SHRI FREMIOTH SAVIO MENEZES,CARANZALEM, GOA vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 1(1), PANAJI

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ITA 343/PAN/2017Status: DisposedITAT Panaji10 January 2019AY 2013-143 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the delay of four days in the clearance of the cheque was attributable to the banking channel and not the fault of the assessee. Therefore, the technical ground of delay should not be used to deny the exemption.

What were the facts?

The assessee claimed deduction under Section 54EC for investment in REC bonds to offset long-term capital gains. The investment was made on March 8, 2013, which was five days beyond the stipulated six-month period from the agreement to sell dated September 4, 2012.

What were the issues?

Whether a minor delay in investment due to banking channels can lead to the disallowance of exemption under Section 54EC. Whether the principle of natural justice was violated by disallowing the exemption without adequate opportunity.

Which sections of the Income-tax Act were involved?

Section 54EC

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PANAJI BENCH, PANAJI

Before: SHRI SHAMIM YAHYA, AM & SHRI RAM LAL NEGI, JM

For Appellant: Shri Y. V. Raviraj
For Respondent: Shri Y. V. Raviraj
Hearing: 14.11.2018

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI

BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM

ITA No.343/Pan./2017 (Assessment Year: 2013-14) Shri Fremioth Savio Menezes Asst. CIT, Circle 1(1), H. No. 301, A1, Kerant, Vs. Aayakar Bhavan, EDC Complex, Caranzalem, Goa Patto Plaza, Panaji, Goa PAN/GIR No. BGBPM 3399 C (Appellant) : (Respondent) : None Appellant by Respondent by : Shri Y. V. Raviraj Date of Hearing : 14.11.2018 : 14.01.2019 Date of Pronouncement

O R D E R Per Shamim Yahya, A. M.:

This appeal by the assessee is directed against the order of the learned

Commissioner of Income Tax (Appeals)– 2 Panaji, pertaining to assessment year 2013-

14.

2.

The grounds of appeal read as under:

1.

The Assessing Officer and Commissioner of Income Tax (Appeals) were not justified in disallowing exemption u/s. 54EC contending that the investment in REC Bonds is made beyond the stipulated time. 2. The Commissioner of Income Tax (Appeals) has erred in not observing the principal of natural justice in confirming disallowance u/s. 54EC which was disallowed without giving any opportunity of explanation to the assessee. 3. The Assessing Officer and Commissioner of Income Tax (Appeals) have shown disregard to the intent of assessee to pay the amount due within stipulated time. 3. Brief facts of the case are as under:

As per the Assessing Officer (A.O. for short), the assessee earned long term

capital gain (LTCG) of Rs.1,52,36,235/- on transfer of his immovable property. The

assessee claimed deduction u/s. 54EC of Rs.45,00,000/- by showing an investment of the

2 ITA No.343/Pan./2017 said amount in REC bonds. The assessee had transferred his immovable property being

plot of land by executing an agreement to sell on 04.09.2012. It was submitted by the

assessee before the AO as well as during appellate proceedings that the rights in the

property were transferred on execution of agreement to sell on 04.09.2012. As per section

54EC, the assessee gets 6 months' time to invest in the eligible bonds. Accordingly, the

assessee should have invested the proceeds of LTCG in eligible issue of bonds on or

before 03.03.2013. However, the assessee invested the proceeds of LTCG in REC bonds

on 08.03.2013. The assessee admits that the cheques issued to REC for investment in

bonds though were presented to the bank on 04.03.2013 were debited in assessee's bank

accounts on 08.03.2013. Hence, the AO held that the assessee had invested in REC bonds

beyond the permissible time limit for claiming exemption u/s. 54EC of the IT. Act and

accordingly, the AO disallowed the said exemption claimed by the assessee and added to

the total income of the assessee.

4.

Before the ld. CIT(A), it was submitted that the assessee had given the cheque to

the bank on 04.03.2013 but the cheque was cleared on 08.03.2013 and the delay if any

was merely four days and, hence, the same should be condoned. However, the ld.

CIT(A) did not agreed with the assessee’s contention and upheld the A.O.’s action.

5.

Against the above order, the assessee is in appeal before us.

6.

We have heard the ld. Departmental Representative. None appeared on behalf of

the assessee. In our considered opinion, the issues raised can be adjudicated by hearing

the ld. Departmental Representative and perusing the records.

7.

Upon careful consideration, we note that the assessee has duly issued the cheque

for the investment in accordance with the act. The delay of the bank in clearing the

3 ITA No.343/Pan./2017 amount is a meager delay of only four days. This delay is attributable to the banking

channel and, hence, in our considered opinion, adverse inference cannot be drawn against

the assessee on the technical ground of delay of merely four days in clearance of the

cheque. Hence, we set aside the orders of the authorities below and decide the issue in

favour of the assessee.

8.

In the result, this appeal by the assessee is allowed.

Order pronounced by listing the result on the Notice Board of the Bench under Rule 34(4) of the Appellate Tribunal Rules, 1963.

Sd/ Sd/- - RAM LAL NEGI SHAMIM YAHYA JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 14.01.2019 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Panji City concerned; (5) The DR, ITAT, Panji; (6) Guard file.

By Order Roshani, Sr. PS

(Sr. P.S./P.S.) ITAT

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