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Income Tax Appellate Tribunal, BANGALORE BENCH “ A ”
Before: SHRI VIJAY PAL RAO
Per Shri Vijay Pal Rao, J.M. : This appeal by the assessee is directed against the order dt.25.3.2014 of Commissioner of Income Tax (Appeals)-II, Bangalore for the Assessment Year 2006-07.
The assessee has raised the following grounds : “ 1. On the facts and in the circumstances of the case, the learned CIT (Appeals) ought to have accepted the explanation of the Appellant and allowed the exemption under Sec. 54F of the Act in full as claimed by the Appellant.
2. The learned CIT (Appeals) erred in upholding the order of the assessing officer wherein it was alleged that the Appellant had not adduced evidence for the investment in the new residential property and improvement thereon as claimed by him when all the materials were placed before the assessing officer to prove the investment in the new asset and also the improvement thereon.
3. The learned CIT (Appeals) ought to have considered the evidence furnished (which was already furnished to the assessing officer) to satisfy that the claim of the Appellant was genuine and correct and supported by evidence and accordingly he ought to have held that the Appellant was entitled to the exemption as claimed by the Appellant under Section 54F of the Act.
4. The learned CIT (Appeals) ought to have appreciated that the investment in the new asset and improvement thereon were evident f r o m the Corporation assessment for tax in the hands of the Appellant and consequently he ought to have allowed the exemption under Section 54F of the Act in full as claimed by the Appellant.
5. Without prejudice, the learned CIT (Appeals) ought to have allowed the' exemption in respect of the investment in the new asset (ground floor and further improvement thereon in the ground floor) towards exemption as provided under Section 54F of the Act.
6. Without prejudice, the disallowance as confirmed by the ld. CIT (Appeals) is arbitrary, excessive and ought to be deleted.
7. For these and such other grounds that may be urged at the time of hearing, the appellant prays that the appeal may be allowed.”
The assessee has claimed exemption under Section 54F of the Income Tax Act, 1961 (in short 'the Act') on the capital gains arising from sale of property. The assessee claimed benefit of section 54F on the ground that he purchased ground floor of residential property bearing BDA Site No.2309, Banasankari II Stage, Bangalore. The Assessing Officer denied the claim of exemption under Section 54 on the ground that the assessee could not produce the evidence of purchase of the said property. The matter was carried to this Tribunal and this Tribunal vide order dt.8.2.2011 remanded the matter to the record of the Assessing Officer to conduct the necessary enquiry whether the assessee has acquired the ownership of the ground floor of the property in question within the time stipulated under Section 54F of the Act. In the order giving effect, the Assessing Officer has again denied the benefit of section 54F on the ground that the assessee has produced the documents which are not registered and therefore the assessee has failed to prove that he has acquired the property in question. The CIT (Appeals) has confirmed the action of the Assessing Officer. Thus this is the second round of appeal before this Tribunal.
Before the Tribunal, the learned Authorised Representative of the assessee has submitted that in support of his claim of ownership, the assessee filed the full and final settlement of property in question dt.5.7.2006 which has been duly attested by the Notary as well as by the two independent witnesses.
The learned Authorised Representative has pointed out that the said settlement of sale has been executed by the General Power of Attorney (GPA)
Holder of the owner of the property Mr. M.B. Ramesh Chandran dt.2.2.2006.
The learned Authorised Representative has submitted that the Assessing Officer has conducted enquiry from the owner of the property however the owner has filed a reply through its advocate and denied to have executed the alleged GPA. The Assessing Officer accepted the reply of the owner without giving an opportunity to the assessee to cross examine or to rebut the reply of the owner of the property/seller. He has further contended that when the assessee has filed the GPA as well as sale document to show that the assessee acquired the ownership of the property for a payment of Rs.20 lakhs as well as taken over the possession of the property as per the purchase and sale document then without proving the contrary, the Assessing Officer is not justified in denying the claim of benefit under Section 54F of the Act.
On the other hand, the learned Departmental Representative has relied upon the orders of the authorities below and submitted that as per the remand order of this Tribunal, the onus was on the assessee to prove the acquisition of the ownership of the ground floor of the property in question. The assessee
failed to prove the same as the owner of the property has denied to have sold the property to the assessee.
Having considered the rival submissions as well as relevant material on record, it is noted that the assessee claimed to have purchased the ground floor of the property bearing BDA Site No.2309, Banashankari II Stage, Bangalore vide full and final settlement of the property with possession dt.6.7.2006. As
per the said document, the assessee stated to have purchased property for a consideration of Rs.20 lakhs and the possession of the property was handed over to the assessee. This sale document was executed by one Sri Dasegowda in the capacity of GPA of the owner of the property Mr. M.B. Ramesh Chandran vide GPA Dt.5.2.2006. The Assessing Officer issued notice to the owner, in response to that the owner sent a reply dt.6.12.2012 through his advocate and denied to have executed any GPA dt.2.2.2006. The owner of the property further claimed that the property is not in the possession of the assessee. It is pertinent to note that the GPA in question appears to have been executed by Sri M.B. Ramesh Chandran in the presence of two witnesses as well as attested by Notary on identification of one advocate. When owner of the property has denied the execution of alleged GPA, then the Assessing Officer ought to have
GPA through examination of independent witnesses who have witnessed the said GPA.
Instead of conducting further enquiry, the Assessing Officer has presumed that the alleged GPA has not been executed by the owner. If the documents are found to be executed by the owner and on behalf of the owner then the registration is not mandatory when the part consideration was paid and possession was taken over by the assessee to constitute the same as transfer under the provisions of Section 2(47)(v) of the Act. Therefore when prima facie it appears that the owner of the property executed GPA through which the property in question was transferred to the assessee for a consideration of Rs.20 lakhs then the subsequent denial by the owner to have executed the document requires further investigation/enquiry. Accordingly, this issue is set aside to the record of the Assessing Officer for conducting proper enquiry by examination of the witnesses who have witnessed the GPA dt.2.2.2006 either on production by the assessee or through summons to be issued by the Assessing Officer. If the witnesses who have witnessed the GPA confirm the execution of the GPA then the claim of the assessee under Section 54F cannot be denied on the ground of ownership.
The other issue is left open.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 31st day of Aug., 2016.