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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
Before: Shri R.K. Panda & Shri Laliet Kumar
IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad Before Shri R.K. Panda, Accountant Member AND Shri Laliet Kumar, Judicial Member ITA No.262/Hyd/2020 Assessment Year: 2017-18 Balaraj Guttamidi, Vs. The Income Tax Officer, Ward – 8(1), R/o. Rangareddy. Hyderabad. PAN : BTLPG4930J. (Appellant) (Respondent) Assessee by: Shri T. Chaitanya Kumar. Revenue by: Shri Kumar Adithya. Date of hearing: 20.12.2022 Date of pronouncement: 21.12.2022
O R D E R PER LALIET KUMAR, J.M.
The appeal of the assessee for A.Y. 2017-18 arises from the order of Commissioner of Income Tax (Appeals) – 2, Hyderabad dt.06.02.2020 invoking proceedings under section 143(3) of the Income Tax Act, 1961 (in short, “the Act”).
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The grounds raised by the assessee reads as under :
“1. The Order of the Hon'ble Commissioner of Income Tax, in so far as it is against the appellant, is contrary to the facts of the case and provisions of law. 2. The Hon'ble Commissioner of Income Tax is not justified in sustaining the disallowance of Rs 46,20,000/- exemption U/ s.54F of the Income Tax Act. 3. The Hon'ble Commissioner of Income Tax is not justified in holding that the appellant is not entitled to the deduction as the house constructed stands in the name of the appellant's son. 4. The Hon'ble Commissioner of Income Tax should have appreciated that the appellant did show the investment as house in his Balance Sheet and that his intention is to acquire a house for living, though in the name of his son. 5. The Hon'ble Commissioner of Income Tax should have appreciated that the object of the provision to Section 54 and 54F is to promote investment in residential property and that the appellant has complied with that condition. Therefore, the Hon'ble Commissioner of Income Tax should have directed the Assessing Officer to allow the exemption provided in Section 54F of the Income Tax Act. 6. The order of the learned Commissioner of Income-Tax (Appeal) in confirming the action of the Assessing Officer in determining the total income at Rs 50,19,867/-against the income admitted of Rs 3,99,870/-. 7. The learned CIT(A) erred in confirming the action of the Assessing in levy of interest u/s. 234A of Rs 78,600/-and 234B of Rs 3,24,225/- of the I.T.Act.”
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2.1 Subsequently, assessee had filed two additional grounds which read as under :
“1. The Assessing officer erred in expanding the scope of assessment by converting limited scrutiny to complete scrutiny while completing the assessment u/s 143(3)on of the I.T. Act and the learned Commissioner Of Income Tax(Appeals) erred in confirming the action of assessing officer. 2. The Assessing officer erred in making addition of Rs50,19,870 on account of capital gain and the learned Commissioner Of Income Tax(Appeals) erred in confirming the action of assessing officer.”
Facts of the case, in brief, are that assessee is an individual who filed his return of income for A.Y.2017-18 on 30.03.2018 admitting total income of Rs.3,99,870/-. The case was selected for scrutiny and accordingly notice u/s 143(2) of the Act dt.14.08.2018 was issued requiring the assessee to furnish the details. After verification of the information submitted by the assessee, Assessing Officer had completed the assessment u/s 143(3) of the Act on 23.12.2019 interalia by making an addition of Rs.46,20,000/- towards capital gain.
Feeling aggrieved with the order of Assessing Officer, assessee carried the matter before ld.CIT(A), who dismissed the appeal of assessee.
Feeling aggrieved with the order of ld.CIT(A), assessee is now in appeal before us.
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Before us, ld. AR submitted that while filing the appeal, assessee had inadvertently omitted to raise a ground against the action of the Assessing Officer in expanding the scope of scrutiny assessment and that the said ground being a legal ground, all the facts relating to the issue are borne out of the order of assessment and prayed to admit the same. Ld. AR further submitted that the Central Board of Direct Taxes (CBDT) vide its Instruction no 05/2016 dt 14th July 2016 had clarified and laid down Standard Operating Procedure for handling cases under limited scrutiny which were selected through CASS Cycle 2015. Ld.AR further relied on the following decisions in support of his case :
• Shri Sagar Uttam Murhe Vs. DCIT, Circle – 8, Pune in ITA Nos. 1615 & 1329/Pun/2018. • CIT Vs. Padmavathi in Tax Case Appeal No.350 of 2020 of Hon’ble Madras High Court.
On the other hand, ld. DR highly opposed for admission of additional grounds of appeal and further averred that there is a jurisdictional High Court’s order against the assessee on the subject matter and further supported the order of lower authorities. Ld.DR further relied on the following decisions in support of his case :
• Ganta Vijaya Lakshmi Vs. ITO, Ward – 1(3), Vijayawada reported in (2013) 37 taxmann.com 263 (Visakhapatnam Trib).
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• 2. Ganta Vijaya Lakshmi Vs. ITO, Ward – 1(3), Vijayawada reported in (2015) 54 taxmann.com 301 (A.P. High Court).
• 3. Prakash Vs. ITO, Ward No.1(5) reported in (2008) 173 Taxman 311 (Bombay High Court.)
We have heard the rival submissions and perused the material on record. In the present case, Assessing Officer had selected the case of the assessee on account of cash deposits Rs.26,35,000/- in his bank account during demonetization period. The assessee during the assessment proceedings had explained that he had sold the agricultural land for a consideration of Rs.75,62,500/- during the A.Y. 2017-18 and he provided the details of payment received by him through cheques and a sum of Rs.25,62,500/- in cash after taking back the dishonoured cheque and further submitted that the assessee had deposited an amount of Rs.26,35,000/- in his bank account at Bank of Baroda. After receiving the scrutiny notice, the assessee had explained the cash deposits and had also claimed deduction under section 54F in response to the notice received by him. The Assessing Officer had denied the claim of assessee under section 54F as the assessee had purchased the property in the name of his son. The assessee had filed computation of income along with his return of income wherein the assessee has not claimed the deduction under section 54F of the Act as consideration received by him was on account of sale of agricultural land. In the assessment proceedings, the
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assessee claimed the exemption under section 54F of the Act and had submitted that the consideration received by him was on account of sale of agricultural land and was invested in purchasing the flat in the name of his son. In other words, the assessee had accepted that the agricultural land was a capital asset and he got capital gain on account of sale of agricultural land for an amount of Rs.46,20,000/-.
Before us, ld. AR sought for admission for additional grounds stating that the same are legal grounds which are raised against the action of Assessing Officer in expanding the scope of scrutiny assessment. On perusal of the order of Assessing Officer, we found that Assessing Officer had restricted the case to limited scrutiny under CASS for verification of cash deposits into the bank account of assessee and the other issue of claim of deduction by the assessee u/s 54F was interlinked with the core issue. While doing so, Assessing Officer had sought various details besides the source for the cash deposits. The issue in the present appeal is with respect to addition of Rs.46,20,000/- on account of capital gains from sale of immovable property. In our view, the Assessing Officer was within his right to examine the issue before us and we do not find any fault on the part of Assessing Officer to deny the deduction of Rs.46,20,000/- in the case selected for limited scrutiny.
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On perusal of the order of ld.CIT(A), it is clear that the reasoning given by the ld.CIT(A) is in line of the law laid down by the jurisdictional High Court in the case of Ganta Vijaya Lakshmi Vs. ITO, Ward – 1(3), Vijayawada reported in (2015) 54 taxmann.com 301 (A.P. High Court). For the completeness of the record, we are reproducing the relevant finding of the ld.CIT(A) mentioned at Para 6 to the following effect :
“6. Decision: In the instant case; the appellant had deposited cash of- Rs.26,35,000/- in his bank account and on questioning regarding the sources, the appellant stated that he had sold immovable property for a consideration of Rs.75,62,500/- out of which an amount of Rs.25,62,500/- was received in cash. The appellant further stated that he had purchased an open plot and constructed a house on it and furnished copies of relevant sale deeds and bank statements. On perusal of the same, it was seen by the AO that the appellant had shown the total amount of Rs.75,62,500/- as sale consideration and claimed deduction u/s 54F amounting to Rs.46,20,000/-. It was also seen by the AO that the appellant had purchased the open plot in his son's name and made construction thereof of G plus 3 floors plus pent house on the said land. The Assessing Officer noted that the appellant to avail deduction u/s. 54F has to invest/purchase in its own name and therefore rejected the claim of deduction u/s 54F accordingly. The appellant has filed an appeal by relying on various decisions that as the appellant has bought the property in name of son, it is eligible for deduction u/s. 54F and relied on the judgment in the case of Smt. Appala Kondamma of Hon'ble ITAT Vishakhapatnam Bench in ITA No.29486295/Viz/ 2016. In that case, deduction u/s. 54F was allowed to that appellant, as he had invested in the name of wife, by relying on the decision of jurisdictional Hon'ble High Court case of Late Mir Gulam Ali Khan Vs CIT and various other decisions. The decisions relied upon by the appellant of M/ s. B. Surendra Choudary of Hon'ble Telangana and AP High Court and Kamal Wahal of Hon'ble Delhi High Court pertain to the investment in the name of wife and further the case law of N. Ram Kumar Vs. ACIT of the jurisdictional Hon'ble ITAT deals with the issue of minor. In the present case, the investment is not made in
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the name of wife or minor son or daughter but in the name of adult son (as .the income of the minor attracts clubbing provision and also the execution of the agreement cannot be done by minor. The decision of the jurisdictional High Court in the case of Late Gulam Ali Khan was rendered on 17.12.1984 and in that case it was seen. that appellant had entered into a transaction after selling the house for purchasing another house and subsequently the legal representative completed the transaction within!! one year from the death of the deceased appellant. ThiS decision thus has been rendered on the peculiar facts that the person died before completing the transaction and the legal heirs thus completed the purchase of the property but the intent of the appellant was clear as he had entered into the transaction before 4iis death and thus the Hon'ble Court decided the issue in the favour of the late appellant by interpreting the larger import of the deduction and the wider term of "assessee" to include family members. In the present case, the appellant has not invested in the name of wife, therefore the decisions cited by the appellant are not applicable and also in the case of Kamal Wah.al- 351 ITR 004 the property was bought in the joint name, which is not the case' of the appellant. It is very clear under the Income Tax Act that all persons are independent assessees, as defined in section 2(7) of the Income Tax Act, 1961 and each others liability or deductions cannot be claimed by either one as part of the family. There is no concept of the word family- with regard to assessee's taxability under -the Income Tax Act. The income is taxed specifically 'under the hand of each assessee as per the scheme of the Act. Therefore, unless there are is peculiar circumstances, as has been observed in the case of late Mir Gulm Ali Khan, 'the Income Tax Act does not allow any room for wider interpretation The decisi8n in the case of Prakash Vs ITO rendered by the Hon'ble Bombay High Court on 12th September, 2008 in ITA No.15/2002 by considering the proposition laid down by the Hon’ble Apex Court is as under …………………………………….. ……………………………………. The decision of the Hon'ble High Court in the case of Mir Gulam Ali Khan has been distinguished based on facts and also it was rendered for the purposes of section 54 of the Act and not section 54F of the Act and was under peculiar circumstances of the case of the demise of the appellant who had invested in the house but passed away before that and the legal heirs had registered it in their name, in the present circumstances there is no such peculiarity. Here the intent is very clear that the investment is made in the name of the son and therefore the ownership of the new asset
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vests with- the son and not with the appellant. The transfer of this new asset would be taxable in the hands of the son and not the appellant as per the Income Tax Act and thus the same cannot be called as the investment by the appellant. The interpretation of investment in family members would also render the proviso (i)(b) of Section 54F infructuous as the .same provides for the taxability of the new asset in the hands of the person claiming such deduction, if transferred before the expiry of the provided periods Thus, the interpretation to apply for asset in the name of son!! as eligible for deduction u/s 54F would not be proper.. In view of the discussions above, the Assessing Officer was correct in disallowing the claim u/s. 54F accordingly.”
From the perusal of the order of ld.CIT(A) and the grounds raised before him, it is clear that the issue raised before the ld.CIT(A) was restricted to the deduction claimed at Rs.46,20,000/- and the assessee has not stated that the agricultural land sold by the assessee is not a capital asset within the meaning of Income Tax Act. In our view, the order of ld.CIT(A) is in accordance with the authoritative pronouncement of the Hon’ble jurisdictional High Court in the case of Ganta Vijaya Lakshmi Vs. ITO, Ward – 1(3), Vijayawada (supra) and therefore, we do not find any reason to interfere with the order of ld.CIT(A). Accordingly, the appeal of the assessee is dismissed.
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In the result, the appeal of assessee is dismissed.
Order pronounced in the Open Court on 21st December, 2022.
Sd/- Sd/- (RAMA KANTA PANDA) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, dated 21st December, 2022. TYNM/sps
Copy to: S.No Addresses 1 Balaraj Guttamidi, Rangareddy, C/o. T. Chaitanya Kumar, Advocate, Flat No.102, Gowri Apartments, URDU Lane, Himayatnagar, Hyderabad. 2 Income Tax Officer, Ward – 8(1), Hyderabad. 3 Commissioner of Income Tax (Appeals) – 2, Hyderabad. 4 Pr.CIT – 2, Hyderabad. 5 DR, ITAT Hyderabad Benches 6 Guard File By Order