TMI Blog2015 (10) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... s that he has raised an additional claim before the ld. CIT(A) towards the cost of construction of the house which has been allowed to him by the ld. CIT(A) by exercising his jurisdiction as he has coterminous power under the I.T. Act. The amount which is finally disallowed would ,therefore, suffer the consequent penalty provisions under section 271(1)(c) of the Act. - Decided against assessee. Exemption u/s 54F is available in respect of investments in two adjacent houses which constitute one residential unit. In the case of the assessee, it has invested the consideration received on sale of plot of land in 03 different plots of lands which were geographically located at 03 different locations i.e, at Santosh Vihar, at B-10 Raghunandan Vihar and at B-1, Raghunandan Vihar. Further, a residential house has been constructed only on the plot of land at Santosh Vihar. It is thus clear that in the facts of the present case, the assessee doesn’t have any legal and tenable basis for claim of deduction in respect of 03 separate plots of land which are physically at different locations as by no stretch of imagination, they would collectively satisfy the definition of “a residential house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d claimed deduction u/s 54 of the Act after buying 03 plots of land totaling to ₹ 11,06,684/- and paid tax on balance amount of ₹ 1,64,316/-. The AO observed that the assessee reinvested the capital gains for buying the new plots of land and not in a residential house which is the pre-condition for claiming deduction u/s 54 of the Act. The AO asked the assessee to explain as to why the amount so invested for buying the new plots of land amounting to ₹ 11,06,684/- be not added to his total income. In response to the query, the assessee submitted his explanation dated 22-10-2009 which was considered by the AO but the AO did not find the reply of the assessee tenable for the reason that plot situated at 127, Bal Vihar, Jhotwara, Jaipur was not a residential house and the income from it was not chargeable under the head Income form House Property . Secondly, the new assets purchased were also not residential houses but they were plots of land. Since the assessee sold a plot of land (not a residential house) and reinvested the capital gains for buying the new plots of land (and not a residential house), it was held by the AO that he was not covered by the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) has erred in directing the AO to compute the penalty on disallowance ₹ 6,64,384/- instead of ₹ 5,07,884/- u/s 54F of the Act and has submitted the working as under: Deduction claimed by the assessee u/s 54 ₹ 11,06,684 Deduction allowed by the CIT(A) u/s 54F ₹ 5,98,800 Balance amount ₹ 5,07,884 3.8 In context of quantum proceedings, it is observed from the order of the CIT(A) that he has allowed deduction in respect of the value of land at Santosh Vihar colony, Jhotwara, Jaipur and related stamp duty of ₹ 4,42,300/- which was claimed earlier before the AO, and an additional deduction towards construction of house of ₹ 1,56,500/- totalling to ₹ 5,98,000/-. At the same time, deduction in respect of purchase of land at B-10 and B-1, Raghunandan Vihar, Jaipur at ₹ 3,05,336/- and ₹ 3,59,048/- respectively were withdrawn. The resultant position that emerges is as under: Deduction claimed before AO ₹ 11,06,684 Add: Addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is upheld on this ground. In the result, ground no. 3 raised by the assessee is dismissed. 3.11 Now coming to ground no. 2, the ld. AR of the assessee has raised two broad contentions before us. Firstly, he has submitted that there was no concealment of particulars of income or furnishing inaccurate particulars of income for the reason that whatever income was to be disclosed was disclosed and the deduction claimed by the assessee was in the computation of income of the assessee. However, the deduction claimed by the assessee was not acceptable to the Department and the same has been disallowed. The ld. AR further submitted that mere erroneous claim made in the return will not be a ground for levying the penalty. Secondly, he has submitted that the return of the assessee was filed in a hurried manner by the ld. AR of the assessee on the last date of filing of appeal on 31-10-2007 and if the return had not been filed by the assessee then the assessee had to face penalty u/s 271B of the Act. Therefore, the ld. AR of the assessee Shri Sushil Varma filed the return of income of the assessee after claiming deduction of ₹ 11,06,684/- u/s 54 of the Act without fully verifyin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 54 of the Act without fully verifying the facts of the case. Thus there was no fault of the assessee in claiming more deduction u/s 54 of the Act and to this effect, an affidavit of Shri Sushil Varma was filed before the ld. CIT(A). It would be interesting to observe that during the course of the assessment proceedings, the assessee has not corrected so called mistake and has continued with the position that claim under section 54 is maintainable. It would be also relevant to note that the ld. AR Shri Sushil Varma who has filed the return has also represented the assessee during the course of the assessment proceedings which shows that the ld AR has been duly authorized to represent the assessee. If it was a case of a bonafide mistake and making a claim in a hurriedly manner, the assessee through its AR has got ample opportunity to withdraw such claim during the assessment proceedings specially when a specific show cause made by the AO on this specific matter of deduction under section 54 and even subsequently during the appellate proceedings which he has failed miserably to utilize. In light of these facts, it is difficult for us to rely on the affidavit filed by the ld AR to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocations i.e, at Santosh Vihar, at B-10 Raghunandan Vihar and at B-1, Raghunandan Vihar. Further, a residential house has been constructed only on the plot of land at Santosh Vihar. It is thus clear that in the facts of the present case, the assessee doesn t have any legal and tenable basis for claim of deduction in respect of 03 separate plots of land which are physically at different locations as by no stretch of imagination, they would collectively satisfy the definition of a residential house . Therefore, it is clearly a case of striking in the dark which the assessee has been unsuccessful as rightly held by the lower authorities. It is clearly a case where the factual position doesn t support the claim of the assessee and there cannot be any dispute or debate that the assessee was eligible for claim at first place. Accordingly, in the facts and circumstances of the case, we are of the considered view that claim of the assessee under section 54 was not a bonafide claim and levy of penalty u/s 271(1)(c) was justified and hence confirmed. 4.0 In the result, the appeal of the assessee is dismissed. Order pronounced in the open court on 07 /09/2015. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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