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2014 (3) TMI 1001 - AT - Income TaxInitiation of proceeding u/s 153C - Held that:- It is not disputed that the assessee in the return of income filed has disclosed the capital gain arising out of the sale of the property. While the Ld. D.R. has contended that only because of seizure of incriminating material due to search and seizure operation, the assessee came forward to disclose the capital gain in the return filed at a belated stage, it is the contention of the assessee that the assessee has filed the return of income within the time permitted under the statute. In fact a draft computation of income on this capital gains was found during the search which demonstrated that the assessee was readying himself to file his return of income. Hence, it cannot be said that the assessee has disclosed the capital gain only as a result of search. In this regard, we may observe that the contention of the Ld. D.R. is not tenable. It is not disputed that the assessee has time to file his return of income as on the date of search i.e. 9.1.2009, within the period allowed under the statute u/s 139(4) of the Act. Therefore, it cannot be presumed that the assessee would not have disclosed the capital gain which was disclosed only as a result of search. It is a fact on record that the AO has accepted the sale consideration disclosed by the assessee. The enhancement in income determined by the AO is not because of suppression of income or non disclosure of income by the assessee but due to disallowance of exemption claimed u/s 54 of the Act. Therefore, considering the totality of facts and circumstances of the case, we are of the view that in the facts of the present case, initiation of proceedings u/s 153C of the Act is not maintainable. Accordingly, the assessee’s ground on this issue deserves to be allowed. - Decided in favour of assessee. Entitlement to exemption u/s 54 - Held that:- The facts and materials in the present case clearly indicate that the property concerned is a residential house with all the amenities. Only because it has ACC roof, it cannot be considered to be a temporary structure. The decisions relied upon by the assessee also support such view. So far as AO’s finding that assessee has purchased two separate properties (new asset) is concerned, the same is also found to be contrary to the materials on record. The materials on record, such as sale deed, site plan etc. clearly demonstrate the assessee purchased a single property, being a land with building. In any case of the matter, we are of the view that, claim of exemption u/s 54 in the impugned assessment year cannot be denied considering the fact that the assessee has invested the capital gain in purchasing a property with an intention to construct a residential house. Therefore, before expiry of the period of three years as allowed u/s 54 for construction, the AO cannot deny such exemption to assessee. Therefore, considering the totality of facts and circumstances in the light of ratio decided in the decisions relied upon by the Ld. A.R., we are of the view that assessee will be entitled to exemption u/s 54 of the Act. - Decided in favour of assessee.
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