DR. JAYA NARAYAN NAIK vs. THE JOINT C.I.T.,

IN THE INCOME TAX APPELLATE TRIBUNAL, RANCHI BENCH, RANCHI

BEFORE S/SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER

ITA No.250/Ran/2014 Assessment Year: 2010-2011

Dr. Jaya Narayan Naik, 126, Vs. JCIT, Range-1, Dhanbad Bagmari Road, Top Floor, Kankurgachi, Kolkata PAN/GIR No.ACMPN 4664 R (Appellant) .. ( Respondent)

Assessee by : Shri Taraknath Jaiswal Adv & Akshaya Ringasia, Adv Revenue by : Shri P.K.Mondal, Addl. CIT(DR)

Date of Hearing : 29/08/2019 Date of Pronouncement : /10/2019

O R D E R Per Bench This is an appeal filed by the assessee against the order of the

Commissioner of Income Tax(Appeals)-Dhanbad dated 7.3.2014 for the

assessment year 2010-2011.

“(A)That on fact and under the circumstances of the case, the CIT(A) was clearly wrong in holding that the assessee was not entitled exemption of Rs.29 lacs u/s.54 of the Act by rejecting the claim of the assessee to have deposited Rs.26 lacs in capital gain deposit account and Rs.3 lacs with West Bengal Housing Board.”

(B) That the CIT(A) was not justified while ignoring the direct

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evidence of the capital gain deposit account and application money with West Bengal Housing Board.” 3. Apropos this ground, ld A.R. submitted that the Assessing Officer has

made addition on account of disallowance of Rs.26,00,000/- u/s.54 of the

Act by observing that the amount was transferred to STDR A/c and no

evidence was there that the amount was invested in capital gains account.

The CIT(A) confirmed the addition without any basis and discarding the

sustainable evidence filed by the assessee i.e. certified issued from the

bank. Ld counsel for the assessee submitted that the very addition made

by the AO and confirmed by the CIT(A) may kindly be deleted.

of Rs.3,00,000/- u/.s.54 of the Act by observing that this amount was

advanced to West Bengal Housing Board and no evidence was filed that this

amount was invested in capital gains account. Ld counsel vehemently

pointed out that merely because no allotment was made to the assessee,

the Assessing officer denied the exemption u/s.54 of the Act and the CIT(A)

also confirmed the same without any basis.

3.1 of the first appellate order and submitted that no copy of capital gains

account or STDR was filed by the assessee showing that the fixed deposit

was made by the assessee in the capital gains account scheme and

certificate was dubious and, therefore, the authorities below were right in

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denying the exemption of Rs.26 lakhs u/s.54 of the Act. Ld D.R. referred to

the decision of Cochin Bench of the Tribunal in the case of R Vidhyadharan

vs DCIT, 131 ITCL 378, wherein, it was held that the deposit of money in

fixed deposit does not fulfil the requirements of capital gains scheme. The

deposits should be made in the specific capital gains scheme. Therefore,

the AO was right in denying exemption u/s.54 of the Act and the CIT(A)

was right in confirming the same.

considered view that for making claim of exemption u/s.54 of the Act, the

assessee is required to deposit before furnishing the return of income, in

any bank or institution as may be specified by the Central Government in

Official Gazette in the capital gains account. From the certified issued by

Branch Manager, State Bank of India, it is discernible that the assessee on

27.3.2010, deposited Rs.26 lakhs in capital gains but the same was

transferred to fixed deposit STDR account No.31110760825. The CIT(A)

specifically asked the assessee to submit copy of STDR account but the

same was not filed which could establish that the fixed deposit was in the

capital gains account. The certificate issued by the Bank and reproduced

verbatim by the CIT(A) at page 3 is self-contradictory, which reveals that

the amount was deposited in SB A/c and then it was transferred to fixed

deposit account No.31117783705 but no proof or account detail or

statement of account was filed by the assessee before the authorities

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showing that fixed deposit was in the capital gain scheme, which could

enable the assessee for making the claim of exemption u/s.54 of the Act.

However, it is not disputed that the amount was initially parked in the

capital gains account and later on the same was transferred to fixed deposit

account. No details of the same were furnished before us at the time of

hearing. Hence, we set aside the addition of Rs.26 lakhs to the file of the

Assessing Officer to verify once again whether the deposit of money of

Rs.26 lakhs in bank account fulfil the requirement of section 54 of the Act.

Accordingly, this part of ground is restored to the file of the AO for

verification and decision afresh about claim of exemption u/s.54 of the Act.

Hence, Ground No.1(A) is allowed for statistical purposes.

the assessee issued a cheque to West Bengal Housing Board alongwith

application for allotment of house, but the same was not allowed and no

allotment was made to the assessee. In our humble understanding, the

provisions of section 54 of the Act making an application for allotment of a

house with West Bengal Housing Board or any other Housing Board is not

sufficient to claim exemption u/s.54 of the Act. Therefore, the authorities

below are right in dismissing the claim of exemption u/s.54 of the Act

pertaining to claim of Rs.3 lakhs. Hence, Ground No.1(B) is dismissed.

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“ That on the facts and circumstances of the case, the CIT(A) is unjustified and unlawful in confirming the order of the AO in making addition of Rs.5 lakhs on account of foreign trip.” 9. Ld A.R. of the assessee submitted that the Assessing Officer as well

as the CIT(A) was not right in confirming the addition of Rs.5 lakhs on

account of foreign trip. Ld counsel submitted that the assessee made

foreign trip to Vietnam on the invitation of Vietnam National Heart

Association and to M/s. Diagnosearch Life Sciences Pvt Ltd., UAE,

respectively and foreign trips were made during the year were not personal

in nature and, therefore, there was no question of disclosing any

expenditure of such tour. Therefore, the AO was not justified in disallowing

the same which is liable to be deleted.

10 Replying to above, ld D.R. took us through the relevant part of the

assessment order para 4.2 and first appellate order and submitted that on

the inspection of passports by the DDIT (Inv.), Kolkata, it was revealed that

the assessee visited on the invitation of Vietnam National Heart

Association and another trip to UAE on the invitation of Diagnosearch Life

Sciences Pvt Ltd., and the invitation letter does not mention that expenses

for travel and stay would be paid for by the invitee. Ld D.R. vehemently

pointed out that another certified by one Gajendra Sharma, Controller,

Finance & Account of M/s. Diagnosearch Life Sciences Pvt Ltd., has no

authority to issue and verify that the expenses for travel, visa and hotel

accommodation were borne by Cardiaokine Inc. Ld D.R. strenuously

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submitted that the appellant does not have any evidence in his possession

to show that expenses were borne by somebody else and the expenses

were incurred in the foreign trip for pleasure of the family members and not

disclosing the expenses in the books of account clearly establish that the

same is undisclosed income which is taxable u/s. 69C of the Act. Ld D.R.

submitted that section 37(1) of the Act clearly provide that the business

expenditure or personal expenses are inadmissible in providing freebees to

medical practitioner by Pharmaceutical and allied health sector industry. He

also referred to CBDT Circular No.4/.2012 dated 1.8.2012. Lastly, ld D.R.

submitted that the claim may kindly be dismissed.

considered view that neither before the lower authorities nor before this

Bench, the assessee has filed any cogent and reliable evidence to show that

the expenses incurred in Vietnam and UAE tour were borne by the host

The CBDT Circular No.5 /2012 dated 1.8.2012 clearly provides that the

expenses incurred in providing freebees to medical practitioner by

Pharmaceutical and allied health sector industries and inadmissible

expenses. In the present case, admittedly, the assessee made foreign tour

to Vietnam and UAE during the relevant financial period and do not show or

procure any expenses incurred towards such foreign trips. Therefore, the

authorities below were right in making addition u/s.69C of the Act treating

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the same as undisclosed expenditure of the assessee during the relevant

financial period. Accordingly, Ground No.2 of appeal is dismissed.

“That on the facts and circumstances of the case, the CIT(A) is unjustified and unlawful in confirming the order of the AO in making the addition of Rs.14,50,000 of share of agricultural income. Though the addition made by the AO is based on highly dubious and flimsy ground which does not carry any merit in the eye of law.”

CIT(A) are not justified in disallowing the agricultural income. He submitted

that in the previous assessment years i.e. 2005-06 to 2007-08, 2010-2011

and subsequent assessment year 2016-17, the agricultural income has been

accepted by the department in the case of the assessee. He also

submitted that in the assessment year 2016-17, the Assessing Officer after

verifying the paternal agriculture income has accepted the claim of the

assessee in his order dated 4.12.2018. He also produced an order u/s.154

r.w.s. 143(3) of the Act dated 11.4.2019 for the assessment year 2016-17

in the case of the assessee and submitted that after considering the

contract notes related to future and option, details of paternal agriculture

income received from the father and details regarding loans received,

sundry creditors and fee receivable observed that the claim of the assessee

is found to be correct and no addition is called for in regard to agricultural

income. Therefore, rule of consistency should be followed. For this

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proposition, he relied on the decision of Hon’ble Supreme Court in the case

of RADHASOAMI SATSANG vs. COMMISSIONER OF INCOME TAX, 193 ITR

321 (SC).

Assessing Officer has made the addition and ld CIT(A) was justified in

confirming the same. He submitted that as against the agricultural income

claimed by the assessee, the assessee could not evidence the deposits in

the bank with regards to sale proceeds of agricultural income. Hence, the

addition deserves to be confirmed.

agricultural income has been accepted by the department in assessment

years 2005-06 to 2007-08, 2010-2011 and subsequent assessment year

2016-17. The departmental authorities have also not doubted the holding

of agricultural land of 45 acres in the name of the father of the assessee

and only disbelieved the income of Rs.14,50,000/- towards agricultural

income as the same was not reflected in the bank account of the assessee.

There may be various reasons to park the fund out of agricultural income in

the bank or in hand to meet further expenditure for this purpose. It is not

the case of the revenue that similar amount of agricultural income should

be reflected in the bank account to prove the agricultural income. There

was no evidence to establish that the assessee has sold the agricultural land

or that the assessee has stopped the agricultural operations. The Revenue

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has not placed on record any positive material to disbelieve the agricultural

income claimed by the assessee, therefore the addition of Rs.14,50,000/-

cannot be sustained. Hence, we set aside the orders of lower authorities

and direct the Assessing officer to delete the addition of Rs.14,50,000/- and

allow this ground of the assessee.

Order pronounced in the open court under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 on 30 / 10/2019.

Sd/- sd/- (Laxmi Prasad Sahu) (Chandra Mohan Garg) ACCOUNTANT MEMBER JUDICIALMEMBER

Ranchi; Dated 30/10/2019 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Dr. Jaya Narayan Naik, 126, Bagmari Road, Top Floor, Kankurgachi, Kolkata

Sr. Pvt. Secretary, ITAT, Cuttack

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