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Income Tax Appellate Tribunal, DELHI BENCH: ‘D’ NEW DELHI
Before: MS SUCHITRA KAMBLE & SHRI PRASHANT MAHARISHISmt. Chandra Prabha
PER SUCHITRA KAMBLE, JM
This appeal is filed by the assessee against the order of the Commissioner of Income Tax [Appeals]-Muzaffarnagar dated 09.03.2016 under section 147/143(3) of the Income Tax Act, 1961 for Assessment Year 2007-08.
The Grounds of appeal
are as under:- “On the facts and in the circumstances of the case and in law the Ld CIT(A) erred in confirming the following actions of the Assessing Officer:
1. In initiating the proceedings u/s 147 of the Income Tax Act, 1961 (the Act) without there being any valid reason to believe that income had escaped assessment;
2. In passing the order u/s 147/143(3) of the Act without disposing of the objections to reopening of the assessment.
3. In not allowing deduction on account of investment in eligible securities u/s 54EC of the Act.
All the above actions being arbitrary, erroneous, misconceived and unjust must be quashed with direction for relief.”
In this case return was filed on 30.01.2008 disclosing income of Rs.1,74,082/-. During the course of assessment proceeding for A.Y. 2008-09, the assessee declared Long Term Capital Gain of Rs.72,12,675/- and claimed deduction u/s 54EC of the Income Tax Act of Rs.50,00,000/- and u/s 54F of Rs.24,61,750/-. The Assessing Officer noticed that the said property was sold on 06.03.2007 and the deduction claimed u/s 54EC & 54F are not allowable. Accordingly, assessment for the A.Y. 2008-09 was made on protective basis. To make the assessment on substantive basis in A.Y. 2007-08 the case was reopened u/s 148 as Long Term Capital Gain of Rs.72,12,675/- had arisen to the assessee in A.Y. 2007-08, and which was not declared by him in his return of income for the A.Y. 2007-08. Hence, there was reason to believe that income of Rs.72,12,675/- had escaped assessment and accordingly notice u/s 148 was issued on 02.01.2012. Notice u/s 148 was issued on 02.01.2012. Notice u/s 143(2) was issued on 21.09.2012 and notice u/s 142(1) along with questionnaire was issued on 16.10.2012. The Charted Attorney attended the proceedings from time to time and furnished reply before the Assessing Officer. The Assessing Officer noted that the assessee herself accepted the land to be capital asset during the assessment proceeding for the A.Y. 2008-09 and also claimed deductions accordingly. From the perusal of the evidences the Assessing Officer noted that the said land is a capital asset and since the transaction took place in 06.03.2007. The said proceedings under the charitable under the head Long Term Capital Gain in A.Y. 2007-08 itself.
Being aggrieved by the assessment order, the assessee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The Ld. AR submitted that the share of the assessee in the property which was sold is 47.96% and the rest of the 52.04% belongs to her father Shri Jai Pal Singh. The land was sold on 06.03.2007. The assessee purchased REC bonds u/s 54EC of Rs.50,00,000/- on 10.10.2007 though as per their procedure they had issued the same on 31.10.2007 i.e. the last day of the month. The Ld. AR further submitted that only 57.96% of the capital gain is to be treated in the hands of the assessee. Section 54EC is to be considered for allowing it since as per the Assessing Officer the same was invoked the investment in bonds after the limitation of six months as required u/s 54EC(1). The Ld. AR submitted that father of the assessee transferred her share of money to bank account on 16.05.2007 and also gifted a sum of Rs.38,83,728/- on the same date. The Ld. AR submitted that unless the money transacted in the transfer of the asset reached her, the assessee could not be assumed to have the capacity to purchase the bonds. The facts about the property in these case are: a) Property sold on - 06.03.2007 b) Money credited in the assessee’s account - 16.05.2007 c) Six month period in terms of section 54EC(1) expired on - 06.09.2007 d) REC bonds purchased on - 10.10.2007
The Ld. AR further submitted that the provision of Section 54EC need to be construed liberally and hence the fact that the assessee even after transfer did not have the benefit of the money until 16.05.2007 needs to be appreciated and hence period of limitation of six months should be taken as running from this date i.e. 16.05.2007 and so the bonds have been purchased within limitation.
The Ld. DR submitted that the time period for investment given under the provisions of section 54EC are mandatory and cannot be condoned by any authority of law. The Assessing Officer as well as CIT(A) has rightly made this addition as the assessee has not disclosed this transaction well within time period for A.Y. 2007-08 but claimed it subsequently.
We have heard both the parties and perused all the relevant materials available on record. Ground Nos. 1 and 2 are not pressed by the Ld. AR during the time of hearing, hence, the same are dismissed. As regards to Ground No. 3, it is pertinent to note that u/s 54EC of the Income Tax Act is a mandatory statutory period prescribed by the legislation that within a period of six months after the date of such transfer of property. In the present case, the assessee admitted that there is a delay of 4 days if the period of investment is calculated from the end of sixth month after the date of such transfer. The reason given by the Ld. AR/assessee though appears to be genuine, the mandatory period cannot allow the assessee to get the benefit of Section 54EC. Thus, the assessment order as well as CIT(A) has properly followed this statutory provisions u/s 54EC of the Act. There is no need to interfere with the findings of the CIT(A). Hence, the appeal of the assessee is dismissed.