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Income Tax Appellate Tribunal, CHANDIGARH “B” BENCH, CHANDIGARH
Before: SHRI N.K. SAINI, Vice- & SHRI S.S.GODARA, JUDICIALMEMBER
आदेश /O R D E R
PER S.S. GODARA, JUDICIAL MEMBER: This assessee’s appeal for assessment year 2009-10 arises against the Commissioner of Income-tax (Appeals)-43, New Delhi passed in case No.186/2016-17, involving proceedings u/s 144 of the Income Tax Act, 1961; in short ‘the Act’. 2. The assessee pleads the following substantive grounds in the instant appeal:- “1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in sustaining an addition of Rs.2,00,000/- on account of cash deposited in the bank account in utter disregard of the explanations rendered which is arbitrary and unjustified. 2. That the Ld. Commissioner of Income Tax (Appeals) has further erred in not allowing the benefit of deduction u/s Section 54 of the Act while computing long term capital gains resulting in an addition of
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Rs.40,11,896/- which is legally allowable and as such the order passed ins arbitrary and unjustified. 3. That the reason given for not allowing the deduction only because the assessee had not filed the return is not tenable inasmuch as the assessee had made a claim before the Assessing officer and it is the duty of the Assessing officer to arrive at the correct taxable income and as such the order is arbitrary and unjustified. 4. That the assessee has purchased a house at England as well as in India utilizing the entire sale proceeds which was sufficient to allow deduction us 54 of the Act and as such the order passed is arbitrary and unjustified.”
The assessee’s former grievance challenges correctness of the CIT(A)’s action restricting the unexplained involvements addition of Rs.4 lac made in the course of assessment / re-assessment framed on 22.12.2016 to the extent of Rs.2 lac in the lower appellate proceedings. Learned counsel representing the assessee is very fair in not disputing the basic fact of the assessee’s cash deposits in NRO bank account. This taxpayer pleaded before the assessing authority that the said sum involved Rs.5 lac realized from property sale(s) and Rs.2 lac each from sale of household items and cash earlier withdrawn; respectively. There is no quarrel between the parties that the Assessing Officer accepted the first head of Rs.5 lac. He thereafter concluded that the latter two head(s) involving Rs.2 lac each had not been explained by way of cogent supportive material. He therefore invoked sec. 69 of the Act to add the amount of Rs.4 lac relevant to the latter two heads as unexplained cash investment(s). The CIT(A) restricts the impugned addition of Rs.2 lac qua the third and last head of cash earlier withdrawn and re-deposited at the assessee’s behest.
We have given our thoughtful consideration to rival contentions. The assessee’s only grievance qua the instant issue is that both the authorities have erred in declining his corresponding explanation to have withdrawn cash sums earlier followed by re-deposits
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made in the NRO bank account. The Revenue’s case on the other hand is that there is no material on record supporting the assessee’s case investments. We find no reason to express our agreement with either of the two parties’ stand in entirety. The fact remains that assessee is an NRI who had purchased and sold the capital asset(s) in question in the relevant previous year. There is reliable presumption therefore that he must have withdrawn some cash amounts for his corresponding cash requirements. He has not filed on record the withdrawals details suggesting exact figures. We therefore are of the view that larger interest of justice would be made in case the impugned above Rs.2 lac is restricted to Rs.1 lac only in the given facts and circumstances. The assessee gets part relief with a rider that our instant estimation shall not be treated as a precedent. 5. Next comes the later issue of disallowance of assessee’s sec. 54 deduction claim. Relevant caser records comprising of the Assessing Officer’s show cause notice dated 02.12.2016, valuation report dated 30.10.2008 pertaining to the capital asset sold, chartered accountant’s certificate dated 10.12.2008 declaring the assessee to have paid the requisite taxes, copy of photograph, map, purchase documents, bank statement indicating transfer of the amount in issue, loan papers regarding house purchased in London, yet another purchase deed dated 11.11.2008 involving residential house in Mohali Punjab etc. alongwith other relevant particulars of sec. 154 rectification etc.; stand perused. 6. There is no dispute between the parties about the assessee having sold his residential house in Chandigarh on 21.10.208 for Rs.70,27,360/- as against cost of acquisition amounting to Rs.6,18,750/- incurred in January, 1995. He invested an amount of Rs.12,96,000/- for purchasing Mohali residential property on 11.11.2008. There is further no quarrel that he had not filed his return at the first instance regarding
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assessment of capital gains amounting to Rs.4,44,982/-in the impugned assessment year. The Assessing Officer formed reasons to believe in these facts and circumstances that the assessee’s taxable income liable to be assessed had escaped assessment in these circumstances. He issued sec. 148 notice dated 30.03.2016 to this effect. The assessee did not file any return either in response to sec. 148 notice or in consequential re-assessment proceedings. He appears to have filed a computation sheet claiming sec. 54 deduction on account of re- investment of capital gains in residential property. The Assessing Officer quoted hon'ble apex court’s decision in Goetz India Ltd. vs. CIT (2006) 284 ITR 323 (SC) to conclude that the assessee’s deduction claim in absence of revised return or that filed in response to sec. 148 notice; could not be accepted. He therefore disallowed / added the impugned deduction.
The CIT(A) has confirmed the Assessing Officer’s action as under:-
“4.8 It is seen from the report of the A.O. and the facts quoted by the assessee that the claim of deduction U/s 54(F) In the assessee’s case has to be permitted with reference to the fact that no return was field by the assessee. The A.O. has contended that no deduction was eligible to the assessee U/s 54 since no return was field. The A.O. states that the judgement of the Hon'ble Supreme Court in Goetze India Pvt. Ltd. clearly states that the A.O. can entertain any claim for deduction or exemption only though the revised return and not through any other document or letter. In the present case the assessee has not filed any return and therefore the only claim for deduction has been made through the computation submitted to the A.O. The assessee contends that the provisions of section 54 only required investment to be made in residential houses and as an alternative, require amount of capital gained to be submitted in the capital gain account before the due date of return. The assessee’s argument is that since the jurisdictional Punjab & Haryana High Court in the case Jagritikumar Vs CIT has held that for the purpose of deduction U/s 54 the due date referred to sub section 2 of that section has to be read as the date till which late return can be field. If that judgement is taken into account, even the assessee had the time upto 31s t March 2011 before which
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the investment could be made under the capital gains scheme. It was submitted that in fact, the assessee had already invested the amount in a residential property abroad and therefore the deduction was legally eligible to the assessee. 4.9 The basic contention here is that section 54 does not require or mandate filing of return but only mandates the timeline for making the investment in a capital gains account scheme or the residential houses for the purpose of eligibility in that section. This interpretation of the assessee of the section by the assessee is not correct. The clear reading of sub section 2 of section 54 could however suggest otherwise. The sub section is reproduced above for consideration. The relevant extract “…. Such deposit being made in any case into later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit” 4.10 It is seen that the second part of the sub section clearly states that the evidence of deposit in the capital gains account has to be attached with the return filed along with the amount utilized for the purpose of purchase of any residential property. Therefore the above provision becomes illogical if the mandate of filing f return is taken out. Therefore the fact of furnishing of return is mandatory for the purpose of the claim u/s. 4,. It is not the case of the A.O. that a claim by the assessee is not being allowed. The fundamental issue is that the claim for deduction under section 54 can only be made by filing the return. The quantification of that claim has to be made in the return itself and that quantification and eligibility has to be assessed by the A.O. Since the assessee has not filed the return in this case, the issue relating to eligibility to claim u/s. 54 do not arise. The A.O. is correct in holding that deduction u/s 54 is not eligible to the assessee. The AR for the assessee was also given a specific opportunity to furnish any judgment in his favour of the jurisdictional tribunal or high court wherein the claim u/s. 54 had been allowed in the case where no return had been field by the assessee. The council was not able to furnish any judgement in this regard. The appeal therefore fails on this ground and the deduction claimed u/s. 54 is not eligible.” This leaves the assessee aggrieved.
Learned counsel vehemently contends during the course of hearing that both the lower authorities have erred in law as well as on facts in disallowing assessee’s sec. 54 deduction claim despite the fact
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that he satisfies all the relevant contentions regarding re-investment of capital gains in residential properties in London as well as in Mohali (supra). The Revenue’s case on the other hand is that assessee had not filed either any return u/s 139(1) of the Act or in response to sec. 148 proceedings so as to eligible for the impugned deduction.
We have given our thoughtful consideration to rival contentions. We notice that the department has adopted inconsistent stands so far as assessee’s sec. 54 deduction is concerned. The Assessing Officer’s show cause notice dated 02.12.2016 forming part of the case records indicates that he had duly upheld the assessee’s deduction claim of Rs.12,96,000/- as allowable even in absence of return sec. 139 of the Act as well as in response to sec. 148 notice as follows:-
“Sub: Show cause notice for Assessment Year 2009-10 in the case of Sh. Param Paul Singh Gandhi-Reg Please refer to the pending proceedings in your case. 2. In this regard, to is informed that Sh. Aneet Goyal, CA appeared without power of attorney and handed over the calculation regarding LTCG, photocopes of the purchase deed and sale deed in respect of the residential property i.e. #2356, Sector-35C, Chandigarh sold by you and also evidence regarding purchase of residential property (new asset) for total cost of Rs.12,96,000/- at Kharar. As the CA has not filed the POA so far and also did not furnish the evidence regarding the cost of improvement claimed at Rs.9,53,550/- and Rs.7,72,200/- as on 31.03.1995 and 31.03.1998 respectively. As the case is getting barred by time on 31.12.2016, I have no alternative best to decide your case on merits u/s. 144 of the IT Act, 1961 on the basis of documents available with this office. 2. As per computation filed, th8e property is sold at Rs.70,27,360/- on which LTCG is calculated at Rs.49,35,830/- and net LTCG is shown at Rs.7,71,530/- against which tax of Rs.1,20,050/- is claimed to be paid on 09.12.2008 as advance tax and in support of this photcopies of the challan is also filed but no evidence regarding filing of return for Assessment Year 2009-10 on due date has been field. 3. Perusal of the documents on record reveals that you alongwith your mother Smt. Motia Ranio purchased, the said property i.e. 2356/35C, Chandigarh for total cost of Rs.6,18,750/- on 20.01.1995 (consideration money Rs.5,50,000 + Stamp Duty Rs.68,750/-) as per evidence placed on record. Therefore, your share of 50% comes at Rs.3,09,375/- as against 6,38,750/- claimed in the computation chart filed. There is no evidence on record which could prove, the cost of improvement at Rs.9,53,550/- and Rs.7,72,200?- as on 31.03.1995
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& 31.03.1998. Therefore, this expenditure is not being allowed for want of evidence. 4. The expenditure of Rs.13,20,000/- is claimed from the LTCG of Rs.49,35,830/- but evidence of Rs.12,96,000/- is only available on record i.e. sale deed of new asset. Hence, the benefit of Rs.12,96,000/- will only be allowed. In view of the above facts, the LTCG is recalculated as under at Rs.50,36,162/- which will be added to your income and penalty proceedings u/s. 271(1)(c) will also be initiated for concealing and furnishing inaccurate particulars of income. Sale consideration Rs.70,27,3360/- Purchase cost/indexed cost (25.01.1995) Rs. 6,95,198/- Rs.3,09,375 x 582 63,32,162/- 259 Exemption u/s 54 Rs.12,96,000 allowable Long Term Capital Gain Rs.50,36,162/-
As per statement of bank account No.04093000250014 placed on records, you were maintaining above said bank account with Punjab & Sind Bank, Sector- 47D, Chandigarh. There is cash deposit of Rs.9 lac on 25.11.2008. You are requested to give the source of this amount with evidence, otherwise the same will be added to our income per section 69 of the IT Act, 1961 and penalty proceedings u/s. 271(1)(c) will also be initiated for concealing and furnishing inaccurate particulars of income.”
Learned Departmental Representative fails to rebut this clinching factual position. We observe in these peculiar facts that the Assessing Officer has accepted assessee’s sec. 54 deduction on the one hand regarding Mohali property but simultaneously held that the taxpayer had not filed any return either u/s 139 or in sec. 148 proceedings. We are of the view in these peculiar facts and circumstances that said inconsistency does not deserve to be concurred with. Hon'ble’ apex court’s decision in Goetz India Ltd. (supra) makes it clear that this judicial precedent does not impinge upon appellate authorities’ jurisdiction to entertain a claim action in absence of revised return in Income Tax law. The hon'ble’ Madras High Court’s decision in CIT vs. Indian Express (Madurai) Pvt Ltd. 140 ITR 705 (Mad) also held that a tax litigation cannot be treated as a “lis” between two parties since the Assessing Officer’s job is to arrive at a correct taxable income.
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We conclude in these facts and circumstances that the learned assessing authority needs to re-consider the impugned deduction claim u/s 54 of the Act afresh on merits in accordance with law after affording adequate opportunity of hearing to the taxpayer. We make it clear that assessee shall be at liberty to file on record all his evidence in support in consequential proceedings. This latter substantive ground is accepted for statistical purposes. 11. This assessee’s appeal is partly allowed for statistical purposes in above terms. Order pronounced in the open Court on 04/06/2019. Sd/- Sd/- [N.K.SAINI] [S.S.GODARA] VICE PRESIDENT JUDICIAL MEMBER
च�डीगढ़ DATED: 04/06/2019 *Dkp आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-Shri Param Paul Singh, House No.2234, Sector-45C, Chandigarh 2. ��यथ�/Respondent-DCIT, (International Taxation), Chandigarh 3. संबं�धत आयकर आयु�त च�डीगढ़/ Concerned CIT Chandigarh 4. आयकर आयु�त- अपील च�डीगढ़/ CIT (A) Chandigarh 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, च�डीगढ़ / DR, ITAT, Chandigarh 6. गाड� फाइल / Guard file. By order/आदेश से,
सहायक पंजीकार आयकर अपील�य अ�धकरण, ।