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Income Tax Appellate Tribunal, DELHI BENCH: ‘SMC-1’ NEW DELHI
Before: SHRI N. K. BILLAIYA & MS SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JM This appeal is filed by the assessee against the order dated 24.01.2018 passed by CIT(A)- 1, Gurgaon, for Assessment Year 2014-15.
The grounds of appeal are as under:- “1. That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding addition of Rs.2,49,900/- representing cash deposits in the bank account and held them to be unexplained deposits and brought forward to tax as income for the instant assessment year. 1.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate the explanation tendered by the appellant to support the cash deposits was out of agricultural income and family savings of HUF which was quite reasonable and therefore, addition sustained is absolutely incorrect and
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untenable. 2 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in upholding addition of Rs. 35,73,050/- representing the claim of deduction under section 54F of the Act. 2.1 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that once the entire capital gain was duly invested by the appellant for purchase of a residential plot for construction of residential house, there was no valid justification to hold that appellant is not entitled to claim of deduction under section 54F of the Act. 2.2 That the finding that appellant had purchased land in the name of wife and therefore, appellant is not entitled to claim of deduction is also based on factual misconception and untenable. 2.3That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that the land was purchased in the joint name of the appellant and his wife and therefore, there was no justification to hold that appellant was not entitled to claim of deduction under section 54F of the Act. 2.4Furthermore, the fact that appellant had handed over the possession of the plot of land by the builder could not ipso facto be a ground to deny claim of deduction more particularly when it was beyond the control of the assessee. 2.5 That furthermore, even the basis adopted that the agreement was signed on 13.12.2017 i.e. after the date of filing of return of income and no amount of capital gains were deposited in the capital gain account scheme before the due date of filing of return under section 139(1) of the Act or before the date of actual filing of return of income is also not based on correct appreciation of facts and law and denial of deduction under section 54F of the Act read with section 139 of the Act is also incorrect, misconceived and untenable. 3. That the learned Commissioner of Income Tax (Appeals) has also erred both in law and on facts in not directing the credit of tax of Rs. 80,000/- against the demand computed in the order of assessment dated 23.12.2016. 4. That various adverse findings and conclusions recorded by the learned
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Commissioner of Income Tax (Appeals) are factually incorrect and contrary to record, legally misconceived and untenable. It is therefore, prayed that it be held that addition/disallowance made by the learned Assessing Officer and sustained by learned Commissioner of Income Tax (Appeals) may kindly be deleted and appeal of the appellant be allowed.”
Return declaring income of Rs. 9,36,730/- was filed on 30/07/2014. During the course of assessment proceedings, the Assessing Officer noted that the assessee had deposited cash in his saving bank account on various dates over the year. The date wise detail of cash withdrawal and cash deposits made by the assessee has been tabulated at Page 4 & 5 of the assessment order. The Assessing Officer asked the assessee to furnish the explanation and evidence with regard to the source of cash deposits in the bank account. No reply was furnished by the assessee. The Assessing Officer thereafter considered the details of cash withdrawals, cash deposits and after giving the credit for cash withdrawals made prior to cash deposits and further held that the cash deposits of Rs. 2 lacs on 6/4/2013 and Rs. 49,900/- on 17/5/2013 remained unexplained. This amount was added to the total income of the assessee. The assessee during the present assessment year sold flat at Gurgaon for a consideration of Rs. 77,47,029/-. The capital gains arising on this transaction was shown at Rs.35,73,050/-, against this the assessee had claimed deduction u/s 54 of the Income Tax Act, 1961 amounting to Rs. 70 lacs on account of investment in house property. The Assessing Officer observed that the assessee provided only a copy of the buyer agreement for purchase of plot and no other document or evidence regarding investment made in a residential house was furnished. The Assessing Officer accordingly asked the assessee to justify a claim of deduction u/s 54 of the Income Tax Act. No reply was furnished by the assessee. The Assessing Officer accordingly held that the assessee was not eligible for deduction u/s 54 of the Income Tax Act and that the capital gains amounting to Rs.35,73,050/- was chargeable of tax. This
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amount was accordingly added to the total income of the assessee.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
As regards Ground No 1 to 1.1 the Ld. AR submitted that the assessee is a retired government employee of BSNL and his son and daughter-in-law are practicing doctors. In this regard the Ld. AR pointed out that the Assessee has filed Return of Income declaring gross total income at Rs. 10,38,062/- TDS certificate a/w Form 26AS. The Ld. AR submitted that the assessee has produced the evidence of holding of agriculture land and confirmation from brother regarding receipt of Rs. 200000/- on 02.03.2013 as share in the agriculture income of HUF. The Ld. AR further submitted that the Assessing Officer has arbitrarily proceeded to disregard the confirmation/ evidence without bringing any adverse material on record. The Ld. AR also submitted that an explanation by an assessee, which is prima facie reasonable, cannot be rejected on capricious or arbitrary ground or on mere suspicion or on irrelevant grounds. The Ld. AR relied upon the following decisions: i) Chunnilal Tikaamchand Coal Ltd. vs. CIT 27 ITR 602 (Pat) ii) Mehta Parikh & Co. vs. CIT 30 ITR 181 (SC) iii) Lalchand Bhagat Ambica Ram vs. CIT 37 ITR 288 (SC) iv) Sri Ram Tandon vs. CIT 42 ITR 689 (All)
The Ld. AR submitted that in absence of maintenance of books of accounts no addition can be made u/s 68 of the Act on account of cash deposit in bank account. The Ld. AR further submitted that where the assessee is neither required by law nor is maintaining books of account, provisions of Section 68 cannot be applied to the assessee. The Ld. AR submitted that the deeming Section 68 reveals that an addition under the said statutory provision can only be made where any sum is found credited in the books of an assessee maintained for any previous year. Thus, the very sine qua non for making of
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an addition under Section 68 pre-supposes a credit of the aforesaid amount in the books of an assessee maintained for the previous year. The Ld. AR further submitted that a credit in the 'bank account' of an assessee cannot be construed as a credit in the 'books of the assessee” for the reason that the “bank account" are not the 'books of the assessee". In this regard assessee placed reliance on various decisions which are as follows: i) K.C.C. Software Ltd. and Ors. vs. DIT and Ors. 298 ITR 1 (SC) ii) CIT vs. Mayawati reported in 338 ITR 563 iii) CIT vs. Bhaichand H. Gandhi 141 ITR 67 (Bom) iv) Shanta Devi vs. CIT 171 ITR 532 (P&H)
In view of these submissions, the Ld. AR submitted that the addition made of Rs. 2,49,900/- may be deleted.
The Ld. DR submitted that the Assessing Officer and the CIT(A) rightly observed that no evidence with regard to the cash deposits made out of agricultural income of HUF and past savings were furnished by the assessee during the Assessment proceedings as well as appellate proceedings before the CIT(A). There was no explanation was filed at the stage of assessment proceedings. In fact, no evidence of agricultural income was shown in any return filed was furnished by the assessee. Thus, the CIT(A) rightly confirmed the addition.
We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the assessee has not maintained books of account and it’s an admitted position. The other relevant fact is that the assessee has not mentioned the agricultural income while filing the returns. But during the course of assessment proceedings, the assessee produced the evidence of holding of agriculture land and confirmation from brother regarding receipt of Rs. 2,00,000/- on 02.03.2013 as share in the agriculture income of HUF. As regards to explanation for Rs. 49,900/-, the same was submitted as family savings by the assessee. These aspects were not
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at all taken into account by the Assessing Officer as well as by the CIT(A). The contention of the Assessee that in absence of maintenance of books of accounts, no addition can be made u/s 68 of the Act on account of cash deposit in bank account, appears to be correct as the assessee is not maintaining any books as mentioned in Section 68 of the Act. The assessee has given the details of cash deposits to the Assessing Officer as well as the same was produced before the CIT(A), but both the authorities ignored the same and sustained the addition under Section 68 of the Act which is not as per the provisions of the said Section. Thus, Ground No. 1 to 1.1 are allowed.
As regards Ground No. 2 to 2.5 related to addition made of Rs.35,73,050/- which represented the claim of deduction u/s 54 of the Act, the Ld. AR submitted that the aforesaid claim is supported by following evidences which were produced before the Assessing Officer:
A Evidence on Record
i) Copy of evidence in respect of sale of flat No. B-7/703, Tulip Orange, Sector-70, Gurgaon on 28.6.2013
ii) Copy of application for allotment to Ramprastha Promoters and Developers (P) Ltd on 13.05.2013.
iii) Copy of cheques dated 13.05.2013 given with application for allotment of plot to Ramprastha Promoters and Developers (P) Ltd.
iv) Copy of Buyer agreement
v) Copy of application and emails with Ramprastha Promoters and Developers (P) Ltd.
vi) Copy of Form 26AS issued by Bharat Sanchar Nigam Ltd.
vii) Copy of complaint filed by assessee before National Consumer Disputes Redressal Commission
viii) Copy of receipt from Ramprastha Promoters & Developers (P) Ltd.
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ix) Copy of computation of long term capital gain
x) Copy of revised computation income for long term capital gain in respect of flat bearing no. B-7/703, Tulip Orange, Sector-70, Gurgaon.
The Ld. AR further submitted that assessee has certain additional evidence which should be brought on record. The same is as follows:
B Additional Evidence
i) NOC from original applicant to developer to include Balwant Singh as joint owner and also undertaking from new applicant dated 09.07.2019.
ii) Detail of changes in the allottee/applicants
The Ld. AR submitted that the CIT (A) has sustained the addition of Rs. 35,73,050/- on following basis:
i) The assessee had entered into a buyer agreement for purchase of land in the name of his wife.
ii) The agreement was signed with the buyer on 13.12.2014 i.e. after the filling of return on 30.07.2014 - Therefore, the amount utilized by him towards construction of house deposited in an account in a specified bank or institution, till that date only can be allowed as deduction u/s 54 of the IT Act. It is also a fact on record that the assessee had not utilized any amount towards purchase of plot by that date and no amount was utilized towards construction of house or deposited in an account in a specified bank or institution till the date of actually filing the return of income
iii) That assessee had failed to construct the residential property within a period of three years from the date of sale of original asset. In fact the construction had not yet started as the assessee could not take possession of the plot under reference. In view of these facts also the assessee is not eligible for deduction u/s 54 of the Income Tax Act.
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The Ld. AR relied upon the following decisions: CIT Vs. Kamal Wahal 351 ITR 4(Del) Laxmi Narayan vs. CIT 402 ITR 117 ( Rajasthan) ITO Vs. S. Vardarajan 33 TTJ (Mad.) 466 Third CIT Vs. V. Natarajan 287 ITR 271 (Madras)
Where entire consideration had flown from assessee he cannot be denied deduction u/s 54 of the Act. Since entire consideration has been flown from assessee and no consideration had flown from any other person, merely because in sale deed name of such other person was also mentioned, assessee could not be denied benefit of deduction of U/s 54 of the Act on that ground.
The Ld. DR relied upon the assessment order and the order of the CIT(A).
We have heard both the parties and perused the material available on record. It is pertinent to note that the assessee seeks to file additional evidence in respect of addition of Rs. 35,73,050/- representing the claim of deduction u/s 54 of the Act. The assessee has filed a paper book consisting documents as additional evidence, which developed and possessed by the assessee post passing of order by CIT(A) on 24.01.2018. The assessee has filed affidavit along with application under Rule 29 of the Income Tax (Appellate Tribunal) Rules, 1963 along with the documents such as NOC from original Applicant to developer to include Balwant Singh as Joint owner & also undertaking from new applicant along with detail of changes in the allottee/applicants. These documents were not before the Revenue authorities. Therefore, it will be appropriate to remand back this issue to the file of the Assessing Officer for proper verification and after verifying the same to decide whether the claim of the assessee is tenable or not. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice. Ground No. 2 to 2.5 are partly allowed for statistical purpose.
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In the result, appeal of the assessee is partly allowed for statistical purpose.
Order pronounced in the Open Court on 03rd JULY, 2020
Sd/- Sd/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 03/07/2020 R. Naheed * Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT
ASSISTANT REGISTRAR ITAT NEW DELHI
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Date of dictation 12.06.2020 Date on which the typed draft is placed before the 12.06.2020 dictating Member
Date on which the typed draft is placed before the Other Member
Date on which the approved draft comes to the Sr. PS/PS
Date on which the fair order is placed before the 06.07.2020 Dictating Member for pronouncement
Date on which the fair order comes back to the Sr. 06.07.2020 PS/PS
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Date on which the file goes to the Bench Clerk
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