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2021 (10) TMI 1191 - AT - Income TaxValidity of Proceedings u/s 153C - whether no proper satisfaction note of the Ld. Assessing Officer has been prepared having jurisdiction over the searched person as well as the assessee for initiating the proceeding u/s 153C - HELD THAT - As in the case of M/s Super Malls Pvt. Ltd 2020 (3) TMI 361 - SUPREME COURT and on examining the satisfaction note reproduced above we are of the considered view that a proper satisfaction note of the Ld. Assessing Officer has been prepared having jurisdiction over the searched person as well as the assessee for initiating the proceeding u/s 153C of the Act and therefore we find no merit in the additional legal ground raised by the assessee. We accordingly dismiss the same. Long term Gain on sale of land - claim of section 54 - From perusal of records we find that registered sale deed was executed on 12.12.2006 but on perusal of paper book we find that the possession of the said flat was given to the assessee on 10.02.2007. The transfer of residential flat in favour of the assessee is completed only when the possession is given i.e. 10.02.2007. On adopting the date of purchase of flat on 10.02.2007 the assessee s claim for section 54F of the Act would be valid as it is within one year. The revenue authorities have adopted the date of sale of land on the basis of registered sale deed dated 28.12.2007 but have not considered the date of possession given by the assessee of the said land on 06.12.2007 but for the purchase of flat revenue authorities have adopted the date of purchase as the registered deed i.e. 12.12.2006 but not considered the date of possession of flat received by the assessee on 10.20.2007. If for sake of academic discussion the basis of possession of the immovable property is taken then also the assessee succeeds as the date of sale of land would be 06.12.2007 and purchase of flat would be 10.02.2007. Assessee has rightly claimed the deduction u/s 54F of the Act for purchase of residential flat on 10.02.2007 which is within one year from the date of sale of the land on 28.12.2007( when the total payment for sale of land was received) and since we have held the claim of section 54 F of the Act for deduction against Long Term Capital Gain as valid, the impugned addition of not utilizing the deposit in Capital Gain Account Scheme will not stand for and therefore, the addition made by the Ld. Assessing Officer stands deleted - Decided in favour of assessee.
Issues Involved:
1. Validity of the assessment order under section 153C of the Income Tax Act. 2. Addition of ?22,99,270/- on account of capital gains on the sale of agricultural land. 3. Disallowance of deduction under section 54F of the Income Tax Act. Issue-wise Detailed Analysis: 1. Validity of the Assessment Order under Section 153C: The assessee challenged the validity of the assessment order on the grounds that the Assessing Officer (AO) did not record proper satisfaction before assuming jurisdiction under section 153C, as required by the decision in CIT vs. M/s Mechmen [2016] 380 ITR 591 (MP). The Tribunal examined the satisfaction note prepared by the AO of the searched person and found that proper satisfaction was recorded. The Tribunal referred to the Supreme Court's decision in M/s Super Malls Pvt. Ltd. vs. Pr. CIT, which allows a single satisfaction note when the AO of the searched person and the other person is the same. Since the satisfaction note was found to be proper, the Tribunal dismissed the legal ground raised by the assessee. 2. Addition of ?22,99,270/- on Account of Capital Gains: The AO added ?22,99,270/- to the assessee's income, alleging that the amount deposited in the Capital Gain Account Scheme was not utilized as claimed. The assessee had initially claimed this amount as a deduction in the original return but later claimed it under section 54F in the revised return filed in response to the notice under section 153C. The Tribunal noted that once a revised return is accepted, the original return loses its existence. The Tribunal found that the sale of land was executed on 28.12.2007, and the possession of the flat was taken on 10.02.2007, which falls within one year before the sale of land. Therefore, the assessee's claim under section 54F was valid, and the addition made by the AO was deleted. 3. Disallowance of Deduction under Section 54F: The AO disallowed the deduction under section 54F, arguing that the flat was purchased on 12.12.2006, which is more than one year before the sale of land. The assessee contended that the possession of the flat was taken on 10.02.2007, within one year of the sale. The Tribunal found that the transfer of the flat was completed only when the possession was given on 10.02.2007. Therefore, the purchase of the flat was within one year of the sale of land, making the assessee eligible for the deduction under section 54F. The Tribunal set aside the findings of the lower authorities and allowed the deduction. Conclusion: The Tribunal concluded that the assessment order under section 153C was valid as proper satisfaction was recorded by the AO. The addition of ?22,99,270/- on account of capital gains was deleted, and the assessee's claim for deduction under section 54F was allowed. The appeal was partly allowed in favor of the assessee.
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