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Shri. B.V. Satyanarayana Rao Versus Commissioner of Income-tax- IV, Bangalore

2015 (12) TMI 354 - ITAT BANGALORE

Revision u/s 263 - as per CIT(A) section 54F of the Act could not be allowed since assessee had returned capital gains after the detection - Held that:- CIT in his order mentions that assessee has sold two sites on 24.07.2008, whereas the first property against which exemption u/s.54F of the Act was purchased on 13.03.2008 and the second property was purchased on 06.08.2008. Obviously the first property was purchased prior to the sale of the sites on 24.07.2008. Disabling clauses (ii) and (iii) .....

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. In other words, we are of the opinion that the order of AO did not have any error which was prejudicial to the interests of Revenue. Order of CIT u/s.263 of the Act is set aside. - Decided in favour of assessee. - I.T.A No. 976/Bang/2014 - Dated:- 27-11-2015 - Shri Abraham P. George, Accountant Member And Shri Vijaypal Rao, Judicial Member For the Petitioner : Shri. R. Chandrashekar, Advocate For the Respondent : Shri. Sanjay Kumar, CIT -III ORDER Per Abraham P. George, Accountant Member In th .....

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s, AO noted that assessee had omitted to include his transactions in an account with Canara Bank, Malur, in his accounts. Assessee stated that there was a cash deposit of ₹ 30,90,000/- in the said account which came out of sale of four sites not disclosed in the return of income. Assessee thereafter offered ₹ 11,58,289/- as short term capital gains and ₹ 5,55,525/- as long-term capital gains after claiming exemption u/s.54F of the Act, for investment in a residential property. .....

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of the Act. CIT also noted that assessee would not be eligible for the claim of exemption u/s.54F of the Act since the admission of capital gains was after detection by the Department and not voluntary. Assessee made a reply to the above notice stating that the SB account with Canara Bank, Malur was placed before the AO, who had considered it before completing the assessment. Further as per the assessee, sale of two of the sites for ₹ 15 lakhs was made on 06.06.2008 prior to the investment .....

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8 for ₹ 15 lakhs. Purchase of one residential house for ₹ 2,18,000/- was done by the assessee on 13.03.2008 and another house for ₹ 6,84,000/- on 06.08.2008. Relying on clause (ii) of proviso (a) to Section 54F(1) of the Act, CIT held that assessee had purchased one another residential house within one year from the date of transfer of the original asset thereby disentitling it from claim of deduction u/s.54F of the Act. Further as per the CIT it was difficult to establish nexu .....

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m, the first issue raised by CIT in the notice was that assessee had not deposited the sale consideration in bank before appropriating it for purchase of the new asset. However, in the final order u/s.263 of the Act, there is no finding adverse to the assessee on this point. Secondly, according to the Ld. AR, AO had carefully considered assessee s explanation that deposits in the bank account were out of consideration received from sale of four sites and was satisfied. CIT, as per the Ld. AR, wa .....

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Court in the case of CIT v. Fine Jewellery (India) Ltd [ITA.296 of 2013, dt.03.02.2015] and also that of Hon ble Delhi High Court in the case of CIT v. Ashish Rajpal (320 ITR 674). 06. Per contra, Ld. DR submitted that AO had not done the enquiry as required under the law for correlating the deposits in the bank account with the sale of the assets. Further according to him once an assessee purchased one another residential property either within a period of two years from the date of transfer o .....

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wards the new asset was not deposited in any bank or institutor specified before the due date for filing the return of income, in terms of Section 54(2) of the Act. b) No nexus has been drawn by the Assessing Officer between the sale consideration of the capital asset as appearing in the conveyance deed and the amount of cash deposits appearing in your bank account. As no linkage is established, the cash deposits appearing in the bank accounts ought to have been taxed uls.68 of the Act as cash c .....

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in your case for the A. Y. 2009-10 is silent on these points, the assessment concluded has become erroneous and prejudicial to the interests of revenue. In view of the above, it is proposed to invoke the provisions of Section 263(1) and in this connection an opportunity is given to explain your case. 08. Relevant part of the original assessment order in which the issue regarding the deposits in the Canara Bank account of the assessee has been dealt with by the AO, is reproduced hereunder : Durin .....

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and his Authorised Representative agreed to offer ₹ 11,58,289/- as Short term Capital gains and ₹ 5,55,525/- as Long term Capital gains (after indexation and considering the re-investment in residential house property and allowing exemption u/s 54F of the IT Act. 1961) vide the assessee's letter dated 12/10/2011. 09. What we find is that AO had done an enquiry and accepted the claim of the assessee that the deposit of ₹ 30.90 lakhs in Canara Bank had come out of the sale of .....

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ve. It is not a case where assessee had returned an amount and the AO had omitted to consider its admissibility or otherwise. It is a case where AO had discovered deposits in the bank account which were explained by the assessee to be out of sale of four sites. It is an admitted position that the sale deeds of the sites were produced by the assessee before the AO. In the face of this, to say that the AO had not done any enquiry would be incorrect. At the best it can be a case of enquiry not to t .....

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