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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI R. C. SHARMA, AM & SHRI AMARJIT SINGH, JM
O R D E R
PER AMARJIT SINGH, JM:
The revenue has filed the present appeal against the order dated 18.07.2014 passed by the Commissioner of Income Tax (Appeals) -33, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2011- 12.
2. The revenue has raised the following grounds: - “1. Whether on the facts and in the circumstances of the case, the Ld.CIT(A) erred in allowing the assessee claim of LTCG, accepting the asseessee working of cost of acquisition and allowing deduction u/s. 54F of the I.T. Act, 1961.
ITA No. 6311/M/2014 A.Y.2011-12
Whether fin the facts and in the circumstances of the case and in taw, the Ld.CIT(A) has erred in accepting new evidence in the form of agreement for purchase of new residential unit and copy if bunk statement of Oriental Bank of Commerce in support of payment of Rs.19.00.000/- made on 29/09/2011, in contravention to Rule - 46A of the IT, Rules l962.
The appellant craves leave to add, to amend, alter, substitute or modify any of the above ground or add a fresh ground as and when found necessary either before or at the time of hearing.” 3. The brief facts of the case are that the assessee filed his return of income on 29.09.2011 declaring total income to the tune of Rs.2,66,800/-. The return was processed u/s 143(1) of the Act. Thereafter, the case was selected for scrutiny under CASS and notice u/s 142(1) of the I.T. Act, 1961 was issued and served upon the assessee. The assessee declared his income from business and profession. The assessee was also proprietor of M/s. A.K. Impex carrying on business activity of exporter of wooden furniture and handicrafts and leather goods. The assessee showed his gross profit of Rs.76,60,177/- which was 09.71% for the F.Y. 2010-11 and net profit of Rs.2,46,032/- which was 3.21% for F.Y. 2010-11. During the year under consideration, the assessee showed the two immovable properties of Rs.80,00,000/- in view of the sale deed dated 19.05.2010. The market value of the property was of Rs.1,60,75,000/- which was purchased with Shri Sunil Naik and Smt. Sheela S. Marathe on 03.02.2007 for sum of Rs.Nil whereas the market value of the property was of Rs.7,07,500/- as per the copy of the purchase deed dated 03.02.2007 and another property was purchased with Shri Sunil Naik and Smt. Sheela S. Marathe on 03.02.2007 of Rs.Nil whereas the market value of the property was Rs.27,48,000/- as per copy of purchase deed dated 03.02.2007. The assessee showed the capital gain of Rs. Nil against the sale consideration received to the tune of ITA No. 6311/M/2014 A.Y.2011-12 Rs.53,33,333/- having equal 1/3 undivided ownership share, right, title in the said property and assessee was showing the sale consideration of Rs.1,07,16,667/- by adopting value u/s 50C of the Act. The assessee was deducting the index cost of acquisition of Rs.56,93,151/- and showing the long term capital gain of Rs.50,23,516/- which was claimed as deduction u/s 54 of the Act of Rs.50,23,516/- as investment in house property u/s 54 of the Act of Rs.51,17,500/- for which the assessee was only submitting the bills of booking amount of Rs.51,17,500/- paid on various dates from Oriental Bank of Commerce. The necessary details were asked and on account of non-submission of necessary evidence, an amount of Rs.70,75,000/- was added to the income of the assessee being unexplained money u/s 69A of the Act. The total income of the assessee was assessed to the tune of Rs.2,53,10,091/-. Feeling aggrieved, the assessee has filed an appeal before the CIT(A) who considered the payment of Rs.19 lacs made on 29.09.2011 which was not considered by the AO and accordingly decided the controversy in favour of the assessee. Feeling aggrieved, the revenue has filed the present appeal before us.
ISSUES NO 1 & 2:- 4. Both the issues are inter-connected, therefore, are being taken up together for adjudication. Under these issues the contention of the revenue is that the CIT(A) has wrongly accepted the cost of acquisition and allowed the claim u/s 54 of the Act and also wrongly considered the payment of Rs.19 lacs made on 29.09.2011 which was new evidence in contravention of provision of Rule 46A of the I.T. Rules, 1962. Before going further, we
ITA No. 6311/M/2014 A.Y.2011-12 deemed it necessary to advert the finding of the CIT(A) in this regard. The para no. 3.4 is hereby reproduced below as under: -
“3.4 I have considered the assessment order, material brought un record and submissions made by the appellant. On appreciation of facts, it is found [hat the assessee has purchased two immovable properties along with Shri Sunil Nayak and Smt. Sheela Marathe on 03.02.2007, which as per AO was purchased for value of Rs.Nil whereas the market value of the said two properties was Rs.7,07,500/- and Rs 27,48,000/-respectively. However, during the course of appellate proceedings, appellant has pointed Out that he had actually purchased these properties for consideration of Rs 7,07,500/- and Rs.27,48,000/' respectively. However, AO had taken the value of Rs.Nil from rectification deed and not the actual purchase deed of conveyance. The appellant has also submitted both copies of agreements which are kepi on record. It is submitted by appellant that the actual purchase was miid"1 vide original document No 12/Q383/06 dated 30.12.2006 which was rectified on 03.02.2007 in respect of property which was jointly purchased fur a consideration of Rs 14,00,0OO/- and the other property to/as purchased by deed of conveyance for a total consideration of purchase price of Rs.41,00,000/- of which t.he appellant had paid a sum of Rs,25,00,000/- for his 2/3 share of purchase price. The details of Rs.55,00,000/- being total consideration is already given hereinbefore It is also seen from the record that both properties were purchased on or before 3"1 February, 2007 and were sold dated 19th of May, 2010. Hence, the income is chargeable as long term capital gains, which is also accepted by the A.O and so assessed it. However, while computing the long term capital gain the A,O has treated the purchase consideration at Rs,Nil for both properties on the basis of rectification deed where since no consideration was to pass on, the purchase consideration has been shown as Nil. But a per the routine registration procedure the market value of both properties is indicated al Rs.7,07,500/- and Rs.27,48,000/- which it is an error made by the A.O. I have gone through the computation made by appellant which is reproduced at para 3,2 of this order. Having gone through this computation, 1 am in agreement with appellant that the total long term capital gain -works out to Rs 50,23,5167- & against the entire amount of market value adopted as per provisions of section SOC by A.O at Rs. 1 ,60,75,000/-. This ITA No. 6311/M/2014 A.Y.2011-12 computation was made available by the A.O in assessment proceedings and is confirmed by A.O. Having agreed in the claim of appellant of long term capital gain of Ra.50,23,53 n/- it is also seen from the records that appellant had purchased a flat No 1804 in Runwal Greens for which the appellant had made total payment of Rs.51,17,500/- and on the basis of such flat purchaser!, the appellant h;^ claimed the exemption (if the aforesaid Mar u/s.54P as against the claim made before the A.O u/s,54, which is denied primarily on the ground that appellant had , only booked the Dial but no conveyance deed was executed. The details of the payment made by appellant are given in para 3 2 of his order. As regard of Rs.51,17,50O/- made by appellant, the A.O has observed that the appellant had not produced the bank submitted m respect of payment of Rs.19,00,000/- made on 29.09,2011. However, during the appellate proceedings. the appellant produced bank statement showing aforesaid payment which is kept on record. As regards deduction U/S.54F, it is not in dispute that Appellant ha? booked a Hat in Runwal Green which is accepted by said Runwal Homes P.Ltd. acknowledging the fact that the amount was received by them in respect of Unit No-T-1-l804. In view of the categorical acceptance by Runwal Homes P. Ltd., it is not in dispute that the appellant had invested the capital gain for purchase of residential flat. Since by virtue of allotment and payment thereto, 1 am of the considered view that appellant had invested substantial part of his net consideration received, the benefit of deduction u/s.54F being beneficial provisions should be allowed. A.O. is, therefore, directed lo allow benefit of deduction as provided u/s 54F. This ground is accordingly allowed.”
On appraisal of the above said finding, it was noticed that the Assessing Officer took the value of both the property as nil on the basis of the rectification deed infact both the properties were actually purchased in sum of Rs.7,07,500/- and Rs.27,48,000/- respectively. The appellant has 2/3rd right in the property which was purchased alongwith Shri Sunil Naik and Smt. Sheela S. Marathe and the other property was purchased in sum of Rs.41,00,000/- to which the appellant paid a sum of Rs.25,00,000/- for his 2/3rd share of purchase price. The total consideration of both the transaction
ITA No. 6311/M/2014 A.Y.2011-12 was to the tune of Rs.25,00,000/-. Both the properties were purchased on 03.02.2007 and were sold on 19.05.2010 which leads to the income chargeable as long term capital gain and this fact has been accepted by the AO. However, the AO treated the purchase price as nil on the basis of the rectification deed. The CIT(A) has considered and workout the long term capital gain assessed by the assessee to the tune of Rs.50,23,516/- as against the entire amount of market value adopted as per the provisions of Section 50C of the Act at Rs.1,60,75,000/-. The appellant had purchased the Flat No. 1804 in Runwal Greens to which the appellant paid a sum of Rs.51,17,500/- and on the basis of the said investment, the appellant claimed exemption u/s 54F of the Act which was denied on the ground of that he only booked the flat and no conveyance/ sale-deed was executed. However, the detail of payment has been given by the assessee. So far as the total payment of Rs.51,17,500/- is concerned. The contention of the AO was that the receipt of Rs.19,00,000/- was not produced however the same was produced before the CIT(A) and Runwal Greens also acknowledge receipt also in respect of Unit No. T-4-1804. Investment is not in disputed, therefore, the benefit of Section 54F of the Act was allowed. The facts are not distinguishable at this stage also. Nothing came into noticed that the AO did not verify the claim of the assessee. The Assessing Officer verified the bank statement for the F.Y. 2010-11 relevant to the A.Y. 2011-12 in which the entry of payment of Rs.19,00,000/- on 29.09.2011 has been reflected. Nothing new evidence was given in appeal. Therefore, taking into account all the facts and circumstances, we are of the view that the CIT(A) has passed the order judiciously and correctly which is not liable to ITA No. 6311/M/2014 A.Y.2011-12 be interfere with at this appellate stage. Accordingly, these issues are decided in favour of the assessee against the revenue.