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Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI D.T. GARASIA & SHRI N.K. PRADHAN
ORDER PER N.K. PRADHAN, A.M. The captioned appeals filed by the assessee are directed against the order of the Commissioner of Income Tax (Appeals)-1, Thane and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the ‘Act’). Since common issues are involved in these appeals, we are proceeding to dispose them off by a consolidated order for the sake of convenience. 2. The ground of appeal filed by the assessee reads as under: The Ld. CIT(A) has erred in facts and in law by passing the appellate order dated 13.10.2016 confirming the action of the AO in disallowing the well- deserved claim of exemption u/s 54F of the IT Act, 1961 amounting to Rs.2,06,10,106/- (Anand Ramprasad Agarwal), Rs.2,06,10,106/- (Radhika Anand Agarwal) and Rs.2,40,27,385/-, (Sudha Ramprasad Agarwal).
3. Facts being similar, we state the case of Shri Anand Ramprasad Agarwal. Briefly stated, the assessee filed his return of income for the AY 2012-13 showing income of Rs.38,35,502/-. The assessee had shown Long Term Capital Gains (LTCG) amounting to Rs.2,06,10,106/- form the sale of a land. The assessee was one of the four co-owners of the said property. The Assessing Officer (AO) completed the assessment u/s 143(3) on 30.03.2015 determining the income at Rs.2,44,45,610/- after making an addition of Rs.2,06,10,106/- on Shri Anand Ramprasad Agarwal, Radhika Agarwal, Sudha Agarwal 3 203, 204/Mum/2017 account of disallowance of exemption u/s 54F in respect of the LTCG declared by the assessee. The AO disallowed the claim of exemption made by the assessee u/s 54F for the following reasons: i. The appellant had not purchased a residential unit within a period of two years from the date of transfer of the asset and had also not deposited the amount of the net consideration, not appropriated by the appellant towards purchase of the new asset in the prescribed capital gains account before the due date of filing of the return of income u/s 139(1) of the I.T. Act. ii. The construction of the residential house shown as purchased by the appellant had not been completed within three years from the date of transfer of the asset. The construction of the building had only been completed upto the plinth level even on 27.03.2015. iii. The appellant had purchased six flats on two different floors which he could not have joined to form a single unit. iv. Initially the appellant had shown to have agreed to purchase Flat No. 401, 402, 403,404, 703 & 704 in the building “Shree Vallabh” vide agreement dated 29.03.2012. Subsequently, another agreement for sale of the same date was also filed according to which the appellant had agreed to purchase Flat No.
302. This according to the AO showed that no flat was allotted to the appellant. The appellant had paid an amount of Rs.2,77,00,000/- to M/s Salasar Property Developers only because the appellant was a partner in M/s Salasar Property Developers and so that the developer could utilize the amount in their business activity. This according to the AO was a colourful and collusive transaction with a view to avoid tax on Long term capital gains. The AO thus made an addition of Rs.2,06,10,106/- to the income of the assessee.
4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). Before the Ld. CIT(A), the assessee had filed a copy of agreement for sale dated 29.03.2012 for having agreed to Shri Anand Ramprasad Agarwal, Radhika Agarwal, Sudha Agarwal 4 203, 204/Mum/2017 purchase Flat No. 401, 402, 403, 404, 703 and 704 from M/s Salasar Property Developers in their Building IA, ‘Shree Vallabh’. The lumpsum consideration for the purchase of these flats was fixed at Rs.3,00,00,000/- and the assessee had paid the net sale consideration amounting to Rs.2,77,00,000/- to the developer on 08.12.2011. The assessee is a partner in M/s Salasar Property Developers from whom he had agreed to purchase the abovementioned flats. The Ld. CIT(A) held (i) even on the date of last submission of the assessee dated 07.10.2016, the construction of building is not complete, (ii) even the Mira Bhayander Municipal Corporation has not allowed permission for construction of the building as the revised plan of the building was filed before the said Corporation on 23.07.2016, (iii) the original asset i.e. land was sold vide agreement for sale dated 08.12.2011, three years from the sale of asset was completed in December, 2014 whereas the building in which the assessee supposedly was to buy a residential unit was yet to get permission for commencement of construction as on 07.10.2016. Therefore, the Ld. CIT(A) held that the conditions prescribed in section 54F(1) i.e. purchase of residential house within two years or construction within three years from the date of transfer of the capital asset by the assessee was not fulfilled. Thus the Ld. CIT(A) dismissed the appeal filed by the assessee.
5. Before us, the Ld. counsel of the assessee files an additional evidence and submits that (i) the Ld. CIT(A) as well as the AO has held that the flats booked by the assessee are not identifiable as plans were sanctioned only up to three floors and the construction of the flat is not complete, (ii) the assessee has submitted before them that the Shri Anand Ramprasad Agarwal, Radhika Agarwal, Sudha Agarwal 5 203, 204/Mum/2017 developer was always going to construct a high rise building by loading TDR and there was a delay to obtain TDR which ultimately delayed the project, (iii) after the passing of the order by the Ld. CIT(A), the plan of 13 floors is sanctioned on 17.06.2017 and the floor plan of the duplex flat allotted to the assessee is also sanctioned, (iv) after the sanctioning the plans, the construction is going on in full swing, (v) the assessee had in bona fide booked a duplex flat in building Shree Vallabh and there was a bona fide delay in construction by the developer. 5.1 The Ld. counsel thus submits that the above additional evidence be admitted as they are essential for determining the allowablity of deduction u/s 54 to the assessee and as they go into root of the matter. The same could not be produced before the Ld. CIT(A) and the AO. He places reliance on Sushila Shanitlal Jhaveri vs. UoI (2006) 286 ITR 428; Smt. Prabhavati Shah vs. CIT 231 ITR 1 (Bom) and Abhay Kumar 63 ITD 144 (Pat.) (TM) .
6. On the other hand, the Ld. DR opposes the admission of additional evidence. It is stated by him that the assessee could have produced the evidence that is the vital and important before the AO and the Ld. CIT(A). Having failed to do so, the assessee should not be allowed to file additional evidence before the Tribunal.
We have heard the rival submissions and perused the relevant materials on records. We find the Ld. CIT(A) has also observed at para 12 (page 17) of his order dated 13.10.2016 the following: “It needs to be stressed here that the appellant is a partner in M/s Salasar Property Developers to whom the appellant has advanced the amount of net consideration of Rs.2,77,00,000/- on 08.12.2011. Future, even the exact Shri Anand Ramprasad Agarwal, Radhika Agarwal, Sudha Agarwal 6 203, 204/Mum/2017 number of residential unit which was supposed to be allotted to the appellant, is not clear. The appellant himself has placed on record two agreements for sale both dated 29.02.2012. Accordingly to one agreement the appellant had agreed to purchase Flat No. 401, 402, 403, 404, 703 and 704 whereas as per the other agreement the appellant had agreed to purchase Flat No.
In reply to show cause notice issued by the AO the AR of the appellant had stated that appellant had in fact agreed to purchase Flat No. 302, 401 & 402 and the appellant had intention of joining all these flats into a single residential unit. All these facts also clearly point out that no flat was in fact allotted to the appellant and the appellant according to the situation mentioned various flats numbers as agreed for purchasing. The amount advanced by the appellant to the developer was clearly because of the reason that the appellant was a partner in the developer concern and the amount advanced was meant for business use of the developer concern, which clearly highlights collusive nature of the transaction entered into by the appellant with the firm in which he was a partner to avoid his capital gains tax liability.” Thus there is merit in the contentions of the Ld. counsel of the assessee that the present additional evidence go to the root of the matter. It has been held by the Hon’ble Bombay High Court in Smt. Suhasinibai Goenka vs. CIT (1995) 216 ITR 518, 521-22 (Bom) that there would be substantial cause for the Tribunal to allow, for ascertaining and deciding the question, the additional documents to be filed in appeal before it for their fair and just disposal by exercising its power to allow production of additional evidence conferred upon it under Rule 29 of the Tribunal Rules. The instant case falls in similar ambit. But where an additional evidence is allowed to be adduced, the interest of justice demands that the other side must be given an opportunity to explain or rebut such additional evidence.