Mahesh Malneedi Vs ITO (ITAT Hyderabad)
As far as the assessee is concerned, he was aware of the bank loan and also the default committed by the vendor in repaying the loan. Thus, the property was not without an encumbrance as on the date of filing of the return and there was no certainty of the transaction going through. In a case where the sale is not concluded or the agreement of sale is not certain to be honoured, the assessee could not have claimed to have purchased the residential property within one year before or within two years after the sale of the original asset or to have constructed the property, therefore, order of disallowance of deduction under section 54F was justified.
FULL TEXT OF THE ITAT JUDGMENT
This is assessee’s appeal for the A.Y 2014-15. In this appeal, the assessee is aggrieved by the order of the learned CIT (A)-5, Hyderabad, dated 29.05.2017 confirming the order of the AO disallowing the deduction claimed u/s 54F of the Act and also in sustaining the additions of Rs.20.00 lakhs and Rs.6.00 lakhs u/s 68 of the I.T. Act.
2. Brief facts of the case are that the assessee, an individual, filed his return of income for the A.Y 2014-15 on 25.07.2014 admitting an income of Rs.11,17,920. The case was selected for scrutiny under CASS on the ground that “Large deduction claimed u/s 54 & large cash deposits in Savings Bank A/c”. Hence, notices u/s 143(2) & 142(1) of the Act were issued and duly served on the assessee. The assessee filed the required information and the AO verified the same. The AO found that the assessee has shown “Nil” income under the head “Capital Gains in the return of income after reducing the cost of acquisition and the claiming deduction u/s 54F of the Act as under:
