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Income Tax Appellate Tribunal, “C” BENCH, KOLKATA
Before: DR. MANISH BORAD, HON’BLE & SHRI SANJAY GARG, HON’BLE
O R D E R
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The above captioned appeal is directed at the instance of the assessee against the directions of the Dispute Resolution Panel – 2, New Delhi, (hereinafter the “ld. DRP”) dt. 05/12/2022, passed u/s 144C(5) of the Income Tax Act, 1961 (“the Act”) for the Assessment Year 2014-15. 2. The assessee has raised the following grounds of appeal:- “1. The Ld. AO has erred on facts and in law in assessing the income under the head capital gain at Rs.41,46,0917- as against Nil income declared by the assessee on the basis of direction of DRP ignoring that the amount of capital gain has been invested in purchase of flat before the time available for filing the return u/s 139 and thus eligible for deduction u/s 54 of the Act even if the sale deed was executed subsequently. He has further erred in observing that assessee has failed to produce documentary evidence in support of claim ignoring that the same was filed before the DRP.
2. The Ld. AO has erred on facts and in law in making addition of Rs. 7,41,700/- in respect of cash deposit in the bank account u/s 68 of the Act as per the direction of DRP. He has further erred in holding that assessee failed to produce documentary evidence in support of averments in the affidavit.
Assessment Year: 2014-15 Jyoti Jha 3. The Ld. AO has erred on facts and in law in making addition of Rs.33,40,580/- by treating the investment made in purchase of flat as undisclosed investment u/s 69 of the Act ignoring that the source of such investment is verifiable from the bank account of assessee and his son.
4. The Ld. AO has erred on facts and in law in making addition of Rs. 11,76,466/- on the basis of entry of TDS reflected in Form 26 AS of the assessee on payment made to M/s Orchid Infrastructure Development Pvt. Ltd. for booking of fiat by Sh. Ranjit Jha in which assessee was only co-applicant ignoring that the said amount was paid by her husband Sh. Ranjit Jha from his bank account as also confirmed by M/s Orchid Infrastructure Development Pvt. Ltd.
5. The appellant craves to alter, amend and modify any ground of appeal
.”
3. Facts in brief are that the assessee is a non-resident residing at Mauritius. She did not file her return of income for Assessment Year 2014-15. Case was reopened u/s 147 of the Act by way of issuance of notice u/s 148 of the Act duly served upon the assessee. Reasons for reopening were for examining the following transaction:- “ SI No. Nature of transaction Date of transaction Amount in Rs.
1. TDS Return-Rent (Section 194) On various dates Rs.70,00,000/-
2. Deposited cash of Rs. 10,00,000 or On various dates Rs.14,04,700/- more in a saving bank account
3. Deposit in Cash aggregating On various dates Rs.5,00,000/- Rs.2,00,00/- or more, with a Banking company
4. Purchase of immovable property On various dates Rs.1,48,27,704/-
3. The ld. Assessing Officer asked for various details to examine these transactions. The assessment was framed u/s 144C of the Act. Assessee filed objections before Dispute Resolution Panel – 2, Delhi, against the said order dt. 22/04/2022. The ld. DRP vide order dt. 05/12/2016 gave directions. The ld. Assessing Officer accordingly framed order u/s 147/144 of the Act dt. 27/01/2023 assessed income at Rs.94,14,225/- making the following additions:-
Assessment Year: 2014-15 Jyoti Jha (i) The claim made u/s 54/54F of the Act at Rs.41,55,508/- not allowed as ld. Assessing Officer alleged that the property purchased by the assessee for claiming exemption was beyond two years from the date of sale of property. (ii) Addition u/s 68 of the Act for unexplained cash deposit at Rs.7,41,700/-. (iii) Undisclosed investment u/s 69 of the Act at Rs.45,17,017/- for the undisclosed investment made in purchase of flat.
Aggrieved the assessee is now in appeal before this Tribunal.
The ld. Counsel for the assessee vehemently argued referring to detailed written submissions as well as placing reliance on various decisions which are forming part of the paper book dt. 26/04/2023 containing 129 pages. 5.1. On the other hand, the ld. D/R vehemently argued supporting the finding of the Assessing Officer as well as directions given by the ld. DRP.
We have heard rival contention and perused the material placed before us. The first issue for our consideration is the denial of exemption/deduction u/s 54 of the Act at Rs.41,55,508/-. We notice that the assessee has sold a duplex flat bearing No. 78, Vijya’s Heritage Uliyan, Jamshedpur on 19/07/2013 for Rs.70,00,000/- and after claiming the indexed cost of acquisition the long term capital gain has been computed at Rs.41,46,091/-. There is no dispute at the end of the revenue authorities with regard to the sale transactions and the figure of the long term capital gain. The assessee has claimed deduction u/s 54F of the Act at Rs.41,55,508/- against the long term capital gain from sale Assessment Year: 2014-15 Jyoti Jha of flat. This deduction has been claimed towards purchase of a flat at Gurgaon. The conveyance deed for the said flat has been executed on 06/03/2018 which is after two years from the sale of the property. Revenue authorities have denied the claim taking basis of the conveyance deed. Before us, the ld. Counsel for the assessee referred to paper book page no. 80 to 83 and demonstrated that the assessee booked an apartment being Flat No. D-1002, Heritage max, Sector No. 102, Gurgaon, Haryana with Dream House Infrastructure Pvt. Ltd. and a buyer agreement was entered on 23/05/2013. In pursuance thereto payment of Rs.63,86,391/- was made up till 17/11/2014. The detail of said payments are as follows:- Date of payment Amount paid 13.03.2013 – On booking Rs.7,00,000/- 27.04.2013 – I installment Rs.13,20,920/- (PB 112) 11.06.2013 – II installment Rs.16,20,290/- (PB 109) 04.07.2013 – II installment Rs.4,00,000/- (PB 110) 14.07.2014 – III installment Rs.11,62,906/- (PB 111) 17.11.2014 – IV installment Rs. 11,82,905/- Total Rs.63,86,391/-
From perusal of the above detail, we notice that six months prior to the date of sale of property at Jamshedpur on 19/07/2013, assessee had already booked a flat at Gurgaon. As per the provisions of Section 54 of the Act, the assessee can claim the exemption/deduction for the investment in the new house which is purchased one year prior to the date of sale or has been purchased two years from the date of sale or has constructed a house within three years from the date of sale which has given rise to the capital gain. The ld. Assessing Officer has completely disregarded the fact that the assessee has made the payment Assessment Year: 2014-15 Jyoti Jha for the purchase of property at Rs.63,86,391/- by the end of the year 2014. Revenue authorities have only taken into account the date of conveyance deed. In our considered view, the assessee has applied the consideration received from the long term capital gain in question, for the purchase of residential flat at Gurgaon within stipulated time limit as provided u/s 54F of the Act and the deduction claimed in the year under appeal is even less than the investment made by the assessee for the purchase of the property at Gurgaon. Hon’ble Bombay High Court in the case of CIT v. Girish L. Ragha (2016) 239 Taxman 449 (Bom. HC), considering similar set of facts observed that the assessee sold residential property and entered into an agreement with the builder for purchased of flat within the prescribed period of two years and after purchase of property there was a civil suit filed by the other parties and the license for constructing the house was finally issued after four years. The Hon’ble Court held that since the assessee has invested money within the stipulated period and delay in obtaining the occupancy certificate was beyond the control of the assessee, the assessee shall be entitled for deduction u/s 54 of the Act. The judgment of the Hon’ble Bombay High Court, squarely applies to facts of the instant case as before us the substantial compliance of Section 54F of the Act has been made by the assessee and the sale consideration received from the property situated at Jharkhand has been applied for purchase of a flat at Gurgaon. The assessee has fulfilled the conditions prescribed u/s 54F of the Act and thus is eligible to claim deduction at Rs.41,55,508/-. We thus, fail to find any merit in the addition made by the Assessing Assessment Year: 2014-15 Jyoti Jha Officer and the same is hereby deleted. Ground No. 1 raised by the assessee is allowed.
Ground No. 2 is raised regarding addition u/s 68 of the Act of Rs.7,41,700/- in respect of cash deposit in the bank account. We observe that the assessee deposited net cash of Rs.13,06,700/- between 30/05/2013 to 20/07/2013. When asked about details of the said deposit it was stated that Rs.5,65,000/- was on account of amounts received from sale of sale of house and the remaining Rs.7,41,700/- from accumulated receipt of sale of agricultural produce and household items. The ld. Assessing Officer was not satisfied with the explanation made with regard to the cash deposit of Rs.7,41,700/-. It is claimed before us by the ld. Counsel for the assessee that when she sold her duplex house at Jharkhand, she also sold the movable items including 5 ACs, 2 Colour TV, 10 Seater sofa with one couch, dining table with 6 chairs, bar cabinet with 5 seater sofa, 3 bed with dressing table, side table and mattresses and all kitchen items comprising of fridge, chimney, utensils and couturiers etc.. These items were separately sold to five persons, namely, Shri Munna Singh (Rs.75,000/-), Smt. Abha Vishvkarma (Rs.50,000/-), Shri Mihir Kumar Jha (Rs.75,000/-), Shri Shiv Shankar Jha (Rs.75,000/-) and Shri Babu Lal Mishra (Rs.75,000/-). The assessee has claimed to have received cash from sale of these household items. In support of this claim affidavits have been filed and are placed at page no. 114 to 118 of the paper book. The revenue authorities have disregarded this claim without bringing on record any contrary evidence which in this case could have been the information directly called from the five persons stated supra who have 7 Assessment Year: 2014-15 Jyoti Jha purchased the household items from the assessee. In absence of any such contrary material, the claim of the assessee in respect of source of cash deposit of Rs.3,50,000/-, is found to be correct. 8.1. So far as the remaining amount of Rs.3,91,700/- is concerned, it is claimed by the assessee that her father, Shri Yogendra Jha, was having 9 bigha of agricultural land which was inherited by the husband of the assessee Dr. Ranjit Jha, in February, 2012. Out of the accumulated agricultural receipts of Rs.4,52,000/- for FY 2010-11, 2011-12 & 2012-13, Shri Upendra Jha, who was looking after the said land, deposited the alleged sum in the bank account of assessee. In support of the same agricultural land holding and other relevant documentary evidences have been placed in paper book page 120. On perusal of these details, we find merit in the contention of the ld. Counsel for the assessee and are inclined to accept the source of the alleged cash deposit of Rs.3,91,700/-. Thus, the source of alleged cash deposit is the sum received from sale of household appliances as well as sale of agricultural produce accumulated for last three years. We accordingly set aside the findings of the lower authorities and delete the impugned addition of Rs.7,41,700/-.
Ground No. 3 is regarding addition of Rs. 33,40,580/-, for the alleged undisclosed investment u/s 69 of the Act, towards purchase of flat. We notice that the assessee had booked a flat at Heritage Max, Gurgaon and during the year, the assessee made payment of Rs.33,40,580/- which comprised of two amounts, first is Rs.13,20,290/- paid from HDFC Bank account of the son of assessee on 30/04/2013 and second is Rs.20,20,290/- (16,20,290 + 4,00,000) paid from bank