SH. LALIT DEEWAN,JAMMU vs. D.C.I.T., CIRCLE-2, JAMMU

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I. T. A. No. 453/Asr/2017 Assessment Year: 2013-14

Lalit Dewan, vs. Dy. CIT, 9, Canal Road, Jammu Circle-2, Aayakar Bhawan, Rail Head Complex, [PAN: ABMPD 9066G] Panama Chowk, Jammu

(Appellant) (Respondent)

Appellant by : Sh. C J S Nanda (C.A.) Respondent by: Sh. Charan Dass (D.R.) Date of Hearing: 11.04.2019 Date of Pronouncement: 30.05.2019 ORDER Per Sanjay Arora, AM: This is an Appeal by the Assessee agitating the Order by the Commissioner of Income Tax (Appeals), Jammu (‘CIT(A)’ for short) dated 31.03.2017, dismissing the assessee’s appeal contesting his assessment under section 144 of the Income Tax Act, 1961 ('the Act' hereinafter) vide order dated 22.01.2016 for Assessment Year (AY) 2013-14.

2 ITA No. 453/Asr/2017 (AY 2013-14) Lalit Dewan v. Dy. CIT relevant year (on 18.3.2013) for Rs.63 lacs, claiming exemption u/s. 54F (at Rs.56,86,491) on the long-term capital gain (LTCG) arising on the said sale. The same stands denied by the Revenue on the ground that the assessee had, on the date of transfer (18.03.2013), more than one residential house, as under, disentitling him for the said claim:

(a) a flat at 142, Belvedere Towers, DLF Phase II, Gurgaon; (b) a residential quarter at Bohri (Borari), Mumbai; and (c) a residential house at 102, Park View Apartments, New Delhi.

The property at (a) is admitted, being in fact let by the assessee during the relevant year, returning the annual value thereof (Rs.4.31 lacs) to tax. The property at (c), as explained by the ld. counsel for the assessee, Sh. Nanda, is by way of a mistake. The same gets included by the Revenue in the list, i.e., of the residential houses owned by the assessee, only on account of its’ mention, albeit wrongly, in the assessee’s return for the relevant year, i.e., while returning the rental income of the property at (a) above. That is, the mention of the house property at (c), instead of that at (a), was a typographical mistake, further pointing, on enquiry, that the said house property [at (c)] is in fact the residential house of the husband of the lessee, Ms. Sumitra Srinavasan Bakliwal, i.e., of Mr. Atul Bakliwal, for which he would refer to the lease deed in respect of the house property at (a) above (PB pgs. 34-38). The ownership of the property at (b) is again admitted. The same, Sh. Nanda would continue, however, is in a dilapidated condition, so that it cannot be regarded as a residential house, i.e., an inhabitable house. The Revenue disputes this on the basis of the assessee’s wealth-tax returns for assessment years 2010-11 to 2012-13, i.e., the three immediately preceding years, wherein the same is shown as a self-occupied house property. True, Sh. Nanda would asseverate during hearing, the same was self-occupied for those years, but not for the current year.

3 ITA No. 453/Asr/2017 (AY 2013-14) Lalit Dewan v. Dy. CIT The wealth-tax return for the current year values the same, accordingly, as an open piece of land (PB pg. 33), demolishing the structure in April, 2012. This fact has been overlooked by the Revenue, relying on the Inspectors’ report dated 05/1/2016 which was in fact never confronted to the assessee, despite being requested for. The Revenue’s case, on the other hand, is that the assessee had been allowed abundant opportunity; he, in fact, participating in the assessment proceeding, became recalcitrant upon detection of the untruth of his claim, and toward which there is extensive reference in the impugned order, including the remand report dated 30/3/2017.

4 ITA No. 453/Asr/2017 (AY 2013-14) Lalit Dewan v. Dy. CIT return therefore itself disproves the assessee’s claim with regard to the house being in a dilapidated condition as on the date of transfer, so as not to be regarded as a residential house proper. This though raises a legal issue in-as-much as such a house, with/upon repairs, could be made habitable. The contention of the house being dilapidated also militates against the assessee’s claim, again unevidenced – other than the wealth-tax return, of having demolished the said house in April, 2012. There is nothing on record to show that the house was demolished during the current year, which would entail expenditure, and which should be evidenced in the normal course, besides raising the question of the house inhabited by the assessee during the current year; the assessee’s only other house being let out. In fact, Sh. Nanda was specifically questioned during hearing on this as well, i.e., the house occupied by the assessee during the current year, to which he, again, could not furnish any answer. He could even not furnish the date on which the wealth-tax return for the current year (AY 2013-14) was filed. This assumes relevance as if not furnished in the regular course u/s. 14(1), in the absence of any positive material evidencing the claim of demolition, is liable to be regarded as filed only to ‘exhibit’ that the house stands since raised to the ground. The same cannot by itself be regarded as a positive evidence of demolition, particularly in the absence of any corroborative material supporting the assessee’s, who is unable to state as to where, then, he resided during the current year, claim. Then, again, the demolition, i.e., assuming so, could be for the purpose of building a new house at the said land; the assessee having in fact acquired, as stated by Sh. Nanda, more land adjacent to the assessee’s land in family settlement during the following year. That is, is only an interim state, with the assessee being in the process, assuming so, of refurbishing or renovating his house, a normal incident inasmuch as old houses need to be substantially repaired or altered to adapt to the changed needs and

5 ITA No. 453/Asr/2017 (AY 2013-14) Lalit Dewan v. Dy. CIT circumstances. This indeed raises a legal issue, as another dimension of that raised earlier. Coming to the Inspectors’ report, the assessee’s principal grievance, valid in principle, is that the same was not confronted to him. The only implication thereof is that the same cannot therefore be relied upon. We have already opined that even de hors the said report, relied upon by the Revenue, the assessee cannot be said to have proved his case despite abundant opportunity. It is then said that the report, being dated 05/1/2016, could not be relied upon. We have already clarified that the non-confrontation of the said report would only imply that the same cannot be relied upon by the Revenue. Further, if the report states of an inhabitable structure on the said land in 2016 (as the assessment and the impugned order state), how would it help the assessee’s case unless, of course, he shows that the assessee built another structure thereon, which itself would prove the demolition of the previous structure, so that the question that would still survive is of the date of the said demolition. The date/s of investment in the new structure may throw some light in the matter, qua which there is no evidence on record. In this regard the investment on which the exemption u/s. 54F is being claimed itself assumes significance inasmuch it may well be that the same is on this new structure. Where so, whether the same is an extension or a complete new structure would also have a direct bearing – other issues apart, on the assessee’s claim. The Revenue, or even the assesse for that matter, is not required to prove admitted facts; the prime being of the same being a self occupied residential house as at 31.3.2012, i.e., the beginning of the current year, and, in fact, for the past several years. If the structure was not, as contended, inhabitable, which though is contrary to the claim of the same being a self-occupied house property, it would stand to be valued as an open piece of land for the preceding years as well; the only adjustment (in that case) to the said value being the reduction therefrom of the estimated expenditure on the demolition

6 ITA No. 453/Asr/2017 (AY 2013-14) Lalit Dewan v. Dy. CIT of the said uninhabitable structure, which expenditure has not been shown. In fact, if the demolition had taken place before 18/3/2013, as contended, why, one wonders, did the assessee at all raise the issue of the house being in a dilapidated condition, contradicted by his own sworn statement (per the return of wealth, which bears a verification) of the same being his self-occupied house. Further, as afore-noted, how could a house, inhabitable on 31/3/2012, become uninhabitable on 01/4/2012 or the subsequent months?

7 ITA No. 453/Asr/2017 (AY 2013-14) Lalit Dewan v. Dy. CIT manner. Sure, he is to decide the legal issue/s afore-referred as well, i.e., where the same arises in the facts and circumstances of the case. Needless to add, the assessee, on whom the primary burden to prove lies, shall cooperate in the said proceedings. As apparent, we do so only as matter of abundant caution, so as to eschew any miscarriage of justice; the record revealing the assesssee’s wife to be unwell at the relevant time, so that the inference drawn by the Revenue of the assessee becoming recalcitrant subsequently, i.e., upon detection of adverse material, appears unfair. The issue being principally factual, has in any case to be decided on the basis and strength of the evidences, for and against, and not on the basis of presumptions, with the assessee in any case bound to cooperate in the set aside proceedings. We decide accordingly.

By Order