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ORDER/आदेश �या�यक सद�य iou flag iou flag iou flag के अनुसार PER PAWAN SINGH, JM- iou flag 1. The present appeal filed by assessee against the order of CIT(A)-27, Mumbai dated 31.10.2012 for Assessment Year (AY) 2008-09. The assessee has raised only one ground of appeal that CIT(A) erred in law in disallowing the claim of assessee u/s54 of the Act.
Brief facts of the case are that the assessee filed return of income for relevant AY on 05.01.2009 declaring total income at Rs. 3,22,540/-. The return of income was selected for scrutiny. While framing the assessment, AO denied the exemption u/s 54 of Income Tax Act, claimed by the assessee on the sale of a property, which was jointly owned by her with her husband. By disallowing exemption u/s 54, the AO made an addition of Rs. 32,74,885/- in its order. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A) wherein the order of AO was confirmed. Further, aggrieved by the order of CIT (A), assessee has approached us in the present appeal.
Appeal was listed for hearing on 27.06/2016, none appeared on behalf of the assessee despite repeated calls when case came up for hearing. No application for adjournment was received on behalf of assessee from the office of Sh. B.M Parekh & Co, whose authority letter is on record. When none appeared despite passing over of the case, we left no option except to hear Ld DR for revenue. DR for Revenue argued that assessee is not entitled for exemption u/s 54 of the Act. The assessee earned LTCG as the assessee neither purchased the new asset Chandrikaben K. Shah nor appropriated (invested) the capital (sale proceed ) within the period prescribed under the Act. The assessee propounded a forged agreement to sale for allegedly purchasing property in Nasik on 15.07.2008. The person from whom the assessee allegedly purchased the property is in fact her husband, no sale and purchase in fact took place. Transaction is a bogus and shame transaction and prayed that appeal of the assessee be dismissed with cost.
We have considered the contention of the DR for Revenue and carefully gone through the record of the case. Section 54 of the Income-Tax Act, may be read as under:
“54. [Subject to the provision of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family] the capital gain arises from the transfer of a long- term capital asset being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of [one year before or two years after the date on which the transfer took place purchased], or has within a period of three years after that date [constructed, a residential house], then], instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,— (i) if the amount of the capital gain [is greater than the cost of [the residential house] so purchased or constructed (hereafter in this section referred to as the new asset)], the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. [(2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset : Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase or construction of the new asset within the period specified in sub-section (1), then,— - Chandrikaben K. Shah (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid.
4. For claiming exemption the assessee has to fulfill the criteria provided under section 54 of the Act. The assessee has shown the sale of Flat No. 501, 5th Floor, Pal residency, Plot No. 358, Bhandarkar Road, Matunga, Mumbai-19 for Rs. 1,25,50,000/- . This flat was purchased by the assessee and her husband in their joint name on 10.10.2003 for Rs. 70 lakhs (excluding stamp duty of Rs. 30,000/- and registration fees of Rs. 7,63,790/-). The assessee claimed to have received LTCG of Rs. 32,73,885/- as not taxable as she had purchased new residential property i.e. flat no. C-17-24 admeasuring 395 sq mt or 4250 sq ft) and building No. C, situated at Meghchhaya Residential Complex, CS No. 25/7/2, Dastagir Baba Road, Belatgavan, Deolali, Nashik, from Kantilal P. Chheda alias Shah on 15.07.2008 for Rs. 36 lakhs. Thus claimed exemption u/s 54 of the Act on sale of Matunga flat. Claim of assessee was not accepted by AO while framing assessment order. AO concluded that the person from whom the assessee has purchased the property is appears to be husband of assessee. Assessee claimed that payment was made through cheques on 15.07.2008, however, the seller has not enchased the same till October 2008. The agreement submitted by assessee which contains the 8 number of non-judicial stamp paper bearing No. 544541 to 544588, the stamp paper appears be dated 02.05.2008 and were purchased on 13.05.2008 from MSSIDC Ltd., Ground Floor, MAHADA Complex, Bandra (East) from Smt. E.F. D’souza. The AO further concluded that on query, it was revealed that extension counter for stamp paper office at MSSIDC Ltd. at MHADA complex was started from August 2008. Further, when the copies of stamp paper were confronted with stamp vendor Smt. E.F. D’souza, she denied the issuance of those paper. Stamp Vendor also denied her handwriting on the stamp paper. After making the full-fledged investigation, the AO concluded that the said purchase agreement was forged on non-judicial stamp and thus concluded that transaction is shame, bogus and fraudulent one and denied the exemption. Before the CIT(A), assessee submitted that AO made the query in the office MSSIDC Ltd. at the fag end of the assessment proceeding on 29.12.2010. The assessment was also completed on the same date without giving proper opportunity to the assessee. The assessee has submitted the agreement and other details to AO well in advance. The AO conducted the on query only at the fag end of assessment proceeding with pre-determined mind without giving an opportunity with the intention to make addition. And claimed genuine transaction of purchased of property and claimed entitled for deduction (exemption) u/s 54 of the Act. The CIT(A) considered the contention of assessee and directed 3 - Chandrikaben K. Shah the AO to submit the remand report vide his letter dated 17.01.2012 and 24.01.2012. Copies of those reports were furnished to the assessee for seeking her comment. The AO submitted his remand report wherein it was disclosed that assessee requested for cross-examination of General Manager of MSSIDC Ltd during the remand proceedings. The AO submitted that the request of assessee for cross-examination of GM of MSSIDC Ltd. was declined as, it is a Government of Maharashtra undertaking and the report was furnished by its General Manager on the basis of record available in his official capacity. In the rejoinder, assessee disputed that interim remand report dated 17.01.2012 as not given to her. Ld CIT (A) noted that the report was already supplied to the assessee and the assessee is in habit of making allegation without verifying the fact from her end. The CIT(A) further observed that assessee claimed that she is entitled for benefit u/s 54 of the Act, thus, the onus lies upon the assessee to establish and prove the transaction of purchase of new property beyond the doubt of any ordinary prudent person. Filing of return of income was due in the normal course on 31.07.2008 which was filed on 05.01.2009. The amount of capital gain was not deposited in capital gain account scheme before due date of filing of return. She claimed that consideration for purchase was paid on 15.07.2008, whereas this fact was that the consideration was received by assessee’s husband in his bank account only on 10.10.2008. The CIT(A) concluded that cheque was prepared back dated only with the intention to claim deduction u/s 54 of the Act by showing investment in new property. While considering the other aspect of the case, ld CIT(A) concluded that the stamp paper were issued for public sale on 29.05.2008, thus, it was unforeseeable that the stamp paper were purchased by the assessee on 13.05.2008. Thus, the stamp paper on which the agreement was executed was fake and forged one. The CIT(A) also considered the contention regarding cross-examination of General Manager of MSSIDC Ltd. and concluded that the report furnished by him is based on record, supported with the copies of relevant entry in the record which was enclosed to the assessment order. There was no such information, which was exclusively in the personal knowledge of General Manager, whose cross-examination asked by assessee. Thus, the assessee was not entitled for cross- examination of General Manager and confirmed the finding of AO.