TMI Blog2020 (5) TMI 183X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The ld. CIT(A) erred in law as well as on the facts of the case in upholding the addition of INR 17,09,798/- without considering and appreciating the intent and purpose of the provisions of Section 54F of the Act. The addition so confirmed by the CIT(A), being totally contrary to the provisions of law and facts of the case, therefore the same may be deleted. 2. Briefly the facts of the case are that the assessment in this case was completed U/s 143(3) r.w.s. 147 of the Act dated 08.10.2016. On the basis of information received during the course of assessment proceedings for the assessment year 2013-14, the notice U/s 148 of the Act was issued on 27.01.2016 stating that the assessee has wrongly claimed deduction U/s 54F of the Act as the assessee has deposited a sum of ₹ 22,50,000/- under capital gain account scheme on 03.12.2011 after due date of filing of return of income i.e, 31.07.2011, therefore, the income of the assessee has escaped assessment within the meaning of section 147 of the Act. In response, the assessee submitted his return of income on 24.03.2016 and thereafter, after considering the submissions of the assessee, the assessment was completed wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act; There was no mala fide intention on the part of Appellant to have deposits the amount under a FDR a/c and not under CGAS a/c. It was just a bona fide mistake which was corrected as soon as it came to the knowledge of the assessee; The whole idea of opening a capital gains account scheme is to delineate the funds from other funds regularly maintained by the assessee and has to ensure that the benefit which has been availed by an assessee by depositing the amount in the said account is ultimately utilized for the purposes for which the exemption has been claimed, i.e., for purchase of the residential house. The Appellant have solely utilized such funds for purchase of residential property and the same has not been rebutted by the Ld. AO; The Appellant have duly disclosed such information in the return of income filed; It is a well settled law that an incentive provision has to be construed liberally with the intent of law. 5. It was further submitted that the Jaipur Bench of the Tribunal in the case of Goverdhan Singh Shekhawat Vs. ITO ward 6(1), Jaipur reported in 102 taxmann.com 50 has held as under: Thus, it is viewed that the assessee's clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital Gain Account Scheme, the Appellant in order to rectify the procedural mistake en-cashed the FDR deposited with ICICI bank and deposited such amount into Capital Gains Scheme FDR with Canara Bank on the same date; c. Ultimately the Appellant utilized the funds kept under the CGA.S account for purchase of property. The similar judgment was pronounced by the different Benches of ITAT in the following cases: ITAT Jodhpur in case of Jagan Nath Singh Lodha v. ITO (148 Taxman 1) ITAT Mumbai in case of Satish P. Malhotra vs. ITO 16(1)(2) (ITA No.6877/Mum/2014) ITAT Mumbai in case of Ms. Satyavati Arvind Kotian vs. ITO - 26(2)(2) (ITA No.5036/Mum/2017) 7. It was further submitted that the intention or bona fide is neither under doubt nor it is doubted. Moreover, it is a settled law that an incentive provision has to be construed liberally as held the Hon'ble Supreme Court in case of Sanjeev Lal 365 ITR 389 as under:- The intention of the Legislature or the purpose with which the said provision has been incorporated in the Act, is also very clear that the assessee should be given some relief. Though it has been very often said that common sense i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposited in the capital gain accounts scheme after the due date of filing the return of income U/s 139(1) of the Act. It was further submitted that even the subsequent purchase of residential property has not been made within the prescribed period of 2 years from the date of transfer of the original asset and therefore, there is no infirmity in the order of Assessing officer in denying the claim of exemption U/s 54F of the Act. 10. We have considered the rival submissions and perused the material available on record. From perusal of the reasons recorded by the Assessing Officer before issuance of notice U/s 148 of the Act, the undisputed facts which are emerging that the assessee sold a plot of land on 10.01.2011 for a consideration of ₹ 22,50,000/- and the said amount was deposited in FDRs maintained with ICICI Bank on 21.1.2011. The FDRs were encashed and the maturity proceeds of ₹ 23,66,223/- so received were deposited in Canara Bank on 03.12.2011. On the same day, out of the maturity proceeds of FDRs, the assessee has made fresh deposits of FDRs of ₹ 22,50,000/- and this time, these FDRs were maintained with Canara Bank under the capital gain account schem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Taxman 154 (Punj. Har.) : 8. A Division Bench of the Gauhati High Court in a case reported as CIT v. Rajesh Kumar Jalan : [2006] 286 ITR 274, held that only Section 139 of the Act is mentioned in Section 54(2) of the Act in the context that the unutilized portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the Income Tax under Section 139 of the Act and that it would include extended period to file return in terms of Sub-Section 4 of Section 139 of the Act. It was held as under:- From a plain reading of sub-section (2) of Section 54 of the Income-tax Act, 1961, it is clear that only section 139 of the Income-tax Act, 1961, is mentioned in section 54(2) in the context that the unutilized portion of the capital gain on the sale of property used for residence should be deposited before the date of furnishing the return of the Income-tax under section 139 of the Income-tax Act. Section 139 of the Income-tax Act, 1961, cannot be meant only section 139(1), but it means all sub-sections of section 139 of the Income-tax Act, 1961. Under sub-section (4) of section 139 of the Income-tax Act an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain circumstances. It reads as under:- (4) Any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a notice issued under subsection (1) of Section 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier; Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year. A reading of the aforesaid sub-section would show that if a person has not furnished the return of the previous year within the time allowed under sub-section (1) i.e. before 31st day of July of the Assessment Year, the assessee can file return before the expiry of one year from the end of ever relevant Assessment Year. 3. Fathima Bai v. ITO, [2010] 32 DTR 0243 (Kar.), it has been held as under :- 8. The section 54(2) declares that within one year from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 139 in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazettee, frame in this behalf and such return shall be accompanied by proof of such deposit, and for the purposes of Sub-Section (1), the amount, if any, already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset: Provided that if the amount deposited under this Sub-Section is not utilized wholly or partly for the purchase or construction of the new asset within the period specified in Sub-Section (1), then,- (i) The amount not so utilized shall be charged under Section 45 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. 11. A reading of the aforesaid Sub-Section would show that if a person has not furnished the return of the previous year within the time allowed under Sub-Section (1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished a return within the time allowed to him under Sub-section (1) of Section 142 may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment year whichever is earlier. Such being the situation, it is the case of the respondent/assessee that the respondent/assessee could fulfil the requirement under Section 54 of the Income Tax Act for exemption of the capital gain from being charged to Income Tax on the sale of property used for residence up to March 30, 1998, inasmuch as the return of Income Tax for the assessment year 1997-98 could be furnished before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier under Sub-section (4) of Section 139 of the Income Tax Act, 1961. 7. I.T.C. Ltd. v. CCE [2004] 7 SCC 591 (SC), it has been held as under :- 23. Presumably the phrase badly drafted was used to mean that the language of the Entry was ambiguous. In case of such ambiguity 'close reasoning' will be employed - but without stretching the language to arrive at the only reasona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by way of dividends the statutory percentage of its distributable profits, it becomes liable to pay, apart from the sum determined as payable by it on the basis of the assessment under Section 23, super-tax at 50 per cent or 37 per cent as the case may be, on the undistributed balance of its distributable profits. In the first place, this provision being penal, the burden would lie on the revenue to prove that the conditions laid down by the section are satisfied. Commissioner of Income-tax, West-Bengal v. Gangadhar Banerjee Co. (p) Ltd., 57 I.T.R. 176, 184 Secondly, penal statutes have to the construed strictly in the sense that if there is a reasonable interpretation which will avoid the penalty, that interpretation ought to be adopted: When the legislature imposes a penalty, the words imposing it must be clear and distinct . 16. He contended that interpretation which has been given by the tribunal is just and proper and decision of co-owner has not been challenged by the department and judgment of Nand Lal (supra) is also not challenged. And the relevant findings of Hon ble High Court read as under: 17. We have heard counsel for the parties. 18. The firs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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