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2018 (3) TMI 581

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..... In this factual matrix of the case, as discussed above, we are of the view that there is no merit in the claims put forth by the assessee in this regard and dismiss the same. Reopening of assessment - Held that:- At the stage of initiation of proceedings it is not necessary that escapement of income need be established, but there should be formation of belief by a reasonable person based on relevant material. In our view, the Assessing Officer has succinctly set out the facts of the case and recorded the reasons leading to the formation of belief that income of the assessee liable to tax had escaped assessment for Assessment Year 2009-10, with due application of mind, following the prescribed procedure as contemplated by the Act and in consonance with the decisions of various Hon'ble Courts. In this factual and legal matrix of the case as discussed above, we do not find any infirmity with the procedure adopted by the Assessing Officer in initiating proceedings under Section 147 of the Act. Interest u/s 234B and 234C - Held that:- Charging of interest is consequential and mandatory and the Assessing Officer has no discretion in the matter. This proposition has been upheld by .....

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..... ( LTCG ) on sale of the aforesaid property was computed at ₹ 6,00,90,049 after claiming indexation and was offered @ 50% of the LTCG thereof at ₹ 3,00,45,025 in each of the hands of the husband Shri Raghuram P Nambyar and wife Smt. Veena Nambyar. The assessees claimed reinvestment of the capital gains by purchase of new properties. Smt. Veena Nambyar, purchased a residential property at Mantra Espana , Kariammanagrahara Village, Varthur Hobli, Bangalore for a total consideration of ₹ 2,38,75,427; invested ₹ 50 lakhs in Bonds for claiming exemption under Section 54EC of the Act and declared the balance of ₹ 61,69,598 as LTCG exigible to tax. In her return of income for Assessment Year 2009-10 filed on 30.7.2009, Smt. Veena Nambyar declared total income of ₹ 69,17,415 that included the aforesaid LTCG of ₹ 61,69,598 and income from other sources. 2.3 Shri Raghuram P Nambyar, on his part, purchased a new residential property in Wind Mills of Your Mind at Whitefield, Bangalore for a total consideration of ₹ 1,43,71,700; invested ₹ 50 lakhs in Bonds for claiming exemption under Section 54EC of the Act; deposited ₹ 40 lakhs .....

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..... 147 of the Act, in view of the fact that the Assessing Officer in the case of the wife Smt. Veena Nambyar, held that the appropriation of LTCG on sale of the said property equally between both spouses @ 50% each was incorrect as the purchase and sale of the same was in the name of Sri Raghuram P Nambyar only and therefore the LTCG arising from sale thereon was to be assessed in his hands alone. Therefore, having declared only 50% of the LTCG in his hands, income of this assessee liable for tax escaped assessment within the meaning of the provisions of Sec. 147 of the Act. After recording reasons in this regard, the Assessing Officer issued notice under Section 148 of the Act on 10.2.2014. The procedure as contemplated by the provisions of Sections 147 148 of the Act have been followed by the Assessing Officer. The assessment proceedings were concluded under Section 143(3) of the Act vide order dt.25.3.2015, wherein the total income of this assessee was determined at ₹ 3,80,16,320 as against returned income of ₹ 66,73,325; in view of the entire LTCG on sale of the aforesaid property at HAL Stage II amounting to ₹ 3,72,03,779 being brought to tax in his hands. .....

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..... operty sold was held by the appellant and the wife of the appellant jointly. b) Not appreciating the fact that the rentals received from letting of aforesaid property were offered to tax in equal proportion in the hands of both appellant as well as appellant s wife and same had been accepted by the department itself. c) Holding that the appellant was the sole/absolute owner of the residential property and appellant s wife had not invested in acquisition of residential property. The conclusions / observations of authorities below being totally erroneous and without basis both on facts and law is to be disregarded. 4.2 The several observations made and various conclusions drawn by the lower authorities in the course of order are without basis and evidence and are made/drawn on surmises, probabilities and conjectures. Such observations and conclusions by quasi-judicial authorities have no support in law and deserve to be rejected in toto. 5. The appellant had rightly offered his portion of long term capital gain to tax and same is to be accepted without variation and the addition as made/ confirmed is not in accordance with law applicable is liable to be .....

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..... nd circumstances of the case. 7. The learned CIT (Appeals) is not justified in law in not allowing the further claim of exemption under Section 54 / 54F in respect of the sum of ₹ 20,00,000 deposited into the capital gains account of the appellant opened in a nationalized bank under the facts and circumstances of the case. 8. The learned CIT (Appeals) is not justified in law in holding that the appellant is not eligible to claim deduction under Section 54 of the Act under the facts and circumstances of the case. 9. Without prejudice the learned CIT (Appeals) ought have given the benefit of claim of exemption under Section 54F of the Act under the facts and circumstances. 10. The appellant craves leave to add, alter, delete or substitute any of the grounds urged above. 11. In the view of the above and other grounds that may beurged at the time of hearing of appeal, the appellant prays that appeal may be allow in the interest of justice and fair play. 3.4 In the course of proceedings the counsels for both assessees filed written submissions. In the case of Smt. Veena Nambyar a paper book (pages 1 to 123) was filed on 19.6.2017. In the case of .....

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..... nd sale deed dt.30.6.2008, under which the said property together with house constructed thereon was sold was only in the name of Sri Raghuram P Nambyar, it does not take away the 50% right in the ownership and enjoyment of the property sold from Smt. Veena Nambyar. In this regard, it was submitted that the authorities below have not considered that the intention of the parties to the sale deed was that both the husband and wife were to jointly sell the aforesaid property along with house thereon and therefore immediately thereafter, Sri Raghuram P Nambyar, the husband made over 50% of the sale consideration i.e. ₹ 3,00,45,025 to the account of his wife, Smt. Veena Nambyar s account. In view of the above, it was argued that both the assessees are entitled to claim the deductions / exemptions under Section 54F and 54 EC of the Act in respect of their equal share of the sale consideration arising from sale of the aforesaid property. Strong reliance was placed on the decision of the Hon'ble Apex Court in the case of Poddar Cements (226 ITR 625) (SC) in support of the proposition that in the context of Sec.22 of the Act, to tax the income, the owner is the person who is entit .....

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..... any immovable property situated in India and it has not been established with any documentary evidence to the effect that such permission was obtained by her in respect of the purchase of the aforesaid property. In this factual situation of the matter, Smt. Veena Nambyar cannot enjoy the benefits of ownership of the aforesaid property, such as receiving rent, earning profits on disposal of the same and the attempt of the assessees, if accepted, would amount to achieving in the present indirect manner what the law never ever intended to grant to Smt. Veena Nambyar in the first place. Thus it is clear and evident that no title on the said property can be conferred on the wife, i.e. Smt. Veena Nambyar in the factual and legal circumstances of the case. 4.3.1 We have considered the arguments, averments and submissions put forth, by both the learned Authorised Representative for the assessee and the learned Departmental Representative for Revenue, and perused and carefully considered the material on record before us. The question for consideration before us is whether Smt. Veena Nambyar, wife of Shri Raghuram P Nambyar was legally 50% co-owner of the property situated at No.1088, HAL .....

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..... e considered from the recitals of the relevant documents and not from any stated intention or claim made which is legally unsustainable. In this factual matrix of the cases on hand, we find no merit in the assessee's contentions that Smt. Veena Nambyar had 50% ownership in the aforesaid property and was therefore entitled to claim and be allowed exemption under Section 54 and 54 EC of the Act. 4.3.2 AS regards the reliance placed by the assessees on the decision of the Hon'ble Apex Court in the case of Poddar Cements P. Ltd. (supra), it is true that the settled position for the purposes of offering income under the head Income from House Property for the purposes of Sec. 22 does not require registration of sale deed. The aforesaid decision of the Hon'ble Apex Court (supra) was rendered in the context of Sec.22 of the Act. In the case on hand, however, the matter of dispute is not with regard to the provisions of Sec.22 of the Act and thus in our considered view the reliance placed by the learned Authorised Representatives thereon is not applicable to the issue before us in the case on hand. At placentum E on page 653 of its decision, their Lordships in the case o .....

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..... in India without the permission of the Reserve Bank of India (RBI). No such permission of the RBI as required by law has been placed before the authorities below or us. In this factual and legal matrix of the case, we uphold the view of the authorities below that Shri Raghuram P Nambyar alone is the purchaser and sole legal owner of the said property as confirmed by the recitals in the registered purchase and sale deeds. 4.3.5 It was also urged that the assessee Smt. Veena Nambyar and her husband Shri Raghuram P Nambyar had contributed funds equally to the construction of the residence on the aforesaid property. On a perusal of the entries in Andhra Bank Accounts cited by the learned Authorised Representative of the assessee, Smt. Veena Nambyar in this regard, we observe that certain amounts have been transferred from her account to that of her husband Shri Raghuram P Nambyar and others; but that the said transfers were for the purpose of construction of the residence, is not supported or corroborated by any bills to prove the assessee's claim that they were utilized for construction. No documentary evidence in this regard has been placed either before the authorities below .....

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..... ped assessment. At the stage of initiation of proceedings it is not necessary that escapement of income need be established, but there should be formation of belief by a reasonable person based on relevant material. In our view, the Assessing Officer has succinctly set out the facts of the case and recorded the reasons leading to the formation of belief that income of the assessee liable to tax had escaped assessment for Assessment Year 2009-10, with due application of mind, following the prescribed procedure as contemplated by the Act and in consonance with the decisions of various Hon'ble Courts. In this factual and legal matrix of the case as discussed above, we do not find any infirmity with the procedure adopted by the Assessing Officer in initiating proceedings under Section 147 of the Act and consequently dismiss Ground Nos.2.1 and 2.2 raised by the assessee. 6. Ground No.6 (Appeal of Shri Raghuram P Nambyar) 6.1 In this ground, the assessee has raised an alternate plea to contend that if the entire LTCG on sale of the aforesaid property is assessed in the hands of the assessee, Shri Raghuram P Nambyar, then the exemption under Section 54 and 54 EC of the Act .....

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