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2021 (2) TMI 1076 - AT - Income TaxDenial of deduction u/s 54F- assessee alongwith 4 other family members sold a piece of land - Out of the sale consideration received assessee had invested in construction of house property and accordingly claimed deduction u/s 54 - as per revenue report of valuation submitted by the assessee cannot be considered as evidence for verification of claim u/s 54F of the Act on the grounds that valuation was made by the valuer on 25/02/2015 instead of year 2011 and the contractor from whom the construction of house was gone done was not produced and source of investment in the house property was not explained or proved by the assessee HELD THAT:- The valuer has determined the cost of construction on 30/07/2011 and the year of construction was certified by the valuer as 2010-11. The fact of construction being carried out has not been doubted by the lower authorities, thus, so far as the assessee has invested capital gain for construction within the time limit prescribed and the said fact has also been confirmed by the registered valuer, therefore, there was no reason to not consider the same. Had there been any doubts about the authenticity of the valuation report, then in that eventuality, the A.O. could have summoned the registered valuer or could have referred the matter to the DVO. Therefore, when once the valuation report of the registered valuer is submitted and the A.O. has not referred the same to the DVO then in that eventuality, the said report ought to have accepted by the A.O. Non-appearance of the contractor before the A.O. - We are of the view that the A.O. should not have taken an adverse inference merely on account of non-appearance of the contractor as practicably it is a common fact that a common man always hesitates in appearing before the Income Tax Department due to fear of being interrogated and getting into unwanted and prolonged litigation. As far as the allegation of the Revenue that the assessee has withdrawn cash to the tune of ₹ 4.00 lacs only till 31/07/2011 which was not invested in construction by that date nor deposited in the bank account notified under capital gain account scheme is concerned. In this regard, we noticed that Section 54(1) of the Act provides that if capital gain earned by assessee is invested within a period of one year before or two years after the date on which the transfer took place, purchased or has within a period of three years after that date, constructed one residential house in India, then exemption u/s 54 shall be available in respect of capital gain in accordance with clause (i) and (ii) thereof. We also draw strength from the decision of CIT vs Jagriti Agarwal [2011 (10) TMI 279 - PUNJAB AND HARYANA HIGH COURT] as held that provision of section 139(4) is not an independent provision, but is related to time contemplated under the provision of section 139(4) of the Act. Accordingly, section 139(4) had to be read alongwith sub section (1) of section 139 and the due date for furnishing the return of income u/s 139(1) is subject to the extended period provided u/s 139(4). Hence, extended period u/s 139(4) has to be considered for the purpose of utilisation of the capital gain amount.Thus the assessee has made investment in construction of house property within the specified time, therefore, we direct the A.O. to allow exemption U/s 54F of the Act to the assessee. Addition on account of cash deposits made in the bank account of the assessee - HELD THAT:- During the course of assessment proceedings, the AO sought explanation regarding source of such deposits which was duly replied by the assessee vide reply dated 23.02.2015 which is at page No. 13 and 14 of the paper book wherein it was categorically explained by the assessee that such sum was received by assessee as gift from his mother. In support of such claim, assessee furnished copy of bank pass book of his mother, wherein a sum of ₹ 12,35,000/- was reflecting as “withdrawals” on the same day. Copy of passbook showing withdrawals of the said amount has also been placed on record. Apart from this, the assessee had also submitted a declaration of gift of his mother - AO completely disregarded the same for the sole reason that the mother of the assessee is very old and assessee had discharged his onus by furnishing vital evidences in the shape of bank statement of his mother and declaration of gift. On the contrary, the A.O. could not place on record any cogent material to prove that the documents placed on record by the assessee are not reliable. Further, the A.O. also could not point out any discrepancy in the documents placed on record relied upon by the assessee. Thus we are of the view that the assessee has proved all the three conditions, i.e. (i) Identity (ii) Genuineness and (iii) creditworthiness of person from whom cash is explained to have been received. See NEK KUMAR VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX. [2004 (7) TMI 59 - RAJASTHAN HIGH COURT] - Decided in favour of assessee.
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