Ashish Vimalnath Phadkule, Solapur V. Income-tax Officer,

ITA 911/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2766 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-12-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 05-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR SUBHASH K R
• Keywords: Sale consideration of property below Jantri Value; Opportunity of being heard; Cost of acquisition
• Section: 50C; 54F; 234B; 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.911/PN/2014 #& & / ASSESSMENT YEAR : 2010-11 SHRI ASHISH VIMALNATH PHADKULE, 26/B, ADHYAPAK COLONY, 728, KURDUWADI ROAD, BARSHI, DIST. SOLAPUR PAN NO. AKOPP6493J . / APPELLANT V/S ITO, WARD-2(2), SOLAPUR . / RESPONDENT / ASSESSEE BY : SHRI M.K. KULKARNI / REVENUE BY : DR. SUBHASH K.R. / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 05-03-2014 OF THE CIT(A)-III, PUNE RELATING TO ASSESSMENT YEAR 2010-11. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 31-07-2010 DECLA RING TOTAL INCOME OF RS.3,53,945/-. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE AO CALLED FOR CERTAIN DETAILS. THE ASSESSE E FILED / DATE OF HEARING :12.01.2016 / DATE OF PRONOUNCEMENT: 03.02.2016 2 ITA NO.911/PN/2014 WRITTEN SUBMISSION GIVING DETAILS OF PROPERTIES SOLD AND PROP ERTIES PURCHASED ALONG WITH THE COPIES OF SALE/PURCHASE DEEDS, D ETAILS OF BANK ACCOUNTS AND FAMILY DETAILS. SUBSEQUENTLY, THE AO A SKED THE ASSESSEE TO EXPLAIN THE TAXABILITY OF INCOME FROM SALE O F PROPERTY. IT WAS SUBMITTED BY THE ASSESSEE THAT HE H AD SOLD HIS AGRICULTURAL LAND WHICH FALLS WITHIN THE MUNICIPAL LIMITS ON 04-01-2010 FOR A CONSIDERATION OF RS.51 LAKHS AS AGAINST T HE MARKET VALUE OF RS.52,35,500/-. HIS SHARE IN THE SAID PROPE RTY WAS 3/4 TH AND THE BALANCE. 1/4 TH BELONGS TO HIS ELDER BROTHER. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS PURCHASED 2 RESIDENTIAL PROPERTIES AND THE AGGREGATE INVESTMENT MADE THEREIN IS RS.45.36 LAKHS, THE DETAILS OF WHICH ARE AS UNDER : SL. NO. ADDRESS OF THE PROPERTY OWNERSHIP DA TE OF PURCHASE COST EXPENSES TOTAL COST 1 FLAT NO.18, THIRD FLOOR, B BLDG NO.1 BHAKTI PARADISE, S.NO.265, HISSA NO.2, CHINCHWAD, PUNE FULL 25 - 02 - 2010 1200000 72710 12,72,710 2 FLAT NO.402, 4 TH FLOOR, B WING, SAI WOODS, S.NO.269/10, CHINCHWAD, PUNE JOINTLY WITH HIS SPOUSE 17 - 05 - 2012 3079600 18470 32,64,340 TOTAL COST 45,37,950 IT WAS SUBMITTED THAT THESE PROPERTIES WERE PURCHASE D ON 25-02-2010 AND 18-05-2010. COPIES OF BOTH THE PURCHAS E DEEDS WERE FILED. IT WAS ACCORDINGLY ARGUED THAT IN VIEW OF THE INVESTMENTS IN THE 2 RESIDENTIAL PROPERTIES NO CAPITAL GAIN ARISES. 3. HOWEVER, THE AO CONSIDERED THE PROVISIONS OF SECTION 50C FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. SINCE THE A SSESSEE HAD NOT DISPUTED THE VALUATION ADOPTED BY THE STAMP DU TY AUTHORITIES THEREFORE THE FULL VALUE OF CONSIDERATION WAS TAK EN AT 3 ITA NO.911/PN/2014 RS.52,35,500/- INSTEAD OF RS.51 LAKHS AS CLAIMED BY THE ASSE SSEE. SO FAR AS THE INVESTMENT IN THE 2 HOUSE PROPERTIES ARE CONCERNED, THE AO NOTED THAT IN VIEW OF THE PROVISIONS OF SECTION 54 F THE ASSESSEE WAS ENTITLED TO EXEMPTION ONLY ON ONE RESIDENT IAL HOUSE PROPERTY. HE, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN A ND SUBSTANTIATE THE CLAIM OF INVESTMENT IN 2 FLATS AT 2 DIFFEREN T LOCATIONS. SINCE THE ASSESSEE DID NOT RESPOND TO THE SA ID NOTICE AND SINCE THE FIRST PROPERTY HAS BEEN PURCHASED ON 25- 02-2010 AND THE ASSESSEE RECEIVED IMMEDIATE POSSESSION AND THE SECOND PROPERTY WAS PURCHASED ON 18-05-2012 FROM THE BUILDER AND NOT ON 18-05-2010 AS CLAIMED, THE AO NOTED THAT ASSESSEE I S ENTITLED TO DEDUCTION U/S.54F ONLY FOR THE AMOUNT OF RS.12,72,710/- . HE ACCORDINGLY ALLOWED DEDUCTION U/S.54F AMOUNTING TO RS.12,72,710/- AND BROUGHT TO TAX CAPITAL GAIN OF RS. 26,62 ,044/- . SINCE THE ASSESSEE DID NOT APPEAR BEFORE THE AO TOWA RDS THE LATTER PART OF THE ASSESSMENT PROCEEDINGS THE AO COMPLE TED THE ASSESSMENT U/S.144 OF THE I.T. ACT. 4. BEFORE CIT(A) THE ASSESSEE CHALLENGED THE ORDER OF THE AO IN PASSING THE ORDER U/S.144 AS WELL AS BRINGING TO TAX THE CAPITAL GAIN OF RS.26,62,044/-. HOWEVER, IN ABSENCE OF ANY SATISFACTO RY REPLY FROM THE ASSESSEE THE CIT(A) UPHOLD THE EXPARTE A SSESSMENT ORDER PASSED BY THE AO. 5. SO FAR AS THE APPLICABILITY OF SECTION 50C IS CONCERNED, H E ALSO UPHELD THE ACTION OF THE AO. THE CLAIM OF THE OWNER SHIP OF THE LAND BY THE ASSESSEES SMALLER HUF WAS ALSO NEGATED BY HIM ON THE GROUND THAT THIS CLAIM WAS NEVER MADE BY THE AS SESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS. ONLY DURING THE COU RSE OF 4 ITA NO.911/PN/2014 THE APPEAL PROCEEDINGS, THE ASSESSEE FILED AN AFFIDAVIT OF SMT. VIJAYALAXMI PHADKULE, MOTHER OF THE ASSESSEE THAT HER HU SBAND LATE SHRI VIMALNATH BALWANTRAO PHADKULE WAS THE KARTA OF THE HUF AND THE HUF HAD AN ANCESTRAL PROPERTY RECEIVED ON PARTITION. THE SAID PARTITION WAS AMONGST THE MEMBERS OF HUF. NARR ATING THE DETAILS, IT WAS EXPLAINED THAT THE PARTITION DEED THAT TOOK PLACE BETWEEN THE MEMBERS OF THE FAMILY WAS HANDED OVER TO T HE AO. THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. THE AO SUBMITTED THAT NEITHER SUCH A PARTITION DEED WAS FILED NOR THE ISSUE OF OWNERSHIP OF THE LAND BY THE HUF WAS RAISED AT A NY TIME BEFORE THE AO. AFTER CONFRONTING THE REMAND REPORT OF TH E AO TO THE ASSESSEE AND THE REPLY GIVEN BY THE ASSESSEE TO SUCH REMAND REPORT, THE CIT(A) REJECTED THE CLAIM OF THE ASSESSEE TH AT CAPITAL GAIN IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE AND IT BELONGS TO THE HUF. 6. AS REGARDS THE CLAIM OF THE ASSESSEE THAT HE IS ENTIT LED TO THE BENEFIT OF SECTION 54F IN RESPECT OF BOTH THE PROPER TIES, THE CIT(A) NOTED THAT SECOND PROPERTY WAS PURCHASED BY TH E ASSESSEE AT SAI WOODS ON 17-05-2012 WHICH WAS BEYOND THE PER IOD OF TWO YEARS AFTER THE DATE OF TRANSFER OF THE ORIGINAL ASSET AS PRESCRIBED UNDER THE MAIN PROVISIONS OF SECTION 54F(1). FURTHER, THE ASSESSEE HAD NOT EXPLAINED BEFORE THE AO TO HIS SPECIFIC NOTICE/QUERY U/S.142(1) ON 13-12-2012 AS TO HOW EXEMPTIO N CLAIMED IN 2 DIFFERENT HOUSES AT TWO DIFFERENT LOCATIONS CAN B E CLAIMED. THE ASSESSEE HAD ALSO NOT RESPONDED TO THE QU ERY RAISED BY THE AO REGARDING THE SOURCES OF THE BALANCE INVESTME NT OF RS.7,12,050/-. THE LD.CIT(A) ACCORDINGLY UPHELD THE ACTION OF THE AO. 5 ITA NO.911/PN/2014 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US WITH THE FOLLOWING GROUNDS : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION O F NET CAPITAL GAIN OF RS 39,34,754/- WHICH IS NOTHING BUT A SALE CON SIDERATION RECEIVED BY THE HUF OF THE ASSESSEE. THAT NO SUCH CAPITA L GAIN IS TAXABLE IN THE HANDS OF THE INDIVIDUAL ASSESSEE. THE ADD ITION OF SALE CONSIDERATION BE DELETED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT PROPERLY APPRECIATING THE PROVISIONS OF S. 8 OF THE HINDU SUCCESSION ACT, 1956. THE PROPER TY WAS RECEIVED BY THE HUF OF THE ASSESSEE ON PARTITION OF THE FAMILY A SSETS. AT THE TIME OF PARTITION THE ASSESSEE WAS SINGLE SOLE SURVIVING C O-PARCENOR. THE PROPERTY BECAME THAT OF SMALLER HUF ON MARRIAGE OF THE ASSESSEE. THE CAPITAL GAIN AND SALE CONSIDERATION OF RS. 3 9,34,754/- BELONGS TO HIS SMALLER HUF. THE ADDITION BE DELETED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE ASSESSMENT IS VITIATED IN LAW SINCE THE INCOME THAT DID N OT BELONG TO HUF HAS BEEN ADDED IN THE HANDS OF INDIVIDUAL. THAT SU CH ADDITION IS CONTRARY TO PROVISIONS OF LAW AND WITHOUT JURISDICTION . THE ADDITION BE DELETED. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LA W THE LEVY OF INTEREST U/S 234B AND 234C IS NOT JUSTIFIED. 5. THE APPELLANT CRAVES/LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 8. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND WHIC H READS AS UNDER : ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ASSESSEE- APPELLANT IS ENTITLED TO CLAIM THE DEDUCTION U/S.54F OF THE ACT AS HE HAS INVESTED THE SALES PROCEEDS OF THE LAND INTO RESIDEN TIAL PROPERTY. THE ASSESSEE ACQUIRED TWO RESIDENTIAL HOUSES FOR SELF RESIDE NCE. THE WORDS A HOUSE HAS BEEN INTERPRETED TO MEAN MORE THAN ONE HOUSE SINCE SINGULAR INCLUDED PLURAL. THE DEDUCTION U/S.54F BE ALLOWED ACCORDINGLY. 9. HOWEVER, THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRES S THE ADDITIONAL GROUND FOR WHICH THE LD. DEPARTMENTAL REPRESENT ATIVE HAS NO OBJECTION. ACCORDINGLY, THE ADDITIONAL GROUND FILED B Y THE ASSESSEE IS DISMISSED. 6 ITA NO.911/PN/2014 10. SO FAR AS THE DEDUCTION U/S.54F IS CONCERNED, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE H AS NOT PURCHASED THE SECOND HOUSE BUT HAS CONSTRUCTED THE HOUSE. THEREFORE HE IS ENTITLED TO DEDUCTION U/S.54F TO THE TUNE OF RS.32,64,340/- AS AGAINST RS.12,72,710/- ALLOWED BY THE AO. HE SUBMITTED THAT SINCE THE FACTS WERE NOT PROPERLY APPRE CIATED BY THE AUTHORITIES BELOW, THEREFORE, THE MATTER MAY BE RESTO RED TO THE FILE OF THE AO FOR FRESH ADJUDICATION OF THE ISSUE AND ALLOW TH E DEDUCTION U/S.54F AS PER LAW. 11. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 12. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDER ED THE VARIOUS DECISIONS CITED BEFORE US. WE FIND DURING THE COU RSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT SUBSTAN TIATE THE CLAIM OF DEDUCTION U/S.54F ON ACCOUNT OF INVESTMENT IN 2 RESIDENTIAL FLATS FOR WHICH THE AO RESTRICTED THE DEDUCTION U/S.54F TO THE FIRST HOUSE AMOUNTING TO RS.12,72,710/- AND DENIED THE CLAIM OF DEDUCTION U/S.54F FOR THE SECOND HOUSE PROPERTY SINCE THE SAME WAS NOT POSSESSED WITHIN 2 YEA RS NOR BOOKED ALSO. HE ALSO DENIED THE BENEFIT OF INDEXATION IN ABS ENCE OF FURNISHING OF THE PROOF OF ACQUISITION OF THE AGRICULTURAL LAN D. WE FIND IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO. 13. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE SECOND HOUSE WAS CONSTRUCTED BY HIM AND NOT PURC HASED AS 7 ITA NO.911/PN/2014 MENTIONED BY THE AO. SINCE THE ASSESSEE WAS NOT PROPE RLY GUIDED DURING THE COURSE OF ASSESSMENT AND APPEAL PROCE EDINGS, THEREFORE DEDUCTION TO WHICH THE ASSESSEE IS OTHERWISE E NTITLED WAS NOT GIVEN. HE SUBMITTED THAT IN THE INTEREST OF JUSTIC E THE ASSESSEE SHOULD BE GIVEN ONE MORE OPPORTUNITY TO SUBST ANTIATE HIS CLAIM OF ELIGIBILITY FOR DEDUCTION U/S.54F FOR THE SECOND HO USE WHICH WAS CONSTRUCTED WITHIN A PERIOD OF 3 YEARS. IT IS T HUS HIS REQUEST THAT THE MATTER MAY BE SET ASIDE TO THE FILE OF THE AO. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN TH E INTEREST OF JUSTICE, WE DEEM IT PROPER TO RESTORE THE ISSUE TO TH E FILE OF THE AO WITH A DIRECTION TO VERIFY THE ELIGIBILITY OF CLAIM OF DEDUCT ION U/S.54F ON THE HOUSE WHICH IS ALLEGEDLY CONSTRUCTED BY THE ASSESSEE WITHIN A PERIOD OF 3 YEARS FROM THE SALE OF THE AGRICULTURAL LAND AND NOT PURCHASED AS MENTIONED BY THE A O. THE AO SHALL DECIDE THE ISSUE AS PER FACT AND AS PER LAW AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 14. SO FAR AS THE GROUND RAISED BY THE ASSESSEE THAT T HE INCOME BELONGS TO THE HUF AND DOES NOT BELONG TO THE ASSESSE E, THE LD. COUNSEL DID NOT PRESS THESE GROUNDS. ACCORDINGLY, THE GROUNDS OF APPEAL NO. 1 TO 3 BY THE ASSESSEE ARE DISMISSED. 15. AS REGARDS THE LEVY OF INTEREST U/S.234B AND 234C AS PER GROUNDS OF APPEAL NO.4 IS CONCERNED, THE SAME IN OUR OPINIO N IS MANDATORY AND CONSEQUENTIAL IN NATURE. ACCORDINGLY THIS G ROUND RAISED BY THE ASSESSEE IS DISMISSED. 8 ITA NO.911/PN/2014 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03-02-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 03 RD FEBRUARY, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) - I II , PUNE 4. 5. 6. THE CIT-III, PUNE $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , $ ' //TRUE COPY// // TRUE COPY // // $ ' //TRUE C // /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE