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2017 (6) TMI 773 - ITAT CHENNAI

2017 (6) TMI 773 - ITAT CHENNAI - TMI - Legality of notice issued under section 143(2) - non proper serving of notice - Held that:- The assessee has not furnished any second address for communication when the assessee was out of station; since the assessee is suppose to do so. When the Department made sincere steps to serve notice and when it was not possible, the notice was served through affixture, which is one of the modes of service of notice as defined in the provisions of CPC. Therefore, w .....

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he new property was taken by the assessee in October, 2006. All these dates are far before the stipulated period of one year prior to the date of sale of the old property on 26.09.2008. Otherwise also, anything that was purchased or constructed prior to 26.09.2007 was not eligible for deduction under section 54 of the Act. Thus, the assessee is not eligible for deduction under section 54 of the Act. The ld. CIT(A) has passed well reasoned detailed speaking order after analysing the documents and .....

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9-10. The assessee has raised two effective grounds viz., (i) the ld. CIT(A) has erred in holding that the notice issued under section 143(2) of the Income Tax Act, 1961 [ Act in short] was laid in law and (ii) the ld. CIT(A) has erred in confirming denial of exemption under section 54 of the Act. 2. Brief facts of the case are that the assessee is an individual and filed the return of income for the assessment year 2009-10 on 31.07.2009 admitting income of ₹.1,91,232/-. The return filed b .....

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of the two witnesses. In response to the notice, the AR of the assessee Mrs. M.R. Ramamani, FCA appeared before the Assessing Officer from time to time and submitted all the details as called for. After examining the details filed by the assessee and considering the submissions of the assessee, the Assessing Officer has completed the assessment under section 143(3) of the Act on 27.12.2011 assessing total income of the assessee at ₹.54,84,269/- after making various disallowances. 3. The as .....

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143(2) of the Act was not served on the assessee and therefore, the assessment order passed under section 143(3) of the Act is liable to be quashed. 5. On the other hand, the ld. DR has submitted that proper notice was served on the assessee and in response to the notice, the AR of the assessee appeared before the Assessing Officer and furnished all the details and made various submissions and thereafter only, the Assessing Officer has passed the assessment order under section 143(3) of the Act .....

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ssessee on 30.09.2010 and found the door locked and, accordingly, he served the notice by way of affixture after obtaining the signatures of the two witnesses. Thereafter, the Ld. A.R. of the assessee has appeared before the Assessing Officer from time to time and had also submitted the Power of Attorney in her favour along with the submissions called for by the Assessing Officer as required for the completion of the assessment proceeding. 6.1 During the course of the appellate proceedings, the .....

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er and legal. The assessee has placed reliance on different case laws to substantiate her plea. After considering the submissions of the AR of the assessee, the ld. CIT(A) has observed as under: 9. I have gone through the findings of the assessing officer and the submissions made by the appellant as well. From the perusal of the facts mentioned in the assessment order, it is noticed that there has been sincere efforts on the part of the Income Tax Officials to get the notice severed on the appel .....

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the summons cannot be served in the ordinary way, the authority can order that the summons be served by affixing a copy thereof in some conspicuous part of the house (if any) in which the person who is to be served is known to have last resided or carried out business. In the present case, the AO has resorted to Affixture of notice only after satisfying himself of the situation which would have warranted the service by was affixture. Therefore, in view of the facts and circumstances of the insta .....

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it was not possible, the notice was served through affixture, which is one of the modes of service of notice as defined in the provisions of CPC. Therefore, we are of the considered opinion that the notice has been served properly and legally. Thus, we find no infirmity in the order of the ld. CIT(A) on this issue and accordingly, the ground raised by the assessee is dismissed. 7. The next ground raised in the appeal of the assessee is that the ld. CIT(A) has erred in confirming denial of exempt .....

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f the house sold, for the repayment of loan availed from the lDBI Bank taken for the purchase of new house. Since, the provisions of section 54 of the Act allows deduction only if the sale proceeds of the old house (sold) are invested in acquiring the new residential property within the stipulated time limits. the Assessing Officer disallowed the assessee's claim of deduction under section 54 of the Act. In addition, the Assessing Officer also disallowed the assessee s claim of course to imp .....

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erty, the assessee returned the advance on the expiry of six months. Meanwhile, the assessee searched for a new house property and entered into agreement to buy the same. When the above MOU expired and there were no immediate buyers for the old property, she purchased the new house property (flat) by availing a loan from the lDBI Bank. Subsequently, in the financial year 2008-09, the assessee sold the old house property and out of the sale proceeds thereof, an amount of ₹.35,54,495/-was ut .....

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ssee, the ld. CIT(A) has observed the Assessing Officer in his order mistakenly considered that the loan was taken for the house which was sold. This was not correct. The loan from lDBI was taken for the purpose of the purchase of a new residential flat. As per the information contained in the assessment order and also ascertained from the submissions of the assessee filed during the course of the appellate proceeding, the ld. CIT(A) has observed and held as under: (i) Though the appellant claim .....

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.03.2013, are as under: - Land (i.e UDS) was registered on 18/05/2005 for a consideration of ₹.31, 84, 675/-. - Construction agreement with the builder dated 18th of November 2004 was for ₹.16,21,200/-. - Total loan availed from the lOBI bank for new house was at ₹.40,00,000/-. - Received the possession of the flat in October 2006. - The assessee occupied the property for self-occupation on 01.10.2008. - Date of repayment and close at of the loan account was 31.10.2008 and the .....

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lating the Long Term Capital Gains from the sale of a residential house, the assessee can be allowed a deduction to the extent of the investment made in a new residential house purchased/ constructed within one year prior to the date of sale of the old house or within two years from the date of sale of all house property purchased a new house or within three years from the date of sale of all house property, constructed a new house. In the instant case, the appellant has sold the older residenti .....

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se, i.e. between 27/09/2008 and 26/09/2011. 15. Whereas, in the present case, the appellant's claim is regarding the new house purchased prior to the date of sale of the old house. As per the details filed by the appellant, she had entered into an agreement with the builder on 18/11/2004. Even the land (UDS) relating to the said flat (new property) was registered on 18/05/2005. Further, even the possession of the new property was received by the appellant in October 2006. All the dates are f .....

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ate that the new house should be purchased or constructed within one year prior to the date,a of sale of the old house. This means that the purchase of construction should have taken place during this period. Hence, repayment of loan availed for purchase of house prior to the specified time limits cannot be allowed as a deduction under section 54 of the Act, irrespective of the date of the payment. 17. In view of the above findings, the assessing officer has rightly concluded that the appellant .....

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e appellant has failed to substantiate or prove the details and the extent of improvements carried out, with necessary evidences, the Assessing Officer disallowed the claim of cost of improvement and its indexation. The appellant, even before the undersigned, could not furnish any such evidences or details of the cost of the improvements except claiming that the old house which was sold, was very old and the appellant kept on incurring various expenses from time to time in the form of interiors .....

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