ITO, WARD-40(4), KOLKATA, KOLKATA vs. SMT. PUSHPA DEVI SETHIA, KOLKATA

आयकर अपील�य अधीकरण, �यायपीठ – “C” कोलकाता, IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH “C” KOLKATA Before Shri S.S.Godara, Judicial Member and Dr. A.L. Saini, Accountant Member ITA No.2009/Kol/2016 Assessment Year :2008-09 Income Tax Officer, V/s. Smt. Pushpa Devi Sethia Ward-40(4), 3, Govt. 2, Ramlochan Mullick Place (West), 2nd Street, Kolkata-73 Floor, Kolkata-001 [PAN No.AJVPS 2277D] .. अपीलाथ� /Appellant ��यथ�/Respondent Shri Saurabh Kumar, Addl. CIT-SR-DR अपीलाथ� क� ओर से/By Appellant Shri Aryan Kochar, Advocate ��यथ� क� ओर से/By Respondent 12-07-2018 सुनवाई क� तार�ख/Date of Hearing 24-08-2018 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER S.S.Godara, Judicial Member:- This Revenue’s appeal for assessment year 2008-09 arises against the Commissioner of Income Tax (Appeals)-12, Kolkata’s order dated 29.07.2016, passed in case No.66/CIT(A)-12/W-40(4)/Kol//2015-16, in both quashing the re-assessment in question to be illegal as well as deleting long term capital gains addition of ₹95,22,372/- made by the Assessing Officer in assessment order dated 30.03.2015, involving proceedings u/s. 147 rw.s. 143(3) of the Income Tax Act, 1961; in short ‘the Act’. Heard both the parties. Case file perused. 2. It emerges at the outset that CIT(A)’s detailed discussion in quashing impugned re-opening as well as deleting the impugned addition of long term capital gains on merit reads as under:- “3.2 I have carefully considered the submissions of the appellant and the assessment order. Facts are that an assessment u/s. 143(3) was

ITA No.2009/Kol/2016 A.Y. 2008-09 ITO Wd-40(4), Kol. Vs. Smt. Pushpa Devi Sethia Page 2 made on 30.12.2010 determining income at Rs.10,01,130/-. Subsequently, the AO issued notice u/s. 148 of the Act on 13.01.2014 which was duly served on 20.01.2014. It is observe by the AO in the order of assessment that the assessee had earned Long Term Capital gains amounting to Rs.2,09,87,245/- and there was claim for the entire amount for deduction u/s. 54 of the Act by purchase of flat for Rs.2,34,64,873/-. It has been observed by the AO that the assessee availed a home loan to the tune of Rs.1,20,00,000/- to purchase the said flat and that amount utilized out of Long Term Capital gain was only Rs.1,14,64,873/- and therefore the assessee was held to have utilized amount of Long term Capital gain of Rs.95,22,372/-. This amount of Rs.95,22,372/- has been now added to the assessed income u/s. 148. The A/R in the course of hearing before me filed written submissions including copy of the order of assessment passed u/s. 143(3) of the Act. the AO in the order of assessment has while computing the assessable income noted income from capital gains from the house property at Rs.2,09,87,245/- and allowed exemption u/s. 54 of the amount of Rs.2,09,87,245/-. One set of profit & loss account and balance sheets as on 31.03.2008 has been filed. In the outset, the A/R has challenged the assumption of jurisdiction u/s 147 of the Act and consequent issue of notice u/s. 148. It is the contention of the A/R that notice was issued after four years from the end of assessment year and that this was totally wrong & uncalled for. The Learned A/R in the written submissions filed before me has contended that the proceedings initiated u/s. 148 are totally bad-in-law. Following contentions as placed in the written submission with regard to the challenge made by the assessee on this issue and the case laws are subtracted as under:- ‘The undisputed fact as apparent from the order of assessment made u/s. 143(3) is that the AO has duly considered the earning of Long Term Capital gains by the assessee and deduction claimed u/s. 154 was allowed. Proceeding u/s. 148 has been drawn later on beyond four years from the end of the year of assessment. There is nothing brought on record by the AO which would lay down any basis for assumption of jurisdiction u/s. 148 as there is no material place on record by the AO which would show that income had escaped assessment because of the failure on the part of the assessee in disclosing facts and materials relevant to L.T. Capital Gains and exemption u/s. 54. The case laws as have been noted above and relied upon by the assessee which include the decision of the Hon'ble Apex Court in the case of CIT vs. Kelvinator of India Ltd. reported in 350 ITR duly support the contentions raised by the assessee that the proceedings in the facts and circumstances initiated u/s. 148 are entirely wrong & uncalled for. Thus, so far as the legality of the

ITA No.2009/Kol/2016 A.Y. 2008-09 ITO Wd-40(4), Kol. Vs. Smt. Pushpa Devi Sethia Page 3 proceedings initiated u/s. 148 are concerned, I allow the ground of the assessee and hold that assumption of jurisdiction u/s. 147/148 & the assessment framed u/s. 147 is bad-in-law. 4. As regards the 2nd ground of appeal, the A/R has raised the following contentions in their submissions:- ‘The appellant submits copy of Conveyance Deed 30.07.2007 whereby the appellant acquired flat. It will be seen that the appellant purchased the flat directly from the Vendor and there is no involvement of Bank. In a case where a person obtaining loan from Bank to pay off consideration for acquisition of flat, the Bank becomes a party to the Conveyance Deed. In the case of the appellant, it is to state that purchase of flat is as per agreement between the Vendor and the appellant. It would clearly establish that the appellant acquired flat out of her own funds which include amounts received on sale of her already existing flat. The appellant having become owner of flat with her own funds subsequently obtained advance against the flat and this transactions of loan against flat has nothing to do with the determination of Long Term Capital Gains and its utilization..’ Since the assessee has also challenged the order framed u/s 147 on merits, I have gone through the facts and find that it is not a case that the assessee has not utilized the Long Term Capital gain in acquisition of the new flat. I find that the full investment made in the new flat is duly appearing in the Balance Sheet. A reference to the Conveyance Deed relating to the acquisition of the new flat shows that the Conveyance Deed is between the Seller and the Assessee only. There is no involvement of any Bank which normally happens if Bank loan is obtained to acquire property. Obtaining loans against the property has nothing to do with the already acquired flat by the assessee. Thus, even on merit, I am of the opinion that the assessee has purchased the new flat by making investment of her funds which obviously used the Long Term Capital gains as well. Therefore, even on merit, I do not find order of the Assessing Officer sustainable. The appeal is allowed.” 3. Learned Departmental Representative vehemently contends that the CIT(A) has erred in law as well as on facts in both quashing the re- assessment as well as accepting assessee’s claim of section 54 deduction for purchase of the residential flat in question. Her case is that assessee had not reinvested all the capital gains since she purchased the above residential property through bank loan only. We find no merit in Revenue’s latter arguments on merits. It fails to rebut the clinching fact that it was the assessee

ITA No.2009/Kol/2016 A.Y. 2008-09 ITO Wd-40(4), Kol. Vs. Smt. Pushpa Devi Sethia Page 4 only who had purchased the residential house in question through the conveyance deed executed with the vendor concerned. The bank is not a party therein even in mortgagee capacity as per the CIT(A)’s findings extracted hereinabove. We therefore conclude the CIT(A) has rightly held that assessee has actually reinvested all of her capital gains as stipulated in the impugned beneficial provisions enshrined in section 54 of the Act requiring liberal consideration. We therefore uphold the CIT(A)’s findings on merits. The Revenue’s arguments qua the legal issue stand rendered infructuous. 5. This Revenue’s appeal is dismissed. Order pronounced in the open court 24/08/2018 Sd/- Sd/- (लेखा सद%य) (�या'यक सद%य) (Dr. A.L. Saini) (S.S.Godara) (Accountant Member) (Judicial Member) Kolkata, *Dkp, Sr.P.S (दनांकः- 24/08/2018 कोलकाता । आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-ITO Ward-40(4), 3, Govt. Place (West), 2nd Floor, Kolkakta-001 2. ��यथ�/Respondent-Smt. Pushpa Devi Sethia, 2 Ramlochan Mullick St. Kolkata-73 3. संबं3धत आयकर आयु4त / Concerned CIT Kolkata 4. आयकर आयु4त- अपील / CIT (A) Kolkata 5. 7वभागीय �'त'न3ध, आयकर अपील�य अ3धकरण, कोलकाता / DR, ITAT, Kolkata 6. गाड< फाइल / Guard file. By order/आदेश से, /True Copy Sr. Private Secretary, Head of Office/DDO आयकर अपील�य अ3धकरण, कोलकाता ।