Popat Manaji Rahinj Vs ITO (ITAT Pune)
ITAT Pune held that exemption under section 54B of the Income Tax Act based on new agricultural land bought in the name of the son and daughter-in-law and not in the name of the assessee is not allowable.
Facts- During the course of assessment proceedings under consideration, AO found that the appellant made a cash deposit in savings bank account with ADCC Bank Ltd. of Rs.47,50,000/-. When the appellant was called upon to explain the source of said cash deposits, it was explained that he had sold the agricultural land & others for a consideration of Rs.28,08,000/- and the cash deposits were made out the sale consideration received on sale of the above agricultural land. The appellant had also submitted that the sale proceeds were utilized for making the cash deposits in the savings bank account. The appellant had not offered the capital gains on sale of the said agricultural land. In the circumstances, AO had proceeded with the assessment of capital gains by adopting the fair market value of the property at 90,000/- per acre based on the ready reckoner valuation, where the land was situated and, accordingly, computed the long term capital gains of Rs.23,28,075/-.
The appellant also failed to offered any explanation in support of the source of cash deposits of balance of Rs.28,42,000/-. In the circumstances, AO had brought to tax the capital gains of Rs.17,59,750/- and also a sum of Rs.28,42,000/- as unexplained cash deposits in the bank account. AO also denied the claim for exemption u/s 54B on the ground that new agricultural lands were bought in the name of son and daughter-in-law.
Conclusion- Coordinate Bench of this Tribunal in the case of Vandana Maruti Pathare vs. ITO, 138 com 259 (Pune – Trib.) held that the deduction u/s 54B cannot be allowed in case where there was no purchase of the land/property in the name of the assessee. We do not find any reason to take a different view from the decision of this Tribunal in the case of Vandana Maruti Pathare.
Held that well settled position of law that no burden lies on the Revenue to show the income is received from any particulars source before invoking the provisions of section 68/69.
FULL TEXT OF THE ORDER OF ITAT PUNE
This is an appeal filed by the assessee directed against the order of the ld. Commissioner of Income Tax (Appeals)- 2, Pune [‘the CIT(A)’] dated 04.01.2016 for the assessment year 2011-12.
2. At the outset, there is a delay of 58 days in filing the present appeal. The legal heir of the appellant filed an affidavit praying for condonation of delay by citing that the delay occurred on account of fact that the appellant was staying at Ahmednagar and he took some time to identify the counsel/tax consultant to file the appeal before the Income Tax Appellate Tribunal at Pune. There was no mala- fide and deliberate intention on the part of the appellant in filing the present appeal with delay.
3. On the other hand, ld. Sr. DR has no serious objection for condonation of delay.
4. In the circumstances, we are of the considered opinion that it is a fit case for condoning the delay and admit the appeal for adjudication.
5. The appellant raised the following grounds of appeal :-
“1. On the facts and in the circumstances of the case the leaned CIT(A) has erred in not appreciation the fact the land sold in respect of which long term capital gain has arisen belonged to Hindu Undivided Family and hence the said LT Gain should not have been assessed in hands of appellant in status of Individual.
2. On the facts and in the circumstances of the case without prejudice to the above Ground No. 1 CIT(A) has erred in not allowing the claim of exemption made u/s 54B of the I.T.Act 1961.
3. On the facts and in the circumstances of the case leaned CIT(A) has erred in considering the fair market value as on 1.4.1981 at Rs.67,500/-.
4. On the facts and in the circumstances of the case leaned CIT(A) has erred in not appreciating the source explained for cash deposits of Rs. 19,42,000/- ( incorrectly taken as Rs.28,42,000 in computation of total income).
5. The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice.”
6. Briefly, the facts of the case are as under :- The appellant is an individual deriving income under the head “salary”. The Return of Income for the assessment year 2011-12 was filed on 29.08.2011 declaring total income of Rs.2,83,360/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-3, Ahmednagar (‘the Assessing Officer’) vide order dated 24.03.2014 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.54,60,640/-. While doing so, the Assessing Officer had made addition under the head “capital gains” on sale of agricultural land of Rs.28,08,000/- and also made addition of Rs.28,42,000/- as unexplained cash deposits in the bank account. The factual matrix of the case is as under :
During the course of assessment proceedings under consideration, the Assessing Officer found that the appellant made a cash deposit in savings bank account with ADCC Bank Ltd. of Rs.47,50,000/-. When the appellant was called upon to explain the source of said cash deposits, it was explained that he had sold the agricultural land situated at Survey No.8/3 having total area of 70R (out of this 30R) at Mauje & others for a consideration of Rs.28,08,000/- on 19.03.2011 and the cash deposits were made out the sale consideration received on sale of the above agricultural land. The appellant had also submitted that the sale proceeds were utilized for making the cash deposits in the savings bank account. The appellant had not offered the capital gains on sale of the said agricultural land. In the circumstances, the Assessing Officer had proceeded with the assessment of capital gains by adopting the fair market value of the property at 90,000/- per acre based on the ready reckoner valuation, where the land was situated and, accordingly, computed the long term capital gains of Rs.23,28,075/-.
The appellant also failed to offered any explanation in support of the source of cash deposits of balance of Rs.28,42,000/-. In the circumstances, the Assessing Officer had brought to tax the capital gains of Rs.17,59,750/- and also a sum of Rs.28,42,000/- as unexplained cash deposits in the bank account. The Assessing Officer also denied the claim for exemption u/s 54B on the ground that new agricultural lands were bought in the name of son and daughter-in-law at Gat No.248 and Gat No.143.
As regards the claim for deduction of construction, the same was also denied on the ground that it was utilized for the purpose of commercial building.
7. Being aggrieved by the above order of assessment, an appeal was filed before the ld. CIT(A), who vide impugned order confirmed the addition on the ground that the assessee had failed to offer any convincing explanation as to source of deposits. Similarly, the addition on account of capital gains was also confirmed.
8. Being aggrieved by the above decision of the ld. CIT(A), the appellant is in appeal before us in the present appeal.
9. The ground of appeal no.1 was not pressed during the course of hearing of the appeal, hence the same is dismissed as such.
10. The ground of appeal no.2 challenges findings of the ld. CIT(A) denial of claim for exemption u/s 54B of the Act. We fin that this issue does not emanate from the order of the ld. CIT(A), as no such ground of appeal was raised before the ld. CIT(A). It is only before us the appellant has sought the relief u/s 54B in the form of additional ground of appeal. It is stated that the sale consideration received on sale of agricultural land was invested in purchase of agricultural lands in the name of son and daughter-in-law as detailed below :-
