KALYAN PRASAD AGARWAL,BHARATPUR vs. ACIT, BHARATPUR

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ITA 321/JPR/2016Status: DisposedITAT Jaipur18 April 2017AY 2008-097 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the reassessment proceedings were justified as the assessee's claim for Section 54F exemption was based on incorrect facts. However, the issue regarding the ownership of the property at Bayana and the consequent eligibility for Section 54F exemption was restored to the Assessing Officer for fresh investigation.

What were the facts?

The assessee claimed exemption under Section 54F on the sale of a plot, but the Assessing Officer reopened the case based on information that the assessee owned another residential property. The assessee also under-declared rental income.

What were the issues?

Whether reassessment proceedings were validly initiated and whether the assessee was eligible for exemption under Section 54F due to owning another residential property.

Which sections of the Income-tax Act were involved?

Section 54F,Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, JAIPUR BENCHES (SMC

Before: SHRI BHAGCHANDvk;dj vihy la-@ITA No. 321/JP/2016

For Appellant: Shri Madhukar Garg (CA) jktLo dh vksj ls@
Hearing: 21/04/2017Pronounced: 25/04/2017

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR Jh Hkkxpan] ys[kk lnL;] ds le{k BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER vk;dj vihy la-@ITA No. 321/JP/2016 fu/kZkj.k o"kZ@Assessment Year : 2008-09 cuke Kalyan Prasad Agarwal, A.C.I.T., Vs. Shiv Vila, Kalyan Colony, Circle- Bharatpur. Bayana, Bharatpur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ADXPA 1024 E vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri Madhukar Garg (CA) jktLo dh vksj ls@ Revenue by : Smt. Poonam Rai (DCIT) lquokbZ dh rkjh[k@ Date of Hearing : 21/04/2017 mn?kks"k.kk dh rkjh[k@ Date of Pronouncement : 25/04/2017 vkns'k@ ORDER

PER: BHAGCHAND, A.M.

This is an appeal filed by the assessee emanates from the order

dated 07/01/2016 passed by the ld CIT(A), Alwar for the A.Y. 2008-09,

wherein the assessee has raised following grounds of appeal:- “1. That the reassessment proceedings taken in this case are illegal and unjustified and the assessment completed by the Assessing Officer is bad in law and deserves to be cancelled. 2. That the learned CIT(Appeals) has erred in holding that the appellant has failed to adduce any material

ITA 321/JP/2016_ 2 Kalyan Prasad Agarwal Vs ACIT

to justify the quantum of rental income not declared by him in the return of income and confirming addition of Rs. 15,420/- made by the Assessing Officer. The addition confirmed is illegal, unjustified and excessive.

3.

That the learned CIT(Appeals) has erred in holding that the appellant was owning a house property at Bayana and hence was not eligible for exemption u/s 54F of the IT Act. The said finding is illegal and unjustified.

4.

That on the facts and circumstances of the case the learned CIT(Appeals) has erred in holding that the assessee was not eligible to claim benefit of exemption u/s 54F of the IT Act and confirming the disallowance of Rs.6,30,886/- made by the Assessing Officer. The said action is illegal and unjustified and the assessee was clearly entitled to exemption u/s 54F of the Act.”

2.

The assessee is an individual filed his return of income on

27/03/2009 declaring total income of Rs. 18,47,440/-. The case was

selected for scrutiny and the assessment was finalized at an income of

Rs. 20,26,440/-. Thereafter the case was reopened by issuing notice U/s

148 of the Income Tax Act, 1961 (in short the Act and the assessment

was finalized U/s 147 read with Section 143(3) of the Act at an income

of Rs. 24,93,750/-.

3.

The ld. CIT(A) dismissed the appeal of the assessee.

ITA 321/JP/2016_ 3 Kalyan Prasad Agarwal Vs ACIT

4.

Now the assessee is in appeal before the ITAT. In the ground No.

1 of appeal, the assessee has challenged the reassessment proceedings,

in this regard, the ld. AR of the assessee has submitted that the

reassessment proceedings are illegal and unjustified. The assessee is a

senior citizen. Order U/s 143(3) of the Act was passed on 20/08/2010.

The case was reopened and he pleaded that the claim of the assessee

U/s 54F was in respect of long term capital gain arising on the sale of

plot, has been disallowed. He submitted that reopening has been made

on the basis of audit objection and relying upon the incorrect

appreciation of facts. He also submitted that no new material was

available with the Assessing Officer to reopen the case.

5.

On the other hand, the ld DR has relied on the order of the ld.

CIT(A). She also submitted that this ground of reopening was not taken

before the ld. CIT(A). Further he submitted that the assessee submitted

a balance sheet for the year ending on 31/3/2008 during the original

assessment proceedings where in the column of fixed assets, the

assessee has disclosed house property valued at Rs. 16,66,980 and on

that basis, the Assessing Officer allowed the claim of exemption U/s 54F

of the Act. However, the Assessing Officer came to know that the

assessee was having two residential properties, one located at Bayana

ITA 321/JP/2016_ 4 Kalyan Prasad Agarwal Vs ACIT

valued at Rs. 2,25,,180 and the other at Jaipur valued at Rs.

14,41,820/-, therefore the assessee was not entitled for benefit of

Section 54F of the Act and the reopening was justified.

6.

I have gone through the rival contentions of both the parties on

this issue. It is noticed that the balance sheet submitted for the year

ending of 31/3/2008 relevant to assessment year 2008-09 has shown

house property and valued at Rs. 16,69,980/-. However, the balance

sheet filed for preceding year i.e. 31/3/2007 relevant to assessment

year 2007-08, the assessee has shown two house properties one located

at Bayana and another at Jaipur. Therefore, on the basis of that, the

assessee’s claim for exemption U/s 54F of the Act with regard to the

capital gain arise on the sale of land at Bhim Nagar, Bayana is to be

considered, in light of that fact hence, in my considered view, the

Assessing Officer was justified in reopening the assessment proceedings.

I hold that it was definitely not on the basis of change of opinion as

canvassed by the ld AR, therefore, the ground No. 1 of the assessee’s

appeal stands dismissed.

7.

In the ground No. 2 of the appeal, the assessee has challenged

the confirming the addition of Rs. 15,420/-. The ld CIT(A) has dealt this

issue in his order in para 5.3 to 5.5, which is as under:-

ITA 321/JP/2016_ 5 Kalyan Prasad Agarwal Vs ACIT

“5.3 I have gone through the assessment order as well as submissions made by the appellant and find that an addition of Rs. 15,420 has been made by the AO on account of under declaration of rental income. It is stated that appellant had declared a rental income of Rs. 23,74,252 from D Amico Ship Ishima India Pvt. Ltd. as against the rental income of Rs. 23,96,280 received from the tenant. The appellant has stated that difference in the income declared is on account of service tax liability for the month of June, 2007 which has been paid by the appellant.

5.4 The appellant has in the course of present proceedings reiterated the submissions filed before the AO and failed to substantiate the reasons for difference in the amount of rental income declared in the return of income and as shown by the tenant in form 16 issued to the appellant.

5.5 Having considered the submissions filed on this issue and after going through the material available on record, I find that appellant has failed to adduce any material to justify the quantum of rental income not declared by him in the return of income. I find that rental income has been under declared and the actual amount of rent received by the appellant is 23,96,280 and therefore AO has rightly made the addition of Rs. 15,420 after allowing the standard deduction of 30% on the total amount of rental income under declared. Accordingly, I confirm the addition of Rs. 15,420 made by the AO under this head.”

8.

I have heard both the sides on this issue. I find that the ld. AR

was not able to controvert the finding recorded by the ld. CIT(A) that

the appellant has declared rental income of Rs. 23,74,252/- from D

Amico Ship Ishima India Pvt. Ltd. as against rental income of Rs.

23,96,280/- received from the tenant. The assessee’s claimed that the

ITA 321/JP/2016_ 6 Kalyan Prasad Agarwal Vs ACIT

difference was on account of service liability in the month of June, 2007

is not a justified claim. I hold that the rental income has to be assessed

as much as it has been received i.e. Rs. 23,96,280/-. The assessee

cannot make any deduction for service taxas claimed as this will amount

to the application of the income. The service tax is not a charge on the

rental income earned. Therefore, I dismiss this ground of assessee’s

appeal.

9.

In the ground Nos. 3 and 4 of the appeal, the issue involved is not

allowing claim of exemption U/s 54F of the Act with regard to the capital

gain benefit arises and the reinvestment made. The ld. CIT(A) has dealt

this issue in para 6.3 to 6.8 of his order.

10.

The ld AR of the assessee has categorically stated that the

assessee is not having any residential property at Bayana. The figure

mentioned in the balance sheet was a mistake of the accountant. The

assessee has submitted an affidavit in this regard.

11.

After hearing both the sides on this issue, I find it appropriate to

restore the issue back to the file of the Assessing Officer. The Assessing

Officer shall investigate with regard to the claim of the assessee that he

is not having any property at Bayana and after ascertaining the correct

ITA 321/JP/2016_ 7 Kalyan Prasad Agarwal Vs ACIT fact, the Assessing Officer shall decide the issue accordingly in

accordance with law. Accordingly, both the grounds of the appeal are

allowed for statistical purposes only.

12.

In the result, the appeal of the assessee is partly allowed for

statistical purposes only.

Order pronounced in the open court on 25/04/2017.

Sd/- ¼Hkkxpan½ (BHAGCHAND) ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 25th April, 2017

*Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Kalyan Prasad Agarwal, Bharatpur. 1. izR;FkhZ@ The Respondent- The ACIT, Circle, Bharatpur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA No. 321/JP/2016) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत

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