BHASKARI MADHAVAN,CHENNAI vs. ITO NON CORPORATE WARD-19(4), CHENNAI

At the outset, learned AR for the assessee submitted that appeal filed by the assessee is time barred by 115 days for which necessary petition for condonation of delay along with affidavit explaining reasons for delay has been filed. The AR further submitted that the assessee could not file appeal within the time allowed under the Act, mainly due to lockdown imposed by the Govt. on account of spread of Covid-19 infections and in view of Hon’ble Supreme Court suomotu Writ Petition No.3 of 2020, if the period of delay is covered within the period specified in the order of the Apex Court , then same needs to be condoned in view of specific problem faced by the public on account of Covid-19 pandemic.

Having heard both sides and considered reasons given by the learned AR for the assessee, we find that the Hon’ble Supreme Court in suomotu Writ Petition No.3 of 2020, has extended limitation applicable to all proceedings in respect of courts and tribunals across the country on account of spread of Covid-19 infections w.e.f. 15.03.2020, till further orders and said general exemption has been extended from time to time. We further noted that delay noticed by the Registry pertains to the period of general exemption provided by the Hon'ble Supreme Court extending limitation period applicable for all proceedings before Courts and Tribunals and thus, considering facts and circumstances of the case and also in the interest of natural justice, we condone delay in filing appeal filed by the assessee and admitted for adjudication.

The assessee has raised following grounds of appeal:-

Brief facts of the case are that the assessee is an individual, did not file her return of income for the assessment year 2011-12. As per information available with the department, it was noticed that the assessee had made huge cash deposits into her bank account. Therefore, assessment has been reopened u/s.147 of the Income Tax Act, 1961,for the reason that income chargeable to tax had been escaped assessment.

The assessee carried the matter in appeal before the first appellate authority. Before the learned CIT(A) the assessee, in light of certain judicial precedents, including the decision of the Hon'ble High Court of Madras in the case of CIT Vs. V.Natarajan (2006) 287 ITR 271, contended that if investments made in the name of married daughter, same needs to be allowed as deduction. The learned CIT(A), after considering relevant facts and also by relied upon various decisions, including the decision of co-ordinate Bench of the ITAT., Chennai, in the case of D.Devadoss Vs. ITO in dated 07.04.2016 rejected arguments of the assessee and sustained additions made by the Assessing Officer towards disallowance of deduction claimed u/s.54 of the Act, by holding that investments made in the name of married daughter cannot be considered as investments made for the purpose of claiming deduction u/s.54 of the Income Tax Act, 1961. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us.

The learned A.R for the assessee submitted that the learned CIT(A) not justified in sustaining addition of Rs.16,77,574/- by disallowing deduction claimed under section 54 of the Income Tax Act, 1961, because new property was purchased in the name of appellant’s daughter. The learned A.R for the assessee referring to the decision of the Hon’ble Madras High Court in the case of CIT Vs. V.Natarajan (supra) submitted that the Hon’ble High Court very categorically held that what is required to be seen is that investment of sale consideration received from transfer of property for buying new asset to allow benefit of deduction u/s.54 of the Act, but it is not relevant whether investment is made in assessee’s own name or his daughter’s name. Therefore, the learned AR submitted that deduction claimed by the assessee u/s.54 of the Act should be allowed.

The learned DR, on the other hand, supporting order of the learned CIT(A) submitted that there is no merit in the arguments of the assessee for the reason that when the courts have allowed deduction made in the name of spouse of the assessee, they have considered provisions of section u/s.64 and 64(1A), where income from property is assessed in the hands of the assessee, even if, property was purchased in the name of spouse or minor children. In the present case, the assessee has purchased property in the name of married daughter and argued she was divorced, but to claim deduction property should be purchased either in the name of the assessee or spouse or minor daughter. The Assessing Officer as well as the learned CIT(A) after considering relevant facts has rightly rejected exemption claimed u/s.54 of the Income Tax Act, 1961 and therefore, their orders should be upheld.

We have heard both the parties, perused material available on record and gone through orders of the authorities below. As per provisions of section 54 of the Income Tax Act, 1961, the assessee can claim benefit of deduction, in case, sale consideration received from transfer of original asset was invested in purchase of another residential house property. As