Case Law Details
Surjit Singh S/o Mehtab Singh Proprietor M/s Beli Ram Surjit Singh Vs PCIT (ITAT Chandigarh)
On perusal of the show-cause notice, it is noted that the ld PCIT has stated that the assessee has sold the house property on 29/02/2011 and has claimed entire capital gains as exempt u/s 54 being money deposited in capital gain account scheme on 12/09/2012. Therefore, it is an undisputed fact that before filing of the return of income on 30/09/2012, the assessee has invested the entire capital gain amounting to Rs. 26,00,000/- in the Capital Gain Account Scheme maintained with SBI on 12/09/2012 and has claimed the entire capital gains as exempt under section 54 of the Act. As the assessee couldn’t carry out the purchase/construction of new property within the stipulated time and that too, before the date of furnishing of the return of income and has invested the entire capital gains in the capital gains account scheme (to be utilized subsequently), the said claim is clearly in consonance with the express and unambiguous wordings of sub-section (2) of section 54 of the Act.
As far as ulilisation of the amount so deposited in the capital gains account scheme is concerned, it is imperative that the assessee utilized the same for the stated purposes of purchase/construction of new property within the stipulated time frame and equally for the Assessing officer to verify the same and in case of any breach/violation/partial non-compliance thereof, the necessary mechanism for bringing the same to tax has been provided in proviso to sub-section (2) to section 54.
Therefore, any action on part of the Assessing officer to verify such utilization needs to be undertaken or examined in the year when the period of three years from the date of transfer of original asset expires and not in the year of the transfer of the original asset. Consequently, any inaction on part of the Assessing officer to carry out such verification will call for action u/s 263 in the year of expiry of three years and not in the year of transfer. Similar view has been taken by the Coordinate Chandigarh Benches in case of Smt Gurmeet Kaur (supra) where it was held that “Any inquiry, therefore, conducted on the transaction by the AO would have made no difference to the outcome of the assessment order for the impugned year. The utilization of the amount invested in capital gains account scheme, could be and was to be examined in subsequent years when so utilized and addition on account of disallowance of exemption granted earlier for incorrect utilization was also to be done in subsequent years only.”
In light of the aforesaid discussions and in the entirety of facts and circumstances of the case, we are of the considered view that the exercise of jurisdiction u/s 263 by the ld PCIT cannot be sustained in view of the express provisions of claim of exemption u/s 54 and the order so passed by the PCIT is set-aside and that of the AO is sustained.
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