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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI A.MOHAN ALANKAMONY & SHRI. G. PAVAN KUMAR
आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:
The appeal of the Revenue and Cross Objection by the assessee are directed against common order of the Commissioner of Income-tax (Appeals)-IV, Chennai for the assessment year 2009-10 in :- 2 -: & C.O.No.84/2013 -12, dt 28.09.2012 passed u/s.143(3) and 250 of the Income Tax Act, 1961 (herein after referred to as ‘the Act’).
The Revenue has raised the following grounds of appeal:-
‘’2. The Id. CIT (A) erred in restricting the addition into ₹5 lakhs out of the addition of ₹16 lakhs made by the AO u/s 68 of the I.T. Act. 2.1. The Id. C!T(A) erred in accepting the stand taken by the assessee that the cash deposit of Rs.16 lakhs is out of the sale consideration of the flat, though it is contrary to the material evidences gathered during the course of assessment proceedings. 2.2 The Id. CIT(A) erred in taking the guideline value adopted as per Sec. 50C of.the I. T. Act for the purpose of calculating capital gains as explained source for unexplained cash credit in the absence of actual transfer of money.
2.3 The ld. Commissioner of Income Tax (Appeals) ought to have given a reasonable opportunity to the AO by way of calling for remand report, when any fresh evidence furnished before him. Thus the Department was prevented from verifying of such evidences as per Rule 46A, before deciding the issue in favour of assessee.
3. The l.d . CIT(A) erred in deleting the addition of Rs.18,77,750 made u/s 69 of the I. T.Act. 3.2. The Id. C!T(A) erred in accepting the stand taken by the assessee that the investment of Rs.18.77 lakhs in acquiring a house plot is out of the sale consideration of the flat though it is contrary to the material evidences gathered during the course of assessment proceedings. 3.3 The Id. CITO erred in taking the guideline value adopted as per Sec. 50C of the I. T. Act for the purpose of calculating capital gains as explained source for unexplained investment in the absence of actual transfer of money.
:- 3 -: & C.O.No.84/2013
3.4 The Id. CIT (A) ought to have given a reasonable opportunity to the AO by way of calling for remand report, when any fresh evidence furnished before him. Thus the Department was prevented from verifying of such evidences as per Rule 46A, before deciding the issue in favour of assessee’’.
The Brief facts of the case are that the assessee is an individual and salaried employee of Southern Railways and filed Return of income on 24.07.2009 with total income of �1,85,614/- and the Return of Income was processed u/s.143(1) of the Act. Subsequently, the case was selected for scrutiny under CASS based on AIR information were the assessee has made aggregate cash deposits of �10,00,000/- and above in Bank account. Accordingly, notice u/s.143(2) of the Act was issued. In compliance to notice, the ld. Authorised Representative of assessee appeared from time to time and gave clarifications on disputed issues. The ld. Assessing Officer on perusal of assessees Bank account with Bank of India, T. Nagar Branch, Chennai found cash deposits aggregating to �20,18,000/-. The ld. Authorised Representative explained that the amount pertains to the sale of property at Chennai of Smt. B.
Vijayalakshmi and family funds. Since, the ld. Assessing Officer could not ascertain any information on sale transaction and Bank account cash deposits has issued summons u/s.131 of the Act to the purchaser of property Smt. B. Vijayalakshmi and recorded sworn statement on :- 4 -: & C.O.No.84/2013 25.10.2011. The purchaser has affirmed that she has purchased property by registered sale deed on 24.10.2008 for a consideration of �21,00,000/-.
But the ld. Assessing Officer on perusal of the Annexure 1-A of the sale deed found that the market value of property was �27,00,000/- and no reasons were provided for considering the sale value as �21,00,000/-. In the assessment proceedings, the assessee gave explanations and history of the property sold on construction, Builder agreement and family partition from 1934 to 2008 and treated the property belongs to HUF. But the ld. Assessing Officer investigated in depth on the facts and observed at page 3 & 4 of the order and applied the decision of provisions of Sec.
50C of the Act and adopted market value at �27,00,000/-. The ld. Assessing Officer based on submissions of assessee found that after sale of property the assessee has purchased land at Tambaram on 06.11.2008 by registered sale deed for consideration of �18,77,750/- by cash. The ld. Assessing Officer based on the information submitted by the assessee discussed pointwise on assessees family properties and Bank deposits at page 5 to 8 of the order and concluded that the property sold is in individual status and taxable in the Hands of assessee. The assessee has requested the Assessing Officer to refer the disputed issue to the valuation officer and District Valuation Officer (DVO) valued the property as per valuation report dated 28.12.2011 for a total value of �36,07,001/- :- 5 -: & C.O.No.84/2013 consisting of value of land �19,80,000/- and building �16,27,001/-. But the ld. Assessing Officer considered the value adopted for stamp duty valuation �27,00,000/- for calculation of capital gains and disallowed Long Term Capital Gains of �14,86,277/- referred at page 11 of the order.
The ld. Assessing Officer found that the assessee had invested in new asset at Tambaram, and claimed exemption u/s.54 of the Act. The land was purchased for construction of residential property which the assessee should have constructed the residential property before 24.10.2011 but no satisfactory evidence was produced that the assessee after purchase of land has constructed a Residential house property and exemption was denied and Long term capital gains are liable for taxation.
In respect of aggregate cash deposits in assessee Bank account as per AIR information, the assessee explained that the amounts were transferred from HUF account and the explanations are not satisfactory and made addition u/s.68 of the Act. The investment in Tambaram land was on payment of cash and submissions on the sources are not accepted and amount of �18,77,750/- was treated as unexplained investments u/s.69 of the Act. The assessee made fixed deposits and has not offered interest on Deposits including saving bank account �39,206/- for taxation and added to Returned income alongwith other additions and passed :- 6 -: & C.O.No.84/2013 assessment order. Aggrieved by the order, the assessee filed an appeal before Commissioner of Income Tax (Appeals).
In the appellate proceedings, the ld. Authorised Representative of the assessee argued the grounds and applicability of provisions of Secs. 68 and 69 of the Act and the claim of exemption u/s.54F of the Act. The ld. Commissioner of Income Tax (Appeals) considered the findings of the ld. Assessing Officer and confirmed the addition of Long term capital gains �14,86,277/- as the assessee has sold the property and disclosed the sale consideration at �21,00,000/- and but the ld. Assessing Officer relied on the guideline value and the contention of the assessee to allow claim u/s.54 of the Act was dismissed. The ld. Commissioner of Income Tax (Appeals) found that the assessee has claimed purchase of land for �18,77,500/- but no evidence was brought on record in assessment proceedings even during appellate proceedings, the fact that the assessee has not undertaken construction of residential house on land at Tambaram. The ld. Commissioner of Income Tax (Appeals) has concurred with the findings of the ld. Assessing Officer in rejecting the claim of the assessee u/s.54 of the Act and confirmed the same.
4.1 In respect of addition of unexplained cash credits, the ld. Assessing Officer made disallowance for non satisfactory explanations of cash deposits of �16,00,000/- in State Bank of India on 24.10.2008. The :- 7 -: & C.O.No.84/2013 explanation envisaged that the assessee has sold the property for a consideration of �32,00,000/- and received 50% by Cheque and cash.
The assessee deposited cash of �16,00,000/- in Bank account and explained the source for cash deposits being cash received on sale of property. The ld. Assessing Officer adopted the value of property at �27,00,000/- invoking provisions of Sec. 50C of the Act. The ld. Commissioner of Income Tax (Appeals) made an mathematical equation that out of �27,00,000/- i.e. �16,00,000/- were received by cheque and balance �11,00,000/- by cash from sale of property. On comparison of cash deposits in Bank account �16,00,000/-, the ld. Commissioner of Income Tax (Appeals) has allowed the source for cash deposits to the extent of �11,00,000/- and sustained the addition of balance �5,00,000/-.
4.2 The ld. Commissioner of Income Tax (Appeals) dealt on the aspects of unexplained investments u/s.69 of the Act, were the assessee has purchased land at Tambaram on 06.11.2008 by registered sale deed and ld. Assessing Officer has brought to tax the said amount as no proper explanations were provided. The ld. Commissioner of Income Tax (Appeals) found that the assessee has invested �18,77,750/- in land. The assessee explained that the source for land is supported with sale consideration of party and was utilized for investment in land and bank deposits. Further, the assessee is having income source from salary :- 8 -: & C.O.No.84/2013 income. The ld. Commissioner of Income Tax (Appeals) found the sale proceeds are partly adjusted in bank deposits to the extent of �11,00,000/- and balance sale consideration alongwith saving of salary income was utilized for investment in land at Tambaram and deleted the addition u/s.69 of the Act and allowed the ground of the assessee.
4.3 Further, the ld. CIT(A) has confirmed the addition of interest on fixed deposits and passed the order dated 28.09.2012. Aggrieved by the order, the Revenue has assailed an appeal before Tribunal.
Before us, the ld. Departmental Representative argued that ld. Commissioner of Income Tax (Appeals) has erred in restricting the addition to �5,00,000/- as against �16,00,000/- made by the ld. Assessing Officer u/s.68 of the Act. The fact being �16,00,000/- received by cash is contra to material evidence available in assessment proceedings. The ld. Commissioner of Income Tax (Appeals) relied on the submissions of assessee and deleted the additions without calling for the comments of the ld. Assessing Officer and prayed for set aside of the order of Commissioner of Income Tax (Appeals).
5.1 Contra, ld. Authorised Representative relied on the findings of the Commissioner of Income Tax (Appeals) and submitted that there is :- 9 -: & C.O.No.84/2013 no fresh evidence filed and therefore the ground of the Revenue be dismissed. 5.2 We heard the rival submissions, perused the material on record.
The contention of the ld. Departmental Representative that fresh material was considered by the ld. Commissioner of Income Tax
(Appeals) and ld. Assessing Officer was denied opportunity to verify. The ld. Authorised Representative explained that the assessee has received sale consideration by cheque and cash which the ld. Commissioner of Income Tax (Appeals) satisfied with available sources and partly allowed ground in the appeal of the assessee and no fresh evidence was produced. At the time of hearing, the Bench raised question to identify the submission of fresh evidence filed by the assessee in the appellate proceeding and the explanations of the ld. Departmental Representative are not convening and could not give satisfactory reply. Hence, we are of the opinion that ld. Commissioner of Income Tax (Appeals) has dealt exhaustively on the provisions and cash flow deposits in Bank account and further having not satisfied with availability of balance sale consideration has restricted the addition to the extent of �5,00,000/- due to the deficiency of source. Therefore, we are not inclined to interfere with the order of Commissioner of Income Tax (Appeals) on the ground and the Revenue ground is dismissed.
:- 10 -: & C.O.No.84/2013
On the second ground, the ld. Commissioner of Income Tax (Appeals) has deleted the addition of �18,77,750/- u/s.69 of the Act, and the Revenue is challenging the evidence and applicability of provisions Sec. 50C of the Act. The ld. Departmental Representative argued that the assessee does not have substantial source for investment in purchase of land. The assessee after sale of property on 24.10.2008 has purchased land at Tambaram by registered sale deed on 06.11.2008 for a consideration of �18,77,750/-. The ld. Commissioner of Income Tax (Appeals) found as on the date of appellate proceedings, the assessee has not constructed a residential house on the said land and denied exemption u/sec. 54 of the Act. In the appellate proceedings, the ld. Authorised Representative explained that investments in land made out of sale consideration of property at Chennai. The ld. Commissioner of Income Tax (Appeals) has equated the sale consideration sources being �11,00,000/- as source for Bank deposits and balance �16,00,000/- was utilized alongwith saving and receipts of salary for the purchase of land and no additional information was submitted except bifurcation of sale consideration. We are of the opinion that ld. Commissioner of Income Tax (Appeals) has dealt based on the information on record has rightly deleted the addition and no fresh evidence was filed by the assessee in :- 11 -: & C.O.No.84/2013 appellate proceedings. Hence, we are not inclined to interfere with the order of Commissioner of Income Tax (Appeals) on this ground also and dismiss the Revenue ground.
The appeal of the Revenue is dismissed.
We take up C.O.No.84/Mds/2013:- The assessee has filed Cross objection against the order of Commissioner of Income Tax (Appeals). The ground Nos. 2,3 & 4 are similar for claim of exemption u/s.54 and 54F of the Act, we found from records that the assessee has only purchased land on 06.11.2008 and not constructed residential house within three years from date of sale of property being 24.10.2008 and the ld. Commissioner of Income Tax (Appeals) has referred at page 3 that the assessee has sold the property in T.Nagar on 24.10.2008. The actual consideration for the sale of the flat was �32,00,000/-, however for the purpose of registration the value was shown at �21,00,000/-. Considering the findings on facts , we dismiss the ground of the assessee.
The next ground raised by the assessee with regard to Commissioner of Income Tax (Appeals) erred in partly sustaining an addition of �5 lakhs out of �16 lakhs assessee by the Assessing Officer. :- 12 -: & C.O.No.84/2013 9.1 In the appellate proceedings, the ld. Commissioner of Income Tax (Appeals) restricted the addition to �5,00,000/- out of �16,00,000/- bank deposits. The ld. Commissioner of Income Tax (Appeals) verified the sources available as per value adopted by the ld. Assessing Officer were the assessee explained that �16,00,000/- by Cheque and balance by cash and the same was deposited in Bank accounts. The contention of the assessee in appellate proceedings that the property was sold for �32,00,000/- being �16,00,000/- by cheque and �16,00,000/- by cash. In such circumstances, the guideline value adopted by the ld. Assessing Officer at �27,00,000/- have to the re-arranged and calculate Long Term Capital Gains and denying the claim u/sec. 54 of the Act, therefore it is not a prudent practice to shift the value adopted as per law and further assessee does not have claim of 100% source for deposits in Bank.
Therefore, we are not in agreement with the contention of the ld. Authorised Representative and we dismiss the ground.
The last ground raised by the assessee is that Commissioner of Income Tax (Appeals) erred in sustaining the assessment of interest on fixed deposits of �39,206/-. We found that the assessee has not offered interest on fixed deposits made out of cash deposits for assessment purpose, which is not disputed in assessment and appellate proceedings :- 13 -: & C.O.No.84/2013 and we don’t find infirmity in the order of Commissioner of Income Tax (Appeals) on this ground and we dismiss the ground of the assessee.
The Cross Objections filed by the assessee is dismissed.
In the result, the Appeal of the Revenue and Cross Objection of the assessee are dismissed.
Order pronounced on Thursday, the 21st day of July, 2016 at Chennai.