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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SHRI WASEEM AHMED&
IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD [CONDUCTED THROUGH VIRTUAL AT AHMEDABAD] BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & Ms. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. No. 385/Ahd/2020 (Assessment Year: 2010-11) Shri Paresh Arvindbhai Patel Vs. PCIT L/h. of Late Shri Arvindbhai Vadodara-1, Aayakar Bhavan, 2nd Floorm Narsinhbhai Patel, Soniwadi Khadki, AT & Post Bhayali, Annexe Building, Race Bhayali, Vadodara-391410 Course, Vadodara [PAN No.AUTPP2873M] (Appellant) .. (Respondent) Assessee by : Shri Tushar Hemani, SR. Adv., with Shri Parimalsinh Parmar, A.R. Revenue by : Shri Ajay Pratap Singh, CIT DR Date of Hearing 27.01.2022 Date of Pronouncement 13.04.2022 O R D E R PER Ms. MADHUMITA ROY - JM:
The instant appeal filed by the assessee is directed against the order dated 22.04.2020 passed by the Principal Commissioner of Income Tax, Vadodara-1, Vadodara under section 263 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for A.Y. 2010-11.
We have heard the rival submissions made by the respective parties and we have also perused the relevant materials available on record.
In the case in hand the assessee has sold an immovable property on 04.11.2009 i.e. during the F.Y. 2009-10. No return of income, however, was filed for the said A.Y. 2010-11. Thus, under Section 147 of the Act the
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case was reopened and the same was finalized on 16.12.2017 on total income at Rs. NIL. The said order dated 16.12.2017 passed under Section 143(3) r.w.s. 147 of the Income Tax Act, 1961 for A.Y. 2010-11 was found to be erroneous and prejudicial to the interest of the Revenue for the following reason as reflecting from the notice under Section 263 dated 24.102.2020 issued under the signature of the PCIT, Vadodara-1, Vadodara:
“ With reference to the assessment order u/s. 143(3) r.w.s. 147 of the I-T Act dated 16.12.2017 for A.Y. 2010-11, it is to be noted that the same is erroneous and prejudicial to the interest of revenue on account of the following:- On the verification of case records, it is seen that during the year under consideration the assessee had capital gain of Rs.1,03,06,987/- and availed exemption u/s. 54B against this capital gain income by declaring purchases of properties vauing at Rs.1,06,76,270/-. The assessee sold his property on 04/11/2009 and purchased seven properties between July 2010 and January 2012. Out of these seven properties, three properties valuing at Rs.23,07,260/- were said to be purchased before the due date of filing of return of income for A.Y. 2010-11 and remaining four properties amounting to Rs.64,47,347/- were said to be purchased after 31/07/2010. As stipulated in Section 54B of the Act, the amount was firstly required to be deposited in the Capital Gain account and thereafter payment was to be made from such capital gain account for availing the exemption, however, details of deposit in capital gain account are not available on record. Besides, it is also noticed that the assessee had paid cash of Rs.38,09,810/- on purchase of land after 31/07/2010 and also availed exemption u/s. 54B of the Act which was not in accordance Math the provision of the Act as it indicated that the amount of cash was not out of capital gain. This has resulted in under assessment of long term capital gain (LTCG) of Rs.64,47,347/- and resultant short levy of tax of Rs.36,52,446/-. In view of above, you are being granted an opportunity ff being heard and to show cause as to why the aforesaid assessment made by the Assessing Officer for A.Y. 2010-11 should not be set-aside with a direction d make fresh assessment in accordance with the provisions of law in this regard. For this purpose, you may appear before the undersigned, in person or trough your authorized representative or file written submission on 03.03.2020 at 11:30 A.M./P.M. In case of non compliance, the matter will be on merits as per material available on records.”
In response to the said notice the assessee submitted the following:-
ITA No. 385/Ahd/2020 Shri Paresh Arvindbhai Patel vs. PCIT Asst.Year –2010-11 - 3 - “In the above case, assessee is an agriculturist by born having agriculture land from his forefather and family and doing agriculture activities on the land since being adult and having only agriculture income as his main income to run his day to day life. In the given case, assessee had sold his property on 04/11/2009 and to claim exemption u/s. 54B of the Act purchased seven properties as mentioned earlier during the period between July, 2010 to January, 2012 which is well in time & as per the guidelines of Section 54B of the Income tax. Act, i.e., Maximum time limit available to him in his case as per the Bare Act reading of Section 54B is 31/03/2012 which is maximum time limit as per section 139 of the Act. Now in the concern it is mentioned in your notice that he had purchased properties worth Rs.23,07,260/- before the due date of filing of return of income for A.Y. 2010-11 which is due date as per section 139(1) of the Act and purchased properties amounting to Rs.64,47,347/- between July, 2010 to January, 2012, which are well before due date of filing of income tax return as per section 139(4) of the Act which in our case will be 31/03/2012. The Bare Act of section 54B of the Income tax Act very clearly mention the amount to be invested in new properties to claim exemption is the before the due date for Income tax return as per section 139 and section 139 is main section which include from 139(1) and 139(4) and all the other subsection comes under section 139. The same view had being considered by Supreme Court in the case of Xavier J. Pulikkal Vs. Deputy Commissioner of Income tax in Civil appeal no. 13849 of 2015. [2016] 73 taxmann.com 34 (SC) dated 30 November, 2015. "In the concerned case, Supreme Court considered the due date for having new investment in the properties will be due date as per Section 139(4) which itself included in section 139 of Income tax Act, fact of which are similar so the facts in our case."”
In support of his case the assessee relied upon the judgment passed by the Coordinate Bench in the cases of (i) Sanjay K. Rana vs. Income Tax Officer, Ward-7(1), Ahmedabad in ITA No. 996/Ahd/2014 for A.Y. 2010-11 (ii) Nandkishor Ramanlal Parikh-HUF vs. ITO, Ward 5(2)(3), Ahmedabad in ITA No. 490/Ahd/2017 for a.Y. 2013-14 (iii) Ashokkumar Kapasiwala vs. ITO, Ward-7(1), Surat in ITA No. 2692/Ahd/2014 for A.Y. 2008-09
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(iv) The Commissioner of Income Tax vs. Shri Ramchandra Rao in ITA no. 47 of 2014 c/w. ITA No. 46 of 2014
So far as the purchase of properties and having payment of the same amount in cash of Rs. 38,09,810/- the assessee submitted the following: “The assessee is agriculturist by born and having only/agriculture income since so many years. He had not filed any income tax return before the above subject return under consideration. He had withdrawn sizable amount from his bank accounts on various dates in which sale proceeds of the land sold being received during the period and from such withdrawal of the amount and out of past saving and cash held by him, sum of which is nearer to of Rs.38 lacs as mentioned by you, utilized for the purchase of properties,”
The Ld. PCIT while dealing with the case made out by the assessee the observation as follows: “A bare reading of section 54B clearly shows that the assessee is entitled to exemption in case he/she purchases agricultural land within a period of two years after the sale of the capital asset. However, to elaborate if we take section 54, sub- clause (2) of ; section 54 says that the unutilized portion of the amount, of capital gain [not utilized before the date of furnishing the return of income under section 139] which is otherwise liable for capital gain tax shall be deposited in the capital gain account scheme within the period of due dat for filing return of income under section 139(1), to claim the exemption u/s 54. Section 54B(2) speaks of two conditions for availing deduction under section 54B(1), Firstly, the assessee has to utilise the capital gain in purchase of agricultural land before the date of furnishing of return of income under section 139 which encompasses sub-sections (1), (4) and (5). Secondly, if it was not done so, it has to be deposited in a Capital Gain Account Scheme before the due date of furnishing of return of income as provided under section 139(1). In the case under consideration, the assessee sold his property on 04/11/2009 and purchased seven properties between July 2010 and January 2012. Out of these seven properties, three properties valuing at were said to be purchased before the due date of filing of return of income for A.Y. 2010-11 u/s. 139(1) (i.e., 31/07/2010) and remaining four properties were said to be purchased after 31/07/2010. As stipulated in Section 54B of the Act, the amount was firstly required to be deposited in the Capital Gain account and thereafter payment was to be made from such capital gain account for availing the exemption, however, details of deposit in capital gain account are not available on record. If the catena of legal principles is applied to the facts of the instant case, it can be seen that till the due date of filing of return of income by the assessee for the
ITA No. 385/Ahd/2020 Shri Paresh Arvindbhai Patel vs. PCIT Asst.Year –2010-11 - 5 - impugned assessment year u/s. 139(1) of the Act, the entire capital gain had not been utilized for purchase of new asset. That being the case, the assessee was required to deposit the unutilized capital gain in Capital Gain Account Scheme within the due date of filing of return of income under section 139(1). Thus, prima facie, the conditions of section 54B(2) have not been complied in the instant case.”
Further that as regards the cash amount paid by the assessee to the tune of Rs. 38,09,810/- on purchase of land after 31.07.2010 the Ld. PCIT observed as follows: “It has been submitted by the assessee that he had withdrawn sizable amount from his bank accounts on various dates in which sale proceeds of the land sold being received during the period and from such withdrawal of the amount and out of past saving and cash held by him, sum of which is nearer to Rs.38 lacs, utilized for the purchase of properties. In view of the clear words used in Section 54B(2) of the Act, it can be seen that the Act compels the assessee to deposit the unutilized amount in the prescribed scheme, therefore, this submission of the assessee is not acceptable since the assessee fails to comply with the provision of the Act and therefore, exemption availed by the assessee in this regard was required to be disallowed by the Assessing Officer which remained to be done. Accordingly, A.O. is directed to decide this issue afresh after conducting necessary inquiries, verification/ examination of the records, keeping in view the relevant provisions of the Act and also after giving the assessee an opportunity of being heard.” 7. We have further perused the order passed by the ITO dated 16.12.2017 under Section 143(3) r.w.s. 147 of the Act where no discussion howsoever in regard to the issue involved is forthcoming. After careful consideration of the entire aspect of the matter by the Ld. CIT(A) as it is evident from the order itself has came to a finding that compliance of provision laid down under Section 54B has not been made by the assessee. Under Section 54B of the Act the amount was firstly required to be deposited in the capital gain account and thereafter payment was to be made from such capital gain account for availing the exemption. No detail of deposit in the capital gain account was made available either before the Revenue or before us by the appellant. Whereas the assessee was required
ITA No. 385/Ahd/2020 Shri Paresh Arvindbhai Patel vs. PCIT Asst.Year –2010-11 - 6 - to deposit the unutilized capital gain in capital gain account scheme within the due date of filing of the return of income under Section 139(1) of the Act. Whereas the record reveals that the assessee had paid cash of Rs. 38,09,810/- on purchase of land after 31.07.2010 and further availed exemption under Section 54B of the Act. These two are contradictory with each other since the amount of cash was not out of the capital gain account.
In this regard, the Ld. PCIT has relied upon the judgment passed by the Hon’ble Madras High Court in the case of K. A. Ramaswamy Chettiar, reported in 220 ITR 657 and the judgment passed by the Hon’ble Allahabad High Court in the case of Swarup Vegetable Products vs. CIT, reported in (1990) 187 ITR 412 (All) which is also found to be proper and relevant to the issue involved before us.
We do not find any iota of evidence submitted by the assessee before the Revenue during the reopening proceeding under Section 147 of the Act in regard to the capital gain account scheme in respect of the several transactions entered into by the assessee both for sale and purchase. Thus, we do not find any enquiry conducted by the concerned ITO in this regard which could be a solid foundation of the opinion made by the PCIT against the order passed by the ITO as erroneous and prejudicial to the interest of the Revenue. It is expected that the ITO would make an enquiry of a particular item of income in the absence of which in the facts and circumstances of the case in our considered opinion the Senior Revenue Officer as the PCIT has the jurisdiction to interfere with the matter under Section 263 of the Act on a prima facie finding of the order as passed by the ITO is erroneous and prejudicial to the interest of Revenue. We, therefore,
ITA No. 385/Ahd/2020 Shri Paresh Arvindbhai Patel vs. PCIT Asst.Year –2010-11 - 7 - do not find any reason to interfere in the order passed by the Ld. CIT(A) in exercising the powers conferred by Section 263 of the Act in setting aside the issue with the direction upon the AO to frame an assessment afresh upon conducting as proper enquiries / verification of the above referred issues and to pass orders which in our considered opinion is just and proper so as to warrant interference. Hence, we confirm the impugned order passed by the Ld. PCIT.
In the result, the appeal preferred by the assessee is dismissed. This Order pronounced in Open Court on 13/04/2022
Sd/- Sd Sd/- (WASEEM AHMED) (Ms. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER