Case Law Details
Uddhav Krishna Bankar Vs ITO (ITAT Pune)
Conclusion: Assessee was not entitled to claim of deduction under section 54F as assessee had failed to deposit the unutilized amount of capital gains in the capital gains scheme account by the due date of filing of return of income.
Held: In the instant case, though assessee had utilized the amount of capital gains for the purchase of agricultural land within the period of two years, but after the due date of filing the return of income. Following the decision in case of Humayun Suleman Merchant vs. CCIT and CIT Vs. Rajesh Kumar Jalan it was held that assessee was not entitled to the claim of deduction under section 54F as assessee had failed to deposit the unutilized amount of capital gains in the capital gains scheme account by the date of filing of return of income.
FULL TEXT OF THE ITAT JUDGEMENT
The above six appeals filed by different assessees are against separate orders of Commissioner of Income Tax (Appeals) – 13, Pune commonly dated 07.02.2018 relating to assessment year 2012-13 against orders passed under section 143(3) r.w.s.147 of the Income Tax Act 1961 (in short ‘the Act’).
2. This bunch of appeals of related parties on similar issue were heard together and are being disposed off by this consolidated order for the sake of convenience.
3. The only issue raised in the present appeals is against the computation of income from long term capital gains in the hands of the assessee and connected issue of denial of exemption under section 54B of the Act.
4. The facts and issue in all the appeals are similar. However, for the sake of convenience, I refer to the facts and issues in the case of Uddhav Krishna Bankar in ITA No.617/PUN/2018.
ITA No.617/PUN/2018 for A.Y. 2012-13 :
5. The assessee has raised the following grounds of appeal :
“1. On the facts and circumstances of the case, the learned AO and ld. CIT(Appeals) has erred in assessing income of Rs.40,13,943/- as against income as per Return of Rs.20,79,010/- and addition of Rs.19,34,933/- on account of Long Term Capital Gain. The addition made to the extent of Rs.19,34,933/- as Long Term Capital Gain should be deleted.
2. Without prejudice to Ground No.1 the AO and ld. CIT(Appeals) has erred both on facts and in law in treating amount of Rs.19,34,933/- as Long Term Capital Gain should be deleted.
3. Without prejudice to Ground No.2, the fact that the relevant details of the claim u/s.54B are available with the assessee. Hence the claiming of exemption under section 54(B) is valid as per law.
4. The Assessing Officer erred in charging interest under sections 234A, 234B and 234C when in fact there was no default as contemplated by the said sections.
5. The appellant has not concealed any income and it is prayed that the penalty proceedings u/s.271(1) initiated by the AO should be dropped.
6. Appellant is genuine in the eye of law and hence appellant prays for just & equitable relief.
7. That the appellant craves leave to add to, alter, amend, modify, substitute, delete and/or rescind all or any of the GROUNDS OF THE APPEAL on or before the final hearing, if necessities so arises.
8. Appellant prays leave to adduce such evidence to substantiate its case.”
6. The appeal of the assessee was fixed for hearing. However, none appeared on behalf of the assessee. On the perusal of the record, assessment order and the appellate order, it is apparent that the issue raised in the present appeal is covered by the order of Hon’ble Bombay High Court in the case of Humayun Suleman Merchant Vs. CCIT (2016) 73 com2 (Bom.). Further, similar issue relying on the decision of Hon’ble Bombay High Court has been decided by the Pune Bench of the Tribunal (where judicial member is a party) in ITA No.923/PUN/2015 relating to assessment year 2009-10 in the case of ITO Vs. Vilas Balram Patil vide order dated 20-12-2017.
7. Briefly in the facts of the case, the assessee had not furnished any return of income in the stipulated period of time. Survey action under section 133A of the Act was conducted in the case of M/s. Pharande Promoters and Builders. During the survey proceedings, it was noticed that the said concern had purchased the land at plot number 725 and 731 located at Borhadewadi, Moshi for a total consideration of Rs.3,22,50,000/- on 12-10-2011. The said land was purchased from Smt.Tarabai Krishna Bankar, i.e. the assessee and her share consideration was Rs.42,20,000/-; and other family members. The Assessing officer also noted that she did not offer any capital gains arising out of the sale of the said land for the Financial Year 2011-12. Therefore, reasons were recorded for reopening the assessment under section 147 and notice under section 148 of the Act was issued on 29-02-2016. However, the assessee did not file any response to the said notice. Subsequently, the case was assigned to ITO, Ward 8(4), Pune under section 120(5) of the Act by the Commissioner. Due to change in incumbent, notice under section 142(1) read with section 129 of the Act was issued to the assessee on 04-07-2016. In response thereto, the assessee filed submissions on 14-07-2016. The submission included copy of income-tax return for the assessment year 2012-13 along with computation of income, sale deed of the property, bank statement and also the assessee filed copy of agricultural land purchased at Mhaskewadi, Ahmednagar and submitted copy of ‘ferfar patrak and 7/12 extract of the same. The ld. Authorized Representative for the assessee filed a letter dated 29-11-2016 stating that the return of income filed in response to notice under section 148 of the Act. Thus, the Assessing Officer treated filing of return of income as filed on 29-11-2016 declaring total income of Rs.20,79,010/-. Thereafter, notice under section 143(2)/ 142(1) of the Act was issued to the assessee asking for various information. The assessee did not comply with the said notice or furnished any information. The Assessing Officer noted that the return filed by the assessee was an invalid return and in the same it had shown capital receipt on account of sale of land to Pharande Promoters and Builders. The assessee had also furnished valuation report in support of its cost of acquisition as on 01-04-1981 and the capital gains were computed at Rs.40,13,938/-. The assessee had claimed deduction under section 54B of the Act on purchase of land at Mhaskewadi on 26-08-2013, i.e. after the due date of filing of return of income and claimed the aforesaid deduction under section 54B of the Act. The assessee though was one of the purchasers of the said land, but had not specified how the purchase consideration was paid. The assessee had also not furnished the details of payment as well as capital gains scheme account details. The Assessing Officer noted that the assessee had purchased the land after due date of filing the return of income and the requirement of law was that the sale consideration had to be deposited in the capital gains account by the due date of return of income. Since the assessee had not furnished any details the claim of deduction under section 54B of the Act was disallowed.
8. The CIT(A) noted the details of sale consideration and that the co- owners reinvested in purchase of agricultural land and have tabulated the same under Para No.5.1 at page 5 of the appellate order. The CIT(A) also observed that the Assessing Officer had disallowed the deduction claimed under section 54B of the Act in view of the violation of section 54B(2) of the Act. The assessee had sold the land to Pharande Promoters and Builders on 12-10-2011 and had made the investment in new agricultural land on 26-08-2013. The assessee along with her other family members had invested in the new land. The said deed was silent about the contribution of each of them individually and merely mentioned the whole consideration at Rs.2,22,66,000/-. Since the assessee had not invested the capital gains unutilized upto the date of filing the return of income under section 139 of the Act, in the approved capital gain account scheme, which should have been made on 31-07-2012, the CIT(A) held that there was violation of provisions of section 54B(2) of the Act. Hence, the assessee was not entitled to claim of deduction under section 54B(1) of the Act. In this regard, reliance was placed on the ratio laid down by the Hon’ble Bombay High Court in the case of Humayun Suleman Merchant Vs. CCIT (2016) 73 taxmann.com 2 (Bom.). Thus, the order of the Assessing Officer was upheld by the CIT(A). The assessee is in appeal against the order of CIT(A).
9. Despite service of notice, none appeared on behalf of the assessee. But the issue is squarely covered by the ratio laid down by the Hon’ble Bombay High Court in the case of Humayun Suleman Merchant Vs. CCIT (supra) which order was further applied by the Pune Bench of the Tribunal in the case of Vilas Balram Patil (supra) and the said decision is squarely applicable to the facts of the present case.
10. The year under consideration is assessment year 2012-13 wherein the return of income under section 139(1) had to be filed by the assessee by 31-07-2012 and under section 139(4) of the Act by 31-03-2013. The assessee had sold the land vide sale deed dated 12-10-2011. The share in sale consideration as received by the assessee was Rs.42,20,000/-. Thereafter, the assessee invested in agricultural land along with other family members and the said investment was made on 26-08-2013. After survey on M/s. Pharande Promoters and Builders who had purchased the property from the assessee and her other co-owners, reasons were recorded for re-opening the assessment and notice under section 148 of the Act was issued to the assessee on 29-02-2016. It is thereafter the assessee filed the return of income declaring income from capital gains at Rs.20,79,01/-. This return was filed on 29-11-2016. There is no dispute with regard to the sale consideration, cost of acquisition and the capital gain arising in the hands of the assessee. However, the dispute which arises is against the claim of the assessee under section 54B(1) of the Act. The said section entitled the assessee to claim the deduction in case the sale proceeds of agricultural land are reinvested in another agricultural land within a period of two years. However, section 54B(2) lays down that in case the sale proceeds are not invested, within the due date of filing of return of income u/s.139 of the Act, then the sale proceeds need to be parked in the capital gains scheme account till it is utilized for the purchase of the new agricultural land. In the case of the assessee where she had sold the land on 12-10-2011 and where her return of income was due by 31-07-2012, the requirement of the law was that she should have parked the funds in capital gains scheme account. However, no such investment was made in the capital gains scheme account. Before the CIT(A), the assessee in the written submissions, copy of which is placed on record had relied on the ratio laid down by the Hon’ble Bombay High Court in Humayun Suleman Merchant Vs. CCIT (supra) to point out that liberal/beneficial interpretation/construction is to be given to the provisions of section 54 of the Act in order to boost the investment in housing sector. Though, admittedly, the assessee has utilized the amount for the purchase of agricultural land within the period of two years, but after the due date of filing the return of income. The CIT(A) while deciding the issue has referred to the written submissions filed by the assessee which are reproduced at pages 3 and 4 of the appellate order. Thereafter, the CIT(A) refers to the deliberation of the Hon’ble High Court in Humayun Suleman Merchant Vs. CCIT (supra) wherein they have interpreted the provisions of section 54F(1) and 54F(4) of the Act and have laid down that section 54F(4) of the Act specifically provides that the amount which have not been invested either in purchase or construction of house, have to be deposited in the specified accounts before the due date of filing the return of income under section 139 of the Act. It further goes on to hold that when there is no ambiguity in the provisions of law, which is subject to interpretation, then there is no occasion to give beneficial construction to a statute. Reference is made to Para No.6 (s) of the said section. The Hon’ble Bombay High Court inturn relies on the decision of Hon’ble Gauhati High Court in the case of CIT Vs. Rajesh Kumar Jalan (2006) 286 ITR 274 which laid down the proposition that amounts subject to capital gains on sale of capital asset for the purpose of exemption, had to be utilized before the date of filing the return of income and since the same was not utilized for the purpose of investment in construction of the new house nor was deposited in the capital gains scheme account; hence, the assessee was held to be not entitled to the claim of deduction under section 54F of the Act. It may be pointed out that in the aforesaid case, the said deduction was restricted to the investment in the new asset at Rs.35 lakhs. Relevant findings of the Hon’ble High Court are reproduced by the CIT(A) at pages 6 to 8 of the appellate order which are being referred to but not being reproduced for the sake of brevity.
11. The said proposition laid down by the Hon’ble Bombay High Court has been applied by the Pune Bench of the Tribunal in the case of Shri Vilas Balram Patil (supra). Vide Para No.7 of the order dated 20-12-2017, the claim of deduction under section 54 of the Act was denied to the assessee as he had not deposited the amount in the capital gains scheme account by the due date of filing the return of income.
12. In view thereof and applying the aforesaid ratio, I hold that the assessee is not entitled to claim of deduction under section 54F of the Act as the assessee has failed to deposit the unutilized amount of capital gains in the capital gains scheme account by the date of filing of return of income. Since this issue is settled by the Hon’ble jurisdictional High Court, hence, the matter is being decided ex parte the assessee. Grounds of appeal raised by the assessee are thus dismissed.
ITA Nos.618 to 622/PUN/2018 :
13. The facts and issue raised in the above appeals are similar to the facts and issue raised in ITA No.617/PUN/2018 relating to assessment year 2012-13. Accordingly, my decision in ITA No.617/PUN/2018 would apply mutatis mutandis to ITA Nos.618 to 622/PUN/2018.
14. In the result, all the appeals of the respective assessees are dismissed.
