RAVI PAROOR DAMODARAN,KOZHIKODE vs. ITO, WARD 1(3), KOZHIKODE

Briefly, the facts of the case are that the appellant is an individual. No regular return of income for the assessment year 2004-2005 was filed by the appellant under the provisions of sec.139(1) of the Income- tax Act, 1961 (hereinafter “the Act”). Based on the information that the appellant sold land to the extent of 8.52 acres for a consideration of Rs.42,00,000, by document No.881/1/203 dated 21.11.2003, the Income Tax Officer, Ward 1(3), Calicut (hereinafter “the AO”) formed an opinion that income escaped assessment to tax, and accordingly, issued a notice u/s.148 of the Act on 2nd January, 2007. The appellant complied with the notice u/s.148 of the Act. During the assessment proceedings, . Sri.Ravi Paroor Damodaran. the appellant filed certain information as called for by the AO, claiming that the transaction of sale of land resulted into net loss of Rs.4,94,017 after reducing the cost of indexation of Rs.10,94,017 and after investing a sum of Rs.35,00,000 in the residential property. In support of purchase of residential property, the appellant produced photocopy of memorandum of family settlement prepared in a plain white paper, in terms of which he claims to have purchased the residential property from his wife Smt.Sasikala for a consideration of Rs.25,00,000. The AO passed the assessment order denying the benefit of sec.54 of the Act by bring into tax the capital gains of Rs.31,05,980.

Being aggrieved by the above assessment order, the appellant filed an appeal before the CIT(A), who vide the impugned order, confirmed the action of the AO by holding that the property acquired under the memorandum of family settlement does not amount to purchase of property. The CIT(A) further observed that in the absence of registration under the Indian Registration Act, the family settlement deed is not valid u/s.17 of the Regulation Act.

Being aggrieved, the appellant is in appeal before the Tribunal, in the present appeal. When the appeal was called on, none appeared on behalf of the appellant, despite due service of notice. Therefore, I proceed to dispose of the appeal, after hearing the learned Senior DR.

I heard the learned Senior DR and perused the material available on record. The solitary issue that arises in the present appeal is whether the AO was justified in denying the benefit of deduction u/s.54 of the Act for want of proof for purchase of residential property. It is claimed . Sri.Ravi Paroor Damodaran. that the appellant acquired the residential property from his wife trough a memorandum of family settlement entered with his wife on a plain white paper, which is unregistered. The finding of the CIT(A) that the property acquired through memorandum of family settlement does not amount to purchase of residential property, is in consonance with the settled principles of law. Further, no credence can be given to the theory of the appellant that he actually purchased the residential property. In these circumstances, I do not find any reason to interfere with the orders of the lower authorities in denying the benefit of deduction u/s.54 of the Act. The same is upheld.

In the result, the appeal filed by the assessee stands dismissed.