The JCIT, Bhopal V. Smt Rekha Gupta , Jhansi

ITSSA 41/Ind/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3258 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-08-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 19-07-2022
• Assessment Year: 2016-2017
• Appeal Filed On: 07-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income; Additional evidence
• Section: 54; 143(3); 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE MS. MADHUMITA ROY, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER (Conducted through Virtual Court) IT(SS)A No. 41/Ind/2019 (Assessment Year: 2016-17) JCIT (OSD)(Central)-I Bhopal Vs. Smt. Rekha Gupta, 811 / 5A, Shakti Nagar Colony, Near Kunj Bihari Mandi, Jhansi (Appellant / Revenue) (Respondent / Assesee) PAN: ABVPG5978P Assessee by Ms. Nisha Lahoti, AR Revenue by Shri P.K. Mitra, CIT-DR Date of Hearing 20.07.2022 Date of Pronouncement 10.08.2022 O R D E R Per B.M. Biyani, A.M.: 1. This appeal by the Revenue is directed against the order dated 31.12.2018 of learned Commissioner of Income-Tax (Appeals)-3, Bhopal [“Ld. CIT(A)”] in Appeal No. CIT(A)-3/BPL/IT-11605,11622,11626, 11632 & 11638/2017-18, arising out of the order of assessment dated 22.12.2017 passed by the learned DCIT, Central-1, Bhopal [“Ld. AO”] u/s 143(3) of the Income-tax Act, 1961 [“the Act”], concerning Assessment-Year 2016-17. 2. The assessee is an individual earning income from salary. A search u/s 132 was conducted on the assessee on 07.01.2016 to 08.01.2016 wherein certain materials were seized. The present appeal relates to the assessment-year 2016-17 which is search-year itself and not a part of preceding six years. For the relevant assessment-year 2016-17, the assessee Shri J.P. Gupta IT(SS)A No.34 & 35/Ind/2019 Assessment year 2014-15 & 2015-16 Page 2 of 11 submitted return declaring a total income of Rs. 27,20,150/- as against which the Ld. AO completed assessment at a total income of Rs. 4,21,95,244/- after making certain additions. Being aggrieved, the assessee filed appeal to Ld. CIT(A). During appellate proceeding, the Ld. CIT(A) allowed part-relief to the assessee. Now being aggrieved by the order of Ld. CIT(A), the revenue has filed this appeal before us. 3. The grounds of appeal are as under: “1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in not considering the detailed Remand Report sent by AO on 29/08/2018 and deciding the issues without calling for remand report on specific issues as warranted by the OM dated 07/11/2014. 2. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 40,71,094/- made by AO on account of disallowance of exemption u/s 54 of Income Tax Act, 1961 for A.Y. 2016-17. 3. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 3,34,61,714/- made by AO on account of undisclosed cash receipts and unexplained receipts for A. Y. 2016-17.” Ground No. 1: 4. In this Ground, the revenue has claimed that the Ld. CIT(A) has erred in not considering the remand-report submitted by Ld. AO and deciding the issues without calling for remand-report on specific issues. The Ld. AR has pointed out that the Ld. CIT(A) has categorically mentioned in Para No. 1.1 / Page No. 5 of the order that the Ld. AO was asked to specify whether he / she would like to be present at the time of hearing in view of provision of section 250(2)(b) of the Act but in absence of any request from the Ld. AO, he had presumed that the AO does not want to attend the hearings personally. Drawing our attention to the first-sentence of the letter dated 28.12.2018 submitted by assessee to the Ld. CIT(A) as rejoinder to the remand-report, the Ld. AR further pointed out that the assessee has not submitted any new or additional evidence to the Ld. CIT(A). The evidences as Shri J.P. Gupta IT(SS)A No.34 & 35/Ind/2019 Assessment year 2014-15 & 2015-16 Page 3 of 11 available before Ld. AO were only required to be examined, analysed and considered by Ld. CIT(A) during appeal. According to Ld. AR, in absence of any new or additional evidence, there was no need to call for remand-report. Still the Ld. CIT(A) has called for remand-report and the assessee has also submitted re-joinder. Therefore, in such circumstances, the Ground taken by the revenue does not have strength. The Ld. DR could not controvert these submissions of Ld. AR. Being so, we find merit in the submissions of Ld. AR and are inclined to dismiss the Ground No. 1 of Revenue. Ground No. 2: 5. This Ground relates to the disallowance of exemption u/s 54F (in Grounds, section 54 is wrongly mentioned) of Rs. 40,71,094/-. 5.1 Facts qua this issue are such that the assessee earned long-term capital gain on sale of a land against which claimed exemption of Rs. 40,71,094/- on the basis of investment in a residential property. However, during assessment-proceeding, the Ld. AO disallowed exemption by observing as under: Page 33 of order: “On going through the records of the assessee it is found that the assessee has claimed exemption u/s 54F on amount of Rs. 40,71,094/- in AY 2016-17. During the course of assessment proceedings the assessee has not furnished any details whatsoever relating to the exemption claimed u/s 54F of the Act. Since, there is no explanation on the part of the assessee when the assessee was having onus to explain with evidence the exemption claimed in ROI, hence, amount of Rs. 40,71,094/- is added to the total income of the assessee during AY 2016-17.” 5.2 During appellate proceeding, the Ld. CIT(A) allowed exemption by holding as under: “4.6 Ground No. 3 for AY 2016-17:- Through this ground of appeal, appellant has challenged addition of Rs. 40,71,094/- on account of deduction claimed u/s 54F of the IT Act. Appellant during appellate proceedings submitted that the AO has disallowed claim of exemption u/s 54F of the IT Act on the Shri J.P. Gupta IT(SS)A No.34 & 35/Ind/2019 Assessment year 2014-15 & 2015-16 Page 4 of 11 ground that appellant has failed to furnish complete details related to claim u/s 54F of the IT Act. The appellant has also stated that land admeasuring 3.09 acre was sold on 06.08.2015. Another land admeasuring 1977.89 sq ft. (plot area) and 2760 sq ft (constructed area) was purchased by appellant vide agreement dated 31.01.2015 for purchase price of Rs. 46,93,466/- and therefore, has claimed exemption of Rs. 40,71,094/- uls 54F. The appellant made investment within stipulated time period as per section 54F of the IT Act. Therefore, the AO was not justified in disallowing claim of exemption uls 54F of the IT Act. In view of the documentary evidences on record, the addition made by/the AO on account of disallowance of exemption uls 54F amounting to Rs. 40,71,094/- is Deleted. Therefore, appeal on this ground is allowed.” 5.3 Before us, the Ld. DR relied upon the observations of Ld. AO and argued that the exemption was rightly disallowed. Ld. DR argued that the Ld. CIT(A) has wrongly deleted the disallowance made by Ld. AO. Hence the action of Ld. CIT(A) is suffering from infirmity and must be reversed. 5.4 Per contra, the Ld. AR submitted that the observation of Ld. AO that no details of exemption was filed during assessment-proceeding, is factually wrong. Ld. AR submitted that the assessee purchased a residential Triplex No. A-11 in “Ambrosia Country”, Kailgua Road, Lalitpur (UP) from M/s Vardhman Infra Estate Pvt. Ltd. for a sum of Rs. 46,93,466/- vide a document titled “Agreement for Sale” dated 31.01.2015. Drawing our attention to Page No. 52 to 57 of the Paper-Book. Ld. AR submitted that the assessee has filed a copy of this agreement to Ld. AO alongwith reply-letter dated 18.07.2017. Ld. AR further submitted that the assessee has also supplied to Ld. AO, the working of capital gain, exemption u/s 54F and remaining taxable gain in a sheet titled “Computation of Total Income”, a copy of which is also placed at Page No. 2 of the Paper-Book. This way, the Ld. AR contented that the assessee has filed necessary details and documents in support of the claim u/s 54 to the Ld. AO during assessment- proceeding. Thereafter, the Ld. AR has relied upon following decisions and contended that the exemption u/s 54F is allowed even if the “Agreement for sale” is executed but sale-deed is not executed: Shri J.P. Gupta IT(SS)A No.34 & 35/Ind/2019 Assessment year 2014-15 & 2015-16 Page 5 of 11 (a) Sanjeev Lal (2014) taxmann.com 300 (Supreme Court), order dated 01.07.2014 (b) Kuldeep Singh (2014) 49 taxmann.com 167 (Delhi High Court), order dated 12.08.2014 5.5 We have considered rival submissions of both sides, material held on record, relevant provision of section 54F and the judicial precedents cited before us. On perusal of the aforesaid “Agreement for sale” dated 31.01.2015 referred to by Ld. AR, we observe that the assessee has actually purchased a residential Triplex No. A-11 in “Ambrosia Country”, Kailgua Road, Lalitpur (UP) from M/s Vardhman Infra Estate Pvt. Ltd. for a sum of Rs. 46,93,466/- . Therefore, in the light of the decisions in Sanjeev Lal (supra) and Kuldeep Singh (supra), relied upon by Ld. AR, the assessee is entitled to exemption on the basis of agreement even if sale-deed was not executed. However, we observe that the agreement is titled “Agreement for sale” and Clause No. 1 and 2 of the agreement clearly specify that M/s Vardhman Infra Estate Pvt. Ltd. was developing the project titled “Ambrosia Country” and the said Triplex No. A-11 shall be constructed. Further, Clause No. 5 of Agreement prescribes “Construction-Linked Payment Plan” as under: 5. Payment Plan:- Construction Link Plan At the Time of Booking 10% 469347/- At the Time of Excavation 15% 704020/- At the Time of Plinth Beam 20% 938693/- At the Time of 1 st Floor Roof 20% 938693/- At the Time of 2 nd Floor Roof 20% 938693/- At the Time of Flooring Started 10% 469347/- At the Time of possession 5% 234673/- Total 100% 4693466/- Thereafter, Clause No. 6 of the agreement reads as under: “6. Second Party have paid amount via Ch. No. 653445 Dated 31/01/2015 of Rs. 8,00,000/- Drawn HDFC Bank Jhansi. The balance payment will be made according to Construction Link Plan given in Point No. 5.” Shri J.P. Gupta IT(SS)A No.34 & 35/Ind/2019 Assessment year 2014-15 & 2015-16 Page 6 of 11 Thus, from the agreement held on record, we are able to ascertain the fact that the asssessee has agreed to purchase a property for Rs. 46,93,466/- against which an investment of Rs. 8,00,000/- by way of advance-payment had also been made. But, however, it is not clear as to whether or not the assessee has made remaining investment of Rs. 38,96,466/- [Rs. 46,93,466/- (-) Rs. 8,00,000/-] and that too within the time-limit prescribed in section 54F. Needless to mention that the exemption u/s 54F is available to the extent of actual payment / investment within the prescribed time- limit. Since the investment of Rs. 8,00,000/- is established but the quantum of remaining investment, whether done or not done and if done then how much, is not verifiable from the material available before us, we think it appropriate to refer this issue back to the Ld. AO for the limited purpose of such verification. The Ld. AO shall give an adequate opportunity to the assessee to file necessary details in this regard, verify the quantum of exemption and thereafter allow exemption in accordance with law. The Ground No. 2 is, therefore, remitted back to Ld. AO. Ground No. 3: 6. This Ground relates to the addition of Rs. 3,34,61,714/- on account of unexplained cash-receipts. 6.1 The Ld. AO has made a total addition of Rs. 3,54,04,000/- consisting of two additions, viz. (i) addition of Rs. 3,18,73,000/- vide Para No. 10.5 of the assessment-order plus (ii) addition of Rs. 35,31,000/- vide Para No. 11.3 of the assessment-order. The first component comprising of Rs. 3,18,73,000/- has been added on the basis of Page No. 18 of LP-2 seized during search. On analysis of this document, the Ld. AO framed a view that the assessee was owner of 8.75 acres of land situated at Samardha site and the same was sold for a sum of Rs. 4,37,50,000/-. The Ld. AO further noted that till the date of search, out of the sum of Rs. 4,37,50,000/- the assessee had received a sum of Rs. 3,54,04,000/- which again is received partly by cheque to the extent of Rs. 35,31,000/- and remaining in cash Rs. Shri J.P. Gupta IT(SS)A No.34 & 35/Ind/2019 Assessment year 2014-15 & 2015-16 Page 7 of 11 3,18,73,000/-. Ld. AO further noted that the assessee is not able to explain the cash-receipt of Rs. 3,18,73,000/-. Accordingly, the Ld. AO made addition of Rs. 3,18,73,000/-. The second component comprising of Rs. 35,31,000/-, which though is the same sum of Rs. 35,31,000/- as mentioned earlier, has been added on the basis of Page 23 of LP-2 seized during search. Ld. AO observed that the document is a Trial-Balance which shows a credit / receipt of Rs. 35,31,000/- by the assessee but the assessee is not able to explain the source of receipt. 6.2 During appellate proceeding, the Ld. CIT(A) reduced the additions of Rs. 3,54,04,000/- [Rs. 3,18,73,000 (+) 35,31,000/-] to Rs. 19,42,286/- and thereby granted a relief of Rs. 3,34,61,714/-, by holding as under: “4.5 .... Appellant during appellate proceedings has strongly contended that addition of Rs. 3,18,73,000/- has been made on the basis of page no 18 of LP-2 seized during search and addition of Rs. 35,31,000/- has been made on the basis of page no 23 of LP-2 seized during search. Appellant submitted that the page represents working of entire group and for entire 51.02 acre land and appellant has sold her share of land for Rs. 66,66,667/- on 06.08.2015. Smt Rekha Gupta along with Smt Anupama Tiwari purchased 5.354 acre of land (3.09 acres of Smt Rekha Gupta and 2.26 acre of Smt Anupama Tiwari). The total area of land acquired individually by various individuals and firms was 50.81 acres and was sold by all the owners in FY 2015-16 and the profit arisen from sale of land was shown individually. Appellant received her share of Rs. 66,66,667/- and has earned capital gain of Rs. 49,46,816/- which was also shown while filing return of income. 4.5.1 I have considered the factual matrix of the case, the plea raised by appellant and has also perused assessment order. It is undisputed fact that appellant has purchased land Shri J.P. Gupta IT(SS)A No.34 & 35/Ind/2019 Assessment year 2014-15 & 2015-16 Page 8 of 11 admeasuring 3.09 acre on 18.03.2008 and 31.05.2008. The entire land of 3.09 acre (being share of appellant) was sold on 06.08.2015. On perusal of page no 18 of LP-2 it is seen that land has been sold @ 50 lacs per acre. The payments have been received partly in cheque and partly in cash. The appellant accounted for the sale proceeds received in cheque. The total land admeasuring 8.75 acres was sold. The appellant's contribution in the said land is 3.09 acres. As per the seized document there were four entries of cash receipts amounting to Rs. 55,00,000/- (Rs. 10,0000/- + Rs. 15,00,000/- + Rs. 20,00,000/- + Rs. 10,00,000/-). The remaining amount has been received by cheque by the respective land owners. The appellant's share of unaccounted receipt is at Rs. 19,42,286/- (3.09÷8.75 x 55,00,000/- ). However, the AO being too harsh on assessee has made addition for sale of entire 8.75 acre of land @ 50 lacs per acre. In reality appellant owns only 3.09 acre in her possession. The AO' ought to have made addition against share of assessee i.e. for 3.09 acre of land and not for entire 8.75 acre and that too on undisclosed cash receipt. The undisclosed cash receipt in the case of appellant comes to Rs. 19,42,286-, however, the balance payment by assessee and others would have been received through cheque. Therefore, the addition made by the AO amounting to Rs. 3,18,73,000/- and Rs. 35,31,000/- are restricted to Rs. 19,42,286/- being Long Term Capital Gain on sale of land received in cash in AY 2016-17. Therefore, the appeal on this ground is partly allowed.” 6.3 Before us, the Ld. DR supported the order passed by Ld. AO and opposed the observations of Ld. CIT(A). 6.4 Per contra, the Ld. AR strongly supported the observations of Ld. CIT(A). Ld. AR contended that the whole site situated at Samardhar consists of 50.81 acres, of which 8.75 acres is a part. But the assessee is neither Shri J.P. Gupta IT(SS)A No.34 & 35/Ind/2019 Assessment year 2014-15 & 2015-16 Page 9 of 11 owner of 50.81 acres nor of 8.75 acres. Ld. AR submitted that the whole site of 50.81 acres was owned by several individuals or firms and the assessee’s share was just 3.09 acres. Ld. AR submitted that all owners of the whole site consisting of 50.81 acres, sold their respective portions and paid taxes individually in their respective returns. Ld. AR submitted that the assessee has also sold 3.09 acres, her share, for a sum of Rs. 66,66,667/- and derived a taxable long-term capital gain of Rs. 49,46,816/- which is already declared in the return. Ld. AR submitted that the Ld. CIT(A) has made a careful analysis of the impugned document and worked out cheque portion of Rs. 35,31,000/- and cash portion of Rs. 19,42,286/- relatable to the assessee (out of the receipt of Rs. 3,54,04,000/-). Ld. AR submitted that the cheque portion of Rs. 35,31,000/- is a part of Rs. 66,66,667/- already declared by the assessee in her return and therefore the same is not undisclosed. However, the Ld. CIT(A) has confirmed addition in respect of undisclosed cash-portion of Rs. 19,42,286/-, worked out by him as related to the assessee, and the assessee has not agitated the same in further appeal to close the matter. Therefore, according to Ld. AR, out of the addition of Rs. 3,54,04,000/- made by Ld. AO, the addition of Rs. 19,42,286/- is rightly confirmed by Ld. CIT(A). Hence there is nothing wrong in the relief of Rs. 3,34,61,714/- granted by Ld. CIT(A). 6.5 We have considered rival submissions of both sides and perused the material held on record including the orders passed by the lower authorities. We observe that the Ld. AO made addition of Rs. 3,54,04,000/- but the Ld. CIT(A) has made a careful analysis of the documents seized during the search, considered the submission of assessee and thereafter came to a conclusion that the Ld. AO was too harsh on the assessee and made addition. We observe that the Ld. CIT(A) has found that the assessee was owner of 3.09 acres only and not of 50.81 / 8.75 acres and thereafter determined that out of the receipt of Rs. 3,54,04,000/-, the unaccounted cash-receipt related to the assessee’s share was just Rs. 19,42,286/-. We observe that the Ld. DR is not able to controvert the findings and calculation of Rs. 19,42,286/- made by Ld. CIT(A). It is a settled law that income has to Shri J.P. Gupta IT(SS)A No.34 & 35/Ind/2019 Assessment year 2014-15 & 2015-16 Page 10 of 11 be taxed in the hands of right person and no person is liable to pay tax on the income not earned by him. Therefore, having regard to the concrete finding given by Ld. CIT(A) which stand uncontroverted by Ld. DR, the assessee was liable to pay tax only on her own income i.e. her share in unaccounted cash-receipt i.e. Rs. 19,42,286/-. We are thus of the view that the Ld. CIT(A) has rightly reduced the addition to Rs. 19,42,286/- and thereby allowed relief of Rs. 3,34,61,714/-to the assessee. Accordingly, Ground No. 3 of Revenue is dismissed. 7. In the final result, this appeal of Revenue is partly allowed for statistical purpose. Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 10/08/2022. Sd/- Sd/- (MADHUMITA ROY) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore Dated : 10.08.2022 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore Shri J.P. Gupta IT(SS)A No.34 & 35/Ind/2019 Assessment year 2014-15 & 2015-16 Page 11 of 11 1. Date of taking dictation 2. Date of typing & draft order placed before the Dictating Member 3. Date on which the approved draft comes to the Sr. P.S./P.S. 4. Date on which the fair order is placed before the Dictating Member for pronouncement 5. Date on which the file goes to the Bench Clerk 6. Date on which the file goes to the Head Clerk 7. Date on which the file goes to the Assistant Registrar for signature on the order 8. Date of dispatch of the Order