NEERA KOTWANI,BHOPAL vs. THE PR CIT -1, BHOPAL

आदेश/O R D E R

Per B.M. Biyani, A.M.:

Smt. Neera Kotwani Assessment year 2015-16 3. Briefly stated the facts are such that the assessee filed her return of income of relevant AY 2015-16 at a total income of Rs. 65,31,390/-. While submitting return, the assessee declared a long-term capital gain of Rs. 73,50,020/- from relinquishment of right; claimed exemption u/s 54F of Rs. 52,53,008/- on the basis of new investment in a residential house; and thereby declared taxable gain of Rs. 20,97,012/-. The case of assessee was selected for scrutiny-assessment and the Ld. AO completed assessment u/s 143(3). Subsequently,the Ld. PCIT examined the record of assessment- proceeding and viewed that the assessment-order passed by Ld. AO is erroneous in so far it is prejudicial to the interest of revenue, which attracts revisionary-jurisdiction u/s 263. The reasons of framing such a view, as culled out fromshow-cause notice dated 11.09.2019 issued by Ld. PCIT, are two-fold as under:

(i) The assessee had claimed exemption of Rs. 52,53,008/- u/s 54F despite being owner of 4 residential house properties on the date of transfer of original asset (i.e. relinquishment of right) from which the capital gain was derived, which is not allowed by section 54F. Thus, the AO has wrongly allowed exemption.

(ii) The assessee was owner of more than one properties, still not declared notional income taxable under “Income from house property” from properties other than self-occupied and actually let out. This has resulted in under-assessment of taxable income.

“Explanation 2 – “For the purpose of this section, it is hereby declared that an order passed by the Assessing Officer shall be deemed to be erroneous in so far as it is prejudicial to the interest of revenue, if in the opinion of the Principal Commissioner or Commissioner - (a) The order is passed without making inquiries or verification which should have been made; (b) The order is passed allowing any relief without inquiring into the claim; (c) …. (d) …”

“(i)Bunglow at “Powai – 84 AakritiAcqua City” – The agreement for Smt. Neera Kotwani Assessment year 2015-16 sale of Duplex-Powai-84 was entered by assessee with M/s AG8 Ventures Ltd. On 22.03.2012 (PB 38-47). The construction was not complete till the date of transfer i.e. 02.01.2015. The reminder letter for payment of installment towards the purchase cost of said property on 23.07.2018 (PB36) also shows that the possession was not received. Further, the company AG8 Ventures Ltd. Went into Corporate Insolvency Resolution Process by National Company Law Tribunal, Indore. Refer PB 37. Thus, the property on the date of transfer i.e. 02.01.2015 was not owned by assessee. Later on the agreement was cancelled due to insolvency proceedings of Seller and Builder – M/s AG8 Ventures Ltd. (ii) Flat at Pune – This property was wrongly taken under the head Fixed Asset schedule of Assessee’s Balance-Sheet, it actually belongs to the Mother in law – Smt. Meera Kotwani. After the death of Smt. Meera Kotwani, the property got transferred in name of Shri Mohan Lal Kotwani (Husband and Legal Heir). The registered land ownership documents in name of Smt. Meera Kotwani are at PB 48-57. (iii) Flat at Aakriti – In the computation of income, under the head “House Property” the flat No. A-7/404, Akriti Ecocity, Bhopal was shown. This was the only flat owned by the assessee on the date of transfer, which was let out to one Shri Pankaj Jaiswal. (iv) Plot at Rajdev Nagar – It is the new property which was purchased and the construction was carried out on this. The assessee claimed exemption u/s 54F in respect of land cost, stamp duty charges and the construction cost undertaken after the date of transfer amounting to Rs. 52,53,008/-.”

Smt. Neera Kotwani Assessment year 2015-16 document of the said flat at Pune, placed at Page No. 48 to 57 in Paper- Book, which is in the name of Smt. Meera Kotwani and not in the name of assessee. Thus, as far as registered owner is concerned, it is Smt. Meera Kotwani and not the assessee. But, however, the Bench raised a query as to who has made investment in the said property? It was further brought to the notice of Ld. AR that the Balance-Sheet is based on double-entry system and therefore if an asset appears in the Balance-Sheet of assessee, the assessee must have made investment although the impugned property is registered in the name of Smt. Meera Kotwani. It was further conveyed to the Ld. AR that unless some documentary evidence is brought on record to prove that the investment in impugned property was really made by Smt. Meera Kotwani, it would be safely presumed that the investment has been made by assessee and the assessee is de facto owner of property. To address this query of Bench, Ld. AR sought adjournments from time to time to bring on record the bank statement from which investment would have been made in the impugned property. But, however, ultimately the Ld. AR admitted inability of assessee to submit the same. Therefore, we have no option except to concludethat since the “flat at Pune” is appearing in the Balance-Sheet of assessee, the investment had also been made by assessee. That means, the assessee was owner of at least 2 residential houses, viz. one at S.No. (iii) admitted by assessee; and another at S.No. (ii) being the “flat at Pune”.

Smt. Neera Kotwani Assessment year 2015-16 As we do so, we make it clear that our expression of view on merits of the case is only a prima facie impression, and it must not, therefore, influence the decision of the AO on merits. Uninfluenced with these observations, the Assessing Officer will take a call on the merits of the matter.

Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 28/03/2023 Order pronounced in the open court on ….../……/2023