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D. Devadass Versus Income-Tax Officer

2016 (6) TMI 795 - ITAT CHENNAI

Denial of exemption under section 54F - assessee purchased a residential plot and constructed a house in the name of his unmarried daughter who was dependent and before due date of filing of return of income under section 139(1)- Held that:- We perused the provisions of section 54F of the Act which are beneficial provisions but exemption under section 54F has to be claimed only by purchasing/ constructing a new residential property in the assessee's own name and not on his unmarried daughter. Th .....

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f expenditure incurred for construction - Held that:- The findings of the Assessing Officer based on suspicion without considering the construction expenditure incurred towards labour, materials on day-to-day basis being highly unorganised sector. The observations of the Assessing Officer that the money has been used for some other purpose and investment are made in the construction of the residential property is from undisclosed source which are different from the Tamilnadu Mercantile Bank Ltd. .....

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fficer on suspicion treated the difference of ₹ 21,53,000 as unexplained income without any evidence or statement recorded from the assessee's mother or sister. The learned Assessing Officer has relied on the sworn statement of the assessee and the daughter and made elaborate findings in his order on addition. The Assessing Officer's observation of unexplained income is on imagination overlooking the fact that the life interest is created for the assessee's mother and sister by will of the .....

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of Income-tax (Appeals) on this issue and remit the entire issue to the file of the Assessing Officer for limited purpose only to verify the excess amount in bank account pertains to the mother and sister of the assessee. - I. T. A. No. 2047/Mds/2015 - Dated:- 7-4-2016 - Chandra Poojari (Accountant Member) And G. Pavan Kumar (Judicial Member) For the Petitioner : K. Meenakshisundaram For the Respondent : B. Lakshminarayanan ORDER G. Pavan Kumar (Judicial Member) 1. The appeal filed by the asses .....

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lained investment in respect of land. 3. The brief facts of the case that the assessee is a retired salary employee of Chennai Port Trust and filed a return of income on July 22, 2011, with the total income of ₹ 8,76,140 and the return was processed under section 143(1) of the Act on September 1, 2011. The case was selected for scrutiny under CASS and notice under section 143(2) of the Act was served on the assessee. In response to the notice, the learned authorised representative of the a .....

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arious dates and submitted that the assessee inherited from his late father along with his mother, four brothers and sister 8.6 acres of agricultural lands at Paruthipattu Village in Avadi and the land was sold for consideration of ₹ 5,34,10,000. The assessee purchased a residential plot at Mangadu and constructed a house in the name of his unmarried daughter out of the net sale consideration and claimed exemption under section 54F of the Act. In continuation to the explanation, the assess .....

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assessee availed of tax exemption under section 54F of the Act. The assessee purchased 2,380 square feet land on January 21, 2011, in the name of his daughter at Sree Ambal Gajalakshmi Nagar, Phase II in Mangadu and constructed a building with plinth area of 4,000 square feet. Out of the net sale consideration of ₹ 97,82,000, the assessee purchased a land for ₹ 19,33,000 including the document charges ₹ 1,60,000 and spent an amount of ₹ 79,49,000 in construction of house .....

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mbers, building construction plan approved by the Mangadu panchayat and the assessee under self- supervision with the help of M/s. Abasus Properties (P.) Ltd. constructed six flats. 3.1 In respect of deposits in Tamilnadu Mercantile Bank Ltd., the assessee has furnished the bank account copy explaining each credit. On a perusal of the bank deposits and cash withdrawals, the Assessing Officer found that there are withdrawals in the bank account and was not disputed by the Revenue. The Assessing O .....

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ng completion period and bank account details. The Assessing Officer recorded statement from unmarried daughter of the assessee on whose name the land was purchased and constructed. The Assessing Officer considering the facts and investment in the name of the daughter has rejected the claim of exemption under section 54F of the Act. The learned Assessing Officer on a perusal of the bank account found that the assessee has withdrawn the amounts and paid for purchase of land during the period from .....

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spect of sale consideration and purchase of the property on suspicion and surmises presumed that the entire sale consideration was credited to the bank account and withdrawn and utilised for the purpose other than acquiring the asset and treated the entire sale consideration spent for acquiring a new asset as undisclosed investment of ₹ 97,82,000. The learned Assessing Officer made an addition for difference in sale consideration after recording of sworn statement that as per the bank stat .....

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ssing Officer alleged that there is no satisfactory proof for the source and hastily concluded ₹ 21,53,000 as unexplained income. With the above additions, the Assessing Officer finalised the assessment and assessed the total income at ₹ 2,26,60,104. Aggrieved by the Assessing Officer's order, the assessee filed an appeal before the Commissioner of Income-tax (Appeals). 4. In the appellate proceedings, the learned authorised representative reiterated the submissions made before t .....

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purchased the property in the name of daughter and relied on the decision of CIT v. V. R. Desai [2011] 197 Taxman 52 (Ker) and also asset should be purchased in the name of the assessee and relied on the following decisions. 1. ITO v. Prakash Timaji Dhanjode [2002] 258 ITR (AT) 114 (Nagpur); [2003] 81 TTJ 694-Purchase in the name of adopted son. 2. Ram Kishan v. ITO 2007-TIOL-178-ITAT-Del. 3. Jai Narayan v. ITO [2008] 306 ITR 335 (P&H)-Purchase in the name of son and grandson. 4. Prakash v. .....

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vidence or submissions are filed in the appellate proceedings and confirmed the additions. Aggrieved by the order of the Commissioner of Income-tax (Appeals), the assessee assailed an appeal before the Tribunal. 5. Before us, the learned authorised representative reiterated the submissions of the assessment and the appellate proceedings and argued that the assessee was denied exemption under section 54F of the Act and he being a retired employee inherited agricultural land at Paruthipattu adjoin .....

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d. for a consideration of ₹ 5,34,10,000 and after setting apart of ₹ 10,00,000 to the mother and ₹ 35,00,000 for the sister share the balance ₹ 4,89,10,000 was divided equally between five brothers and the assessee's share worked out to ₹ 97,82,000. The assessee deposited the sale consideration in Tamilnadu Mercantile Bank Ltd. including the instalments of mother and sister aggregating to ₹ 1,19,35,000. Subsequently, the assessee utilised the entire amount .....

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on the judicial decisions and the Benami Transactions (Prohibition) Act, 1988, and explained that the land was purchased in the name of unmarried daughter and she was married subsequently. On the issue of capital gains accounts scheme the assessee has purchased land immediately after sale of property and withdrew the money from bank account and started construction. In the present case, the assessee acquired the land before due date of return of income under section 139(1) of the Act and further .....

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amount were utilised in construction of residential flat and paid advances for purchase of tiles, timber, steel, sand, blue metal, etc. The Assessing Officer conducted enquiry and the Inspector reported that the property was constructed by the assessee but the Assessing Officer under suspicion the entire sale consideration was utilised for some other purpose and the amount invested in construction of property at Mangadu is different and made addition as undisclosed investment without any evidenc .....

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of the sister was paid and was out station and mother was living with the assessee. Therefore, the amount of ₹ 10,00,000 paid to the assessee's mother was deposited in the assessee's account and similarly ₹ 11,53,000 instalment of sister share was also deposited in the bank account. The Assessing Officer recorded the statement and has overlooked the charge created by the deceased father on the property in favour of the mother and sister and treated the amount as undisclosed i .....

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the assessee. 8. We heard the rival submissions and perused the material on record and judicial decisions cited. On the issue of claim of exemption under section 54F of the Act, the learned authorised representative argued grounds and filed written submissions explaining that the assessee has purchased the land in the name of unmarried daughter who was dependent and before due date of filing of return of income under section 139(1) of the Act. Therefore, the assessee has not made investment unde .....

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o the blood relation or family members and also rely on the decision of Prakash v. ITO [2009] 312 ITR 40 (Bom), [2008] 173 Taxmann 311 (Bom) where the Lordships have considered that the exemption should be allowed only in the name of the assessee, confirm of the order of the Commissioner of Income-tax (Appeals) on this ground and dismiss the ground of the assessee. 9. The learned Assessing Officer has made an addition of ₹ 97,82,000 to the returned income without considering the facts that .....

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le proceeds deposited from December 6, 2010, to December 15, 2010, and the assessee has withdrawn the total consideration during the period from December 21, 2010, to January 4, 2011. It is clearly evident from the action of the assessee that money was withdrawn and utilised for purchase of land in the name of daughter on January 21, 2011, before the end of the previous year and commenced construction of residential flats. The findings of the Assessing Officer based on suspicion without consider .....

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were also issued in the name of the persons, and there is no clarity on issue whether the said sum was utilised for the construction of residential building. Therefore, we are of the opinion that the matter has to be re-examined by the Assessing Officer in the above context. Considering the apparent facts and circumstances, we set aside the order of the Commissioner of Income-tax (Appeals) and remit the issue to the file of Assessing Officer for verification. 10. On the last ground, the learned .....

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