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TMI Blog2019 (8) TMI 1316X X X X Extracts X X X X X X X X Extracts X X X X ..... filing the appeal is only two days and hence keeping in mind that there is no negligence or lack of diligence in filing the appeal belatedly, we condone the delay of two days in filing the appeal. 4. The assessee is an individual. He sold agricultural lands belonging to him in Sy.No.165/17, Doraisanipalaya, Bilekahalli Village, Begur Hobli for a consideration of Rs. 6,95,00,000 under an agreement dated 06.09.2007 whereby possession of the property was also delivered to the purchaser in AY 2008-09. The assessee deposited Rs. 6 crores in capital designated capital gain deposit account with Syndicate Bank, Jayanagar Market Branch on 14.12.2007. The provisions of section 54B of the Act are as follows:- "Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. 54B.(1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or a parent of his for agricultural purposes (hereinafter referred to as the original asset)], and the assessee has, within a period o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer of the original asset expires; and (ii ) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid." 5. As can be seen from the provisions of Sec.54-B (2) of the Act, if the capital gain is not utilized as contemplated u/s.54-B(1) of the Act within the due date for filing return of income u/s.139 of the Act, to claim exemption/deduction, the Assessee has to deposit the capital gain in a specified account. As per proviso to section 54B(2), if the amount deposited in the capital gains account is not utilised wholly or partially for purchase of new asset within the period specified in sub-section (1) i.e., within a period of two year after the date of transfer of capital asset which gives rise to capital gain, then the amount not so utilised shall be charged u/s. 45 as income of the previous year in which period of two years from the date of transfer of the original asset expires. In that case the capital gain will not be taxed in the year of transfer but will be taxed in the previous year within which it had to be utilized and if not so utilized it will be charged to capital tax in that year in which the period for utilization of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d therefore the sale could not be completed. Stand of the assessee was that as per the requirements of section 54B of the Act, capital gain had to be utilised in purchase of another agricultural land and the fact that assessee had paid the entire sum of Rs. 4,68,00,000 out of the capital gain within the period contemplated u/s. 54B of the Act was not disputed. The fact that registration and other formalities could not be completed owing to circumstances beyond the control of assessee cannot be the basis on which deduction u/s. 54B of the Act can be denied to the assessee. The assessee in this regard had placed reliance on the decision of the Hon'ble High Court of Karnataka in the case of CIT v. Sambandam Udaykumar in ITA No.175 of 2012, judgment dated 15.02.2012 wherein the Hon'ble High Court took the view in the context of provisions of section 54F of the Act which requires construction of a residential house for claiming exemption. The Court found that capital gain had been invested for construction, but the construction of house was not complete. The Court took the view that requirements of section 54F of the Act were completed by the assessee inasmuch as within the period requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4B of the Act, the CIT(Appeals) held that thought the amount of capital gain was invested in purchase of agricultural land, the assessee failed to get valid title in his name within the stipulated period and therefore assessee was not entitled to deduction u/s. 54B of the Act. The assessee had, before the CIT(Appeals), relied on the decision of the Hon'ble Delhi High Court in the case of CIT v. Kuldeep Singh [2014] 49 taxmann.com 167 (Delhi) wherein the Hon'ble Court took the view that if the assessee enters into an agreement with the builder within the prescribed period contemplated u/s. 54 of the Act, i.e., two years from the date of transfer of capital asset, the assessee's claim for deduction should be allowed, even though the assessee did not get legal ownership of the flat in which he had invested the capital gain. This decision was, however, distinguished by the CIT(Appeals) with the following observations: - "7. I find that this decision is distinguishable on facts. The case before the Hon'ble Court was that advance had been paid to the builder and the same was linked to the stage of construction, moreover there was a very high degree of certainty in completing the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the view that initiation of reassessment proceedings have not been established to have been in accordance with the requirements of section 147 of the Act. There is no material brought to our notice that reasons were recorded before issue of notice u/s.148 of the Act which is a sine quo non for valid initiation of reassessment proceedings u/s.147 of the Act. Apart from the above, there appears to be no tangible material coming into the possession of AO after expiry of period of limitation for framing assessment order u/s. 143(3) of the Act based on which, he came to the conclusion that there has been escapement of income chargeable to tax. The department has also not been able to show before the Tribunal the reasons recorded to justify the validity of initiation of reassessment proceedings u/s. 147. In these circumstances, drawing an adverse inference, we hold that initiation of reassessment proceedings u/s. 147 of the Act were not valid. 19. As far as merits of the addition is concerned, it is seen that the assessee has invested a sum of Rs. 4.68 crores by paying advance for purchase of agricultural lands. It is not disputed that had the sale been completed pursuant to those ag ..... X X X X Extracts X X X X X X X X Extracts X X X X
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