Case Law Details

Case Name : Jayaseelan Vs ITO (ITAT Chennai)
Appeal Number : I.T.A. No. 1455/Chny/2018
Date of Judgement/Order : 24/09/2021
Related Assessment Year : 2014-15

Jayaseelan Vs ITO (ITAT Chennai)

Shri Jayaseelan (the Appellant) has filed the current appeal being aggrieved against the order dated March 5, 2018 passed by the ld. Commissioner of Income Tax (Appeals) (the CIT(A)) for the assessment year 2014-15 wherein  the claim of the Appellant claiming benefit under section 54 of the Income Tax Act,1961 (the IT Act) was rejected.

Factually, the Appellant sold his property and claimed exemption under Section 54 of the IT Act in his income tax return. The Assessing Officer (“AO”) however rejected the claim observing that as per the property’s registered document the transferors acknowledged the receipt of rupees 11 lakhs in cash from the Appellant on the date of execution of the document i.e., on July 04, 2016 and the possession was also handed over on July 04, 2016. According to the AO when the property was sold on May 06, 2013 and purchased the property on June 04, 2016 which is two years beyond the transfer of the capital asset, the Appellant is not entitled to the benefit under Section 54 of the IT Act.

The Appellant submitted that he has purchased the property within 2 years. Further, submitted that the seller of the property gave confirmation that they have received the amount of ₹.10,00,000/- on April 08, 2015 and the possession was also given. Therefore, the transfer took place on April 08, 2015 and the Appellant is entitled for the benefit under Section 54 of the IT Act.

Section 54 exemption cannot be claimed on the basis of non-genuine agreement

On the other hand, the department has submitted that the Xerox copy of the agreement submitted by the Appellant dated April 08, 2015 is not a genuine one and there is no signature of the Appellant.  Further, submitted that the sale deed dated July 04, 2016 clearly mention that the sellers have been received full consideration on the date of sale and possession was also given on the same day. Furthermore, submitted that the recital in the registered sale deed is a conclusive proof that the alleged agreement shown by the Appellant dated April 08, 2015 is only an after-thought and submitted that the Appellant is not eligible for the benefit under Section 54 of the IT Act.

The Hon’ble ITAT, Chennai observed that the sale agreement which does not bear the signature of the Appellant and also translated a copy of the sale agreement into English dated April 08, 2015 and found that nowhere in the sale agreement it is mentioned that the possession was given to the Appellant.

As per the sale deed dated July 04, 2016 the entire amount was received by the sellers on July 04, 2016 and possession was also handed over to the Appellant on July 04, 2016.

Under the above facts and circumstances the Court opined that the sale agreement dated April 08, 2015 is not genuine. Accordingly, the benefits under Section 54 of the IT Act cannot be granted to the Appellant for the main reason that the sale deed clearly mentions that the entire sale consideration was received on the same day, and possession was also handed over.

In view of the above, the Court found no reason to interfere with the order of the CIT(A). Thus, dismissed the ground raised by the Appellant.

FULL TEXT OF THE ITAT JUDGMENT

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 13, Chennai, dated 05.03.2018 relevant to the assessment year 2014-15.

2. Facts are in brief that the assessee is an individual, filed his return of income by declaring total income of 2.8,02,720/-. During the course of assessment proceedings, the assessee has admitted capital gains of 2.18,12,563/- and claimed an exemption under section 54F of the Income Tax Act, 1961 [“Act” in short] towards purchase of house for a cost of ₹.18.53 lakhs on 21.10.2008. The source of funds required for this purpose was said to be out of sale consideration of ₹.47.66 lakhs received by the assessee arising out of sale of building for a consideration of ₹.76 lakhs vide document number 1276 of SRO, Mylapore. But, the registering authority fixed the value of the land at ₹.1,43,00,000/-. The assessee claimed his share of sale consideration at ₹.47.66 lakhs arising from the above value of the property fixed by the registering authority on estimate basis. The assessee has claimed an exemption in respect of the new property purchased under section 54F of the Act. But, as per the proviso to section 54F of the Act, the benefits of exemption is not available to an assessee who owns more than one residential house other than the new asset on the date of the transfer of the original asset. On perusal of the balance sheet and its enclosures particularly in respect of fixed assets reveal that the assessee already owned house at Arni valued at ₹.6,95,745/-. In the return of income also the assessee has explicitly claimed deduction under section 54F of the Act only as found in Col. No. D of Schedule Capital gain. When the Assessing Officer raised a question about this, the assessee’s authorised representative has replied vide his letter dated nil filed on 11.07.2016 that the assessee had inadvertently mentioned the section 54F instead of section 54 of the Act. The Assessing Officer has further noted that the assessee has sold a property vide document No. 1276 of SRO, Mylapore on 06.05.2013 and the assessee has purchased a property vide document No. 4932 of SRO, Arni on 04.07.2016 from one Shri M. Elumalai & Smt. B. Deepa. As per the narration in page 2 of the said registered document, the transferors acknowledged the receipt of ₹.11 lakhs in cash from the assessee on the date of execution of the document i.e., on 04.07.2016 and the possession was also handed over on 04.07.20216. According to the Assessing Officer, when the property was sold on 06.05.2013 and purchased the property on 04.07.2016, which is two years beyond the transfer of capital asset, the assessee is not entitled for the benefit under section 54 of the Act and the same was brought to the notice of the assessee. Before the Assessing Officer, the assessee has filed a Xerox copy of sale agreement dated 08.04.2015 between the assessee and the seller Shri M. Elumalai & Smt. B. Deepa and submitted that as per agreement, the assessee has already paid ₹.10,90,000/- to the sellers on 08.04.2015 and the balance amount of ₹.10,000/- has to be paid within two years from the date of agreement i.e., 08.04.2015. According to the Assessing Officer, the Xerox copy of the agreement submitted by the assessee is silent about the handing over of the possession seller to the assessee. The Assessing Officer also noted that the sale agreement dated 04.07.2016 is very clear that the entire amount of sale consideration was received on 04.07.2016 and also possession was given. Accordingly, the Assessing Officer has doubted the sale agreement produced by the assessee dated 08.04.2015 and rejected the claim of the assessee claiming benefit under section 54 of the Act. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer.

3. On being aggrieved, the assessee carried the matter in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the assessee has sold the property on 06.05.2013 and entered into an agreement dated 08.04.2015 with Shri M. Elumalai & Smt. B. Deepa and paid the amount. As per agreement, the total sale consideration was ₹. 11 lakhs out of which ₹.10,90,000/- was already paid and remaining ₹.10,000/-was paid within two years. According to the Authorized Representative of the assessee, the assessee has purchased the property within 2 years and therefore, the assessee is entitled to the benefit under section 54 of the Act. He also further submitted that the seller of the property gave confirmation that they have received the amount of ₹.10,00,000/- on 08.04.2015 and the possession was also given. Therefore, the transfer took place on 08.04.2015 and the assessee is entitled for the benefit under section 54 of the Act.

4. On the other hand, the ld. DR has submitted that the Xerox copy of the agreement submitted by the assessee dated 08.04.2015 is not a genuine one and there is no signature of the assessee. He further submitted that the sale deed dated 04.07.2016 clearly mention that the sellers have been received full consideration on the date of sale and possession was also given on the same day. It was further submission that the recital in the registered sale deed is a conclusive proof that the alleged agreement shown by the assessee dated 08.04.2015 is only an after-thought and submitted that the assessee is not eligible for the benefit under section 54 of the Act.

5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The only issue for consideration before us is whether the sale agreement entred into by the assessee on 08.04.2015 is genuine or not. In this case, the assessee has sold the property on 06.05.2013 bearing document No. 1276 for a sale consideration of ₹.76 lakhs. The Registering Authority estimated the value for the purpose of levying stamp duty at ₹.1,43,00,000/-. The assessee claimed his share of sale consideration at ₹.47.66 lakhs. The assessee also purchased a property vide document No. 4932 dated 04.07.2016. Entire sale consideration was paid on 04.07.2016 as per registered sale deed and also property was handed over to the sellers. The case of the assessee is that he has entered into an agreement with the sellers Shri M. Elumalai & Smt. B. Deepa and paid cash of ₹.10,90,000/- on 08.04.2015 and the balance amount of ₹10,000/- was to be paid within two years. They also acknowledged the receipt of the payment and possession also. We have gone through the sale agreement, which do not bear the signature of the assessee and also translated copy of the sale agreement into English dated 08.04.2015 and found that nowhere in the sale agreement it is mentioned that the possession was given to the assessee. In the alleged letter filed by the assessee that the amount of ₹.10,90,000/- was paid and possession was handed over to the assessee, neither date is mentioned nor there is signature from the sellers of the property. As per the sale deed dated 04.07.2016, the entire amount was received by the sellers on 04.07.2016 and possession was also handed over to the assessee on 04.07.2016. Under the above facts and circumstances, we are of the opinion that the sale agreement dated 08.04.2015 is not genuine. Accordingly, the benefits under section 54 of the Act cannot be granted to the assessee for the main reason that the sale deed clearly mentions that the entire sale consideration was received on the same day and possession was also handed over. In view of the above, we find no reason to interfere with the order of the ld. CIT(A). Thus, the ground raised by the assessee is dismissed.

6. In the result, the appeal filed by the assessee is dismissed.

Order pronounced on the 24th September, 2021 at Chennai.

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