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2023 (3) TMI 316 - AT - Income TaxExemption u/s 54 - AO held that an amount not deposited in capital gain account before the due date of filing return u/s 139(1) as ineligible for exemption u/s 54 - retrospectivity of amendment brought by the Finance (No. 2) Act, 2014 in sub-section (1) of section 54 w.e.f. 1st April, 2015 - HELD THAT - CIT(A) misdirected himself in forming his view that the amendment brought by the Finance (No. 2) Act, 2014 in sub-section (1) of section 54 w.e.f. 1st April, 2015 is retrospective being clarificatory in nature and that the amendment restricts the benefit of exemption u/s 54 to purchase of one house property. CBDT Circular No. 1 of 2015 dated 21.01.2015 explains that the amendment applies in relation to assessment year 2015-16 and subsequent years. Consequently, the amendment will not apply to the case of the assessee which pertains to AY 2012-13. It may be stated that the Ld. AO did not record any finding on the claim of adjustment of stamp duty of Rs. 2,94,000/- in computing long term capital gain made by the assessee. The claim has not been entertained by the Ld. CIT(A) for want of evidence of payment. AR has also not addressed us in this regard. As it is, now the claim has become only academic in nature. Accordingly, we decide all the additional grounds taken by the assessee before the Tribunal in favour of the assessee. Addition u/s 68 - assessee did not offer proper explanation as to the nature and source of the cash deposits and added the same to the income of the assessee - assessee in reply stated that during the year total amount was deposited by her husband in her bank accounts - HELD THAT - CIT(A) disbelieved the explanation of the assessee merely for want of confirmation of deposits from the husband of the assessee without appreciating the circumstances under which the assessee was placed wherein she could not force her husband to confirm the deposits made by him in her bank accounts. The assessee has brought on record date-wise cash deposited in her bank accounts during the period from 01.04.2012 to 31.03.2015 as also the details of amounts received by the assessee as stridhan from 01.04.2012 to 31.03.2015. It is an admitted position that PAN of the creditor husband was given to the Ld. AO who could easily ascertain the creditworthiness of the assessee which was not done. CIT(A) has not stated that he examined the ITRs of the husband but drew adverse inference that he was a man of no means which is contrary to the facts available in the records. Where the assessee gave the name and address of the creditor and furnished PAN No., merely issue of notice to the creditor and not pursuing the matter further by the Revenue, held in RISSA CORPORATION PVT. LIMITED 1986 (3) TMI 3 - SUPREME COURT that the assessee had discharged the burden of proving the nature and source of credit entries that lay on the assessee. We therefore, hold that the impugned addition under section 68 made by the AO and confirmed by the Ld. CIT(A) does not rest on sound legal footing. We delete the same. Appeal of the assessee is allowed.
Issues Involved:
1. Whether the CIT(A) erred in passing the appeal order before the scheduled hearing date. 2. Whether the CIT(A) erred in not considering Rs. 2,94,000/- stamp duty as part of the cost of acquisition for computing long-term capital gain. 3. Whether the CIT(A) erred in sustaining the addition of Rs. 37,02,500/- under section 68 of the Income Tax Act, 1961. 4. Whether the CIT(A) erred in restricting the exemption under section 54 to one house property and applying the amendment retrospectively. 5. Whether the CIT(A) erred in enhancing the income without issuing a show cause notice as required under section 251(1)(2) of the IT Act. 6. Whether the CIT(A) erred in upholding the partial disallowance of Rs. 11,49,116/- under section 54 for not depositing the amount in the Capital Gains Account scheme before the due date. Detailed Analysis: 1. Passing the Appeal Order Before the Scheduled Hearing Date: The assessee contended that the CIT(A) passed the order on 05.10.2016, a day before the scheduled hearing on 06.10.2016. The Tribunal found this to be against the principles of natural justice, thus favoring the assessee on this ground. 2. Non-Consideration of Stamp Duty in Cost of Acquisition: The CIT(A) denied the inclusion of Rs. 2,94,000/- stamp duty in the cost of acquisition for lack of evidence. The Tribunal noted that neither the AO nor the CIT(A) entertained this claim due to the absence of supporting documents. The Tribunal did not address this issue further as it became academic in nature. 3. Addition of Rs. 37,02,500/- Under Section 68: The AO added Rs. 37,02,500/- as unexplained credits in the assessee's bank account. The assessee claimed these were deposited by her husband, but no confirmation was provided. The Tribunal observed that the identity of the depositor (husband) was established, and the strained relationship between the assessee and her husband explained the lack of confirmation. The Tribunal held that the assessee discharged her burden of proof and deleted the addition. 4. Restriction of Exemption Under Section 54 to One House Property: The CIT(A) restricted the exemption under section 54 to one house property, applying the amendment retrospectively. The Tribunal disagreed, stating the amendment effective from 01.04.2015 applies prospectively to AY 2015-16 and subsequent years. The Tribunal cited various judicial precedents supporting the prospective application of the amendment. 5. Enhancement of Income Without Show Cause Notice: The CIT(A) enhanced the income without issuing a show cause notice as required under section 251(1)(2). The Tribunal found this action to be procedurally incorrect and against the principles of natural justice, thus favoring the assessee. 6. Partial Disallowance of Rs. 11,49,116/- Under Section 54: The AO disallowed Rs. 11,49,116/- for not depositing the amount in the Capital Gains Account scheme before the due date. The Tribunal held that the assessee is entitled to exemption if the investment is made before the filing of the belated return under section 139(4). The Tribunal cited several judicial decisions supporting this view and concluded that the disallowance was not sustainable. Conclusion: The Tribunal allowed the appeal in favor of the assessee, addressing all grounds comprehensively and ensuring adherence to legal principles and judicial precedents. The order pronounced on 24th February 2023 underscored the importance of procedural fairness and correct application of tax laws.
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