TMI Blog2021 (2) TMI 1076X X X X Extracts X X X X X X X X Extracts X X X X ..... der the same. Had there been any doubts about the authenticity of the valuation report, then in that eventuality, the A.O. could have summoned the registered valuer or could have referred the matter to the DVO. Therefore, when once the valuation report of the registered valuer is submitted and the A.O. has not referred the same to the DVO then in that eventuality, the said report ought to have accepted by the A.O. Non-appearance of the contractor before the A.O. - We are of the view that the A.O. should not have taken an adverse inference merely on account of non-appearance of the contractor as practicably it is a common fact that a common man always hesitates in appearing before the Income Tax Department due to fear of being interrogated and getting into unwanted and prolonged litigation. As far as the allegation of the Revenue that the assessee has withdrawn cash to the tune of ₹ 4.00 lacs only till 31/07/2011 which was not invested in construction by that date nor deposited in the bank account notified under capital gain account scheme is concerned. In this regard, we noticed that Section 54(1) of the Act provides that if capital gain earned by assessee is invested wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hus we are of the view that the assessee has proved all the three conditions, i.e. (i) Identity (ii) Genuineness and (iii) creditworthiness of person from whom cash is explained to have been received. See NEK KUMAR VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX. [ 2004 (7) TMI 59 - RAJASTHAN HIGH COURT] - Decided in favour of assessee. - ITA No. 49/JP/2018 - - - Dated:- 28-1-2021 - Shri Sandeep Gosain, JM And Shri Vikram Singh Yadav, AM For the Assessee : Shri Manish Agarwal (CA) For the Revenue : Smt. Monisha Choudhary (Addl.CIT) ORDER PER: SANDEEP GOSAIN, J.M. This is an appeal filed by the assessee against the order of ld.CIT(A)-3, Jaipur dated 06/12/2017 for the A.Y. 2011-12 in the matter of order passed U/s 143(3) read with Section 147 of the Income Tax Act, 1961 (in short, the Act), wherein following grounds have been taken. 1. On the facts and the circumstances of the case the Ld. CIT(A) erred in confirming the disallowance of deduction u/s 54F of ₹ 5,78,571/- made by ld.AO arbitrarily and accordingly treating it as a long term capital gain when all the conditions prescribed u/s 54F were fulfilled by assessee. 1.1. That the Ld. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. In this regard, the ld AR appearing on behalf of the assessee has reiterated the same arguments as were raised before the ld. CIT(A) and also relied upon the written submissions filed before the Bench and the contents made in the written submissions of the assessee are as under: In these grounds of appeal, assessee has challenged the action of ld.CIT(A) in confirming the addition of ₹ 5,78,571/- made by ld.AO by denying deduction claimed by assessee u/s 54F of the Act. Facts pertaining to the grounds of appeal are that during the year under appeal on 01.12.2010, assessee alongwith 4 other family members sold a piece of land situated at Village Dantali, Patwar-Dantali, Tehsil-Sanganer, Jaipur for a total consideration of ₹ 40,50,000/-, (copy of sale deed at APB 15-16) of which assessee s share was ₹ 5,78,571/-. Out of the sale consideration received assessee had invested in construction of house property and accordingly claimed deduction u/s 54F of the Act. These facts were disclosed in return of income filed in response to notice u/s 148. However, subsequently, it was realised by assessee that cost of acquisition was omitted to be claimed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dated 25.02.2015 and also the valuer has visited the property in 2015 disregarded the same and directed the assessee to produce the contractor who constructed the house. Assessee tried his best but since has no control over the contractor failed to produce him and ld. AO disallowed the exemption claimed by assessee u/s 54F. In this regard, it is submitted that non appearance of contractor before AO should not lead to adverse inference in the case of assessee as, it is a well known fact that a common man always hesitates in appearing before Income Tax Department due to fear of being interrogated and getting into unwanted and prolonged litigation. It is further submitted that undoubtedly, valuation as carried out by the registered valuer on 25.02.2015 was as per the construction rates in force in 2011, as the construction work was complete in the year 2011 itself, which fact is mentioned in Valuation report itself and is overlooked by ld. AO as well as ld. CIT(A). The valuer has determined the cost of construction for30.7.2011 (APB 20) and year of construction was certified by the valuer as 2010-11 (APB 22). Your honours would appreciate that it was only for the reason th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accordance with, any scheme30 which the Central Government may, by notification in the Official Gazette, 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 utilised 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. On perusal of above, it is evident that to be eligible for claiming exemption u/s 54: (1) Full amount of the capital gain has to be invested by assessee in purchase/ construction of new residential house property within the time limit prescribed u/s 54(1); (2) If assessee has not invested full amount of capital gain within one year before the date of transfer and not even upto the due date of filing return, the same is to be deposited in accordance with Capital Gain Accounts Scheme within time limit u/s 139(1), which can be subsequently utilized within 2 years for purchase or within 3 years for construction of new house property. (3) Further, assessee can also claim exemption, if the capital gain is utilized within the time limit u/s 139(4) even th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed deduction u/s 54F of the Act. These facts were disclosed in return of income filed in response to notice u/s 148. However, subsequently, it was realised by assessee that cost of acquisition was omitted to be claimed in return of income, thus assessee vide letter dated 27.02.2015 claimed the cost of acquisition of ₹ 20,000/- (FMV on 01.04.1981) and after claiming indexed cost of the same worked out LTCG at ₹ 4,36,371/- on which deduction was claimed u/s 54F on the plea that sale proceed. Assessee also furnished a copy of Valuation Report of Registered Valuer in support cost of Construction in house property carried out by it. However, the AO recomputed the cost of acquisition claimed by assessee and also disallowed the exemption claimed by assessee U/s 54F of the Act. 6. After having gone through the facts of the present case, we also noticed that the claim of the assessee for seeking exemption U/s 54F of the Act was rejected by the Revenue merely on the ground that the report of valuation submitted by the assessee cannot be considered as evidence for verification of claim U/s 54F of the Act on the grounds that valuation was made by the valuer on 25/02/2015 inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on man always hesitates in appearing before the Income Tax Department due to fear of being interrogated and getting into unwanted and prolonged litigation. As far as the allegation of the Revenue that the assessee has withdrawn cash to the tune of ₹ 4.00 lacs only till 31/07/2011 which was not invested in construction by that date nor deposited in the bank account notified under capital gain account scheme is concerned. In this regard, we noticed that Section 54(1) of the Act provides that if capital gain earned by assessee is invested 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 exemption u/s 54 shall be available in respect of capital gain in accordance with clause (i) and (ii) thereof. Further, provisions of section 54(2) of the Act provides as under: Profit on sale of property used for residence. 54.(2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he full amount of capital gain is utilized within time limit u/s 139(4) as section 139 mentioned in the act for that purpose includes all subsections. However, if the amount is not actually utilized within the time limit, exemption can t be claimed by depositing the amount after due date mentioned u/s 139(1). If the assessee wants to deposit the amount in capital gain account, the deposition has to be within the time limit mentioned u/s 139(1) of the Act. In this regard, we draw strength from the of the Hon ble Gauhati High court in the case of CIT v. Rajesh Kumar Jalan (2006), wherein Hon ble Court took the view that the section mentioned in the section 54(2) above refers time limit of section 139 and not the 139(1) alone. Section 139 includes section 139(4) wherein time limit for filing belated return is one year from the end of assessment year or completion of assessment whichever is earlier. While concluding so, Court has observed that Section 54 of the Income-tax Act, 1961, is a beneficial provision of the Income-tax Act, 1961 for the assessee in the matter relating with the sale of properties used for residence, it appears, for the constitutional goal of providing residence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to time contemplated under the provision of section 139(4) of the Act. Accordingly, section 139(4) had to be read alongwith sub section (1) of section 139 and the due date for furnishing the return of income u/s 139(1) is subject to the extended period provided u/s 139(4). Hence, extended period u/s 139(4) has to be considered for the purpose of utilisation of the capital gain amount. The Coordinate Bench of ITAT Mumbai Benches of the Tribunal in the case of Kishore H. Galiya v. ITO in ITA No.7326/ Mum/2010, has held that when the assessee had utilised the amount which was more than the capital gain earned towards consideration of new residential house within extended period u/s 139(4) of the Act, the claim made by assessee for exemption u/s 54F of the Act could not be denied. The Coordinate Bench of the ITAT Jaipur in the case of ACIT Vs. Maya Devi Sharma in ITA No. 71/JP/15 dated 25.07.2017 (relevant Para 5.4 at page 24 of the order) wherein it was observed as under: Regarding the allowability of claim u/s 54F for belated return filed u/s 153A, it is submitted that sub-section 4 of section 54F provides that the amount of sale consideration has to be appropriated before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01004657 on 14.03.2011(APB 35-36). During the course of assessment proceedings, ld.AO sought explanation regarding source of such deposits. In this regard, vide reply dated 23.02.2015 (APB 13-14), it was explained that such sum was received by assessee as gift from his mother. In support of such claim, assessee furnished copy of bank pass book of his mother, wherein a sum of ₹ 12,35,000/- was reflecting in withdrawals on the same day (APB 32-34) and also submitted a declaration of gift of his mother (APB 31). However, ld. AO completely disregarded the same for the sole reason that she could not be produced for examination. Since mother of assessee is very old and was not keeping well, assessee could not produce her. At this juncture, it is submitted that assessee has discharged his onus by furnishing vital evidences in the shape of bank statements of her mother and declaration of gift. Further, if at all AO had any reservations in accepting the same, he should have brought some cogent material on record to prove the same wrong, whereas in the instant case no discrepancy has been pointed by AO as well as ld.CIT(A) and submission of assessee has been rejected w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t page No. 32-34 of the paper book. Apart from this, the assessee had also submitted a declaration of gift of his mother which is at page No. 31 of the paper book. However, the AO completely disregarded the same for the sole reason that the mother of the assessee is very old and assessee had discharged his onus by furnishing vital evidences in the shape of bank statement of his mother and declaration of gift. On the contrary, the A.O. could not place on record any cogent material to prove that the documents placed on record by the assessee are not reliable. Further, the A.O. also could not point out any discrepancy in the documents placed on record relied upon by the assessee. It is a settled law that whenever any sum is credited in books of accounts of assessee, in order to prove the same as genuine, three things have to be proved in respect of investors of money: (i) Identity of persons who have advanced the money: The same is proved beyond doubt as money has been received by assessee from his mother and no outsider. (ii) Genuineness of transactions: Once identity is proved, genuineness is said to be proved if transaction has taken place through banking channels, confirmati ..... X X X X Extracts X X X X X X X X Extracts X X X X
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