TMI Blog2013 (6) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... uction is in habitable condition. A construction in inhabitable position cannot be equated with a residential house. If a person cannot live in a premises, then such premises cannot be considered as a residential house. Thus investment in the construction would be complete as a house only when such house becomes habitable as supported by the decision of Saleem Fazelbhoy vs. DCIT (2006 (6) TMI 139 - ITAT BOMBAY-G). The evidence brought on record by the Assessing Officer clearly shows that the property purchased by the assessee would not fall within the description of residential house. Being so, the claim of the assessee cannot be allowed u/s. 54F. Also see Smt. Rohini Reddy [2008 (4) TMI 363 - ITAT HYDERABAD-B]. Against assessee. Claim for construction expenditure denied - Held that:- The assessee not placed before the Assessing Officer the required information like the details from whom the assessee purchased construction material. Further it is also brought on record by the Assessing Officer that the contractors to whom payments were made withdrew the amount from their accounts in a short time and closed the accounts within a few months. The evidence brought on record by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal construction was also admittedly made, the learned CIT(A) erred in negating the claim of additional investment in toto. (v) On the facts and in the circumstances of the case, the learned CIT(A) ought to have held that any amount of capital gain held as not appropriated towards acquisition of the new asset is to be assessed in the previous year in which the period of three years from the date of transfer of the original asset expired. (vi) For the above grounds and such other grounds that may be urged at the time of hearing, the appellant prays that the appeal be allowed. The appellant craves leave to add to, amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary. 3. Brief facts of the issue are that the assessee filed return of income declaring income at Rs. 17,54,250 along with agricultural income of Rs. 4,52,000. The Assessing Officer determined the income at Rs. 2,16,34,695 as against the returned income in addition agricultural income of Rs. 4,52,000. In this case the assessee sold a house situated at Dwarakapuri Colony, Hyderabad for a consideration of Rs. 2.3 crores. After reducing the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also mentioned that nobody was available at that site on the day of his visit and that there were no houses in and around half kilometre radius of the site. He also observed grass growing over the entire site, besides some bushes. Accordingly, he concluded that the place was not a habitable one. The Inspector also enclosed photographs taken by him of the above mentioned construction. He also reported that he could not find any signs of demolished construction in the south west corner of the site, where, originally, a building should have been existing as per the site plan enclosed with the sale deed. The Inspector also met the Sarpanch of Kokapet Village, who accompanied him to the site. The Sarpanch, who is born and brought up in Kokapet itself, stated that no hills or boulders were existing at the said site as per his knowledge. The Inspector did not find even any mouram or bitumen road inside the compound wall. He only found a road made up of quarry dust, that too only outside the boundary wall. The Assessing officer noted that though the assessee had submitted a quotation mentioning that a bitumen road was proposed to be laid from the main road to the site, the surrounding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , nothing would have prevented her from arranging a second visit and explaining the indications of the preliminary works executed and the existence of the said 600 sq. ft house. 3.6 In view of the above, the Assessing Officer concluded that the assessee had only tried to hoodwink the Department from all angles. It was only after her claim regarding additional works was questioned with reference to the site visit report and the statements of the persons claimed as having done the works, that the assessee took back her claim regarding additional works and requested for allowance of deduction to the extent of Rs. 90,40,000 only, which is the cost of the purchase of the house. She noted that on physical inspection, even the house claimed as purchased through the sale deed was also not visible and only two rooms constructed subsequently were physically available. Therefore, he concluded that the house purchased by the assessee must have been demolished and what was found was only a site and a make believe house of two rooms with hollow bricks. 3.7 Having arrived at the above findings, the Assessing Officer opined that the purpose of enactment of sec. 54 is encouraging the housing se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase of a house of 600 sq. ft only for the purpose of getting deduction under sec. 54. He observed that the assessee had claimed having incurred additional construction charges after the purchase of the site, which, in fact, were received back by her, as stated by the persons concerned. 3.9 Accordingly, the Assessing officer did not allow the deduction u/s. 54 of the Act for the purchase of the house property, after rejecting the claim of the expenditure towards construction charges. Since the assessee failed to furnish any evidence regarding the payment of Rs. 10,000/- at the time of acquisition of the building sold, such expenditure was also not allowed. The Assessing Officer has also enclosed the photographs of the new construction and the plot, besides the road made up quarry dust, as annexure to the Assessment order. 4. On appeal the CIT(A) observed that the Assessing Officer found that there was no construction from West to East, as shown in the sale deed. Instead, there was a small construction, consisting of two rooms, made of hollow bricks, located from South to North. Besides, the plinth area of the structure found existing was also about 200 sq. ft. only, as again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f ITO v. Rohini Reddy (122 ITD 1) have opined that since the expression "Residential House" is not defined under the Act, the purposive meaning has to be adopted to such expression, instead of going by the technical meaning assigned under various enactments or by the meaning given in the dictionary. They opined that the totality of the circumstances in the said case indicated that the property purchased was never intended to be used as a 'residential house', either by self occupation or for letting out. In view of the said decision of the Tribunal Hyderabad Bench, as also the clear legislature intention behind sec. 54F, the CIT(A) was of the view that in view of the findings of the Assessing officer during the field enquiry, the construction of 600 sq. ft. on the impugned land, even if existing at the time of purchase thereof, cannot qualify as a 'residential house'. Besides, looking to the status of the assessee, it is clear that she would have never intended to use the house admeasuring 600 sq. ft. for her self occupation. It is also clear that despite contending that the same was being used as residence by one of her servants, the said claim remains unsubstantiated and the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee, it is not applicable to the assessee's case, as in assessee s case, no new house has been acquired by the assessee within the stipulated time. 4.4 In view of the above discussions, the CIT(A) held that he found no infirmity in the computation of capital gains by the Assessing Officer without allowing any deduction claimed under sec. 54 for the purchase of new house property, as also, the rejection of the assessee's claim regarding incurrence of additional construction charges. Accordingly, He rejected the grounds raised by the assessee. 5. The learned AR submitted that the assessee by way of letter dated 23.12.2009 had submitted before the Assessing officer that the document evidencing purchase of house shows a house existing thereon with a built up area of 600 sq. ft. The total investment of Rs. 90,40,000/- was made for the purchase of the said house, including the payments towards registration charges and commission paid. The assessee had also intimated the Assessing officer that the said house was being used as 'Residence' by one of the servants of the assessee. The AR further submitted that the additional construction, for which purposes amounts were advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings of the enquiries made by the Assessing Officer, if the Assessing Officer decided to act upon the information gathered by him and to use the same against the assessee, he should have put the same to the assessee for rebuttal. He claimed that the conclusions drawn by the Assessing Officer are one sided, without observing the principles of natural justice. 5.3 The AR also submitted that the cases relied upon by the Assessing Officer are distinguishable, as in the case of ITO vs. Pawan Kumar Garg (97 ITD 575 (Chd), there was no construction at all and in order to claim exemption when the return was selected for scrutiny, two small rooms had been hurriedly constructed. The AR pointed out that in the case of Smt. Reeta Gaur v. DCIT (90 ITD 24) (Luck) also the claim of construction on the plot of land was not on the record. 5.4 The learned AR further submitted that the assessee had purchased a house bearing number 1-50/3, incurring an expenditure of Rs. 90,40,000/-, within one year after selling her house at Punjagutta and, therefore, such purchase was qualified for deduction under sec. 54 of the Act. He submitted that in the case of Manoharlal vs. ITO (supra) it has been held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent of investment made in purchase of the house bearing number 1-50/3, Kokapet and should have directed that the amounts not utilized would be liable for assessment in the assessment year 2010-11. 5.7 The AR further submitted that the Assessing officer omitted to exclude the commission of Rs. 30,000 paid by the assessee in connection with the sale of her house at Punjagutta, which constituted expenditure incurred wholly and exclusively in connection with the transfer and was eligible for deduction as per sec. 48(i) of the Act. He submitted that necessary evidence in this regard has been filed before the Assessing officer and the claim of deduction was denied by him without assigning any reason. 6. The DR relied on the order of the CIT(A) and also on the order of the Tribunal in the case of ITO v. Smt. Rohini Reddy (122 ITD 1) wherein held that benefit of exemption u/s. 54 is allowable only when the property sold as well as property purchased by the assessee are intended to be used as residential houses; neither the roofed structure built on the land sold by the assessee was self occupied or let out or intended to be used as residence, nor the two plots purchased by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of [two years] after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of section 54F, the assessee is required to purchase with a period of one year before or two years after the date on which the transfer took place or constructed within a period of three years after the date of transfer, any new residential house. Before the lower authorities, the learned AR took a plea that the assessee has purchased the house bearing No. 1-50/3 at Kokapet village, Hyderabad vide sale deed dated 15.12.200. The AR also taken a plea that the assessee made a payment of Rs. 106 lakhs towards improvement thereof and being so, the assessee has appropriated the sale consideration for the purpose of a new house, the benefit u/s. 54F has to be given. To verify the facts of the case, the Assessing Officer carried on enquiry and found that there was no construction as mentioned in the sale deed. Instead, there was a small construction consisting of two rooms made of hollow bricks located from south to north measuring about 200 sq. ft. as against 600 sq. ft. in the sale deed. The assessee taken a plea before the lower authorities that this construction was used by servants as their residence. However, the Assessing Officer brought on record that the said constructio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as "residential house" u/s. 54F of the Act. The popular meaning of the word "house" is a place or a building used for habitation of persons. "Residential house" is a dwelling house as distinguished from a house of business, warehouse, office, shop, etc. In other words, residential house is a building used as a place of abode in which people reside or dwell in contra distinction in one which is used for commercial or business purposes. Since a house is called residential house with reference to the purpose of its users, it may not be necessary that somebody should live in it continuously. It is enough if it was a house for residence. Therefore, the assessee's plea cannot be considered as there is a residential house as the said structure cannot be considered as a dwelling unit and the investment claimed by the assessee is not eligible for deduction u/s. 54F of the Act. Being so, the claim of the assessee cannot be allowed u/s. 54F of the Act. Accordingly, we confirm the order of the CIT(A) on this issue. ITA No. 572/Hyd/2012 (Sri Bala Vishnu Raju) 11. This appeal by the assessee is directed against the order of the CIT(A)-IV, Hyderabad dated 31.1.2012 for A.Y. 2004-05. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, and therefore, even if no income from such property was actually offered to tax in earlier years, this could not disentitle the assessee from deduction u/s. 54 of the Act. The AR submitted that the properties purchased on 25.3.2004, for which claim u/s. 54 was made, are indeed house properties. However, there is vacant land also, appurtenant to such house properties. It was stated that the assessee wished to construct further building on such vacant land, which is appurtenant to residential house property purchased. 12.4 The learned AR also submitted that the Board's Circular No. 667 dated 18.10.1993 clarifies that if the amount of capital gain for the purpose of sec. 54, and net consideration for the purpose of sec. 54F, is appropriated towards purchase of a plot and also towards construction of a residential house thereon, the aggregate cost should be considered for determining the quantum of deduction u/s. 54/54 F, provided that the acquisition of plot and also the construction thereon, are completed within the period specified in these sections. The representative submitted that as per the said circular, the assessee is entitled to invest the sale proceeds in purchase of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... very structure of the constructed area was such as showed that the assessee did not intend to use the same for his residence or to let it out. It could have been used as a garage or servant quarter. However, to be treated as a residential building, the structure should be predominantly as residential building, having a land appurtenant thereto, and not just an open plot of land, having some insignificant structure. He also referred to the decision of the Tribunal in the case of ITO Vs. Smt. Rohini Reddy (122 ITD 1) (313 ITR (AT) 346). Besides, he referred to the decisions in the cases of D. P. Mehta vs. CIT (251 ITR 521)(Del.) and Rajesh Surana v. CIT (306 ITR 368) (Raj). The Assessing Officer observed that the said cases squarely covered the facts of the assessee's case and considering the view expressed therein, the structure of 350 sq. ft. in the assessee's case could not be treated as an asset in the nature of buildings or land appurtenant thereto or a residential house. With regard to the contention of the assessee that the condition for deduction u/s. 54 is only "chargeability" of income from such house property under the head 'Income from House Property', the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The learned AR submitted that the CIT(A) ought to have considered the fact that the property sold by the assessee was a residential house. The CIT(A) ought to have followed the decision of the Tribunal in the case of ITO v. Dr. Uma Challa (ITA No. 755/Hyd/2007 dated 24.10.2008) which supports the case of the assessee. The AR submitted that the CIT(A) ought to have appreciated the evidence brought on record and ought to have held that the assessee is entitled to exemption u/s. 54 of the Act. The AR submitted that the assessee sold the property No. 8-2-293/82/A/854-S and 854-S/1 and issue relating to chargeability of capital gain came up for consideration for the A.Y. 2007-08. The assessee's claim for exemption has not been accepted by the Assessing Officer. Assessee could not succeed before the CIT(A). The assessee filed appeal before the Tribunal. The said appeal numbered as ITA No.704/H/11 has been heard on 02-01-2013 before the "A" bench of the Tribunal. The AR submitted that detailed submissions made by the assessee before the lower authorities in support of the contention that property purchased qualifies as a residential house may kindly be considered as part and parcel of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence to the effect that the said built up area was fit enough to be used for human habitation. Obviously, for being habitable by human beings, the unit should have had the basic amenities like a place for cooking/kitchen, toilet and bathroom, approach road within the plot, etc. However, no evidence in this regard could ever be produced. The assessee could not furnish any evidence regarding any electricity or telephone or tap water connection having been granted to the said structure, which could have made it a liveable unit. 14.2 The DR further submitted that even though it has been contended that the said house had earlier been let out, no evidence to support such contention could ever be filed. No such income has been proved as ever disclosed to the Department. Besides, even the Municipal Tax payment receipt does not support the contention of the assessee, as the same pertains to the year 2010-11, whereas the nature of the house property is to be examined in the financial year 2003-04. Since the assessee has not been able to substantiate his claim that the 350 sq. ft. structure on the plot was a liveable unit, it is clear that the decision of the Tribunal in the case of Dr. ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land with a small shed claiming that it is measuring 350 sq. ft. But on verification by the Assessing Officer, it was found that it is only 100 sq. ft. and unfit for human residence. Being so, it cannot be considered as residential house in terms of section 54F of the Act. The structure of 350 sq. ft. existing on 980 sq. yards of the land sold by the assessee on 4.2.2004, which comprised of 3 rooms of 10 ft. x 10 ft. each, cannot be considered as fit for human habitation. In fact, despite relying on the specific finding of the Tribunal in the above case, the assessee has not been able to furnish any evidence to the effect that the said built up area was fit enough to be used for human habitation. Obviously, for being habitable by human beings, the unit should have had the basic amenities like a place for cooking/kitchen, toilet and bathroom, approach road within the plot, etc. However, no evidence in this regard could ever be produced. The assessee could not furnish any evidence regarding any electricity or telephone or tap water connection having been granted to the said structure, which could have made it a liveable unit. 15.1 The investment made by the assessee in the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d consequently, the Assessing Officer erred in making addition of Rs. 47 lakhs without rebutting the evidence produced by the appellant. (vi) For the above grounds and such other grounds that may be urged at the time of hearing, the appellant prays that the appeal be allowed. The appellant craves leave to add to, amend or modify the above grounds of appeal either before or at the time of hearing of the appeal, if it is considered necessary. 18. Brief facts of the issue are that in this case assessment was completed u/s. 143(3) of the Act vide order dated 24.12.2009 by determining the income of the assessee at Rs. 13,28,45,498 including capital gain of Rs. 5,10,66,500 as against the returned income of Rs. 5,41,49,287. As discussed in the assessment order, the assessee had filed his original return of income on 28.7.2007, disclosing total income of Rs. 5,30,14,348, which included house property income of Rs. 8,02,137, long term capital gains of Rs. 5,29,09,619 and income from other sources of Rs. 4,37,531. Later, on the basis of SRO data, the Assessing Officer had issued a letter to the assessee on 7.8.2008, calling for information about the sale transactions of the properties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 2,07,64,000/- between the sale consideration shown in the return and data collected from the SRO. On receipt of this letter, the assessee filed a revised return on 18.11.2008 wherein the total capital gains on the two properties were enhanced to Rs. 6,09,54,330/-. In the said revised return, the sale consideration of the first property was admitted at Rs.9,78,42,000/-, while the cost of improvement was kept the same as in the original return. However, the assessee claimed exemption u/s. 54 of Rs. 1,48,85,000/- for investment up to 28.07.2007 in the new asset, being house property at No. 2-91/14/7 and 2-91/14/8 Kondapur Village. 18.5 For the property at Sr. No. (ii) above, the sale consideration was taken at Rs. 4,21,22,000/- as per SRO values and cost of improvement was shown as originally declared. In the note appended to the computation, it was mentioned that the return had been revised to rectify the mistakes in non adoption of market value for working out the long term capital gain under sec. 50C and also for not claiming exemption u/s. 54. The assessee also furnished the details of the cheques of Rs. 1,48,85,000/ - for his investment up to 28.7.2007. 18.6 The Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as no mention of the building/house constructed by the assessee, in the sale deed. In respect of plot No. 700 and 700/1, Road No. 36 Jubilee Hills, Hyderabad the Assessing Officer noted that the assessee had purchased the said property, admeasuring 1955 sq. yards vide 4 sale deeds in July, 2000. A total of 650 sq. ft. of built up area was mentioned in the annexure to the purchase deeds thereon. Since, the plots purchased by way of 4 purchase deeds were four parts of contiguous area of land; it was clear that very small units of 150 sq. ft. were mentioned in three of them and one unit of 200 sq. ft in the 4th one. The Assessing Officer has appended photocopies of the annexures to the purchase deeds showing the location and the size of dwellings under reference to the assessment order. 18.8 The Assessing officer noted that the above properties were sold by the assessee to M/s. Mold Tech Technologies Ltd., vide two sale deeds dated 6.12.2006 and 11.12.2006. On page 2 of the said deeds, it was clearly mentioned that the agreement holder, Sri C. Vasudeva Reddy for the previous owner Sri P. Subba Raju, had constructed small dwelling units on the above plots, which were assessed to muni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llings, annexed to the purchase documents, have also been enclosed to the Assessment order. 18.10 The Assessing Officer noted that the above said property was sold by the assessee to Sri T. Narendra Choudary, vide two sale deeds dated 06.12.2006, for a consideration of Rs. 1,89,00,000/- and Rs. 2,21,00,000/- respectively. In the sale deeds the small dwellings were shown, as against the claim of Rs. 2.16 crores towards improvement and the claim of a double storied house of 4800 sq. ft. thereon. The Assessing officer has enclosed the photocopies of the annexures to the sale deeds, showing the built up area of 200 sq. ft. each, totalling to 400 sq. ft. of constructed area on land of 1401 sq. yards. 18.11 During the course of assessment proceedings, the Assessing officer issued summons to 5 persons to whom Rs. 5,10,66,500/- were claimed as paid towards the cost of improvement, including construction of house/building. Summons were issued at the addresses given by the assessee. However, the same were returned unserved on account of incomplete address/non availability of the persons concerned. The Assessing Officer, therefore, required the assessee to produce the said party for verif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that he did not remember when and where he had signed the document and who got it signed by him. 18.14 The Assessing Officer also recorded a statement from the second person, Sri B. Narsinga Rao. Sri Narsing Rao also turned out to be a very small time rock cutter, who had never done any work of the value of more than Rs. 1 lakh in his life. He was never involved in a contract work, wherein various machines, lorries and workers are engaged. Though he also claimed to have undertaken the work of rock cutting for the assessee at Road No. 36 Jubilee Hills site, he did not have any details, bills etc., for such a huge magnitude of work. He also out rightly disowned the signature for the receipt of Rs. 72,52,534/- submitted by the assessee. The Assessing Officer found that the signature of Sri B. Narsing Rao on the said receipt was totally different from the signature of the person produced before her. 18.15 The Assessing Officer also made enquiries with M/s. Mold Tech Technologies P. Ltd., to whom the above property had been sold. Vide their letters dated 2.9.2009, 7.9.2009 and 14.9.2009, they submitted that the land had been purchased by them for the purpose of their corporate off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer carried out a verification of the cheque payments made to them and others. It was found that they were employees of a company, M/s. ASIP (P) Ltd., and had opened accounts apparently only for the receipt and withdrawals of the payments made by the assessee. She found that the accounts were closed within a few months. The assessee did not provide their addresses, nor produced them for verification of the genuineness of the claim of works done by them. Besides, the assessee also failed to produce any bills or other documents in support of the cost of improvement and construction of two storied house of 4,800 sq. ft. 19. The Assessing Officer not accepted claim of the assessee on the following reasons: Plot Nos. 700 700/1 (i) Though there was an approval of MCH in the name of P. Subba Raja, the previous owner/attorney holder, the mere presence of such permission was not significant. She noted that property tax had been paid earlier also for the small dwelling by the previous owner. (ii) The assessee could not rebut the claim of M/s. Mould Tech Technologies Ltd. regarding absence of any house or building (apart from the small dwellings) and that they had bor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores could be submitted by assessee. (ix) For B. Narasiga Rao, he is not the person (as per assessee's version), whose signatures are on the receipt of work contract of Rs. 70 lakhs. (x) For K.Satyanarayna, he refused to have signed on revenue stamp submitted by assessee. (xi) Statements of Shri B. Narasing Rao and K. Satyanarayna exposed the falseness of the claim of assessee. (xii) Other persons, to whom the remaining payments were made, could not be traced. Neither were they produced by assessee. Hence there is no verification at all regarding the genuineness of such work. (xiii) Mold Tech Technologies confirmed having received the land with small dwellings, as per sale deed and stated having spent about Rs. 4 crores on excavation, rock cutting and levelling work. (xiv) For the other property at 854 S 854 S-1, Jubilee Hills Corporation had stopped giving building construction permission during the period 1991 to 2007 due to hatched zone/Green zone. (xv) Even though the query was first raised in September,2009, till the date of passing of the assessment order, despite scores of hearings in the case, nothing more could be submitted by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e incorrectness of the claim was detected by the dept. 19.5 With regard to the claim made in the return of income, it was submitted before him that while filing the revised return, the assessee had been advised that he was entitled to claim a deduction in respect of purchase/construction of immovable property after the sale of his Jubilee Hills property. The assessee averred that the total income and tax was computed by the tax consultant accordingly. However, when the assessee sought an advice from another tax consultant, he opined that the claim u/s. 54F might not stand the test of law. It was submitted that the assessee, thereafter, even changed his tax consultant. It was pleaded that the claim that the claim of deduction had been made under the bona-fide impression regarding entitlement, which was prompted by the wrong advice of the earlier consultant. The assessee therefore, requested the Assessing officer to ignore the claim. However, the Assessing officer concluded that it was only after the department detected and confronted the facts to the assessee that the claim was withdrawn. Considering the withdrawal of claim was not voluntary, she rejected the claim of deduction u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad of discounting the same on the ground that the said person withdrew the amounts from their bank accounts which fact should in fact have been held in favour of the assessee. In the light of the field facts supported by the letters from the Greater Hyderabad Municipal Corporation and the Jubilee Hills Co-op Housing Society and also the written evidence tendered from Sri Naren Chowdary the CIT(A) should have accepted the claim of the assessee regarding the cost of improvement (Property No. 2). The CIT(A) ought to have appreciated that the enquiries were conducted by the Assessing Officer more than two years after the close of the relevant accounting year and that too when the purchasers had already embarked upon fresh constriction after razing down the existing structures. 20.3 The learned AR submitted that in the light of the documentary evidence and the explanations furnished by the assessee coupled with the voluntary withdrawal of the claim for deduction u/s. 54, the CIT(A) ought to have accepted the claims made by the assessee. The AR prayed that the income returned by the assessee in the revised return subject to withdrawal of the deduction u/s.54 may be directed to be accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jubilee Hills Cooperative Society, to the effect that the MCH had stopped issuing permission for construction on the plots during 1991- 2007, rather showed that there could not have been any such construction. She also did not find any strength in the argument of the assessee that the property was not mentioned in the sale deed, as it was of no use to the purchaser. These findings led the Assessing Officer to make further enquiries regarding the improvement/ construction contendedly made. 21.3 The learned DR submitted that during the assessment proceedings, the assessee was required to prove his contention regarding improvement/construction. As discussed in para 3 of the assessment order the assessee furnished the details regarding cost of improvement, investment etc., along with documentary evidence in the form of purchase deeds, sale deeds, copy of bank accounts showing receipt of sale considerations and payment towards cost of improvements. Besides, signed receipts and agreements/documents with contractors etc., were also submitted. The assessee also provided the addresses of the 5 persons to whom the total amount of Rs. 5,10,66,500 had been contendedly paid. However, the sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntractors, engaged for carrying out such improvement/construction. 21.5 The DR submitted that so far as the exemption u/s. 54F is concerned, it is clear that even if Smt. K. Usha Rani and Smt. Padmavati had purchased the so called "new asset", the house property at 2-91/14/7 8, Kondapur, on behalf of the assessee only and that they were to transfer it in the name of the assessee after his return from USA, the spot enquiries revealed that the plots were open plots, having only a 16 x 10 asbestos shed. In fact, while withdrawing the claim of exemption u/s. 54 in respect of the said property, the assessee admitted that he had been incorrectly advised in this regard by the earlier Tax consultant, and, therefore, the claim was withdrawn on the advice of another tax consultant later. Even if the advice of the former consultant was based on any judicial precedent or interpretation, obviously, the asbestos shed cannot be considered as a residential house in the light of the decisions, such as, the one decided by the Tribunal in the case of ITO v. Rohini Reddy (122 ITD 1). 21.6 The DR submitted that the claim of the assessee regarding improvement/construction is not allowable only o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e persons are not having sufficient experience or capacity to carry on such kind of work. The assessee not placed before the Assessing Officer the required information like the details from whom the assessee purchased construction material. Further it is also brought on record by the Assessing Officer that the contractors to whom payments were made withdrew the amount from their accounts in a short time and closed the accounts within a few months. The evidence brought on record by the Assessing Officer shows that the alleged improvements or construction made by the assessee is false. Being so, we are inclined to uphold the argument of the DR and dismiss the ground taken by the assessee. 23. Regarding the addition u/s. 68 of the Act at Rs. 47 lakhs, the facts are that the assessee had obtained loans aggregating to Rs. 77.5 lakhs from various persons during the year under consideration and had submitted confirmation letters from each of the 28 creditors before the Assessing officer, besides furnishing certificates of land holding issued by the revenue authorities in respect of all of them. Certificates of income derived by the creditors had also been furnished in most of the cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he creditors and the Assessing Officer had failed to disprove the claim of the assessee as not genuine. Thus, the Tribunal deleted the addition made by the Assessing Officer. On the revenue's appeal, the High Court upheld the order of the Tribunal. The High Court supported the finding of the Tribunal that the assessee had discharged the onus cast upon it by providing the basic materials and it was the Assessing Officer who had failed to prove to the contrary. The AR submitted that the additions made under sec.69 of the IT Act may be ordered to be deleted. 24.2 The AR submitted that the CIT(A) recorded that the assessee indeed furnished confirmations from the respective creditors for substantiating their identities and besides these the assessee also furnished the pattedar passbooks, and income certificates from the VROS to establish the creditworthiness of the creditors. In spite of the fact that the creditors come from village background and, therefore, maintenance of bank accounts by the respective creditors could not be expected and in any case it was in the control of the assessee, the CIT(A) pointed out that the loans were given in cash and accordingly, despite having establ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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