TMI Blog2018 (6) TMI 885X X X X Extracts X X X X X X X X Extracts X X X X ..... struction of the house before filing return of income - hence the claim u/s 54F cannot be denied under these circumstances - Decided in favor of assessee. - ITA No. 580/Hyd/2017 - - - Dated:- 13-6-2018 - SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Shri K.A. Sai Prasad For The Revenue : Shri Rajeev Benjwal ORDER PER S. RIFAUR RAHMAN, J.M.: This is assessee s appeal for the A.Y 2008-09 against the order of the CIT(A)-10, Hyderabad, dated 30.09.2016. 2. Brief facts of the case are, a search and seizure operation u/s 132 of the IT Act, 1961 (in short the Act ), was conducted at the residential premises of the assessee on 17.10.2007. It was found that assessee sold a land to the DLF company and not filed any return of income. Accordingly, a notice u/s 148 of the Act, dated 04/11/2009 was issued and served on the assessee asking him to file return of income. In response to the above notice, assessee filed his return of income for the AY 2008- 09 on 24/11/2009 declaring sale consideration with DLF. In that return, assessee has brought on record the sale consideration of ₹ 2,73,58,820/- and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or exemption under section 54F of the Act on the basis of the additional evidence f iled. The CIT(A) shall afford on opportunity to the assessee and decide the issue afresh in the light of the additional evidence f iled. This ground of the assesses allowed for statistical purposes. 3. In consequence to the above direction of the ITAT, at the time of proceedings before the CIT(A), assessee has filed written submissions and relevant bills/vouchers as additional evidence what was submitted before the ITAT. The CIT(A) asked the AO to submit the remand report. In response to the above, AO submitted a remand report vide letter dated 26/02/2016. In the remand proceedings, AO made enquiries and after considering the submissions of the assessee s claim of exemption u/s 54F in the report, accepted the claim of the assessee. For the sake of clarity, it is reproduced hereunder: The assesse has furnished the NOC for obtaining Electricity connection on 30/07/2008 in which the sarpanch of the Village Panchayat has certif ied the existence of a residence. Furhter the assessee has furnished the copies of the bills and vouchers in support of construction of the house. On ver ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed a residential house and also submitted photo copies of the above said building. 6. Addl. CIT, Range-8, Hyderabad called A.R of the assessee for hearing on the remand report on 19.12.2015, The following issues were discussed between them: 1. He has stated that he made the submission of Xerox copies of the all expenses / bills / vouchers. He produced the original bills / invoice / vouchers to A.O for cross verif ication. The following bills were randomly verified and found in order: a) Sri Srinivas Tube well (21-11-2007) = 1,77,915: verif ied b) Siddartha Timber Deport (22-04-2008) = 3,88,560: verif ied c) Jai Ganesh Word Works (10-05-2008) = 4,30,900 verif ied 2. The signed valuation report was submitted by assessee. The original was produced during hearing for verif ication. The valuation report was verif ied and found in order. 3. Assessee submitted that he has submitted the bills for expenses which were used for levelling, earth f illing, stone crushing etc., at the time of construction. He produced the related bills / vouchers. It was randomly verif ied: a) Cutting Sheet rock dt. 05.02.2008 = ₹ 60,000, 90,000 b) Ston ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enditure claimed i.e., Rs.l,42,64,285/-, the appellant tried to gather the details of actual expenditure and the corresponding vouchers. These were entered into tally package to correlate the expenditure and availabil ity of funds. These were produced before the learned Assessing Off icer for verif ication during the remand proceedings. 3. It is a fact that the actual expenditure was more than the f igure arrived at by the Approved Valuer. The appellant, being uneducated, was ignorant of construction matters, and did spend more. There was certainly wastage and lot of excess expenditure due to inexperience and lack of knowledge in construction matters. 4. It is submitted that the rates adopted by the Approved Valuer are standardized ones and construction at these rates may not be Possible even for experienced technical persons and contractors. However, the appellant did spend more than the f igure of cost, estimated by the Valuer. 5. It is submitted that section 54F refers to the cost of new asset to the appellant and since the appellant spent ₹ 1,42,64,285/-, this f igure is the cost of the new asset to him. 6. It is, therefore, prayed that the Hon b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rred an appeal before us by raising the following grounds of appeal: 1. The Ld. CIT(A), in the facts and circumstances of the case, is not justif ied in rejecting the appellant s claim u/s 54F. 2. The Ld. CIT(A) is not justif ied in rejecting the appellant s claim u/s 54F, ignoring the well-settled proposition that the due date for furnishing return of income as per Sec. 139(1) is subject to extended period provided under sub-section (4). 3. The appellant reserves his right to add or alter any ground or grounds during the course of hearing . 10. The ground No. 1 and 3 are general in nature, hence, need no adjudication. The effective ground No. 2 is with regard to rejecting the claim of the assessee u/s 54F of the IT Act. 11. With regard to ground No. 2, the ld. AR submitted that assessee has sold land to DLF company and major portion of the sale proceeds were vastly used to construct a residential house located at Narsingi Village, RR District. He submitted that assessee is an illiterate person and not aware of procedure of maintaining book keeping and statutory provisions, he went ahead in constructing the residential house with the proceeds of sale cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at assessee has in fact invested to the extent of ₹ 1.42 crores. 11.2 Further, ld. AR relied on the decision of the Hon ble Karnataka High Court in the case of CIT Vs. K. Ramachandra Rao, reported in [2015] 56 Taxman.com 163 (kar.). In the above decision, it was observed by the Hon ble High Court that when the assessee invests the entire sale consideration in construction of a residential house within 3 years from the date of transfer, he should not be denied exemption u/s 54F of the Act on the ground that he did not deposit the amount in the bank before filing of the return of income. 11.3 He further submitted that CIT(A) has observed from the valuation report, as per which, construction period was mentioned as May 07to Oct 08 whereas the land was purchased in Feb 08. Against such observation, he submitted that the inspection of the property was conducted in 2010 and he observed that date of construction was mentioned by mistake. What is relevant is whether the assessee was actually constructed the property within the period allowed u/s 54Fof the Act, it is wrong on the part of the CIT(A) to deny the benefit merely on clerical error or wrong observation of the valuer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . There is no doubt that there existed a residential house and also assessee invested considerable portion of sale consideration in constructing the residential premises. It is the fact that assessee has constructed a property within the time allowed u/s 54F of the IT Act. CIT(A) denied the exemption u/s 54F of the IT Act of the assessee by raising some doubts on the existence of bills / vouchers and also there are mismatch of dates of bills / vouchers which was submitted before him and further he observed that there are certain anomalies in the valuation report submitted by the valuer, in particular, dates of construction period starting from May 2007, whereas the land was purchased in Feb 2008. As far as these bills and anomalies in the valuation report are concerned, in our view, as submitted by Ld. AR, assessee has not maintained proper records to claim the deduction u/s 54F of the IT Act, only on denial of such benefit, assessee has procured the bill from the same vendors and those bills / vouchers were submitted as additional evidence before the CIT(A) and the ITAT in the original proceedings, same bills / vouchers were duly verified by A.O and Addl. CIT, Range-8 and they fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return, failing within section 139(4), is as much a statutory right vested in the assessee, as is the power vested in the Assessing Officer to net in the escaped income for taxation under section 147. There is no reason to read the two provisions as in conflict with an another, or to read one provision as overriding the other; both can stand harmoniously to arrive at the true taxable income. The bar against the carrying forward of the loss is attracted only if the loss is not determined in pursuance of a return filed under section 139. Under Section 139, filing of a return may come under any one of the three sub-section 139(1) or section 139(4). Any return filing within any of these sub-sections is a return filed under section 139 . 13.3 In the case of CIT Vs. B.V.R. Glucose Products Ltd., 250 ITR 512, the Hon ble Jurisdictional High Court has held as under: that section 139(4) had to be read as a proviso to subsection (1) in which case a return f iled under subsection (4) has to be treated as a return under subsection (1). Section 80 which provides for submission of returns of loss contemplates determination of the loss in pursuance of a return f iled under section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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