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Before: Shri V. Durga Rao
आदेश /O R D E R This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi dated 08.05.2023 relevant to the assessment year 2015-16.
Brief facts of the case are that the assessee has filed his return of income for the assessment year 2015-16 on 28.11.2015. The return filed by the assessee was processed under section 143(1) of the Income Tax Act, 1961 [“Act” in short]. Subsequently, the case of the assessee was selected for limited scrutiny in CASS to verify the claim of deduction under the head capital gains. After considering the submissions of the assessee against statutory notices, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 07.11.2017 by assessing total income of the assessee at ₹.13,46,600/- after taxing ₹.10,00,000/- since the assessee has not fulfilled the conditions laid down in the proviso to section 54F(4) of the Act for not utilizing the said amount either by depositing in the CGAS nor used for purchase of new property. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer.
On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the assessee has acquired another residential property for more than the sale consideration received within seven months from the sale of original asset. The assessee was under the impression that since he will be investing into the property to the extent of ₹.83 lakhs shortly, some more cash may be required for making full payment and thereby retained ₹.10 lakhs in his savings bank account. It was further submission that the provisions of section 54 of the Act, being beneficial provision, considering the fact that the investment was made more than the sale consideration received by the assessee, it was prayed for deleting the addition.
On the other hand, the ld. DR supported the orders of authorities below.
Heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book filed by the assessee. In this case, the assessee sold a property on 02.03.2015 for a consideration of ₹.75.00 lakhs. On verification of details, the Assessing Officer has noted that the assessee has not utilized the entire net consideration for the purchase of construction of the new asset before the date of furnishing the return of income i.e. 28.11.2015. The assessee had given advance of ₹.5,00,000/- to the seller on 05.11.2015. Agreement to purchase the property for ₹.83,00,000/- was entered into on 05.11.2015. Balance payment of ₹.78,00,000/- was made before the execution of sale deed on 21.12.2015. Accordingly, the assessee claimed deduction under section 54F of the Act of ₹.83.00 lakhs. However, the Assessing Officer has observed that the assessee ought to have deposited the entire net consideration i.e., ₹.70.00 lakhs in Capital Gain Accounting to Scheme before the due date of filing of return under section 139(1) of the Act, whereas, the assessee deposited ₹.60,00,000/- on 30.08.2015 and accordingly, the Assessing Officer taxed the unutilized amount of ₹.10,00,000/-, which was confirmed by the ld. CIT(A).
In this case, the assessee sold the property for a consideration of ₹.75.00 lakhs, whereas, Agreement to purchase the property for ₹.83,00,000/- was entered into and after making full payment, the sale deed was executed on 21.12.2015. The above facts are not in dispute. The only discrepancy is that against the sale consideration of ₹.75 lakhs, after making advance of ₹.5,00,000/-, the assessee has deposited ₹.60.00 lakhs in capital gains scheme account instead of depositing ₹.70.00 lakhs. It is an undisputed fact that after sale of the property for ₹.75.00 lakhs, the assessee acquired new property for consideration of ₹.83.00 lakhs. Of course, there is small technical lapse of the assessee for which, the benefit of section 54 of the Act shall not be denied. Section 54 of the Act is a beneficial provision and a beneficial interpretation has to be made as far as possible for giving benefit to the assessee. Therefore, it is opined that the technical lapse should not disentitle the assessee for the benefit of section 54 of the Act.
6.1 in the case of Motilal Padampat Sugar Mills Limited v. State of Uttar Pradesh and Others 118 ITR 326, the Hon’ble Supreme Court has held that “thus there is no presumption that every person knows the law. It is often said that everyone is presumed to know the law, but that is not a correct statement; there is no such Maxim known to the law”. In the present, it was the only dispute that the assessee had not deposited ₹.10.00 lakhs in the capital gain scheme account, whereas, against the sale consideration of ₹.75.00 lakhs, ₹.60 lakhs was deposited in the capital gain scheme account besides payment of advance of ₹.5 lakhs to the seller. It is also not disputed that against the sale consideration of ₹.75 lakhs, the assessee made investment to the extent of ₹.83 lakhs by execution of sale deed on 21.12.2015 which is well before the end of the financial year. Under the above facts and circumstances and in view of the judgement of the Hon’ble Supreme Court, the order of the ld. CIT(A) is set aside and direct the Assessing Officer to grant the full benefit of section 54 of the Act to the assessee and accordingly the addition made by him stands deleted.