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2020 (11) TMI 307 - AT - Income TaxNotice u/s 143(2) with wrong date of filing of return - assessee filed its original return of income under section 139 of the Act on 30/07/2013, and notice under section 143(2) of the Act, was issued to assessee on 19/11/2013 - HELD THAT - On analysing the argument advanced by Ld.AR having regard to the notices issued it is a fact that return of income for assessment year under consideration could not have been filed on 31/07/2012. And therefore in our view date of filing of return for assessment year 2013-14 mentioned in notice issued under section 143 (2) of the Act on 19/11/2013 could only be a typographic mistake. Therefore, contentions of Ld.AR cannot be appreciated. In our view the error has occurred due to typographical mistake and hence it is curable as per provisions of section 292B of the Act. Limitation for issuing notice under section 143(2) of the Act for year under consideration expires on 30/09/2014. We also note that, Ld.AO issued notice again under section 143(2) of the Act, on 04/09/2014, placed at page 56 of paper book within period of limitation. We also note that, said notice was received by assessee on 10/09/2014, thereby complying with requirements for assuming jurisdiction by Ld.AO, within period of limitation, as observed in case of Hotel Bluemoon 2010 (2) TMI 1 - SUPREME COURT - In our view, decision of Hon ble Supreme Court in case of Hotel Bluemoon will not come in support of assessee in the present facts. Accordingly Grounds 6-7 raised by assessee stands dismissed. Exemption u/s 54F - not considering deposit in capital gains account scheme - assessee declared long term capital gain at nil , after claiming indexed cost of acquisition of ₹ 6,90,120/- and claimed exemption of ₹ 97,09,800/- under section 54F, consisting of ₹ 44 lakh kept in capital gains account and 55 lakh held in PD account by income tax Department - whether the amount so deposited has been utilised for construction or purchase of house would arise only in assessment year 2016-17? - HELD THAT - In the present facts of the case, we note that assessing officer has examined the withdrawals/deposits found in the capital gains account scheme during the year under consideration. In our view such action by Ld.AO is not in accordance with provisions of section 54F(4) - assessee is eligible to claim exemption under section 54F, to the extent the amount was deposited as on 31/03/2013 i.e before the end of financial year relevant to assessment year under consideration i.e ₹ 44,00,000/-. Assessee has claimed that advance of ₹ 4,84,020/- was paid to telecom employees co-operative society with an intention to purchase site, and that, said amount was refunded back, since BDA did not allot the site. Ld.AR brought to our notice specific ground no.3, raised in respect of the same, as assessee is denied said amount as deduction under section 54F - CIT(A) rejected assessee s contention only on the ground that no details were filed in respect of cancellation of deed with BDA.We note that this claim was made before Ld.AO during assessment proceedings. At the outset we also note that Ld.Ar fairly admitted that assessee is not eligible for deduction of ₹ 44,00,000/- - As submitted that the advance given proves that assessee was genuinely perusing investment in a new asset as required under the law. Accordingly, Ground no.3-4 raised by assessee stands partly allowed. Amount seized by revenue lying in PD account - HELD THAT - The seizure of cash and keeping in PD account is a separate procedure prescribed in the act which is different from deposits made into capital gains account scheme. As observed by Ld.CIT(A) amount kept in PD account is under the control of Department, while amount kept in capital gains account scheme is under the control of assessee. There is no provision under the Act, to link both the types of deposits. Assessee could avail deduction under section 54F(1) of the Act, only if the deposit is actually made in the capital gains account scheme. Accordingly, we are of the view that Ld.CIT(A) rightly rejected the claim of deduction under section 54F of the Act in respect of ₹ 55 lakh seized by Department and kept in PD account. - Decided against assessee. Interest charged under section 234B - AR submitted that the amount of ₹ 55 lakh seized and kept in PD account should be treated as payment of tax and accordingly interest under section 234B of the Act should be computed by deducting the said sum as payment of tax - HELD THAT - Provisions of section 132B of the Act governs the manner of utilisation of funds seized by the Department. If the amount seized and kept in PD account is more than the liability payable by assessee, then the assessee is entitled to interest also as per the provisions of section 132B of the Act - this amount cannot be treated as equal and to advance tax for purpose of computing interest under section 234B of the act. We, therefore do not find any infirmity in the observations of Ld.CIT(A). - Decided against assessee.
Issues Involved:
1. Exemption under Section 54F of the Income Tax Act. 2. Validity of the assessment due to non-issuance of notice under Section 143(2). 3. Treatment of the amount seized and kept in the PD account. 4. Levy of interest under Section 234B. Detailed Analysis: 1. Exemption under Section 54F of the Income Tax Act: The assessee claimed exemption under Section 54F for the sale of a property, asserting that ?44,00,000 was deposited in the Capital Gains Account Scheme (CGAS) and ?55,00,000 was seized by the Department. The Assessing Officer (AO) rejected the claim for ?44,00,000, noting that the amount was frequently transferred and not used for purchasing or constructing a residential property. The AO also rejected the claim for ?55,00,000, stating it was kept in a bank locker to suppress receipt and had no intention to pay legitimate taxes. The Tribunal concluded that the assessee is eligible for exemption for the amount deposited in CGAS before the due date of filing the return under Section 139(1), i.e., ?44,00,000. However, the Tribunal upheld the rejection of the claim for ?55,00,000, as it was not deposited in CGAS but was seized and kept in the PD account. 2. Validity of the Assessment due to Non-Issuance of Notice under Section 143(2): The assessee argued that the assessment was invalid as no proper notice under Section 143(2) was issued for the return filed on 30/07/2013. The AO issued a notice on 19/11/2013, which mentioned an incorrect filing date of 31/07/2012. The Tribunal held that this was a typographical error and was curable under Section 292B. Additionally, a subsequent notice was issued on 04/09/2014 within the period of limitation, thus validating the assessment. 3. Treatment of the Amount Seized and Kept in the PD Account: The assessee contended that the ?55,00,000 seized and kept in the PD account should be treated as deposited in CGAS. The Tribunal rejected this argument, noting that there is no provision to consider the amount seized and kept in the PD account as equivalent to deposits in CGAS. The Tribunal upheld the CIT(A)'s observation that the amount was unexplained income and was not intended to be deposited in CGAS. 4. Levy of Interest under Section 234B: The assessee argued that the ?55,00,000 seized should be treated as payment of tax, and interest under Section 234B should be computed accordingly. The Tribunal upheld the CIT(A)'s decision, stating that the seized amount could only be adjusted towards taxes after the determination of liability and cannot be equated with advance tax payments. Therefore, the interest under Section 234B was correctly levied. Conclusion: The appeal was partly allowed. The Tribunal granted exemption under Section 54F for the amount deposited in CGAS but upheld the rejection of the exemption for the amount seized and kept in the PD account. The validity of the assessment was affirmed despite the typographical error in the notice under Section 143(2). The interest under Section 234B was correctly levied, considering the provisions of Section 132B.
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