Anisha R. Dhanani, Mumbai V. The ACIT, Circle-1(2), Baroda

ITSSA 142/AHD/2015

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8355 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 21-01-2020
• Assessment Year: 2009-2010
• Appeal Filed On: 30-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift
• Section: 54F; 153A; 234B; 201; 143(2); 139(1); 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, HONBLE JUDICIAL MEMBER AND SHRI WASEEM AHMED HONBLE ACCOUNTANT MEMBER IT(SS)A.NO.142/AHD/2015 / ASSTT.YEAR : 2009-10 ANISHA R. DHANANI FLAT NO.281, 28 TH FLOOR KALPATARU HEIGHTS MAHALAXMI, MUMBAI PAN : ACTPD 3111 C VS ACIT, CIR.1(2) BARODA. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SAKAR SHARMA, AR REVENUE BY : SHRI AARSI PRASAD, CIT - DR / DATE OF HEARING : 21/01/2020 / DATE OF PRONOUNCEMENT: 22/01/2020 !'/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-1, VADODARA DATED 16.2.2015 PASSED FOR THE ASSESSMENT YEAR 2009-10. 2. ASSESSEE HAS TAKEN FOUR GROUNDS OF APPEAL, OUT O F WHICH GROUND NO.1 IS GENERAL GROUND, WHICH DOES NOT CALL FOR RECORDING O F ANY FINDING, HENCE REJECTED. IT(SS)A NO.142/AHD/2015 2 3. IN GROUND NO.3, THE ASSESSEE HAS SUBMITTED THAT THE LD.CIT(A) HAS ERRED IN NOT DELETING INTEREST CHARGED UNDER SECTION 234B OF THE ACT AMOUNTING TO RS.8,25,140/-. AS FAR AS CHARGING OF INTEREST UNDE R SECTION 234B IS CONCERNED, THE SAME IS CONSEQUENTIAL IN NATURE. IN CASE WHILE GIVING EFFECT TO ORDER OF THE TRIBUNAL IT COMES OUT THAT TOTAL ASSESSED INCOME HA S BEEN REDUCED AND INTEREST ON CERTAIN AMOUNT UNDER SECTION 234B IS NOT CHARGEA BLE, THEN THE LD.AO SHALL CARRY OUT THAT EXERCISE AFTER PROVIDING OPPORTUNITY OF HEARING TO THE ASSESSEE. IN OTHER WORDS, IT IS JUST CONSEQUENTIAL, HENCE REM ITTED TO THE AO FOR RE- ADJUDICATION AFTER ORDER OF THE ITAT ON THIS APPEAL . 4. IN GROUND NO.2 THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING ACTION TAKEN BY THE AO UNDER SECTION 153 A OF THE INCOME TAX ACT. IN OTHER WORDS, THE LD.COUNSEL FOR THE ASSESS EE SUBMITTED THAT SINCE NO SEIZED MATERIAL WAS FOUND DURING THE COURSE OF SEAR CH, THEREFORE, NO ACTION UNDER SECTION 153A OF THE ACT OUGHT TO BE TAKEN BY THE AO. 5. BRIEF FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION132 OF THE INCOME TAX ACT, 1961 WAS CARRIED OUT AT THE RESIDENTIAL PR EMISES OF THE ASSESSEE AND DHANANI GROUP OF CASES ON 11.02.2011. THE ASSESSEE HAS FILED HER ORIGINAL RETURN OF INCOME UNDER SECTION 139(1) ON 31.7.2009. HER RETURN COULD BE SCRUTINIZED BY ISSUANCE OF NOTICE UNDER SECTION 143 (2) UPTO 31.9.2010. THUS, BEFORE THE SEARCH, THE TIME LIMIT TO ISSUE NOTICE U NDER SECTION 143(2) FOR PASSING A REGULAR ASSESSMENT ORDER UNDER SECTION 14 3(3) HAD ALREADY EXPIRED. ON THE STRENGTH OF THIS, LD.COUNSEL FOR THE ASSESSE E SUBMITTED THAT THE AO HAS DISALLOWED CLAIM OF THE ASSESSEE FOR GRANT EXEMPTIO N UNDER SECTION 54F, AND SUCH EXEMPTION HAS BEEN DENIED WITHOUT RELYING UPON ANY MATERIAL UNEARTHED DURING THE COURSE OF SEARCH, THEREFORE, HIS ORDER QUA THIS ISSUE IS NOT SUSTAINABLE. IN SUPPORT OF HIS CONTENTIONS, HE REL IED UPON A LARGE NUMBER OF DECISIONS VIZ. IT(SS)A NO.142/AHD/2015 3 I) PR.CIT VS. DESAI CONSTRUCTION P.LTD., 387 ITR 55 2 (GUJ); II) PR.CIT VS. DEVANGI, 394 ITR 184 (GUJ) III) PRIYA HOLDING P.LTD. VS. ACIT, 90 TAXMANN.COM 408 (GUJ); 6. ON THE OTHER HAND, THE LD.CIT-DR TOOK US THROUGH STATEMENT OF THE ASSESSEE RECORDED DURING THE COURSE OF SEARCH. HE MADE REFERENCE TO QUESTION NO.9 AND ITS REPLY. UNDER QUESTION NO.9, THE ASSES SEE WAS ASKED TO GIVE DETAILS OF MOVABLE AND IMMOVABLE PROPERTIES HELD BY HER, AN D HER FAMILY MEMBERS, AND ALSO SOURCE THEREOF. IN RESPONSE TO THIS QUEST ION, ASSESSEE DISCLOSED THAT SHE OWNED TWO FLATS; ONE AT 281, 28 TH FLOOR, KALPATARU HEIGHTS, DR.A. NAIR ROAD, MUMBAI, ANOTHER AT SOITAIRE, MUMBAI. SHE HAS ALSO DISCLOSED OTHER DETAILS OF THE PROPERTY OWNED BY HER. ON THE STREN GTH OF THIS REPLY, THE LD.CIT-DR CONTENDED THAT DURING THE COURSE OF SEARC H IT REVEALED THAT HER CLAIM UNDER SECTION 54F IS BASICALLY INCORRECT. SH E HAS NOT DISCLOSED DETAILS OF THESE FLATS OR PROPERTIES IN THE COMPUTATION OF INCOME. SHE SHOULD HAVE PUT A NOTE UNDER THE RETURN WHILE CLAIMING EXEMPTION UN DER SECTION 54F OF THE ACT. THUS, ACCORDING TO THE LD.CIT-DR, THE AO HAS RIGHTLY EXERCISED JURISDICTION OVER HER. 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND GONE TH ROUGH THE RECORD CAREFULLY. THERE IS NO DISPUTE WITH REGARD TO FACT THAT ALONG WITH COMPUTATION OF INCOME FOR THE CLAIM OF EXEMPTION UNDER SECTION 54F, THE ASSESSEE HAS NOT APPENDED ANY NOTE EXHIBITING THE FACT THAT SHE OWNE D OTHER FLATS. COPY OF THE RETURN HAS BEEN PLACED ON PAGE NO.15 TO 21 OF THE P APER BOOK SUBMITTED ON 16.1.209. NON-DISCLOSURE OF THE ABOVE FACTS IN THE COMPUTATION OF INCOME IF LOOKED INTO IN THE LIGHT OF THE REPLY GIVEN TO QUES TION NO.9 WOULD INDICATE THAT PRIMA FACIE CLAIM OF THE ASSESSEE WAS NOT ADMISSIBLE, BECAUSE, SHE FAILED TO DISCLOSE DETAILS OF THAT PROPERTY. HENCE, DURING T HE COURSE OF SEARCH, IT WAS UNEARTHED THAT THE ASSESSEES CLAIM UNDER SECTION 5 4FWAS DOUBTFUL CLAIM. IN IT(SS)A NO.142/AHD/2015 4 THE ABOVE SITUATION, THE AO IS JUSTIFIED TO INITIAT E ACTION UNDER SECTION 153A OF THE ACT. WE DO NOT FIND ANY MERIT IN THIS GROUND O F APPEAL. IT IS DISMISSED. 8. IN THE NEXT GROUND, THE GRIEVANCE OF THE ASSESSE E IS THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING DISALLOWANCE OF EXEMPTION U NDER SECTION 54F OF THE ACT AMOUNTING TO RS.50 LAKHS. 9. BEFORE, WE ADVERT TO THE FACTS, WE WOULD LIKE TO NOTE RELEVANT PART OF SECTION 54F, WHICH READS AS UNDER: 54F. (1) SUBJECT TO THE PROVISIONS OF SUB-SECTION (4), WHERE, IN THE CASE OF AN ASSESSEE BEING AN INDIVIDUAL OR A HINDU UNDIVIDED F AMILY, THE CAPITAL GAIN ARISES FROM THE TRANSFER OF ANY LONG-TERM CAPITAL A SSET, NOT BEING A RESIDENTIAL HOUSE (HEREAFTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET), AND THE ASSESSEE HAS, WITHIN A PERIOD OF ONE YEAR BEFORE OR TWO YEARS AFTER THE DATE ON WHICH THE TRANSFER TOOK PLACE PURCHASED, OR HAS WIT HIN A PERIOD OF THREE YEARS AFTER THAT DATE CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA (HEREAFTER IN THIS SECTION REFERRED TO AS THE NEW ASSET), THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SE CTION, THAT IS TO SAY, (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 CA PITAL 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 CHARGE D UNDER SECTION 45: PROVIDED THAT NOTHING CONTAINED IN THIS SUB-SECTION SHALL APPLY WHERE (A) THE ASSESSEE, (I) OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER TH AN THE NEW ASSET, ON THE DATE OF TRANSFER OF THE ORIGINAL ASSET; OR *** *** *** 10. THERE IS NO DISPUTE WITH REGARD TO FULFILLMENT OF OTHER CONDITIONS BY THE ASSESSEE AS CONTEMPLATED IN SECTION 54F. SHE HAS S OLD LONG TERM ASSET AND WHICH GAVE RISE TO LONG TERM CAPITAL GAIN. SHE HAS PURCHASED A NEW IT(SS)A NO.142/AHD/2015 5 RESIDENTIAL HOUSE IN INDIA. ONLY OBJECTION RAISED BY THE AO IS THAT SHE WAS HAVING MORE THAN ONE RESIDENTIAL HOUSE OTHER THAN T HE NEW ASSET ON THE DATE OF TRANSFER OF ORIGINAL ASSET. IN OTHER WORDS, IN THE OPINION OF THE AO, HER CASE FALLS WITHIN THE AMBIT OF SUB-CLAUSE (A)(I) OF PROV ISO OF SECTION 54F(). THE LD.COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING PLACED ON RECORD DETAILS IN TABULAR FORM WITH RESPECT TO ALL PROPERTIES OWNED B Y ASSESSEE, AND SUCH DETAILS READS AS UNDER: SR. NO DETAILS OF PROPERTY REFERRED TO IN ASSESSMENT ORDER IN PARA 7.1 AT PAGE 5 PAPER BOOK PAGE NO INDIVIDUALLY OR JOINTLY OWNED PROPERTY PURPOSE FOR WHICH PROPERTY WAS USED 1 70% SHARE IN PARK VIEW APARTMENT, MUMBAI 36-50 JOINTLY OWNED AND SOLD IN A.Y. 07-08 RESIDENTIAL 2 90% SHARES IN FLAT NO 281, KALPATRU HEIGHTS, AGNIPADA, MUMBAI JOINTLY OWNED AND PRESENTLY USED AS RESIDENCE RESIDENTIAL 3 FLAT NO 17A/B, EAST COURT CONDOMINIUM, GHORPADI, PUNE 5-10; 51-94 JOINTLY OWNED AND GIFTED IN A.Y. 2004- RESIDENTIAL 4 FLAT AT INDORE, BAFNA TOWER 13-14; 22-35 INDIVIDUALLY AND ACQUIRED ON 26 TH OCT, 2007 COMMERCIAL 5 FLAT AT UDAIPUR HITAWALA COMPLEX 95-119 INDIVIDUALLY AND ACQUIRED ON 4 TH AUGUST, 2009 ,. RESIDENTIAL 6 FLAT AT ELITA (KEY STONE REALTORS) 120-218 JOINTLY OWNED AND ACQUIRED ON 9 TH OCTOBER, 201 2 RESIDENTIAL 7 FLAT-SOLITAIRE MUMBAI (WADHWA GROUP) 219-308 JOINTLY OWNED AND ACQUIRED ON 26 TH MAY, 2010 RESIDENTIAL 8 FLAT NO 206 AT EKTA SUPREME HOUSING 16; 309 PROPERTY PURCHASED FOR WHICH EXEMPTION U/S 54F CLAIMED RESIDENTIAL 11. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT A PERUSAL OF THE ABOVE WOULD INDICATE THAT AT THE RELEVANT TIME ONLY TWO P ROPERTIES ARE RELEVANT WHICH ARE SHOWN AT SERIAL NO.2 AND 4. AS FAR PROPERTY-1 IS CONCERNED, IT WAS ALREADY SOLD IN THE ASSTT.YEAR 2007-08. OTHER ONE IS GIFTE D IN THE ASSTT.YEAR 2004-05. IT(SS)A NO.142/AHD/2015 6 ALL OTHER PROPERTIES HAVE BEEN ACQUIRED AFTER THE E ND OF THE ACCOUNTING YEAR RELEVANT TO THE PRESENT ASSESSMENT YEAR. ACCORDING TO HIM, SUB-CLAUSE (1)OF CLAUSE (A) OF THE PROVISO APPENDED TO SECTION 54F A UTHORISE THE ASSESSEE TO CLAIM FOR EXEMPTION UNDER SECTION 54F IF SHE OWNS O NE RESIDENTIAL HOUSE, OTHER THAN A NEW ASSET ON THE DATE OF TRANSFER OF C APITAL ASSET. IN OTHER WORDS, THIS PROVISO DISENTITLE BENEFIT OF SECTION 54F ONLY IN A CASE WHERE THE ASSESSEE OWNS MORE THAN ONE RESIDENTIAL HOUSE, OTHER THAN TH E NEW ASSET ON THE DATE OF TRANSFER OF ORIGINAL ASSET. MEANING THEREBY, IF AN ASSESSEE WAS HAVING TWO RESIDENTIAL HOUSES ALREADY, WHEN SHE PURCHASED NEW HOUSE BY UTILIZING LONG TERM CAPITAL GAIN, THEN SHE WILL NOT BE ENTITLED TO CLAIM EXEMPTION UNDER SECTION 54 OF THE ACT. 12. THE LD.DR ON THE OTHER HAND CONTENDED THAT FLAT AT INDORE, BAFNA TOWER IS A RESIDENTIAL HOUSE. THE ASSESSEE HAS TRE ATED IT AS COMMERCIAL ASSET, AND IF IT BE TREATED AS RESIDENTIAL HOUSE, THEN THE ASSESSEE WOULD BE HAVING TWO RESIDENTIAL HOUSES AT THE TIME WHEN SHE USED ALLEGE D CAPITAL FOR PURCHASE OF NEW HOUSE. FOR BUTTRESSING HIS CONTENTION, HE REFE RRED TO PAPER BOOK WHEREIN COPY OF THE PURCHASED DEED HAS BEEN PLACED ON RECOR D. 13. THE LD.COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, SUBMITTED THAT THOUGH IN THE SALE DEED IT HAS BEEN NARRATED AS A R ESIDENTIAL HOUSE BUT IT CEASED TO BE A RESIDENTIAL HOUSE. THE WHOLE BAFNA TOWER H AS BEEN RENTED OUT BY THE RESIDENTS. FOR BUTTRESSING HIS CONTENTION, HE PLAC ED ON RECORD COPIES OF PHOTOGRAPHS EXHIBITING THAT VARIOUS COMMERCIAL ACTI VITIES ARE BEING GOING ON IN THE BAFNA TOWER. SHE HAS ALSO SUBMITTED THAT TH IS PREMISE HAS BEEN LET OUT BY THE ASSESSEE TO LIBERTY URVARAK LTD. THE ASSESS EE HAS BEEN OFFERING THE RENTAL INCOME. IN THIS TOWER, IDBI BANK IS ALSO WO RKING, AND SANWARI DRESSES & KUNDAN JEWELLERY. IT(SS)A NO.142/AHD/2015 7 14. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE FIN D THAT THOUGH IN THE SALE DEED FLAT AT BAFNA TOWER, INDORE HAS BEEN TERMED AS RESIDENTIAL HOUSE, BUT CEASED TO BE A RESIDENTIAL PROPERTY BECAUSE COMMERC IAL ACTIVITIES ARE GOING ON IN THIS PROPERTY. ALL FLAT OWNERS HAVE LET OUT THE IR PROPERTIES; THAT BEING SO, NO ONE CAN USE IT FOR RESIDENTIAL PURPOSE. THIS FACT OUGHT TO HAVE BEEN EXAMINED BY THE AO BEFORE DISBELIEVING. IF THIS PROPERTY IS EXCLUDED FROM RESIDENTIAL HOUSE, THEN THE ASSESSEE WOULD BE HAVING ONLY 90% I N A FLAT NO.281, KALPATARU HEIGHTS, MUMBAI. APART FROM THIS, THE ASSESSEE WAS NOT HAVING ANY RESIDENTIAL HOUSE IN THIS ACCOUNTING YEAR, AND THER EFORE HER CASE WOULD FALL WITHIN THE AMBIT OF CLAUSE (A)(I) OF THE PROVISO AP PENDED TO SECTION 54F. IT IS ALSO PERTINENT TO OBSERVE THAT OBJECT OF SECTION 54 F IS GO GIVE INCENTIVE TO THE ASSESSEE FOR MAKING INVESTMENT IN PURCHASE OF RESID ENTIAL HOUSE. SUCH OBJECT OUGHT NOT TO BE DEFEATED ON SUM FLIMSY REASONS. TH EREFORE, IN VIEW OF ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE ASSESSEE IS ENTITLED FOR EXEMPTION UNDER SECTION 54F OF THE INCOME TAX ACT. WE DIRECT THE AO TO GRANT EXEMPTION OF RS.50 LAKHS ON ACCOUNT OF INVESTMENT I N NEW RESIDENTIAL HOUSE OUT OF LONG TERM CAPITAL GAIN. THIS GROUND OF APPE AL IS ALLOWED. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 22 ND JANUARY, 2020 AT AHMEDABAD. SD/- SD/- (WASEEM AHMED ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 22/01/2020