TMI Blog2019 (9) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... he circumstances in which the name of RL came to be entered qua the said plot in the records of JDA. And, further, that her ownership in December, 2001, when RL was alive, only would validate the ATS dated 25/12/2001, on the basis of which the assessee makes a claim of transfer. Why, the house was admittedly constructed, and not purchased, by the assessee, disproving the said ATS, which is for the purchase of a built house property. The assessee s case, i.e., on the merits of the denial of claim u/s. 54, whichever way one may look at it, is completely unproved; in fact, disproved. The assessee has abysmally failed to exhibit the satisfaction of the conditions for claim of s. 54. Nothing has been brought on record to rebut the clear findings by the Revenue authorities which, being consistent with the material on record, have been endorsed - no case for allowing a deduction u/s. 54, claimed at ₹ 27.10 lacs, in respect of purchase of a residential house in December, 2001 by the assessee, is made out. The assessee is apparently the owner of the subject property, having constructed it, but that by itself would not entitle him for a claim u/s. 54, the ingredients of which r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order is liable to be cancelled. 2. That the reopening of the case is illegal, invalid and bad in the eyes of law. The reasons recorded, i.e., prior to the issue of notice u/s. 148(1) on 10.3.2006 (served on 16.3.2006), conveyed by the Assessing Officer (AO) to the assessee vide his letter dated 16/17.11.2006 (PB pg. 4), are as under: The ACIT (HQ) vide his office letter No. 6358 dated 03-03-2006 passed on a consequential information in case of search and seizure operation in case of M/s Mahajan Co., Group of cases. This information was received from the ADI (Inv.) Jammu for taking action u/s. 153C in respect of the following transactions:- Name address of the person Particulars of Transactions Date of payment Amount Sh. Om Prakash Gupta S/o Sh. Jagri Mal R/o Sh. 16-F, Sector 14, Nanak Nagar, Jammu Sale of H. No. 559-A Gandhi Nagar, Jammu 01-06-2001 01-06-2001 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng primary facts, which are not disputed, raised legal pleas. How could the same be ousted at the threshold? The same is admitted ( NTPC Ltd. v. CIT [1998] 229 ITR 383 (SC)). On merits, I find, equally, the assessee to have no case. The information received from the Investigation Wing of the Revenue is on the basis of material seized during search proceedings u/s. 132 of the Act. The statutory presumption u/s. 292C is as to the truth of its contents. Further, the source of the information leading to the reason to believe, further, is the agreement to sell dated 01.6.2001 entered into between the assessee and one, Raj Kumar s/o Sh. Sardari Lal, per which the assessee sold a residential house (at 559A, Gandhi Nagar, Jammu) to the latter for ₹ 35 lacs. The information is relevant, from a reliable source, and specific, i.e., has a direct and live nexus with the reason to believe the assessee to have income in the form of capital gain, which had escaped assessment in-as-much as it was, on verification, found by the AO that the assessee had not returned any income for the relevant year, or otherwise disclosed this transaction to the Revenue. How could it be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return filed on 21.6.2006 (PB pgs. 1-3), is the agreement to sell (ATS) dated 25.12.2001 (PB pgs. 38-39). The assessee failing to produce AD, claiming her whereabouts to be not known, the AO located her and recorded her statement u/s. 131 of the Act on 13.12.2006, wherein her statement being reproduced at pgs. 3-4 of the assessment order, she averred that: (a) she had never owned any landed property at the stated address, much less sold it to any one; (b) that she had in fact taken a small room (without kitchen) in the backyard of the said residential property at a rent ₹ 35-40 per month from Sh. Om Prakash Gupta (OPG), the assessee, where she lived for 5-6 year before vacating it about two years back; and (c) that she being a non-state subject, could not either purchase or sell any immovable property in the said of J K, further adding that she was resident of Village Barnala, Distt. Gurdaspur, Punjab. She, further, on being confronted with the ATS dated 25.12.2001, purportedly excecuted by her, categorically denied having executed any such document, clarifying to be an illiterate, having n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), JDA, the said office was enquired with by the AO, requiring it to clarify the ownership of the said property and, further, if OPG had purchased it from RL. On the basis of the documents provided by the Director s office, it transpired that RL had submitted an affidavit dated 13.11.2003 stating that Sh. Om Prakash s/o Sh. Jagiri Mal Gupta, is the sole occupant of plot no. 358 (House No. 16), measuring 9 Marlas, at Sector 14, Nanak Nagar, Jammu, who had constructed a house thereat. And that he had occupied the said premises as a tenant, and had no other concern/interest therein . And, accordingly, had no objection to the said plot being regularized in favour of OPG, passing the correction order. The assessee had also furnished an affidavit dated 04.9.2003 to the effect that he was in possession of the said plot of land, and had constructed a pucca house thereat, residing therein with his family for the last two years. Apart from the said affidavit, RL had made a declaration on oath before the Munsiff, Judicial Magistrate, first class, Jammu, again on 13.11.2003, to the same effect, also stating the circumstances under which his name had entered as an occupant of plot no. 358 (Hou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not made any investment on the purchase of new house property at Nanak Nagar, Jammu. In his return of income filed subsequent to the issue of notice u/s 148, he has admitted that he had sold his house property at 559-A, Gandhi Nagar, Jammu for a consideration of ₹ 35 lacs. He has, however, claimed in the said return that he had purchased a new residential house at Nanak Nagar, Jammu from Smt. Amriti Devi w/o Sh. Rattan Lal. He was given innumerable opportunities to produce evidence to show that the new residential house was actually purchased by him subsequent to his selling of his house at 559-A, Gandhi Nagar, Jammu. However, discussion in the asstt. order clearly shows that he has not able to show that the new residential house was actually purchased by him. On the contrary sustained enquiries, investigations and examinations conducted by this office has proved beyond any doubt that no residential property at Nanak Nagar, Jammu was purchased by the assessee as claimed by him in his return of income for the relevant Asstt. Year. In fact examination has proved that Agreement to Sell entered into by the assessee with Smt. Amriti Devi was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On the perusal of above section, it is clear that the appellant should have purchased the property one year before or two years after the date of transfer. 4.2 As far as the agreement to sell and irrevocable power of attorney dated 25.12.2001 produced by the appellant is concerned, the document does not seem to have legal validity on the basis of following groundsa) Firstly the property claimed to have been purchased by the appellant was in the name of Sh Rattan Lal and after the death of Sh. Rattan Lal he was survived by a wife and sons. Smt Amriti devi wife of Late Sh. Rattan Lal has herself declared in the statement dated 14.12.2009 recorded during remand proceedings that her husband was a state subject and her sons are state subject but she does not hold a state subject of the state. As per the laws of the state, after the death of Sh. Rattan Lal, only his sons will get the rights in property and not his wife as she is a non state subject. Therefore, she cannot sign an agreement to sell or issue an irrevocable power of attorney in respect of a property in which she does not have any legal right. Thus, the documents submitted by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and report by the AO, which had been ignored by the ld. CIT(A) in passing his order. 7. I have heard the parties, and perused the material on record. 7.1 Section 54 of the Act reads as under: Profit on sale of property used for residence. (1) Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of a longterm capital asset, being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head Income from house property (hereafter in this section referred to as the original asset), and the assessee has within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India , then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 as the income of the previous year in which the period of three years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. (emphasis, supplied) The assessee in the instant case has sold his residential house at Gandhi Nagar, Jammu during the previous year relevant to AY 2002-03 for a consideration of ₹ 35 lacs, receiving ₹ 2 lacs by cheque and the balance ₹ 33 lacs in cash, during the period from 01.6.2001 to 12.12.2001 (refer para 1 (pg.1) of the assessment order, para 3.1 of the appellate order). He is, therefore, entitled to deduction u/s. 54 in computation of capital gains arising on the said transfer upon investment of the said capital gain on: (a) purchase of a residential house in India within a year prior to the date of transfer; or (b) purchase of a residential house in India within a period of two years from the date of the transfer; or (c) construction of a residential house in India within a period of three years from the date of transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PG (assessee) was the sole occupant of the said plot at Nanak Nagar (measuring 9 marlas) and had constructed a house thereat, wherein he was putting up as a tenant of OPG s/o Sh. Jagiri Mal Gupta, in whose favour, therefore, the plot may be regularized, passing a correction entry (in the records of the JDA), to which he had no objection; (f) statement of Sh. Kulwant Singh, Naib Tehsildar, JDA (Zone-B) in response to summons u/s. 131, that the certificate issued by the JDA in respect of the correction of its record on 02.01.2004, i.e., listing the assessee as the occupant of the property, was in response to an application for regularization/correction of the said property in his name; (g) statement on oath u/s. 131 of the Act dated 13.12.2006 by Smt. Amriti Devi w/o Sh. Rattan Lal, deposing to have occupied the Nanak Nagar property as a tenant of OPG (assessee) and, further, had not sold any property to him at any time; in fact, having not owned any property in J K, which she was not entitled to in view of her being not a state subject, and that, she being illiterate, with no knowledge of written language, the ATS dated 25/12/2001 is a forged docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e question of selling it does not arise. That, therefore, the ATS dated 25.12.2001 is a forged document, with in fact she being an illiterate, putting her thumb impression, who had no knowledge of either Hindi or English alphabets. It is clear that neither she nor her husband owned the subject property at any time. Needless to add, there is no registration of the ATS dated 25/12/2001, nor the returning of capital gain by AD on the sale of the subject property, with the Revenue making no attempt and rightly so, to assesss the same in her hands or her late husband. The assessee s plea of her cross-examination is wholly misplaced. As clarified by the AO, both in the assessment order and the remand report, she is the assessee s witness. The onus was on the assessee to, in discharge of his burden of proof, exhibit that ATS dated 25.12.2001 is a valid document. Why, until the AO made efforts to contact her, it could not even be said if RL had a wife, and with that name, as her name appeared in no other document. She was, however, despite several opportunities extended during the assessment proceedings, not produced by the assessee, nor even her address furnished, stati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about 2 years back. The date of purchase (or acquisition) of plot and period of construction of house thereat, is thus not clear, nor has the assessee, at any stage, despite being called upon regularly to do so, produced any document toward the same. If the assessee did indeed construct a house thereat, as the material on record suggests, he, in receipt of ₹ 33 lacs in cash from June to December, 2001 (with ₹ 21 lacs being received on 12/12/2001 itself), implying him to be the owner of the land, why one wonders did not state so, producing the document of title to the land? The same is understandable as it is inconsistent with his case of having bought a built house from AD. If, as stated, he was in September, 2003 already residing in the house for two years, the house would have been constructed earlier. The period indicated by the statement dated 13/12/2006 of AD also suggests the same. Clearly, therefore, the ATS dated 25/12/2001 is a forged document, and even otherwise of no consequence as AD was never the owner of the subject property, much less in December, 2001, i.e., during the life time of RL. RL, however, having expired by the time the reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. Why, the house was admittedly constructed, and not purchased, by the assessee, disproving the said ATS, which is for the purchase of a built house property. 8. The assessee s case, i.e., on the merits of the denial of claim u/s. 54, whichever way one may look at it, is completely unproved; in fact, disproved. The assessee has abysmally failed to exhibit the satisfaction of the conditions for claim of s. 54. Nothing has been brought on record to rebut the clear findings by the Revenue authorities which, being consistent with the material on record, have been endorsed. I am, under the circumstances, of the clear view that no case for allowing a deduction u/s. 54, claimed at ₹ 27.10 lacs, in respect of purchase of a residential house in December, 2001 by the assessee, is made out. The assessee is apparently the owner of the subject property, having constructed it, but that by itself would not entitle him for a claim u/s. 54, the ingredients of which remain to be satisfied, and the case as made out, completely unproved, if not disproved. I, therefore, decline interference, and uphold the impugned disallowance. I decide accordingly. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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