDUCTION UNDER SECTION 54F OF THE ACT IN RESPECT O F RS.55 LAKH SEIZED BY DEPARTMENT AND KEPT IN PD ACCOUNT. ACCORDINGLY THIS GROUND RAISED BY ASSESSEE STANDS P ARTLY ALLOWED. 46. GROUND NO.8 IS IN RESPECT OF INTEREST CHARGED UNDER SECTION 234B OF THE ACT. 47. LD.AR SUBMITTED THAT THE AMOUNT OF RS. 55 LAKH SEIZ ED AND KEPT IN PD ACCOUNT SHOULD BE TREATED AS PAYMENT OF TAX AND ACCORDINGLY INTEREST UNDER SECTION 234B OF THE ACT SHOULD BE COMPUTED BY DEDUCTING THE SAID SUM AS PAY MENT OF TAX. LD.CIT(A) REJECTED THE SAID SUBMISSION BY O BSERVING AS UNDER: 10. IN GROUND NO.7 THE APPELLANT HAS CONTENDED THA T SINCE THE CASH OF RS.55,00,000/- WAS SEIZED AND LYI NG WITH THE DEPARTMENT AND WAS AVAILABLE FOR ADJUSTMEN T TOWARDS TAXES THUS INTEREST UNDER SECTION 234B CANN OT BE LEVIED. THE ADJUSTMENT OF AMOUNT SEIZED AND KEPT IN PD ACCOUNT OF COMMISSIONER CONCERNED ARE AVAILABLE FOR ADJUSTMENT TOWARDS TAX BUT ONLY AFTER THE TAXES AND OTHER DUES ARE DETERMINED AND IT CANNOT BE SAID OR EQUATED WITH THE AMOUNT OF PREPAID TAXES. THE CHARGING OF INTEREST IS MANDATORY AND ARE CHARGEABL E WHENEVER THERE IS INCIDENCE OF THE SAME. THEREFORE, NO APPEAL CAN LIE AGAINST THE ORDER CHARGING INTEREST IF PAGE 21 OF 23 ITA NO.864/BANG/2017 THERE IS AN IN SIDDONS, UNLESS IT CONCERNS ARE PERC EIVED AN APPARENT NON APPLICATION OF MIND. THE AO IS ACCORDINGLY DIRECTED TO LEVY INTEREST APPLICABLE AS PER LAW AFTER TAKING INTO CONSIDERATION THE FILING OF T HIS APPELLATE ORDER. ACCORDINGLY, THESE GROUNDS ARE DISMISSED. FROM THE ABOVE OBSERVATION OF LD.CIT(A), IT IS FOUN D THAT PROVISIONS OF SECTION 132B OF THE ACT GOVERNS THE M ANNER OF UTILISATION OF FUNDS SEIZED BY THE DEPARTMENT. IF T HE AMOUNT SEIZED AND KEPT IN PD ACCOUNT IS MORE THAN THE LIAB ILITY PAYABLE BY ASSESSEE, THEN THE ASSESSEE IS ENTITLED TO INTEREST ALSO AS PER THE PROVISIONS OF SECTION 132B OF THE A CT. ACCORDINGLY, THIS AMOUNT CANNOT BE TREATED AS EQUAL AND TO ADVANCE TAX FOR PURPOSE OF COMPUTING INTEREST UNDER SECTION 234B OF THE ACT. WE, THEREFORE DO NOT FIND ANY INFI RMITY IN THE OBSERVATIONS OF LD.CIT(A). ACCORDINGLY, THIS GROUND RAISED BY ASSESSEE STANDS DISMISSED. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS PARTL Y ALLOWED AS INDICATED HEREINABOVE. ORDER PRONOUNCED IN OPEN COURT ON 5 TH NOVEMBER, 2020 SD/- SD/- (B.R BASKARAN) (BEENA PI LLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 5 TH NOV., 2020. /VMS/ PAGE 22 OF 23 ITA NO.864/BANG/2017 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL. BANGALORE. PAGE 23 OF 23 ITA NO.864/BANG/2017 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -11-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -11-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -11-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -11-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -11-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -11-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -11-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS