Jatender Singh Marvaha, Kolkata V. DDIT(IT) - 1(1)/Kolkata, Kolkata

ITSSA 159/KOL/2014

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3681 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 30 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-04-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 10-12-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANAND R BAIWAR CIT LD
• Assessee Lawyers: ANKIT JALAN LD
• Keywords: Capital asset; Principle of natural justice; Cost of acquisition; Corroborative evidences
• Section: 54B; 142(1); 153A; 131; 54; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : A B ENCH, KOLKATA BEFORE : SHRI M. BALAGANESH,ACCOUNTANT MEM BER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER IT(SS) NO. 159/KOL/2014 A.Y : 2011-12 JATENDER SINGH MARVAHA VS. D.DI.T (IT)-1(1), KOLK ATA PAN: BQKPM 1218H [APPELLANT-ASSESSEE ] [DEPARTMENT-RESPONDE NT ] APPELLANT BY : SHRI ANKIT JALAN, LD.AR RESPONDENT BY : SHRI ANAND R. BAIWAR, CIT, LD .DR DATE OF HEARING : 15-11-2017 DATE OF PRONOUNCEMENT : 09-02-2018 ORDER SHRI S.S.VISWANETHRA RAVI: THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DT : 21-10- 2014 OF THE CIT-A, VI, KOLKATA FOR THE A.Y 2011-12. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND A CITIZEN OF UNITED KINGDOM. A SEARCH & SEIZURE OPERA TION WAS CONDUCTED U/S. 132 OF THE ACT ON THE ASSESSEE AT THE NETAJI S UBHASH CHANDRA BOSE INTERNATIONAL (NSCB) AIRPORT ON 26-01-2011. IN CONS EQUENCE OF THE SAID SEARCH & SEIZURE OPERATION, THE AO ISSUED NOTICE U/ S. 153A OF THE ACT TO THE ASSESSEE TO FILE THE RETURN OF INCOME FOR THE A .Y UNDER CONSIDERATION. IN RESPONSE TO SAID NOTICE ISSUED U/ S. 153A, THE ASSESSEE FILED HIS RETURN FOR THE A.Y UNDER CONSIDERATION O N 23-02-2012 BY DECLARING TOTAL INCOME AT RS.500/-. UNDER SCRUTINY, THE NOTICES US/. 143(2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAI RE WERE ISSUED. IN RESPONSE TO WHICH, THE A/R OF THE ASSESSEE APPEARED AND FILED SUBMISSIONS IN RESPECT OF QUESTIONNAIRE ISSUED ALON G WITH DETAILS. ON PERUSAL OF THE SAID RETURN AND SUBMISSIONS OF THE A SSESSEE, THE AO DISALLOWED OF RS. 4,50,000/- UNDER THE HEAD BROKERA GE & OTHER IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 2 EXPENSES AND RS.40,00,000/- TOWARDS CLAIM OF EXEMPT ION U/S. 54EC OF THE ACT AND DETERMINED THE LONG TERM CAPITAL GAINS AT RS.70,06,500/- VIDE HIS ORDER DT. 13-03-2013 U/S. 143(3), 153A AND 153B(1)(B) OF THE ACT. 3. GROUND NO.1 RELATES TO RESTRICTION OF DISALLOWAN CE TO RS.1,50,000/- UNDER THE HEAD BROKERAGE & OTHER EXP ENSES BY THE CIT-A AGAINST RS.4,50,000/- MADE BY THE AO. 4. THE FACTS RELATING TO GROUND NO.1 ARE THAT A SEA RCH & SEIZURE OPERATION WAS CONDUCTED ON THE ASSESSEE U/S. 132 OF THE ACT AT THE NETAJI SUBHASH CHANDRA BOSE INTERNATIONAL (NSCB) AI RPORT ON 26-01- 2011. ACCORDING TO AO, THE SAID SEARCH & SEIZURE O PERATION WAS CONDUCTED ON RECEIPT OF INFORMATION FROM DDIT, AIU, NEW DELHI, WHEREIN THE SEARCH TEAM FOUND CASH OF RS. 51.50 LAK HS ROUGHLY AND 20,000 POUNDS STERLING FROM THE ASSESSEE. BUT, FOR NOT PROVIDING ANY SUPPORTING EVIDENCE AND DOCUMENTS IN RESPECT OF SOU RCE OF SAID CASH A WARRANT OF AUTHORIZATION U/S. 132(1) OF THE ACT W AS ISSUED. THE SAID WARRANT WAS EXECUTED ON THE ASSESSEE AT NSCBI AIRPO RT, KOLKATA AND RETURNED AN AMOUNT OF RS.2,19,000/- TO THE SATISFA CTION AND SEIZED AMOUNT OF RS. 49,00,000/- AND 20,000 POUND STERLING WAS HANDED OVER TO AD, DIRECTORATE OF ENFORCEMENT, KOLKATA ON 27-01-11. 5. ACCORDING TO AO, AS PER THE STATEMENT RECORDED U /S. 131 OF THE ACT THE ASSESSEE WAS COMING FROM PHAGWARA, DIST: JA LANDHAR, PUNJAB BY FLIGHT NO. SG 212, DELHI TO KOLKATA. THE SAID CA SH AMOUNT FOUND IN THE SEARCH & SEIZURE OPERATION WAS RELATING TO SALE PROCEEDS OF AN ANCESTRAL LAND MEASURING 18 MARLAS SITUATED IN PHAG WARA, PUNJAB @ RS. 4.25 LAKHS PER MARLAS AND THE SAID AMOUNT WAS R ECEIVED BY THE ASSESSEE IN CASH FROM SALE OF SAID PROPERTY THROUGH THROUGH PROPERTY DEALER, SHRI AVTAR SINGH. A STATEMENT OF SHRI AVTA R SINGH WAS RECORDED U/S. 131 OF THE ACT, WHEREIN HE STATED THA T THE ASSESSEE SOLD AN ANCESTRAL LAND MEASURING 18 MARLAS TO SHRI MUKESH KUMAR @ IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 3 RS.4.25 LAKHS PER MARLAS. THE ASSESSEE RECEIVED RS. 1,00,000/- AS TOKEN MONEY AND RS.10,00,000/- AS ADVANCE MONEY AN D REMAINING BALANCE OF RS.66,00,000/- IN CASH ON 24-01-2011, BU T THE LAND WAS REGISTERED AT RS.20,00,000/- INSTEAD OF ACTUAL VALU E RECEIVED. THE AO REQUESTED THE ASSESSEE TO FURNISH THE EVIDENCES OF PAYMENT OF BROKERAGE AND OTHER EXPENSES. IN RESPONSE TO WHICH , THE ASSESSEE STATED THAT THE BROKERAGE OF RS. 1,50,000/- WAS PAI D TO SHRI AVTAR SINGH AND REMAINING RS.3,00,000/- LAKHS WERE INCURR ED FOR ASSESSEE TOWARDS TRAVELLING, LODGING & FOOD EXPENSES IN CONN ECTION WITH SAID TRANSACTION. FOR NON PRODUCTION OF ANY SUPPORTING E VIDENCES, THE AO DISALLOWED THE SUM OF RS.4,50,000/- UNDER THE HEAD BROKERAGE & OTHER EXPENSES AND ADDED THE SAME BY STATING AS UN DER:- 13. THE SUBMISSION OF THE AR IS CONSIDERED BUT FOUN D TO BE NOT TENABLE. AS PER SECTION 48, THE ASSESSEE CAN CLAIM DEDUCTION OF ONLY THOSE EXPENSES WHICH HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANS FER OF THE CAPITAL ASSET. THE EXPRESSIONS 'WHOLLY' SHOULD BE UNDERSTOOD TO MEAN T HE QUANTUM OF EXPENSES AND 'EXCLUSIVELY' TO MEAN THE PURPOSE OF INCURRING SUCH EXPENDITURE AND BOTH THE SITUATIONS HAVE TO BE CUMULATIVELY SATISFIED AND DEMONSTRATED BY THE ASSESSEE BY WAY OF PRODUCTION OF TANGIBLE EVIDENCES. IN THE WRITTEN SU BMISSION, THE AR ARGUES THAT PAYMENT OF BROKERAGE OF RS.L,50,000/- SHOULD BE ALLOWED FOR DEDUCTION AS IT WAS WITHIN THE GENERALLY ACCEPTED PRACTICE OF PAYING UP THE PROPER TY BROKERS IN THE REAL ESTATE BUSINESS. THE ARGUMENT OF THE AR CANNOT BE ACCEPTED AT FACE V ALUE IN THE ABSENCE OF ANY PROOF THAT SUCH EXPENDITURE WAS ACTUALLY INCURRED BY THE ASSESSEE. SINCE NO SUCH EVIDENCE IS ADDUCED IN THIS REGARD, THE ARGUMENT OF THE AR IS R EJECTED AND THE CLAIM FOR DEDUCTION OF RS.1, ,50,000/- ON ACCOUNT OF BROKERAGE PAYMENT IS HELD TO BE INADMISSIBLE. 14. AS REGARDS THE OTHER EXPENSES ALSO, THE AR WAS UNABLE TO PRODUCE ANY DOCUMENTARY EVIDENCE WHICH COULD PROVE A NEXUS BETWEEN THE ALLE GED EXPENDITURE AND THE SALE OF THE PROPERTY. IN THE WRITTEN SUBMISSION, THE AR STATED THAT THE ASSESSEE CAME TO INDIA FOR 15 DAYS WITH A PURPOSE TO SELL THE PROPERTY IN QUES TION. HE ALSO MADE A VERY NAIVE AND SIMPLISTIC STATEMENT THAT 'THE CHEAPEST ROUND-TRIP AIRFARE FOR ECONOMY CLASS BETWEEN LONDON AND INDIA IS APPROX. RS.50,000/- AND LODGING EXPENSES IN INDIA IS NORMALLY @ RS.7,000/- PER DAY. SO, IN THE CASE OF HIS CLIENT, LODGING EXPENSES COMES TO RS.L,05,0001- ( I.E., RS.7,000 X 15) AND FOODING EX PENSES IN HOTELS COMES TO APPROX. RS.75,000/- FOR 15 DAYS. FOR VISITING HERE AND THER E, CAB HIRE CHARGES WAS APPROX. RS.70,000/-'. THE SUBMISSION OF THE AR IS NOT TENAB LE FOR SEVERAL REASONS. FIRST, NO DOCUMENTARY EVIDENCE IS FURNISHED IN SUPPORT OF SUC H CLAIMS. THE AR IS ALSO NOT SURE OF THE ACTUAL AMOUNT OF EXPENDITURE, IF ANY INCURRED A ND HE HAS ONLY MADE SOME GUESSTIMATE OF FIGURES LIKE 'APPROX.'. SECOND, LODG ING AND FOODING CHARGES HAVE BEEN ESTIMATED FOR 15 DAYS, FOR THE PERIOD OF ASSESSEE'S STAY IN INDIA FROM J 7 TH JANUARY, 2011 TO 2 ND FEBRUARY, 2011. IT IS EVIDENT FROM RECORD OF PROCE EDINGS THAT THE ASSESSEE LANDED IN NEW DELHI AIRPORT ON 17 TH JANUARY,2011 AND CONVEYANCE OF THE SOLD OUT PROPER TY WAS GIVEN TO THE PURCHASER ON 24 TH JANUARY 2011 AFTER RECEIPT OF THE ENTIRE SALE CONS IDERATION OF RS.76,50,000/- IN THE FORENOON OF 24 TH JANUARY ITSELF, ALL THESE HAPPENED WITHIN A PERIOD OF 7 DAYS ONLY. SO THE PERIOD COMMENCING FRO M 25 TH JANUARY, 2011 TO 2 ND FEBRUARY, 2011 FOR THE ASSESSEES STAY IN INDIA IS NOT EVEN REMOTELY CONNECTED WITH THE SALE OF THE PROPERTY IN QUESTION. THIRD, THE ASSESS EES CLAIM OF BOARD AND LODGING IN A HOTEL IS ALSO NOT SUPPORTED BY ANY EVIDENCE. IN THE LIGHT OF ABOVE FACTS AND CIRCUMSTANCES OF TH E CASE, IT IS HELD THAT THE ASSESSEES CLAIM FOR DEDUCTION OF AFORESAID EXPENSE S IS NOT TENABLE, WHICH WAS OSTENSIBLY MADE TO REDUCE HIS TAX LIABILITY. THE CLAIM IS, ACC ORDINGLY, REJECTED. IN VIEW OF ABOVE, THE AO DISALLOWED THE SUM OF RS.4 ,50,000/- UNDER THE HEADS BROKERAGE & OTHER EXPENSES AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 4 6. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE CIT-A. BEFORE HIM THE ASSESSEE CONTENDED THAT THE SAID EXPENDITUR E WERE INCURRED DURING THE COURSE OF SALE OF SAID ANCESTRAL PROPERT Y (LAND) AND THEY WERE DIRECTLY RELATED TO THE SOURCE OF INCOME, THER EBY DEDUCTED THE SAME FROM SALE CONSIDERATION. THE ASSESSEE SUBMITTE D THAT THE PAYMENT OF BROKERAGE OF RS.1,50,000/- WAS GENERALLY ACCEPTED PRACTICE OF PAYING UP THE PROPERTY BROKERS IN THE R EAL ESTATE BUSINESS. THE AO ALSO ACCEPTED THE FACT OF THAT DURING THE AS SESSMENT PROCEEDINGS THE SAID LAND WAS SOLD THROUGH AN AGENT . THE AGENT STATED THE SAME BEFORE THE AO UNDER STATEMENT U/S. 131 OF THE ACT AND THE ASSESSEE ALSO STATED IN RESPONSE TO THE Q.2 THAT THE BROKERAGE OF 2% SALE CONSIDERATION OF THE SAID LAND WAS PAID TO SAID AGENT. IT WAS ALSO SUBMITTED THE AIRFARE, TRAVELLIN G, LODGING AND FOODING EXPENSES INCURRED BY THE ASSESSEE DURING TH E COURSE OF SALE TRANSACTION OF SAID ANCESTRAL PROPERTY. THE ASSESSE E TRAVELLED FROM LONDON TO INDIA AND STAYED IN INDIA FROM 17-01-2011 TO 2-2-2011 TO COMPLETE THE SAID TRANSACTION AND URGED TO ALLOW TH E SAME AS IT WERE INCURRED DURING THE COURSE OF SAID TRANSACTION. 7. THE CIT-A CONSIDERING THE SUBMISSIONS OF ASSESSE E DELETED THE DISALLOWANCE OF RS.1.5 LAKHS TOWARDS BROKERAGE AND FOR THE BALANCE OF RS.3 LAKHS TOWARDS OTHER EXPENSES, DIRECTED THE AO TO RESTRICT THE SAME TO RS.1.5 LAKHS I.E. 50% OF DISALLOWANCE OF RS .3 LAKHS BY STATING AS UNDER:- 3.2. I HAVE CONSIDERED THE FACTS OF THE CASE. THE CLAIM OF RS. 4.5 LAKHS MADE BY THE APPELLANT CONSISTS OF TWO PARTS. THE FIRST PART REL ATES TO BROKERAGE OF RS. 1.5 LAKHS PAID TO SHRI AVTAR SINGH, BROKER. THE ASSESSING OFFICER HAS DISALLOWED THE SAME ON ACCOUNT OF LACK OF DOCUMENTARY EVIDENCE. HOWEVER, IT IS NOTED THAT IN THE STATEMENT RECORDED U/S 131 OF THE IT ACT, 1961 ON 27.1.2011 I.E. DURING TH E SEARCH PROCEEDINGS ITSELF, THE APPELLANT HAD STATED THAT THE CASH FOUND ON HIM WAS OUT OF SALE PROCEEDS OF LAND WHICH WAS CARRIED OUT THROUGH SHRI AVTAR SINGH, BROKER. I N THE SUBSEQUENT STATEMENT DATED 28.1.2011, HE STATED THAT HE HAD PAID BROKERAGE OF RS.1.5 LAKHS TO SHRI AVTAR SINGH. THE APPELLANT IS A CITIZEN OF UK AND HAD FEW LOCAL CONT ACTS AT PHAGWARA, PUNJAB. THEREFORE, IT IS QUITE REASONABLE TO EXPECT THAT HE WOULD BE CARR YING OUT LAND DEAL THROUGH SOME BROKER. IN FACT, INVOLVEMENT OF SHRI AVTAR SINGH AS A BROKER IN THE LAND DEAL HAS BEEN CONFIRMED BY THE ADIT(LNV.), JALANDHAR ALSO. THUS, IT IS NOT DISPUTED, THAT THE DEAL WAS DONE THROUGH THE BROKER, WHO MUST HAVE CHARGED BROK ERAGE. IT IS TRUE, THAT THE APPELLANT COULD NOT PRODUCE DOCUMENTARY EVIDENCE FO R BROKERAGE. HOWEVER, IT IS QUITE COMMON THAT FOR SUCH TRANSACTION NO PROPER BILLS OR OTHER DOCUMENTARY EVIDENCE IS MAINTAINED BY THE PARTIES. THE LAND SOLD WAS FOR RS .76.5 LAKHS AND BROKERAGE OF RS.1.5 LAKHS WHICH COMES TO AROUND 2%. IT IS COMMON KNOWLE DGE THAT BROKERS NORMALLY CHARGE BROKERAGE IN THAT RANGE FOR LAND TRANSACTION. CONSI DERING THESE FACTS, I AM OF THE VIEW IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 5 THAT THE CLAIM FOR BROKERAGE OF RS. 1.5 LAKHS MADE BY THE APPELLANT IS REASONABLE. THE DISALLOWANCE OF BROKERAGE IS THEREFORE, DELETED. 3.3. COMING NOW TO THE BALANCE CLAIM OF DEDUCTION O F RS. 3 LAKHS, THE APPELLANT HAS STATED THAT HE HAD TRAVELLED FROM UK ONLY FOR THE P URPOSE OF LAND DEAL AND HAS SPENT AN AMOUNT OF RS. 3 LAKHS APPROXIMATELY ON TICKET, FOOD AND LODGING ETC., ALTHOUGH NO DOCUMENTS WERE MAINTAINED IN RESPECT OF THE EXPENSE S. THE ASSESSING OFFICER HAS DISALLOWED THE ENTIRE AMOUNT CLAIMED STATING THAT T HE APPELLANT COULD NOT PRODUCE EVIDENCE IN RESPECT OF THE EXPENSES INCURRED AND TO ESTABLISH THAT THEY WERE INCURRED ONLY FOR PURPOSE OF SALE OF LAND. HOWEVER, IT IS UN DISPUTED THAT THE APPELLANT WAS BASED AT UK AND HAD MADE TRIP TO PHAGWARA, PUNJAB AND HAD SOLD LAND THERE. OBVIOUSLY, HE MUST HAVE INCURRED EXPENSES ON TRAVEL AS WELL AS FO OD AND LODGING. HOWEVER, THOUGH THE APPELLANT IS A CITIZEN OF UK, HE IS A PERSON OF IND IAN ORIGIN AND HAD ANCESTRAL PROPERTY AT PHAGWARA, PUNJAB. IT IS QUITE REASONABLE TO EXPECT THAT HIS VISIT TO PHAGWARA WOULD ALSO BE UTILIZED TO MEET FRIENDS AND RELATIVES ETC. MORE OVER, AS POINTED OUT BY THE ASSESSING OFFICER, THE EXPENSES HAVE BEEN CLAIMED FOR THE PER IOD FROM 17.1.2011 TO 2.2.2011, THOUGH THE DEAL HAD BEEN COMPLETED ON 24.1.2011 AND EXPENSES INCURRED BEYOND THAT DATE COULD NOT HAVE BEEN INCURRED FOR PURPOSE OF DE AL. THEREFORE, IT IS DIFFERENT TO ACCEPT THE CONTENTION THAT THE ENTIRE EXPENDITURE ON THE V ISIT WAS WHOLLY AND EXCLUSIVELY FOR PURPOSE OF SALE OF LAND. IT IS WOULD BE MORE REASON ABLE TO SAY, THAT THE EXPENSES INCURRED ON THE VISIT WERE INCURRED PARTLY FOR PURP OSE OF SALE OF LAND AND PARTLY FOR PERSONAL AND SOCIAL PURPOSE. CONSIDERING ALL THESE FACTS, I AM OF THE VIEW THAT IT WOULD MEET ENDS OF JUSTICE IF CLAIMED FOR THE SAID EXPENS ES ON TRAVELLING, FOOD AND LODGING IS ALLOWED TO THE EXTENT OF 50%. 3.4. CONSIDERING THE ABOVE DISCUSSION THE ASSESSING OFFICER IS DIRECTED TO REDUCE THE DISALLOWANCE OF RS.4.5 LACS TO RS. 1.5 LAKHS. 8. BEFORE US THE LD.AR REITERATED THE SAME SUBMISSI ONS MADE BEFORE THE AUTHORITIES BELOW. HE FURTHER SUBMITS TH AT ALL THE DETAILS WERE SUBMITTED BEFORE THE AO, BUT, HE DID NOT CONSI DER THE SAME IN TERMS OF THE TRANSACTION, WHICH WERE RELATED TO THE SALE OF SAID ANCESTRAL PROPERTY. THE CIT-A OUGHT TO HAVE ALLOWED THE ENTIRE EXPENSES OF RS. 3 LAKHS. THE ASSESSEE CAME TO INDIA TO COMPLETE TRANSACTION OF SALE OF ANCESTRAL LANDED PROPERTY AN D THE SAID EXPENDITURE WERE INCURRED DURING HIS STAY IN INDIA I.E THE PERIOD OF SALE OF SAID PROPERTY. THE ASSESSEE IS ENTITLED TO CLAIM THE REMAINING EXPENDITURE OF RS.1.5 LAKHS TOWARDS OTHER EXPENSES AND PRAYED TO ALLOW GROUND NO.1 RAISED BY THE ASSESSEE. 9. ON THE OTHER HAND, THE LD.DR ARGUED THAT THE BRE AK-UP OF OTHER EXPENSES AND SUPPORTING EVIDENCES TOWARDS SUCH CLAI M WERE NOT GIVEN BY THE ASSESSEE BEFORE THE AO & CIT-A. THE A SSESSEE ONLY PRODUCED SOME CALCULATION AND ON THAT BASIS SOUGHT ALLOWANCE WITHOUT THERE BEING ANY EVIDENCE. FOR NON SUBMISSI ON OF EVIDENCE THE AO HAS RIGHTLY DISALLOWED THE SAME AND RELIED O N THE ORDER OF AO. IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 6 10. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L ON RECORD. WE FIND THAT THE FACTS RELATING TO THE ISSUE IN HAN D ARE THAT THE ASSESSEE CAME TO INDIA TO COMPLETE THE SALE TRANSAC TION OF THE SAID ANCESTRAL PROPERTY. DURING THE SALE TRANSACTION, TH E ASSESSEE STAYED IN INDIA AND INCURRED OTHER EXPENSES OF RS.3 LAKHS TOWARDS AIRFARE, FOODING & LODGING EXPENSES. WE FIND THAT THE ASSESS EE DID NOT PRODUCE ANY DOCUMENTARY EVIDENCE EITHER BEFORE THE AO OR THE CIT-A IN SUPPORT OF THE CLAIM OF TOWARDS LODGING, FOODING AND TRAVELLING EXPENDITURE INCURRED BY THE ASSESSEE DURING THE SAI D TRANSACTION. HOWEVER, THE CIT-A CONSIDERING THE SUBMISSIONS OF A SSESSEE HAS RESTRICTED THE SAME TO RS.1.50 LAKHS I.E. 50% OF RS . 3 LAKHS UNDER THE HEAD OTHER EXPENSES. IN OUR OPINION, IT IS QUITE, REASONABLE AND JUSTIFIED IN THE FACTS AND CIRCUMSTANCES OF THE CAS E. THEREFORE, OUR INTERFERENCE IS UNCALLED FOR ON THIS ISSUE. WE UPHO LD THE ORDER OF THE CIT-A IN RESTRICTING THE SAME ON THIS ISSUE. THEREF ORE, THE GROUND NO. 1 RELATING TO OTHER EXPENSES IS DISMISSED. 11. GROUND NOS. 2 & 3 RELATING TO CONFIRMATION OF D ISALLOWANCE OF RS.40,00,000/- TOWARDS CLAIM OF EXEMPTION U/S. 54EC OF THE ACT BY THE CIT-A. 12. DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE CLAIMED EXEMPTION FOR AN AMOUNT OF RS.40,0 0,000/- U/S. 54EC OF THE ACT. BUT, FOR NON-SUBMISSION OF ANY EVI DENCE OF INVESTMENT OF RS.40,00,000/- THE AO SHOW CAUSED THE ASSESSEE QUESTIONING WHY THE CLAIM TO AN EXTENT OF RS. 40,00 ,000/- SHOULD NOT BE DISALLOWED. IN REPLY, THE ASSESSEE THROUGH A LET TER DT. 6-2-2013 STATED THAT THE ASSESSEE INTENDED TO PURCHASE BONDS OF NATIONAL HIGHWAY AUTHORITY OF INDIA, BUT DUE TO SEIZURE OF R S.49,00,000/- BY THE SEARCH TEAM DURING THE SAID SEARCH & SEIZURE OP ERATION, THE ASSESSEE COULD NOT ACTUALLY INVEST THE SAID AMOUNT AS PER SECTION 54EC OF THE ACT. THE AO FOUND THE SUBMISSION OF THE ASSESSEE NOT IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 7 ACCEPTABLE AND FOR NON SUBMISSION OF ANY EVIDENCE A S REQUIRED BY HIM, DISALLOWED THE CLAIM OF EXEMPTION BY STATING A S UNDER:- DISALLOWANCE OF CLAIM FOR EXEMPTION U/S. 54EC: ' 15. IT IS PERTINENT TO NOTE THAT THE AR OF THE AS SESSEE VIDE ORDER SHEET NOTING DT.06.03.20 13 HAS SUBMITTED THAT THE ASSESSEE HAD NO BANK ACCOUNT IN INDIA FOR THE A.Y.2011-12. HOWEVER, THE ASSESSEE IN HIS COMPUTATION OF INCOME FOR THE R ELEVANT A.Y.2011-L2 HAS CLAIMED EXEMPTION U/S 54 EC OF THE INCOME TAX ACT, 1961 TO THE EXTENT OF RS. 40,00,000/- ON ACCOUNT OF 'PROPOSED NHAI BOND) (NOT MADE DUE TO MONEY SEIZED)'. SECTION 54EC(I) OF THE INCOME TAX ACT PROVIDES THAT [CAPITAL GAIN NOT TO BE CHARGED ON INVESTMENT IN CE RTAIN BONDS. 54EC. (1) WHERE THE CAPITAL GAIN ARISES FROM THE TR ANSFER OF A LONG-TERM CAPITAL ASSET (THE CAPITAL ASSET SO TRANSFERRED BEING HEREAFTER IN THI S SECTION REFERRED TO AS THE ORIGINAL ASSET) AND THE ASSESSEE HAS, AT ANY TIME WITHIN A PERIOD OF SI X MONTHS AFTER THE DATE OF SUCH TRANSFER, INVESTED THE WHOLE OR ANY PART OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET, THE CAPITAL GAIN SHALL BE DEALT WITH IN ACCORDANCE WITH THE FOLLOWIN G PROVISIONS OF THIS SECTION, THAT IS TO SAY,- (A) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS NOT LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET, THE WHOLE OF SUCH C APITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45,' (B) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET, SO MUCH OF THE CAPI TAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS THE COST OF ACQUISITION OF THE LONG-TERM SPECIFIED ASSET BEARS TO THE WHOLE OF THE CAPITAL GAIN, SHALL NOT BE CHARGED UND ER SECTION 45 : PROVIDED THAT THE INVESTMENT MADE ON OR AFTER THE 1 ST DAY OF APRIL, 2007 IN THE LONG-TERM SPECIFIED ASSET BY AN ASSESSEE DURING ANY FINANCIAL YEAR DOES NOT EXCEED FIFTY LAKH RUPEES. ] [EMPHASIS ADDED] 16. IN LIGHT OF THE ABOVE PROVISION, THE AR OF THE ASSESSEE VIDE ORDER SHEET NOTING DT.04.03.20 13 WAS REQUESTED TO SHOW CAUSE WHY IN THE ABSENCE O F EVIDENCE OF INVESTMENT MADE U/S. 54EC, THE ASSESSEES EXEMPTION CLAIM TO THE EXTENT OF RS.40,00,000/- SHOULD NOT BE DISALLOWED. THE AR OF THE ASSESSEE IN HIS REPLY DT. 06.02.2013 SUBMITTED THAT THE ASSESSEE INTENDED TO PURCHASE THE NATIONAL HIGHWAYS AUTHORITY OF INDIA BONDS OF RS.40,00,000/- BUT FAILED TO DO THE SAME DUE TO SEIZED CASH AMOUNT OF RS.49,00,000/-. I T IS, THEREFORE, EVIDENT THAT NO ACTUAL INVESTMENT U/S. 54EC OF THE INCOME TAX ACT AMOUNTIN G TO RS.40,00,000/- WAS MADE BY THE ASSESSEE. THE ASSESSEE HAS CLAIMED THE SAID EXEMPTI ON BASED ON HIS INTENTION TO INVEST IN SUCH BONDS HOWEVER, THE SECTION 54EC(1) OF THE ACT SPECI FICALLY PROVIDES THAT EXEMPTION CAN BE ALLOWED PROVIDED THAT THE INVESTMENT HAS BEEN MAD E WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF TRANSFER OF THE CAPITAL ASSET. IN THE INSTA NT CASE, IT IS EVIDENT THAT NO INVESTMENT AS REQUIRED U/S. 54EC WAS MADE BY THE ASSESSEE. THEREF ORE, THE EXEMPTION CLAIMED U/S. 54EC TO THE EXTENT OF RS.40,00,000/- IS DISALLOWED. 13. BEFORE THE CIT-A IN THE FIRST APPELLATE PROCEED INGS, IT WAS CONTESTED THAT THE ASSESSEE RECEIVED SALE CONSIDERA TION ON 24-01- 2011 AND THE AMOUNT OF RS. 49 LAKHS WAS SEIZED BY T HE IT AUTHORITIES ON 26-01-2011 AND, THEREFORE, NO MONEY LEFT IN THE HANDS OF ASSESSEE. THE ASSESSEE ALSO SUBMITTED THAT WITHIN T WO DAYS OF RECEIPT OF SALE CONSIDERATION OF THE SAID PROPERTY WAS SEIZ ED BY THE I.T AUTHORITY. FURTHER, IT WAS CONTENDED THAT THE SEIZE D AMOUNT WAS NOT RECEIVED BY THE ASSESSEE AND WAS NOT IN POSSESSION OF SALE CONSIDERATION TO INVEST IN SPECIFIED BONDS AND AS S UCH, THE ASSESSEE WAS PREVENTED FROM MAKING SUCH INVESTMENTS. THE ASS ESSEE ALSO SUBMITTED THAT THE SEIZED AMOUNT WAS IN THE ACCOUNT OF THE IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 8 GOVERNMENT AND THE SAME WAS USED FOR WELFARE OF THE COUNTRY AND THE ASSESSEE IS ENTITLED TO CLAIM THE BENEFIT OF EX EMPTION U/S. 54EC OF THE ACT. THE SUBMISSION OF THE ASSESSEE BEFORE THE CIT-A IS REPRODUCED HEREIN BELOW:- 4.1 THE APPELLANT HAS MADE THE FOLLOWING SUBMISSION IN THE MATTER:- ' THE APPELLANT HAD DEDUCTED AN AMOUNT OF RS. 40,00 ,0001- AS EXEMPTION U/S. 54EC WHILE COMPUTING HIS CAPITAL GAIN. THE LD. ASSE SSING OFFICER DISALLOWED THE SAME AND MADE IN HIS FINDINGS THAT' NO ACTUAL INVESTMENT U/S. 54EC OF THE INCOME TAX ACT, 1961 AMOUNTING TO RS.40,00,000/- WAS MADE BY THE AS SESSEE. THE ASSESSEE HAS CLAIMED THE SAID EXEMPTION BASED ON HIS INTENTION TO INVEST IN SUCH BONDS HOWEVER, THE SECTION 54EC(1) OF THE ACT SPECIFICALLY PROVIDES THAT EXEMP TION CAN BE ALLOWED 'PROVIDED' THAT HE INVESTMENT HAS BEEN MADE WITHIN A PERIOD OF SIX MON THS FROM THE DATE OF TRANSFER OF THE CAPITAL ASSET. IN THE INSTANT CASE, IT IS EVIDENT T HAT NO INVESTMENT AS REQUIRED U/S. 54 C WAS MADE BY THE ASSESSEE. ' IN THIS REGARD, I WOULD LIKE TO DRAW THE ATTENTION OF YOUR HONOUR TOWARDS THE DATES OF INCIDENTS AND FACTS OF THE CASE. THE APPEL LANT SOLD THE PROPERTY ON 24TH JANUARY 2011 AND RECEIVED THE SALE PROCEEDS ON 24TH JANUARY 2011. THE APPELLANT WHILE COMING TO KOLKATA FROM DELHI AFTER SELLING THE LAND WAS BR OUGHT UNDER THE PROCEEDINGS OF SECTION ,132A OF THE INCOME TAX ACT, 1961 ON 26 TH JANUARY 2011 AND ON THE SAME DAY THE WHOLE AMOUNT OF THE SATE PROCEED WAS SEIZED BY THE OFFICI ALS AND TAKEN AWAY FROM THE APPELLANT. ULTIMATELY THE AMOUNT RECEIVED BY THE AP PELLANT FROM THE SALE PROCEEDS WAS TAKEN OVER AND THE APPELLANT HAD NOTHING IN HIS HAN DS. HOWEVER THE APPELLANT WHILE COMPUTING THE CAPITAL GAIN HAD TAKEN EXEMPTION OF R S. 40,00,000/- U/S. 54EC OF THE INCOME TAX ACT, 1961. SECTION 54EC OF THE INCOME TA X ACT, 1961 STATES THAT: . '54EC. (1) WHERE THE CAPITAL GAIN ARISES FROM THE T RANSFER OF A LONG-TERM CAPITAL ASSET (THE CAPITAL ASSET SO TRANSFERRED BEING HEREA FTER IN THIS SECTION REFERRED TO AS THE ORIGINAL ASSET) AND THE ASSESSEE HAS, AT ANY TIME W ITHIN A PERIOD OF SIX MONTHS AFTER THE DATE OF SUCH TRANSFER, INVESTED THE WHOLE OR ANY PA RT OF CAPITAL GAINS IN THE LONG-TERM SPECIFIED ASSET, THE CAPITAL GAIN SHALL BE DEALT WI TH IN ACCORDANCE WITH THE FOLLOWING PROVISIONS OF THIS SECTION, THAT IS TO SAY,- (A) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS NOT LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET, TH E WHOLE OF SUCH CAPITAL GAIN SHALL NOT BE CHARGED UNDER SECTION 45; (B) IF THE COST OF THE LONG-TERM SPECIFIED ASSET IS LESS THAN THE CAPITAL GAIN ARISING FROM THE TRANSFER OF THE ORIGINAL ASSET, SO MUCH OF THE CAPITAL GAIN AS BEARS TO THE WHOLE OF THE CAPITAL GAIN THE SAME PROPORTION AS TH E COST OF ACQUISITION OF THE LONG-TERM SPECIFIED ASSET BEARS TO THE WHOLE OF THE CAPITAL G AIN, SHALL NOT BE CHARGED UNDER SECTION 45:' IT IS TO BE NOTED THAT FOR THE INVESTMENT IN SPECI FIED BOND WITHIN THE TIME LIMIT AS SPECIFIED IN THE ABOVE SECTION THE APPELLANT MUS T BE IN POSSESSION OF THE SALE CONSIDERATION WHICH HE HAD RECEIVED BY SALE PROCEED S. THE SECTION EXPLAINS ABOUT THE EXEMPTION AMOUNT AND THE TIME LIMIT OF INVESTMENTS FROM THE DATE OF TRANSFER BUT IT IS NO WHERE MENTIONED IN THE SECTION ABOUT THE RECEIVI NG OF THE SALE CONSIDERATION OR ABOUT THE TIME LIMIT O/KEEPING THE SALE PROCEEDINGS RECEI VED IN HANDS. IN THE PRESENT CASE THE FACTS OF THE CASE CLEARLY SIGNIFIES THAT ALTHOUGH T HE APPELLANT HAD SOLD THE ASSET BUT JUST WITHIN TWO DAYS OF THIS SALE THE WHOLE AMOUNT OF TH E SALE CONSIDERATION WAS SEIZED BY THE INCOME TAX AUTHORITY OF INDIA. AS SUCH THE APPELLAN T WAS PREVENTED TO INVEST THE AMOUNT AND HENCE IN THIS CIRCUMSTANCE THE INTENTION OF THE APPELLANT HAD TO BE GIVEN A THOUGHT. MOREOVER IT SHALL BE NOTED BY YOUR HONOUR THAT TILL DATE THE SEIZED AMOUNT IS NOT BEEN RECEIVED BY THE APPELLANT AND HENCE IT CAN BE RIGHTLY CONCLUDED THAT THE APPELLANT WAS IN NO POSITION TO INVEST THE AMOUNT AS HE WAS N OT HAVING THE POSSESSION OF THE SALE CONSIDERATION. IT IS TO BE NOTE THAT THE SALE CONSI DERATION WAS NOT LAYING ANYWHERE ELSE BUT, WAS IN THE ACCOUNT OF THE GOVERNMENT IT ELF. A S SUCH BEING THE AMOUNT BEING ULTIMATELY USED FOR THE WELFARE OF THE COUNTRY (AS THE AMOUNT WAS IN GOVERNMENT'S ACCOUNT) THE BENEFIT U/S. 54EC SHOULD BE PROVIDED T O THE APPELLANT. FURTHER, WE WOULD LIKE TO SUBMIT THAT FROM THE READ ING OF SECTION 54EC OF THE INCOME TAX ACT 1961 IT CAN BE SAID THAT THE EXEMPTI ON WOULD BE ALLOWED TO THE ASSESSEE ONLY WHEN THE AMOUNT OF CAPITAL GAIN DERIVED FROM T HE TRANSFER OF CAPITAL ASSET IS INVESTED IN THE LONG TERM SPECIFIED ASSET. TO CLEAR IT MORE, WE CAN STATE THAT TO MAKE THE IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 9 INVESTMENT IN THE SPECIFIED ASSET THE ASSESSEE WILL REQUIRE CASH REALIZED FROM THE TRANSFER OF THE ASSET. IN THE INSTANT CASE IT WAS IMPOSSIBLE FOR THE APPELLANT TO MAKE PAYMENTS IN SPECIFIED BONDS AND IN NATURAL JUSTICE LAW CANNOT C OMPEL ANYBODY TO DO THE IMPOSSIBLE WHICH YOUR HONOUR CLEARLY EXIST IN THE PRESENT CASE . IT IS TO BE NOTED THAT A TAXING STATUE OR ANY OTHER STATUTE HAS TO BE CONSTRUED REASONABLY AND EVERY EFFORT SHOULD ALWAYS BE MADE TO ASCERTAIN THE INTENTION OF THE PARLIAMENT F ROM THE WORDS EMPLOYED AND, AS FAR AS POSSIBLE, AN INTERPRETATION WHICH LEAD TO ABSURD ITY SHOULD BE AVOIDED. IF THE CONSIDERATION IS NOT RECEIVED OR IS NOT IN THE HAND S OF THE ASSESSEE THE QUESTION OF INVESTING IT DOES NOT ARISE AND HENCE THE EXEMPTION ON PROVISIONAL BASIS AS COMPUTED BY THE APPELLANT IS JUSTIFIED AND SHOULD BE ALLOWED. MOREOVER TO SUPPORT THE SAME [WOULD LIKE TO REFER THE DECISION TAKEN BY THE HON'BLE LTAT, CALCUTTA BENCH, IN THE CASE OF [CHANC HAL KUMAR SIRCAR VS. LNCOME TAX OFFICER WD 32(1) (ITA NO. 1146/KOL/2011)] WHEREBY I T WAS HELD THAT - 'IN VIEW OF THE ABOVE CONSISTENT PRINCIPLE ADOPTED BY HON'BLE HIGH COURTS IN RESPECT TO INTERPRETATION OF A BENEFICIAL PROVISION I.E. EXEMPTION PROVISION UND ER CAPITAL GAINS TAX, WE HAVE TO TAKE SIMILAR APPROACH IN DECIDING THE ISSUE IN HAND I.E. THE CLAIM OF ASSESSEE FOR EXEMPTION U/S. 54EC OF THE ACT BECAUSE THIS IS EXACTLY SIMILA R TO SECTION 54E, 54B OR 54EA OR EB OF THE ACT. IN THE PRESENT CASE BEFORE US, ADMITTEDLY ASSESSEE RECEIVED PART PAYMENTS AFTER EXECUTION OF AGREEMENT TO SALE AND HANDING OVER OF POSSESSION THEREBY COMPLETING THE TRANSACTION IN TERMS OF SECTION 53A OF TRANSFER OF PROPERTY ACT BUT INVESTED IN SPECIFIED BONDS I.E. NABARD BONDS WITHIN ONE MONTH OF THE REC EIPT OF SALE CONSIDERATION BEING PART PAYMENT. HENCE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ELIGIBLE FOR EXEMPTION U/S.54EC OF THE ACT ON PART PAYMENT RECEI VED AFTER COMPLETION OF TRANSACTION ON 02,07.2004 AND AS DETAILED OUT IN PARA 3 PAGE 3 OF THIS ORDER. AO IS DIRECTED ACCORDINGLY. THIS ISSUE OF ASSESSEE'S APPEAL IS ALL OWED. SIMILAR ARE THE FACTS IN ITA NO. 1146/KOL/2011 IN THE CASE OF SHRI CHANCHAL KR. SIRC AR, HENCE AO WILL ALLOW EXEMPTION IN THIS CASE ALSO. I WOULD LIKE TO DRAW THE ATTENTION OF YOUR HONOUR T OWARDS THE DECISION TAKEN IN THE CASE OF MAHESH NEMICHANDRA GANESHWADE VS. INCOM E TAX OFFICER ([2012]17 ITR (TRIB.)116(PUNE)) WHEREIN THE HON'BLE ITAT HAD MADE THE FOLLOWING DECISION - 'THOUGH S. 54EC REQUIRES THE INVESTMENT TO BE MADE WITHIN 6 MO NTHS OF THE DATE OF TRANSFER, A TECHNICAL INTERPRETATION CANNOT BE ADOPTED BUT IT H AS TO BE INTERPRETED HAVING REGARD TO THE PURPOSE AND SPIRIT OF THE SECTION. IN CIRCULAR NO. 791 DATED 2.6.2000 THE CBDT HELD IN THE CONTEXT OF CAPITAL GAINS ARISING U/S. 45(2), THAT THOUGH THE TRANSFER ARISES IN THE YEAR OF CONVERSION OF A CAPITAL ASSET INTO STOCK-IN -TRADE, THE PERIOD OF 6 MONTHS FOR INVESTMENT U/S. 54E HAS TO BE RECKONED FROM THE DAT E OF SALE OF THE STOCK-IN-TRADE. THE CBDT APPRECIATED THE IMPOSSIBILITY OF THE ASSESSEE BEING ABLE TO INVEST THE AMOUNT IN SPECIFIED ASSETS WITHIN SIX MONTHS FROM THE DATE OF TRANSFER. THIS INTERPRETATION OF THE CBDT SUPPORTS THE ASSESSEES CLAIM THAT WHERE THE C ONSIDERATION IS RECEIVED MUCH AFTER THE DATE OF TRANSFER AND IT IS NOT POSSIBLE TO INV EST THE SAME WITHIN 6 MONTHS OF THE DATE OF TRANSFER, THE PERIOD OF 6 MONTHS MUST BE RECKONE D FROM THE DATE OF RECEIPT OF CONSIDERATION. KEEPING IN CONSIDERATION THE ABOVE DECISIONS GIVEN BY THE HONBLE COURTS AND THE FACTS OF THE CASE AND IN THE PRESENT CIRCUMSTAN CES THE EXEMPTION OF SECTION 54EC IS JUSTIFIED AND MUST BE ALLOWED AS THE APPELLANT WAS NOT IN POSSESSION OF THE CONSIDERATION RECEIVED BUT CLAIMING THE EXEMPTION IN HIS COMPUTAT ION CLEARLY SHOWS HIS INTENTION OF INVESTMENT. THE LD. ASSESSING OFFICER WAS NOT JUSTI FIED IN NOT CONSIDERING THE FACTS OF THE CASE AND IGNORED THE FACT THAT THE APPELLANT WAS NO T HAVING THE CASH WITH HIMSELF AND WAS PREVENTED TO MAKE THE INVESTMENT IN THE SPECIFI ED BONDS AND VEHEMENTLY AND WRONGLY DISALLOWED THE EXEMPTION WITHOUT CONSIDERIN G THE MERITS OF THE CASE. 14. THE CIT-A CONSIDERING THE SUBMISSIONS OF THE AS SESSEE CONFIRMED THE ORDER OF THE AO BY OBSERVING THAT THE ASSESSEE COULD HAVE ARRANGE FUNDS FROM SOME OTHER SOURCES TO MAKE THE INVESTMENT WITHIN PRESCRIBED TIME. RELEVANT PORTION IS REPRODU CED HEREIN BELOW: 4.2 IT IS UNDISPUTED, THAT THE APPELLANT HAS NOT MADE ANY INVESTMENT IN ELIGIBLE BONDS WITHIN THE PRESCRIBED PERIOD. HOWEVER, THE AP PELLANT HAS STATED THAT HE INTENDED TO MAKE INVESTMENT BUT COULD NOT DO SO BECAUSE OF T HE MONEY BEING UNDER SEIZURE. THE APPELLANT HAS ALSO REFERRED TO THE DECISIONS OF THE TRIBUNAL IN THE CASES OF CHANCHAL SIRKAR (SUPRA) AND MAHESH NEMICHANDRA GANESHWADA (S UPRA). ON GOING THROUGH THE SAID DECISIONS, IT IS SEEN, THAT THEY WERE DELIVERE D ON ENTIRELY DIFFERENT FACTS. IN BOTH THE CASES, INVESTMENTS HAD BEEN MADE BUT THERE WAS SOME DELAY DUE TO LATE RECEIPT OF SALE CONSIDERATION. IN THE APPELLANTS CASE, ON THE OTHE R HAND, NO INVESTMENT HAS BEEN MADE AT ALL. IT IS TRUE THAT CASH OUT OF SALE RECEIPT HA S BEEN SEIZED BY THE DEPARTMENT BUT THE IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 10 APPELLANT COULD HAVE ARRANGED FUNDS FROM SOME OTHER SOURCE TO MAKE INVESTMENT WITHIN THE PRESCRIBED TIME, IF HE WANTED TO AVAIL THE EXEM PTION. THE PROVISIONS OF SECTION 54EC ARE QUITE CATEGORICAL AND NO EXEMPTION CAN BE GRANT ED IN ABSENCE OF ACTUAL INVESTMENT. CONSIDERING THIS, THE DISALLOWANCE OF EXEMPTION OF RS. 40 LAKHS IS UPHELD. 15. BEFORE US THE LD.AR SUBMITS THAT THERE WAS NO M ONEY LEFT WITH THE ASSESSEE TO INVEST IN THE BONDS REQUIRED U/S. 5 4EC OF THE ACT. FURTHER, IT WAS ARGUED THAT IF THE MONEY WAS WITH T HE ASSESSEE, HE COULD HAVE INVESTED THE SAME AS REQUIRED U/S. 54EC OF THE ACT TO CLAIM EXEMPTION THEREON. THE WHOLE AMOUNT WAS SEIZE D WITHIN 2 DAYS OF SALE RARELY PREVENTED THE ASSESSEE TO INVEST IN THE SPECIFIED BONDS. THE ASSESSEE HAS RIGHTLY CLAIMED THE EXEMPTION U/S. 54EC AS THE MONEY WAS KEPT IN THE ACCOUNT OF GOVERNMENT AND IT SHOULD BE TREATED AS INVESTMENTS MADE IN SPECIFIED BONDS REQU IRED TO BE INVESTED UNDER THE SCHEME OF NATIONAL HIGHWAY AUTHO RITY. THE LD. AR ARGUED THAT THE FINDING OF THE AO IS INCORRECT AND THE FINDING OF THE CIT-A IS PERVERSE AND REFERRED TO PARA 4.2 OF THE C IT-AS ORDER. THE LD.AR ALSO ARGUED THAT THE CIT-A WAS WRONG IN OBSER VING THAT THE ASSESSEE COULD HAVE ARRANGED FROM OTHER SOURCES TO MAKE INVESTMENT WITHIN PRESCRIBED TIME AND AS SUCH FINDI NG OF THE CIT-A IS UNCALLED FOR IN VIEW OF PECULIAR CIRCUMSTANCES IN T HE PRESENT CASE. THE LD.AR PRAYED TO ALLOW THE GROUND NOS. 2 & 3 BY TREA TING THE SUM OF RS. 40 LAKHS AS IF INVESTED IN THE BONDS. 16. ON THE OTHER HAND, THE LD.DR SUBMITS THAT IN OR DER TO CLAIM EXEMPTION U/S. 54EC OF THE ACT, THE ASSESSEE MUST S HOW THE INVESTMENT MADE AS PER PROVISIONS OF RELEVANT SECTI ON. THE ASSESSEE FAILED TO SHOW ANY INVESTMENT BEFORE THE AO AND CIT -A FOR CLAIM OF EXEMPTION AND SUBMISSION OF AS SEIZED AMOUNT IS BEI NG IN THE GOVERNMENT ACCOUNT AND IT SHOULD BE TREATED INVESTE D IN BONDS, WHICH IS NOT TENABLE AT ALL IN THE FACTS AND CIRCUM STANCES OF THE PRESENT CASE. HE RELIED ON THE ORDERS OF THE AO & C IT-A. HE URGED TO DISMISS GROUNDS 2 AND 3 RAISED BY THE ASSESSEE. IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 11 17. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIA L ON RECORD. IT IS AN ADMITTED FACT THAT THE AMOUNT IN QUESTION TO THE EXTENT OF RS. 49,00,000/- WAS SEIZED BY THE IT AUTHORITY. THE FAC TS IN RESPECT OF SALE OF LAND, SEARCH & SEIZURE OPERATION, ISSUANCE OF NOTICE U/S. 153A OF THE ACT AND FILING OF RETURN FOR THE A.Y UNDER C ONSIDERATION ARE UNDISPUTED. IT IS ALSO NOT DISPUTED THAT THE AMOUNT OF SALE OF SAID LAND WAS LYING IN THE CUSTODY AND IN THE ACCOUNT OF GOVERNMENT. WE FIND THAT IN RESPONSE TO NOTICE ISSUED U/S. 153A OF THE ACT, THE ASSESSEE FILED HIS RETURN OF INCOME ON FOR THE A.Y UNDER CONSIDERATION AND CLAIMED EXEMPTION OF RS.40,00,000/- U/S. 54EC O F THE ACT. BOTH AO & CIT-A HAVE DENIED THE CLAIM OF EXEMPTION OF RS .40,00,000/- FOR WANT OF PROPER EVIDENCE SHOWING THE CAPITAL GAINS W ERE INVESTED IN SPECIFIED BONDS I.E PROVIDED BY THE GOVERNMENT OF I NDIA, NATIONAL HIGHWAY AUTHORITY BONDS (NHAI). THE DEDUCTION U/S. 54EC OF THE ACT IS PERMISSIBLE IF THE AMOUNT REPRESENTING THE LONG TERM CAPITAL GAIN IS INVESTED IN SPECIFIED BONDS WITHIN PRESCRIBED TIME. IN THE PRESENT CASE, THE ASSESSEE HAD ADMITTED THAT HE HAD NOT MAD E ANY INVESTMENTS IN SPECIFIED BONDS NOTIFIED U/S. 54EC O F THE ACT. THE ASSESSEE ONLY CLAIMS THAT SINCE THE MAJOR PORTION O F THE SALE PROCEEDS OF THE PROPERTY AMOUNTING TO RS. 49,00,000 /- WAS SEIZED BY THE INCOME-TAX DEPARTMENT PURSUANT TO SEARCH ON 26-01-2011. NO MONEY WAS LEFT WITH THE ASSESSEE TO MAKE INVESTM ENTS IN SPECIFIED BONDS. SINCE THE MONIES WERE LYING TO THE ACCOUNT OF THE CENTRAL GOVERNMENT, THE LD.AR PLEADED THAT THE SAME SHOULD BE CONSTRUED AS AMOUNT BEING INVESTED BY THE ASSESSEE AS PER SECTION 54EC BONDS. THIS ARGUMENT OF THE LD.AR CANNOT BE AC CEPTED AND IS UNTENABLE IN LAW. WE FIND THAT THE ASSESSEE HAD NO T TAKEN ANY STEPS TO RECOVER THE SAID SEIZED CASH FOR ONWARD INVESTME NT IN 54EC BONDS OR HAD NOT COMMUNICATED TO THE AO REGARDING HIS INT ENTION OF DOING SO. THE ASSESSEE MADE A CLAIM OF DEDUCTION U/S. 54 EC IN THE RETURN OF INCOME WITHOUT MAKING ANY INVESTMENT IN THE NOTI FIED BONDS AS PER SECTION 54EC OF THE ACT. THE LD. AR ALSO ARGUED THA T A SITUATION OF IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 12 IMPOSSIBILITY OF PERFORMANCE THAT THE LAW CANNOT CO MPEL A MAN TO PERFORM, WHICH HE COULD NOT POSSIBLY PERFORM. IN O UR OPINION, THIS ARGUMENT WOULD NOT COME TO THE RESCUE OF THE ASSESS EE IN AS MUCH AS CLAIM OF DEDUCTION U/S. 54EC OF THE ACT, WHICH I S GOVERNED BY CERTAIN CONDITIONS TO BE COMPLIED WITH. SECTION 54 EC MANDATES THAT INVESTMENT IN SPECIFIED BONDS TO BE MADE WITHIN PRE SCRIBED TIME BY THE ASSESSEE EITHER OUT OF SALE PROCEEDS OF CAPITAL ASSET OR OUT OF ANY OTHER MEANS. IN THE PRESENT CASE, ADMITTEDLY THE A SSESSEE HAD NOT MADE ANY INVESTMENTS IN THE SPECIFIED BONDS AS PER PROVISIONS OF SECTION 54EC OF THE ACT, WHICH HAS RIGHTLY BEEN DEN IED BY THE AO AND CONFIRMED BY THE CIT-A. IN VIEW OF AFORESAID DISCUS SION, WE HOLD THAT SINCE NO AMOUNT WAS INVESTED IN THE SPECIFIED BONDS MANDATED U/S. 54EC OF THE ACT, THE LOWER AUTHORITIES HAVE RIGHTLY REJECTED THE CLAIM OF ASSESSEE IN THIS REGARD. WE UPHOLD THE ORDER OF THE CIT-A. ACCORDINGLY, THE GROUND NOS. 2 & 3 RAISED BY THE AS SESSEE IN THIS APPEAL ARE DISMISSED. 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 -02-2018 SD/- SD/- M. BALAGANESH S.S. VISWANETHRA RAVI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 09-02-2 018 IT(SS) NO. 159/KOL/2014 JATENDER SINGH MARVAHA.. 13 PP(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT/ASSESSEE : SHRI JATENDER SINGH MARVAHA C/ O AGARWAL VISHWANATH & ASSOCIATES, 133/1/1A, S.N BANA JEREE ROAD, PUSHKAL BHAWAN, 3 RD FLOOR, KOLKATA-700013. 2 RESPONDENT/REVENUE : THE DDIT(IT)-1(1),KOLKATA 110, SHANTIPALLY, KOLKATA-700107. AAYKAR BHAWAN, KHADINAMORE, P.O. CHINSURAH, DIST-HO OGHLY. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER SR.P.S, HEAD OF OFFICE ITAT KOLKATA