The DCIT, Central Circle-2(2), Ahmedabad V. Shri Dipak Govindbhai Dalwadi, Ahmedabad

ITSSA 299/AHD/2014

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4932 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 8 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 16-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Cost of acquisition; Benefit of exemption; Capital Gains
• Section: 54; 132; 143(3); 50C; 54F; 153A; 133(6); 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “B” BENCH (Conducted Through Virtual Court) Before: Ms.Annapurna Gupta, Accountant Member And Shri TR Senthil Kumar, Judicial Member The DCIT, Central Circle-2(2), Ahmedabad (Appellant) & ITO, Ward-4(2)(1), Ahmedabad Vs Shri Dipak Govindbhai Dalwadi 44, Yogeshwar Nagar, opp. Kalindi Bunglows, Thaltej, Ahmedabad-380054 PAN No: AAUPD7851Q (Respondent) Revenue by : Shri Sanjeev Jain, CIT/DR Assessee by : Shri Tushar Hemani,Sr. Adv. with Parimalsinh B. Parmar, A.R. Date of hearing : 09-02-2022 Date of pronouncement : 25-03-2022 आदेश/ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- Both the present appeals filed by the Revenue relate to the same assessee but pertain to different assessment years(A.Y), i.e A.Y 2009-10 & A.Y 2013-14 respectively, and are against separate orders passed by the Commissioner of Income Tax (Appeals)-III & 4, Ahmedabad, resp. (in short referred to as CIT(A)), dated 29- 04-2014 & 01-08-2017 resp., u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the “Act”) . IT(SS)A No. 299/Ahd/2014 & ITA No. 2416/Ahd/2017 Assessment Years 2009-10 & 2013-14 I.T(SS).A No. 299/Ahd/2014 & Ors. A.Y. 2009-10 & 13-14 Page No DCIT vs. Dipak Govindbhai Dalwadi 2 2. At the outset, it was common ground that the issues involved in both the appeals were interlinked and therefore both the appeals needed to be heard together. Accordingly both the appeals were taken for hearing together. 3. The appeal of the Revenue relating to the assessment year 2009-10 was first taken up for hearing. IT(SS)299/Ahd/2014 Revenues Appeal A.Y 2009-10 4. Ground no. 1 raised by the Revenue reads as under: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 1,43,80,000/- for the protective addition made towards unexplained investment in plotNo.151 at Kalhar Exotica. 4.1 At the outset itself, Ld. D.R. contended that the issue involved in the ground related to addition made on protective basis in the hands of the assessee towards unexplained investment in a plot of land, the substantive addition having been made in the hands of one Shri Arvindbhai Govindbhai Dalwadi, the brother of the assessee. The Ld. D.R. admitted that the substantive addition in the hands of Shri Arvindbhai Govindbhai Dalwadi stood confirmed by the Ld. CIT(A) and appeal preferred by the assessee before the ITAT in Appeal No. IT(SS)A No. 175/Ahd/2015 was dismissed as withdrawn on account of the assessee availing the benefit of Vivid Se Vishwas Scheme,2020. Copy of the said order of the ITAT dated 22.02.2021 was filed before us. Ld. D.R. admitted that since the dispute stood settled and taxes due thereon paid, the protective addition in the hands of the assessee was not justified. 4.2 In this backdrop of the admission of the Ld. D.R. before us we shall proceed to adjudicate the issue raised by the Revenue as above. I.T(SS).A No. 299/Ahd/2014 & Ors. A.Y. 2009-10 & 13-14 Page No DCIT vs. Dipak Govindbhai Dalwadi 3 5. We have gone through the orders of the authorities below. We note from the same that the facts relating to the issue were that during the course of search action undertaken on the assessee u/s 132 of the Act on 08.12.2009, a diary was found revealing a plot bearing no. 151 at Kalhar Exotica being purchased in the name of Arvindbhai Govindbhai Dalwadi, the brother of the assessee. It was noted by the Assessing Officer (A.O.) that total payment of Rs. 1,65,12,000/- was made in cash and through cheques, out of which the source of investment of an amount of Rs. 1,43,80,000/- remained unexplained. During the course of investigation pursuant to search the statement of the assessee was recorded in which he admitted to have made the said payments on behalf of his brother. But subsequently during assessment proceedings, he retracted from this admission, stating that the purchase was noted in his diary only to convince his father that the amount had been invested on behalf of his brother by him, that there was nothing else besides the noting in the diary showing any link or connection of the assessee with the purchase of the impugned property. The A.O. taking note of the admission of the assessee held that though the substantive addition of the cash of Rs. 1,43,80,000/- had been made in the hands of Shri Arvindbhai Govindbhai Dalwadi ,in whose name the property stood purchased, but considering the statement of the assessee recorded u/s. 132(4) and the fact that Shri Arvindbhai Govindbhai Dalwadi had disowned the said diary, So to protect the interest of the revenue, protective addition was made in the hands of the assessee. 6. The Ld. CIT(A) deleted the addition made in the hands of the assessee for the reason that the amount of unexplained investment was to be considered on merits in the case of Sh.Arvindbhai Govindbhai Dalwadi,since the appeal of the said assessee was also pending with the same CIT(A). 7. The fact which now emerges before us is that the substantive addition made in the case of Arvindbhai Govindbhai Dalwadi stood confirmed in first appeal by the I.T(SS).A No. 299/Ahd/2014 & Ors. A.Y. 2009-10 & 13-14 Page No DCIT vs. Dipak Govindbhai Dalwadi 4 CIT(A) and the assesses appeal preferred before the ITAT against the said order of the Ld.CIT(A) has been dismissed as withdrawn on account of the assessee availing the benefit of Vivid Se Vishwas Scheme,2020 and paying taxes thereon. 8. In view of the above facts, the status of the impugned addition of unexplained investment in land amounting to Rs.1.43.80,000/- is that the dispute with regards to the same stands settled in the case of Shri Arvindbhai Govindbhai Dalwadi where substantive addition was made and taxes against the same paid . Since the dispute relating to the impugned addition stands so settled, there can be no question of any dispute surviving, be it regarding the protective addition made in the case of the assessee before us, as fairly admitted by the Ld.DR also. The order of the Ld.CIT(A) deleting the addition made on protective basis in the hands of the assessee of Rs.1,43,80,000/- on account of unexplained investment is accordingly upheld. 9. Ground of appeal No.1 of the Revenue is therefore dismissed. 10. Ground no. 2 reads as under: 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in allowing the deduction u/s. 54F of the I T Act for the capital gain to the extent of Rs. 46,86,201/- (being 50% share of the assessee on the capital gain on sale of land plot No.450 of Bopal for Rs. 93,72,402/-) on investment made of Rs. 1,19,50,000/- in 17, Kalhar Exotica. 11.. The short issue involved in the impugned ground, it was pointed out, related to the claim of exemption of capital gains on utilization of the said gains by investing in another capital asset as per the provisions of Section 54F of the Act. 11.1. Brief facts relating to the case are that the assessee was found to have entered into banakhat/ agreement along with Smt. Shantaben G. Dalwadi with Aananya Developers on 24.07.2008 for sale of land bearing Plot No. 450 at Bopal for a I.T(SS).A No. 299/Ahd/2014 & Ors. A.Y. 2009-10 & 13-14 Page No DCIT vs. Dipak Govindbhai Dalwadi 5 consideration of Rs. 95 lacs. The A.O. treated the said transaction as tantamounting to transfer as per the provisions of Section 2(47)(v) of the Act read with 53A of the Transfer of Property act and noting that the assessee had one half share in the said land, he held that out of total capital gains amounting to Rs. 93,72,402/- computed on the said transaction, half of it amounting to Rs. 46,86,201/- was taxable in the hands of the assessee. Before the Assessing Officer, the assessee besides opposing the addition so proposed, also made an alternate plea that the investment made in Plot No. 151 at Kalhar Exotica be considered for the purposes of exemption u/s. 54F of the Act. The A.O. rejected the contention of the assessee stating that the said plot had been purchased by Shri Arvindbhai Govindbhai Dalwadi and not by the assessee or Smt. Shantaben G. Dalwadi the co-owner of the property sold. He therefore rejected the claim of the assessee on this ground. 12. The Ld.CIT(A) however allowed the claim of the assessee noting that this issue had already been considered in the case of the co-owner Smt. Shantaben G. Dalwadi for the impugned assessment year i.e. 2009-10 wherein the assessee had claimed exemption u/s. 54F of the Act on account of investment made in Plot No.17 Kalhar Exotica, which was denied noting that the investment was made in the name of the assessee before us i.e. Deepak Govindbhai Dalwadi. The Ld. CIT(A) in the present case noted therefore that the since the investment was in the name of the assesee himself and the satisfaction of other condition of Section 54F having been noted as being fulfilled in the case of Smt. Shantaben G. Dalwadi, the assessee was entitled to deduction u/s. 54F on the same. The relevant findings of the Ld. CIT(A) at para 6.4 & 6.5 of the order is as under: 6.4 I have considered the facts of the case. It is observed that sale consideration of Rs.95 lakhs received or transfer of land at Bopal, was invested by Smt. Shantaben G. Dalwadi in property at Plot No. 17, Sector of Kalhar Exotica in the name of her son Sri Dipak G. Dalwadi, the appellant and her daughter in law Smt. Nainaben D Dalwadi(wife of appellant). The issue involved is deduction u/s. 54F. The capital gain of Rs.93,72,402/- has been worked out by the AO as under: Sale Consideration Rs. 95,00,000/- I.T(SS).A No. 299/Ahd/2014 & Ors. A.Y. 2009-10 & 13-14 Page No DCIT vs. Dipak Govindbhai Dalwadi 6 Cost of acquisition Rs. 21,924/- Indexed Cost 502 x 21924/ 100 = Rs. 1,27,600/- Capital Gain Rs. 93,72,402/- The appellant's share in this capital gain comes to 50% i.e. Rs.46,86,201/-. 6.5 The issue has already been examined in the case of Shantaben G. Dalwadi for the AY 2009-10 wherein the Id. CIT(A) has observed as under: "The appellant while strongly objecting to the above observation of the AO has to contend that Section 54F mandates that the house should be purchased by the assessee and it does not stipulate that the house should be purchased in the name, of the assessee only. In the instant case of the assessee, it is the assessee who has purchased the property at 17, Kalhar Exotica as is evident from the fact that the sale consideration received from Aanya Developers have been credited in the bank account of her son Arvind Dalwadi who in turn has paid the same for purchasing the said property in respect of which the deduction u/s. 54F of the Act is sought for in case of the - appellant. It is submitted that the entire sale consideration received on alleged sale of Block No. 450 of Bopal to Aanya Developers is invested in the residential property at 17, Kalhar Exotica as found noted on page No. 3 of AS-13 of seized material. Thus, even otherwise there is a live link between the transfer, receipt of sale consideration by the appellant and the date of investment in the property at 151, Kalhar Exotica in respect of which the deduction u/s. 54F is claimed." However, there the contention was rejected as the investment made in the name of appellant Dipakbhai G. Dalwadi for which deduction was claimed in the case of mother Shantaben G. Dalwadi. However, in the case of appellant, the investment is in his own name and therefore, having already held in the case of Shantaben G. Dalwadi that other condition of section 54F are being fulfilled, investment being in the name of appellant himself which is more than the amount of capital gain, appellant is entitled to deduction u/s. 54F. The AR has also submitted that deduction u/s. 54F is alo allowable in respect of purchase of a plot for construction of house and the appellant is entitled to deduction u/s. 54F. The issue has been examined. It has held by various courts that even if construction of house is not complete the assessee is eligible for deduction u/s. 54F. Reliance is placed on following decisions: 1. Raineet Sandhu (Smt.) v. Dv. CIT (2012) 49 SOT 7 (Chd.(Trib.) The assessee had invested full sale consideration received on sale of original asset in purchase of plot of land and started construction of a new house, though not completed. In view thereof the assessee was entitled to the exemption under section 54F of the Act, in as much as the thrust of the said section is on investment of net consideration received on sale of original asset and started construction of a new residential house, I.T(SS).A No. 299/Ahd/2014 & Ors. A.Y. 2009-10 & 13-14 Page No DCIT vs. Dipak Govindbhai Dalwadi 7 though the new house is not completed the assessee had complied with provisions of section 54F and hence is entitled to benefit of exemption claimed by assessee. 2. Commissioner of income-tax v. Dr. R. Balaji [2014] 41 taxmann.com 411 (Karnataka) In terms of section 54F, when assessee invests sale consideration in purchase of a residential property within prescribed time period, he is entitled to claim deduction and, in such a case, extent of construction of residential building and facilities provided in such building are not relevant. 3. Pushpa Devi Tirbrewala (SmtT .v. ITO (2013) 58 SOT 41/158 TTJ 46 (UP) (Hyd.)(Trib.) Capital gains-Purchase of plot for construction-Eligible for exemption-Assuming the construction is not completed within three years, the exemption can be withdrawn the period when three years expires. [S.54F] Investment in purchase of a plot for construction of house would entitle an assessee to cbim exemption under section 54 or section 54F. Exemption darned by assessee under section 54 cannot be denied on the ground that assessee has not utilized sale consideration received from sale of flats itself, in purchasing a new residential house. Assuming the construction is not completed within three years, the exemption can be withdrawn the period when three years expires. Accordingly, A.O. is directed to allow deduction u/s. 54F on the capital gain of Rs. 46,86,201/- on the investment made of Rs. 1,19,50,000/- in 17, Kalhar Exotica as per the details submitted. This ground of appeal is allowed. 13. The ld. D.R. was unable to controvert the factual findings of the Ld. CIT(A) that the investment in Plot No.17,Kalhar Exotica was found to have been made in the assessee himself and that all other conditions of section 54F were found to be complied with in respect of the said investment in the case of the co-owner Smt Shantaben G Dalwadi. 14. In view of the same, the very basis with the A.O. for denying the benefit of exempt u/s. 54F Act, that no investment had been made by the assessee, does not remain. The Order of the ld. CIT(A) therefore calls for no interference allowing the claim of deduction u/s. 54F of the Act. Ground of appeal no.2 of the Revenue is therefore dismissed. 15. In effect appeal of the Revenue is dismissed. I.T(SS).A No. 299/Ahd/2014 & Ors. A.Y. 2009-10 & 13-14 Page No DCIT vs. Dipak Govindbhai Dalwadi 8 16. We shall now take up the Revenues appeal pertaining to A.Y 2013-14. ITA No. 2416/Ahd/2017 Revenues appeal A.Y. 2013-14 17. Ground raised by the Revenue reads as under: 1. "that the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.7,54,36,257/- made by the A.O. under section of 50C of the Income Tax. Act. 1961." 2. "that the Ld. C1T(A) has erred in law and on facts in holding that the proviso to section 50C of the Income Tax Act, 1961 had retrospective operation even though the Legislature has made it effective from 01.04.2017. " 3. "that the Ld. CIT(A) has erred in law and on facts in not appreciating that the property mentioned in the Banakhat referred in the assessment proceedings in the assessee's case in A.Y. 2009-10 was agriculture land and the consideration was mentioned as transfer of "property without possession", whereas the properly registered during the F.Y. 2012-13 was non-agricultural, along with possession, and that, therefore, capital gains was correctly brought to tax in the A.Y. 2013-! 4. " 4. "that the Ld. C1T(A) has erred in law and on facts in failing to further appreciate that the terms of registration of the impugned property mentioned in the Banakhat were not adhered to and the A.O- was, therefore correct in taxing capital gains in A.Y. 2013-14." 18. The solitary issue in the present appeal relates to the addition made u/s. 50C of the Act of an amount of Rs. 7,54,36,257/-. All the grounds raised by the assessee, it was pointed out are with respect to the same addition. 18.1. The facts of the case are that during the FY 2012-13 relevant to the impugned AY 2013-14, the assessee was found to have executed a Sale Deed dated 14/05/2012 in respect of Non- Agriculture Land situated at Block No. 450, mouje Bopal, Tal: Daskroi, Ahmedabad for a total consideration of Rs. 95,00,000/-.On the basis of the ITS details, the AO observed that the stamp duty paid was of Rs. 39,35,200/- and therefore he called for the information u/s. 133(6) of the Act from the office of Sub- Registrar, Ahrnedabad-9, Bopal. As per the information received from the sub- registrar, the market value of the said non-agriculture land sold by the assessee was of Rs. 8,03,09,250/- as against the sales consideration shown by the assessee in the Sale I.T(SS).A No. 299/Ahd/2014 & Ors. A.Y. 2009-10 & 13-14 Page No DCIT vs. Dipak Govindbhai Dalwadi 9 Deed of Rs. 95,00,000/. Accordingly, the AO issued show cause notice, which is reproduced in the assessment order, asking the assessee as to why the long term capital gain u/s. 50C of the Act of Rs. 8,01,22,458/- should not be added to the total income of the appellant. The assessee filed reply dated 22/03/2016, which is also reproduced in the assessment order, the contention in brief, being that the impugned land was an agricultural land and was not shown in the return of income for Assessment Year 2013-14 as it was already taxed in the earlier Assessment Year 2009- 10 and further reference was made in the Banakhat dated 24/07/2008 relating to the sale of the impugned land for an amount of Rs.95 lakhs to M/s Ananya Developers. It was further contended that out of the said amount of Rs.95 lakhs, an amount of Rs.70 lakhs had been paid by M/s Aanya Developers through account payee cheques during the period 21/04/2008 to 06/05/2008. Further it was contended that the possession of the impugned land was handed over to M/s Ananya Developers and accordingly, in the Balance Sheet of M/s Ananya Developers as at 31/03/2009 the said land had been shown as capital work in progress and certain expenditure also had been incurred towards development on the said land. Therefore, it was also contended that transfer has already been completed relevant to Assessment Year 2009-10 and also relied upon the Assessment Order in the case of Assessee himself for the Assessment Year 2009-10, wherein, relying upon all those facts, capital gain has been taxed in Assessment Year 2009-10. It was also contended that the possession of the said land was transferred to M/s Ananya Developers in the previous year relevant to Assessment Year 2009-10 and therefore, relying upon the provisions of Section 2(47)(v) of the Act r.w.s 53A of the transfer of Property Act, long term capital gain tax on the said land on an amount of Rs. 95 lakhs had already been calculated and added by the AO in Assessment Year 2009-10. It was also contended that the issue relating to transfer of land to M/s Aanya Developers in Assessment Year 2009-10 had also attained finality as on the said addition, no appeal has been preferred by the Assessee and therefore contended that the issue has already been examined and taxed in Assessment Year 2009-10 on the basis of Banakhat I.T(SS).A No. 299/Ahd/2014 & Ors. A.Y. 2009-10 & 13-14 Page No DCIT vs. Dipak Govindbhai Dalwadi 10 (Agreement to Sale) dt. 24/07/2008 and Department having considered the same as 'transfer' in the Assessment Order passed on 22/12/2011 for Assessment Year 2009- 10, now again the charging of capital gain tax on the very same land on the basis of the final execution of the Sale Deed was bad in law no addition was to be made. However, the AO did not accept the submission of the appellant for various reasons as stated on page no. 7 & 8 of the Asst. Order. Some of the reasons assigned by the AO were delay in registration of the property as per the terms of the Agreement to Sale, stamp duty paid was of Rs. 39,35,200/- on the valuation adopted by the Sub- registrar at Rs. 8,03,09,250/-, the heading of the Banakhat (Agreement to Sale) date 24/07/2008 clearly mentioned that the Agreement for Sale of land was "without possession", full consideration of Rs. 95,00;000/- fixed in the agreement to sale has not been paid and only Rs, 70,00,000,/- has been paid etc. Hence, the AO applied the provisions of Sec. 50C of the Act while taking the value of the property as adopted by the stamp valuation authority for the purpose of payment of stamp duty as deemed full value of consideration received for the transfer of the impugned land and computed the long term capital gain of Rs. 7,54,36,257/- as under: Sale consideration adopted / assessed as per section 50C Of the income-tax Act-as per jantri value of the property Which was registered as per sale deed dt. 10/05/2012 Rs. 8,03,09,250/- Cost of acquisition is taken at Rs. 21,9241- (purchase date 16/12/1980) As per Assessment Order for A.Y. 2009-10 Dated 22/12/2011). Hence, Indexed cost of acquisition will be: 852x21,924/100 Rs. 1,86,792/- Rs. 8,01,22,458/- Less: Already taxed in the assessment order I.T(SS).A No. 299/Ahd/2014 & Ors. A.Y. 2009-10 & 13-14 Page No DCIT vs. Dipak Govindbhai Dalwadi 11 u/s. 153C r.w.s. 153A r.w.s. 143(3) dated 22/12/2011 for Assessment year 2009-10 Total capital gain Rs. 93,72,402/- Assesse's share comes to 50% i.e. Rs. 46,86,201/- Long Term Capital Gain Rs. 7,54,36,257/- 19. The Ld. CIT(A) deleted the addition on various grounds including noting the fact that the impugned transaction had already been treated as transfer in assessment year 2009-10 and capital gains earned thereon brought to tax in the hands of the assesse which had been accepted by the assessee also. The Ld. CIT(A) also noted that even otherwise as per the proviso to Section 50C of the Act inserted with effect from 1 st April 2016, the stamp duty value as on the date of entering into agreement to sale/banakhat was to be treated as opposed to that on the date of registration of sale on the fulfillment of certain conditions. The Ld. CIT(A) noted this proviso had been held by the ITAT Ahmedabad Bench to be retrospective being curative in nature for removing the undue hardship to the assessees in the case of Dharamshibhai Sonani vs. ACIT and he further noted that the assessee fulfilled all the conditions for the applicability of the proviso and therefore also the stamp duty value substituted by the A.O. on the date of registration of the sale deed was not in accordance with law. 20. We have heard both the parties. It is an admitted fact that the impugned transaction had already been treated as transfer in the hands of the assessee in the year in which the agreement to sell was entered into i.e. assessment year 2009-10 and the assessee had accepted the stand of the revenue. Having said so, we find that there is no case at all for taxing the same transaction in the impugned year also as rightly held by the Ld. CIT(A). For this reason alone, the addition made by treating the said transaction as transfer undertaken during the year and substituting the stamp duty value for the sale consideration as per the provisions of Section 50C of the Act is therefore not tenable in law. Even the computation of capital gain made by the AO I.T(SS).A No. 299/Ahd/2014 & Ors. A.Y. 2009-10 & 13-14 Page No DCIT vs. Dipak Govindbhai Dalwadi 12 as reproduced above, reducing the capital again already taxed in A.Y 2009-10 from the total capital gains computed is an implicit admission on the part of the Revenue that the impugned transaction already stands taxed in an earlier year. There is absolutely no scope or reason for taxing a transaction of capital gain earned on account of transfer of capital asset in two separate years as the transfer of the asset can take place in one year only. The Revenue having already treated the impugned asset as transferred in A.Y 2009-10, which has been accepted by the assessee also, the Revenue is precluded from changing its stand now and treating the asset transferred in the impugned year. The order of the Ld.CIT(A) deleting the addition made of Rs.7,54,36,257/-is upheld. 21. Ground of appeal No.1-4 are dismissed in above terms. 22. In effect, both the appeals filed by the Revenue are dismissed Order pronounced in the open court on 25-03-2022 Sd/- Sd/- (TR SENTHIL KUMAR) (ANNAPURNA GUPTA) JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER Ahmedabad : Dated 25/03/2022 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद