B.P. JAIN, A.M. :-
This appeal of the assessee arises from the order of learned CIT(A), Bikaner vide order dt. 28th Nov., 2014 for asst. yr. 2010-11.
2. The assessee has raised the following grounds of appeal :
"1. Rs. 9,99,050: The learned CIT(A) erred in law as well as on the facts of the case in confirming the denial of deduction claimed by the assessee under s. 54F(4) of the Act and thus, thereby confirming the increased amount of the long-term capital gain at Rs. 9,99,050. The denial of the deduction and excess capital gain taxed of capital gain so made and confirmed by the learned CIT(A), being contrary to the provisions of law and facts, the assessee kindly be held entitled to the deduction so claimed and the addition made in the long-term capital gain by Rs. 9,99,050 be deleted in full.
2. Rs. 3,80,000 : The learned CIT(A) further erred in law as well as on the facts of the case in confirming the addition made on account of bank deposits by the AO of Rs. 3,80,000 under s. 68 of the Act The addition so made and confirmed by the learned CIT(A) is contrary to the provisions of law and facts hence, kindly be deleted in full.
3. The learned AO further erred in law as well as on the facts of the case in charging interest under ss. 234B and 234D of the Act and as also in withdrawing of interest under s. 244A of the Act. The appellant totally denies its liability of charging and withdrawal of any such interest The interest so charged/withdrawn, being contrary to the provisions of law and facts, kindly be deleted in full.
4. The appellant prays your Honour indulgences to add, amend or alter any of the grounds of the appeal on or before the date of hearing."
3. In this case, the registry has informed that the appeal has been filed late by 63 days. The Authorised Representative appearing for the assessee drew my attention towards the prayer for condonation of delay filed on 20th July, 2016 along with affidavit of the assessee and the employee Shri Suresh Kumar in the office of the chartered accountant Shri Ashok Agarwal. It was submitted that the order of CIT(A) was received by the Authorised Representative at Bikaner and thereafter, the assessee handed over the same to the new counsel Shri Ashok Agarwal at Alwar because she had shifted to Alwar by that time. Unfortunately the same was misplaced by the employee Shri Suresh Kumar in the office of the CA. Shri Agarwal. Later on, when this fact came to notice, immediately the appeal was got prepared at Jaipur and filed. Because of these facts, substantial time was consumed and the delay was for the reasons beyond the control of the assessee and a liberal interpretation in the matters of the condonation of delay is required. He placed reliance on certain decisions. The learned Departmental Representative raised no objection. After hearing the parties, I am of the considered view that there did exist a sufficient cause contributing to the minor delay of 63 days and hence the same is hereby condoned.
4. The brief facts of the case in ground No. 1 are that during the year, the assessee sold property at F-7, Kanta Kathuria Colony, Bikaner on 10th Feb., 2010 to four parties for Rs. 13,00,000 which were deposited in OBC on 10th Feb., 2010. The same was valued by the registering authority for stamp duty purposes at Rs. 16,14,400. The AO alleged that no capital gain was declared in the return filed on 4th June, 2010. When the assessee was asked, it was submitted that she purchased a residential plot at D183, Karni Nagar, Lalgarh, Bikaner for Rs. 23 lacs on 28th July, 2010 and also constructed a residential house within the period of 3 years and hence, there was no capital gain. The AO however, referred to s. 54F(4) and alleged that the sale consideration was not deposited in the scheme notified by the Government. If the law provides something to do in a certain manner, then it should be done exactly in the same manner, which was not done in this case. The submission of the assessee that she had no knowledge of the tax laws and the sale consideration was already kept in a bank account was rejected by the AO. Finally, the claim of deduction made under s. 54F was disallowed. Before the learned CIT(A) detailed submissions were filed, which were forwarded to the AO calling for his remand report. The AO submitted his remand report and the assessee filed rejoinder thereon. The learned CIT(A) held that the assessee sold the property on 10th Feb., 2010 in four parts for Rs. 13 lakhs, valued at Rs. 16,14,400 by the registering authority and the entire amount of sale consideration was invested in the purchase of new property at Rs. 23 Lakhs on 28th July, 2010 before the due date of the filing of return i.e. 31st July, 2010, however, the amount was not deposited in the scheme notified by the Government and the investment was not made in the manner provided under s. 54F(4) and that the assessee should have filed a revised return under s. 139(5). Finally, the learned CIT(A) upheld the order of AO and confirmed the disallowance of the claim made under s. 54F.
5. Before me, the counsel for the assessee Shri Mahendra Gargieya, Advocate vehemently objected to the disallowance so made by the AO and confirmed by the CIT(A) by stating that the issue involved is fully covered by the various decisions rendered by different Hon’ble High Courts and Tribunals including the Jodhpur Tribunal. It was submitted that the authorities have misinterpreted the provisions of s. 54F in as much as admittedly the entire net consideration and rather more than that being Rs. 23,00,000 as against the actual sale consideration of Rs. 13,00,000 and even against the stamp valuation at Rs. 16,14,400, the assessee had already invested in the purchase of a new plot purchased on 28th July, 2010 which was even before the due date prescribed under s. 139(1) being 31st July, 2010. The assessee started construction in January, 2012 which was completed in December, 2012 and, therefore, the condition of the construction of a new residential house within the prescribed period of three years under s. 54F(1) was admittedly fulfilled. The provisions of s. 54F(4) requiring the assessee to deposit the net consideration in the notified bank account could not be made applicable in this case because the assessee had already utilized substantially more amount in the purchase of the plot and the construction of a new residential house within the period prescribed. Therefore, there was no warrant to invoke s. 54F(4). In addition, it was also submitted that s. 54F(1) requires the assessee to construct the new house within a period of three years, which fell on 9th Feb., 2013, whereas the assessee has already fulfilled such conditions upto 31st July, 2010 by investing more amount than the net sale consideration and even the house was constructed upto December, 2012, which facts are not under dispute. He relied upon various authorities as under :
1. Nand Lal Sharma vs. ITO (2015) 122 DTR (Jp)(Trib) 404
2. Jagan Nath Singh Lodha vs. ITO (2004) 85 TTJ (Jd) 173
3. Ajay Goyal vs. ITO (2006) 99 TTJ (Jd) 164
4. CIT vs. Rajesh Kumar Jalan (2006) 206 CTR (Gau) 361 : (2006) 286 ITR 274 (Gau)
5. Fathima Bai vs. ITO (2009) 32 DTR (Kar) 243
6. CIT vs. Jagriti Aggarwal (2011) 245 CTR (P&H) 629 : (2011) 64 DTR (P&H) 333 : (2011) 339 ITR 610 (P&H)
7. Rakesh Nain Trivedi vs. CIT (2014) 162 TTJ (Asr)(UO) 1 : (2015) 152 ITD 869 (Asr)
8. N. Ram Kumar vs. Asstt. CIT (2012) 150 TTJ (Hyd) 656
9. ITO vs. Gope M. Rochlani (2013) 95 DTR (Mumbai)(Trib) 33 : (2013) 158 TTJ (Mumbai) 120
6. As regards the further objection that the assessee should have filed a revised return of income under s. 139(5), it was submitted that firstly this was not the case made out by the AO originally in the assessment order but was an objection raised only during the course of the remand proceedings by the successor AO which was not permissible and also submitted that since the appellant was contending that there was no capital gain as it had already intended and also rather acted accordingly by making investment in the new residential house, hence there was no capital gain tax liability in her hand and since there was no omission or wrong statement made in the originally filed return of income hence, she was not required to file a revised return. Otherwise also, this technical plea could not come in the way once she has complied with the law in substance which was not found wrong. He also argued that an incentive provision should be interpreted liberally. Lastly, he submitted that in case of any contrary decision brought by the Revenue, the view favourable to the assessee may be adopted.
7. On the other hand, the learned Departmental Representative appearing for the Revenue, heavily relied upon the orders of the AO and the CIT(A).
8. I have heard the rival contentions and facts of the case in the light of the authorities cited at bar. The vital facts are not denied that the assessee in this case had purchased a new residential plot on 28th July, 2010 for Rs. 23,00,000 which was much more than the net sale consideration of Rs. 13,00,000 arising on account of the sale of old property on 10th Feb., 2010. It is also not denied that the assessee thereafter, commenced the construction which was completed by December, 2012 by making further investment. This was duly submitted to the AO vide letters dt. 20th Feb., 2013 and 25th Feb., 2013, the copies of which are placed in the assessee’s paper book. Further relevant facts not under dispute are that the due date of filing of the return under s. 139(1) in this case was 31st July, 2010, whereas such time-limit under s. 139(4) was 31st March, 2012. The period of three years prescribed under s. 54F(1) falls on 9th Feb., 2013. In the light of these facts I proceed to examine the relevant provision. Sec. 54F(1) provides that in a case where the assessee, has within a period of three years from the date of transfer, constructed a new house and if the amount of investment made therein is more than the net consideration arising from the sale of the original assets, the whole of such capital gain shall not be charged under s. 45. On the other hand, s. 54F(4) provides that where the amount of net consideration is not utilized by the assessee for the purchase or construction of the new assets before the date of furnishing of the return of income under s. 139, the same shall be deposited before furnishing such return but in any case not later than the due date under s. 139(1). The facts in the present case are not in dispute that the assessee had already invested substantially more amount i.e. Rs. 23,00,000 as against the net consideration of Rs. 13,00,000 only in the purchase of plot on 28th July, 2010 itself. In other words, even before the due date prescribed under s. 139(1) being 31st July, 2010, investment of larger amount than the net consideration was made. There apart, construction of the house thereon was also completed within the prescribed time-limit of three years. These facts were not denied even during the course of hearing. The authorities cited by the learned counsel for the assessee related to the situation where the assessee made the investment within the due date prescribed under s. 139(4) and it was held that s. 54 or s. 54F for that reason uses the word s. 139, which meant not only s. 139(1) but also s. 139(4). Therefore, a larger time-limit was available to the assessee. The following decisions are relied upon :
1. Jagan Nath Singh Lodha vs. ITO (supra), (DPB 8-13), wherein it was held that :
"Intention of assessee from the very beginning being to purchase residential house and he having done so within two years of sale of plot, he was entitled to exemption under s. 54F in respect of the amount invested even though he failed to deposit the amount in capital gains accounts scheme during the interregnum."
2. Ajay Goyal vs. ITO (supra), wherein it was held that :
"...There seems to be no dispute with regard to the fact that the sale proceeds of plot in question were utilised by the assessee within three years as required, but what is in dispute is the time of completion of the house in question......... When the assessee had invested this sale proceed within the stipulated time, and admittedly much more investment was needed in the construction of the house, it would be unjustified to hold that the assessee has not carried out the intention of the legislature. So, the assessee is entitled to the relief as claimed for—Jagan Nath Singh Lodha vs. ITO (supra) relied on."
3. In CIT vs. Rajesh Kumar Jalan (supra), (DPB 14-21), wherein it was held that :
"Capital gains—Exemption under s. 54—Time-limit for making deposit under the scheme—Only s. 139 is mentioned in s. 54(2)—Sec. 139 cannot mean only s. 139(1) but means all sub-sections of s. 139—Therefore, assessee can fulfil the requirement of s. 54 of depositing the unutilised portion of the capital gain on sale of residential property in notified scheme upto the expiry of time-limit for filing return under s. 139(4)"
4. Fathima Bai vs. ITO (supra), (DPB 22-26), wherein it was held that :
"Capital gains—Exemption under s. 54—Time-limit for making deposit under the scheme—Sec. 54(2) requires that the assessee should deposit the amount of capital gain either in the capital gains accounts scheme or invest the same before filing of return within the period permitted under s. 139—In the instant case, the due date for filing of return was 30th July, 1988 and the assessee was entitled to file return under s. 139(4) within the extended time i.e., upto 31st March, 1990—Assessee had utilised the entire capital gains by purchasing a house property before the extended due date under s. 139(4)—Therefore, she is eligible for exemption under s. 54."
9. No contrary decision was cited by the Revenue. In the light of the above and respectfully following the above decisions, I am, therefore, of the considered opinion that the appellant was fully entitled to the deduction as claimed under s. 54F, there was no justifiable reason to deny the same by the authorities below. The order of the authorities below on this issue is, therefore, reversed and this ground of the assessee is allowed.
10. The facts of the second grounds of appeal are that as per AIR information, it was noticed that the assessee made substantial cash deposits in the bank a/c No. 11662010001750 in Oriental Bank of Commerce, Jainvi Colony, Bikaner being operated jointly by the appellant with her husband Shri Ramesh Chand Yadav, the detail of which are reproduced at p. 2 of the assessment order. As per AO, the assessee could explain the deposits mentioned at S. Nos. 3, 4 and 6 however, there was no satisfactory explanation w.r.t. deposit at S.Nos. l, 2 and 5 totalling to Rs. 3,80,000 (Rs. 1,00,000 at s. No. l, Rs. 30,000 at s. no. 2 and Rs. 2,50,000 at s. No. 5). When asked the assessee submitted that such amount belonged to her husband who deposited the same. Her relation with the husband was strenuous since last several months because of family disputes and therefore, she had to open another bank account in her single name. She being a lady and wife, always co-operated with her husband but in any case, these amounts belonged to the husband only. The AO however, relying upon the written statement of the husband, rejected the contention and finally, added the entire amount of Rs. 3,80,000 as unexplained cash credit under s. 68 of the Act.
11. In the first appeal, before the learned CIT(A) detailed submissions were filed, which were forwarded to the AO calling for his remand report and the assessee filed rejoinder. The learned CIT(A) also confirmed the addition so made under s. 68, merely repeating the finding of the AO summarily.
12. The Authorised Representative appearing for the assessee submitted that firstly, the addition could not have been made under s. 68 in as much as the assessee did not maintain any books of account and the subjected amount was not found in her books of accounts which was a precondition. The bank pass book could not be treated as assessee’s books of account as contemplated under s. 68. He relied upon the following decisions :
(i) Smt. Shanta Devi vs. CIT (1988) 68 CTR (P&H) 52 : (1988) 171 ITR 532 (P&H)
(ii) Anand Ram Raitani vs. CIT (1997) 139 CTR (Gau) 235 : (1997) 223 ITR 544 (Gau) ,
(iii) CIT vs. Bhaichand H. Gandhi (1983) 141 ITR 67 (Bom)
(iv) ITO vs. Kamal Kumar Mishra (2013) 143 ITD 686 (Lucknow) .
13. In the alternative, he has further submitted that on merits also there was no case for the AO to make the addition in as much as the substantive facts not denied by the Revenue are that it was a joint bank account, opened by the husband of the assessee, who admitted to have made deposits in the said bank account, which was an apparent state of affair. He relied upon the decision reported in CIT vs. Daulat Ram Rawatmull 1972 CTR (SC) 411 : (1973) 87 ITR 349 (SC). Further contended that the AO completely failed to prove that the subjected deposits was the undisclosed income of the assessee lady only. The husband admitted that he was earning Rs. 30,000 to 40,000 per annum in the past and hence it was not abnormal if he could deposit savings of Rs. 34,00,000 in the bank account. The AO blindly believed the written statement of the assessee (sic—assessee’s husband) which was self-serving in as much as he could have been fastened the tax liability if he failed to explain the source of such deposits. Moreover the facts are not denied that the relationship of the assessee lady with her husband were strenuous and they were residing separately, therefore; the veracity of the statement of husband was highly doubtful. The AO merely proceeded on mere suspicion without bringing any cogent evidence to discharge the burden lay upon him under s. 69/69B even assuming the AO made out his case under those provisions. The Authorised Reprsentative also tried to explain that there were sufficient withdrawals available made from the same very bank account in the preceding dates which was available to be deposited on the later dates and therefore, prayed that the entire addition be deleted.
14. The learned Departmental Representative, on the other hand, relied upon the orders of the authorities below and also stated that the assessee did not avail the opportunity of cross-examination of the husband though provided. In the rejoinder the learned Authorised Representative submitted that simply from that fact, the necessity of the burden lay upon the AO to prove the investment made by the assessee only, cannot be said to have been discharged and the AO proceeded on merely suspicions relying upon certain decisions.
15. I have heard the rival contentions and perused the facts of the case. Firstly, I may deal with the legal contention of the assessee that the impugned addition was beyond the scope of s. 68. I fully agree with the contention of the learned Authorised Representative that before invoking s. 68, maintenance of the accounts by the assessee itself and finding credit of the subjected amount therein are the conditions precedents, and without satisfying them, the AO could not have invoked s. 68. I am supported by the decisions cited by the learned Authorised Representative. The propositions laid therein fully apply on the admitted facts available in this case. Now coming to the facts of the case on merit, some of the important facts having a bearing over the issue in hand, not denied, are that it was a joint bank account wherein the husband was first named. In answer to question No. 6 of his written statement placed in the assessee’s paper book he clearly admitted having opened the said bank account. He also admitted having deposited cash and also further transacted. On the other hand, there appears no contrary evidence brought on record to suggest that it was assessee only who made the entire deposits in the said bank account on all the days. The AO fully relied upon the statements of the husband only, ignoring the above fact as also the fact that once the husband was admittedly having earnings in the past, he could have also deposited in the bank account, even assuming AO’s version is accepted. The motive of husband appears clear behind alleging that it was all assessee’s money, because of the ongoing dispute between the husband and wife and the fear of being caught in the tax net. The AO merely proceeded on suspicion. He even did not hold the husband as assessee’s benamidar. Taking a circumspect view of all the facts and circumstances and the authorities relied upon, I am of the considered opinion that there was no justification for making the impugned addition, hence the same is hereby deleted. This ground of the assessee is allowed.
16. Ground No. 3 challenges the levy of interest under ss. 234B and 234D and being consequential in nature, the same be recomputed while giving effect to this order.
17. In the result, appeal of the assessee is allowed.