2017 (4) TMI 392 - AT - Income Tax

Clam of deduction u/s 54F - amount was not deposited in the scheme notified by the Government and the investment was not made in the manner provided under section 54F(4) - Held that - Section 54F(4) provides that where the amount of net consideration is not utilised by the assessee for the purchase or construction of the new assets before the date of furnishing of the return of income under section 139, the same shall be deposited before furnishing such return but in any case not later than the due date under section 139(1). The facts in the present case are not in dispute that the assessee had already invested substantially more amount, i.e., ₹ 23,00,000 as against the net consideration of ₹ 13,00,000 only in the purchase of plot on July 28, 2010 itself. In other words, even before the due date prescribed under section 139(1) being July 31, 2010 the investment of larger amount than the net consideration was made. There apart, construction of the house thereon was also completed within the prescribed time limit of three years. These facts were not denied even during the course of hearing. The authorities cited by the learned counsel for the assessee related to the situation where the assessee made the investment within the due date prescribed under section 139(4) and it was held that section 54 or section 54F for that reason uses the word section 139 , which meant not only section 139(1) but also section 139(4). Therefore, a larger time-limit was available to the assessee. The appellant was fully entitled to the deduction as claimed under section 54F, there was no justifiable reason to deny the same by the authorities below. - Decided in favour of assessee Addition u/s 68 - unexplained deposits in bank account - Held that - Before invoking section 68, maintenance of the accounts by the assessee itself and finding credit of the subjected amount therein, are the conditions precedents, and without satisfying them, the Assessing Officer could not have invoked section 68. Having a bearing over the issue in hand, not denied, are that it was a joint bank account where in the husband was first named. In answer to question No. 6 of his written statement placed in the assessee s paper book he clearly admitted having opened the said bank account. He also admitted having deposited cash and also further transacted. On the other hand, there appears no contrary evidence brought on record to suggest that it was a assessee only who made the entire deposits in the said bank account on all the days. The Assessing Officer fully relied upon the statements of the husband only, ignoring the above facts as also the facts that once, the husband was admittedly having earnings in the past, he could have also deposited in the bank account, even assuming Assessing Officer s version is accepted. The motive of husband appears clear behind alleging that it was all the assessee s money, because of the ongoing dispute between the husband and wife and the fear of being caught in the tax net. The Assessing Officer merely proceeded on suspicion. He even did not held the husband as the assessee s benamidar. No justification on making addition - Decided in favour of assessee

Issues Involved:
1. Denial of deduction under section 54F(4) of the Income Tax Act.
2. Addition made under section 68 of the Income Tax Act.
3. Charging of interest under sections 234B and 234D and withdrawal of interest under section 244A of the Income Tax Act.
4. Condonation of delay in filing the appeal.

Issue-wise Detailed Analysis:

1. Denial of Deduction under Section 54F(4):
The primary issue concerned the denial of deduction claimed by the assessee under section 54F(4) of the Income Tax Act, resulting in an increased long-term capital gain of ?9,99,050. The facts revealed that the assessee sold a property and invested the sale proceeds in purchasing a new residential plot and constructing a house within the prescribed period. However, the Assessing Officer disallowed the deduction because the sale consideration was not deposited in the scheme notified by the Government, as required by section 54F(4). The Commissioner of Income-tax (Appeals) upheld this view. The assessee argued that the entire sale consideration was invested in the new property before the due date for filing the return under section 139(1) and cited various judicial precedents to support her claim. The Tribunal concluded that since the assessee had invested more than the net sale consideration in the new property before the due date and completed the construction within three years, the deduction under section 54F was justified. The Tribunal reversed the orders of the lower authorities and allowed the deduction.

2. Addition Made under Section 68:
The second issue pertained to the addition of ?3,80,000 under section 68 of the Income Tax Act, based on unexplained bank deposits. The Assessing Officer added the amount as unexplained cash credit, which was confirmed by the Commissioner of Income-tax (Appeals). The assessee contended that the deposits were made by her husband in a joint bank account and that she did not maintain any books of account, making section 68 inapplicable. The Tribunal agreed with the assessee, noting that the bank passbook could not be treated as the assessee's books of account under section 68. Additionally, the Tribunal found that the husband had admitted to making the deposits and that there was no evidence to suggest that the deposits were the assessee's undisclosed income. Consequently, the Tribunal deleted the addition.

3. Charging of Interest under Sections 234B and 234D:
The third issue involved the charging of interest under sections 234B and 234D and the withdrawal of interest under section 244A. The Tribunal noted that these were consequential in nature and should be recomputed while giving effect to its order.

4. Condonation of Delay:
The appeal was filed late by 63 days. The Tribunal condoned the delay, accepting the assessee's explanation that the delay was due to the misplacement of documents by the chartered accountant's office and was beyond the control of the assessee. The Tribunal emphasized a liberal interpretation in matters of condonation of delay and found sufficient cause for the delay.

Conclusion:
The Tribunal allowed the appeal, granting the deduction under section 54F, deleting the addition under section 68, and directing the recomputation of interest under sections 234B and 234D. The delay in filing the appeal was condoned. The order was pronounced on January 5, 2017.

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