SIDDHARTH PAHWA,KOLKATA vs. I.T.O., WARD-33(1), KOLKATA, KOLKATA

O R D E R

PER DR. MANISH BORAD, ACCOUNTANT MEMBER :

2. However, the said declared income was recomputed at Rs.70,99,897/- in the Assessment Order passed u/s 143(3) of the Income Tax Act, 1961 dated 29.11.2017 passed by Learned Income Tax Officer, Ward - 33(1), Kolkata (hereinafter referred to as Ld. ITO) by disallowing the entire claim of deduction preferred u/s 54F of the Act, on the ground that he failed to transfer the Sale proceeds of the flat in a separate Capital Gain Account created with a Bank for the purpose of making investment in a new flat. Further, the Ld. AO has considered wrong purchase cost and financial year of acquisition for computation of the indexed cost of the flat sold.

3. Being aggrieved with the said Order passed u/s 143(3), your appellant preferred an Appeal before the Learned Commissioner of Income Tax (Appeals) - 9, Kolkata on 06.01.2018. The said Appeal Order was passed on 15.12.2022 by the Learned Commissioner of Income Tax, NFAC, Delhi [hereinafter referred to as Ld. CIT (A)] by confirming the order passed u/s 143(3) of the Act. The Learned CIT (A), while passing order u/s 250 has stated that 'No documents / evidences produced neither in the course of the assessment proceedings nor at the time of the appeal proceedings as regard to the transfer of the property' is not correct. Further, the claim that "The year of taxability was not agitated at the time of the assessment' is also not correct. Therefore, the instant appeal is preferred by your appellant before your honours for redressal and appraisal, by enumerating the facts of the case as below.

4. That your appellant submits that the sale consideration from the sale of one-half portion of the Flat No. 7B2 located at 24/1A, Ballygunge Circular Road, Kolkata - 700 019 would have been at Rs.1,12,50,000/- in place of Rs.1,10,00,000/- shown in the computation of income filed at the time of filing his return of income, only because the balance amount of Rs.2,50,000/- was paid by the buyer of the said flat after 31.03.2015 in the form of cheque drawn on bank and TDS [Rs.1,37,500 + Rs.1,12,500/-]. During the course of hearing of scrutiny assessment u/s 143(3) the information was passed on to the Ld. AO by a letter dated 11.11.2017 and a request was made to re-compute the Long Term Capital Gain (LTCG) accordingly. Assessment Years: 2015-16 Siddharth Pahwa 3

5. That your appellant submits that though the payments against the said proposed Sale of Flat started coming up from 15.01.2015, the execution of Deed of Conveyance of the said Flat was held on 05.05.2015, after receipt of the entire consideration money. Thus, the LTCG arises to your appellant only in the next Assessment Year, i.e. AY 2016-17 and not in the Current Assessment Year though inadvertently the same was declared as LTCG in the current Assessment Year. The question which is raised here, when the LTCG has taken place as per law! i.e., whether in AY 2015-16 or in AY 2016- 17. Your appellant submits that the correct position would be to consider the LTCG in AY 2016-17only and not in the Assessment Year 2015-16 (under dispute) as the title of the property was transferred to buyer only in AY 2016-17 by execution of the Deed of Conveyance. Your appellant further submits that if any mistake is committed by an assessee unknowingly then a prudent Assessing Officer should consider the correct position of Law and assess an Assessee accordingly.

6. That your appellant further submits that Ld. AO has considered FY 1999-2000 as the year of purchase of the said Flat sold instead of FY 1993-1994. Your appellant submits that actual investment was made and possession of flat was taken in the FY 1993-94 along with his father Dr. Vijay Pahwa (since deceased), as Father & Natural Guardian after payment of full consideration. However, the registration of the said flat was made in the FY 1999-2000 due to some problem with the promoter-developer of the said flat at that time. Hence, it is prayed before your honour to consider the year of physical possession of the said flat as FY 1993-94 as actual date of acquisition of the flat instead of FY 1999-2000 as considered by the Ld. AO. 7. That your appellant submits that Indexed Cost be calculated on the basis of year of acquisition, i.e. FY 1993-94 at Rs.33,12,891.80/- [Rs.7,89,400/- x 1024/244] because the cost of acquisition of the sold flat was Rs.7,89,400/- as per Books of Accounts of your appellant in the FY 1993-94 and not Rs.2,09,100/- as in the FY 1999-2000 as considered by the Ld. AO. Your appellant further submits that the actual year of acquisition may please be directed to be considered as the Assessment Years: 2015-16 Siddharth Pahwa 4 year of purchase for the purpose of the calculation of the indexed cost of acquisition. 8. That your appellant further submits that the alleged non-deposit of Long Term Capital Gain proceeds as specified in Section 54F is not correct, as your appellant transferred Rs. 80,00,000/- in a Special Deposit Account created as compliance to Section 54F of the Act with Standard Charted Bank, hence, the allegation made against your appellant do not hold good. 9. That your appellant further submits that out of the LTCG earned, investment made for the purchase of a new House Property (Flat) on 17.08.2016 jointly with his father and two others in equal shares, wherein your appellant's share comes at Rs.42,25,000/- which may please be allowed as investment u/s 54F, as the said investment in Flat has been within two Financial Years from the date of Sale. 10. That your appellant craves leave to urge, to add, to alter, to amend and/or to adduce further Statement of Facts on or before the date of appeal hearing.” 3. Brief facts of the case are that the assessee is an individual earning income from salary and profession. Income of Rs.14,00,130/- declared in the e-return for Assessment Year 2014-15 filed on 31/08/2015. Case selected for scrutiny through CASS followed by notice u/s 143(2) and 142(1) of the Act. In the course of the assessment proceedings, ld. Assessing Officer examine the long-term capital gains received by the assessee during the year. After considering the submissions filed by the assessee the ld. Assessing Officer made the following additions:-

(a) shortfall in sale consideration declared during the year – Rs.2,50,200/- Assessment Years: 2015-16 Siddharth Pahwa 5 (b) excess claim of cost of acquisition on account of year of acquisition adopted by the Assessing Officer as 1999-20 as against 1993-94 claimed by the assessee – Rs.27,62,469/- denial of deduction u/s 54F of the Act at Rs.42,25,000/-. (c) 3.1. After making the above additions income of the assessee assessed at Rs.70,99,897/-which included long-term capital gains at Rs. 56,99,767/-. 3.2. Aggrieved the assessee preferred appeal before the ld. CIT(A) but failed to succeed on any of the issues as the ld. A/R of the assessee was either unable to satisfy the ld. CIT(A) with the contentions or relevant documentary evidences were not placed in support of the grounds.

I.T.A. No. 84/Kol/2023 Assessment Years: 2015-16 Siddharth Pahwa 6 7. The first issue for our consideration is regarding the taxability of the transactions for sale of immovable property carried out during the year. We notice that the transactions for long term capital gain is on account of sale consideration received from sale of a flat situated at 7th Floor of Premises No. 24/1A Ballygunge Circular Road, Kolkata. The consideration for the said transaction was agreed at Rs.1,12,50,000/- . The major consideration amounting to Rs.1,10,00,000/- was received during the financial year 2015-16 relevant to assessment year 2016-17 and the balance of Rs.2,50,000/- was received in the subsequent financial year. The deed of conveyance was entered on 05/05/2015, which falls under the assessment year 2015-16. Though it was contended by the ld. Counsel for the assessee that the alleged transaction needs to be taxed in assessment year 2016-17 rather than assessment year 2015-16 but when it was asked whether the assessee has disclosed the said transactions in the return for assessment year 2016-17, no satisfactory reply was given. Thereafter, the ld. Counsel for the assessee requested for not pressing this issue and give consent on behalf of the assessee that the alleged transactions may be taxed for Assessment Year 2015-16, i.e., the year under consideration. So for the purpose of adjudicating this issue we hold that on account of acceptance of the assessee and on account of the fact that major consideration was received during the assessment year 2015-16, the taxability of these transactions will fall under Assessment Year 2015- 16. Assessment Years: 2015-16 Siddharth Pahwa 7 8. The next issue for our consideration is regarding the addition of Rs.2,50,200/- on account of discrepancy in shortfall of sale consideration declared by the assessee. We notice that the sale consideration for the alleged transactions of sale of flat, is Rs.1,12,50,000/- (though inadvertently the Assessing Officer has taken the figure at Rs.1,12,50,200/-) and the consideration received in the year was Rs.1,10,00,000/- and the remaining sum was received for the next year but since it has not been offered to tax in the assessment year 2016-17, the addition for Rs.2,50,200/- is confirmed and to this extent the finding of the ld. CIT(A) is confirmed and the issue is decided against the assessee.