2004 (6) TMI 309 - AT - Income Tax

Denial of exemption u/s 54F - purchase of flat - addition of unexplained deposit in a bank account, and charging of interest u/s 234A and 234B - HELD THAT - We are of the considered opinion that the amount of Rs. 4,01,000 out of Rs. 5 lakhs which were ultimately invested within the stipulated time is to be exempt from tax although the assessee failed to technically deposit the same in the capital gain account. The intention of the Act as well as the intention of the assessee are to be considered in a right perspective. It is not the case of the Department that the assessee wanted to utilise the amount for other purpose than to purchase a house within two years to the extent it has been utilised. As a result, we delete the addition of Rs. 4,01,000 out of Rs. 5 lakhs as per rules and sustain the remaining amount. Thus this ground of appeal is partly allowed. Unexplained deposit - The assessee had made total withdrawal of Rs. 3,14,000 in SBBJ, Jodhpur from January, 1995 to March, 1995 against which he made a total deposit of Rs. 3 lakhs in Vijaya Bank, Jaipur, which included single deposit on 31st March, 1995. Thus the learned CIT(A) was right in holding that the deposits made by assessee in Vijaya Bank, Jaipur stand well explained from the withdrawals made from SBBJ Bank, Jodhpur and he had rightly deleted the addition made by AO. We do not find any infirmity in the order of the learned CIT(A). As a result we decline to interfere with the impugned order of the learned CIT(A). In the result, the appeal of the Department is dismissed and the appeal of the assessee is partly allowed.

Summary

Issues Involved:
The judgment involves issues related to denial of exemption u/s 54F, addition of unexplained deposit in a bank account, and charging of interest u/s 234A and 234B.

Denial of Exemption u/s 54F:
The case involved the denial of exemption u/s 54F to the assessee who had sold a plot and reinvested the proceeds in purchasing a residential house. The AO disallowed the claim as the unutilized amount was not deposited in the Capital Gains Account Scheme. However, the CIT(A) allowed the claim to the extent of the amount invested in purchasing a flat at Jaipur. The Tribunal considered the intention of the assessee and held that the amount invested within the stipulated time should be exempt under s. 54F, despite the technical default of not depositing the unutilized amount in the capital gain account scheme before filing the return. Citing relevant case laws, the Tribunal partially allowed the appeal, deleting the addition of the invested amount.

Addition of Unexplained Deposit in Bank Account:
The Department's appeal included an issue regarding the deletion of an addition of Rs. 2 lakhs on account of an alleged unexplained deposit in Vijaya Bank. The assessee had transferred the amount from his account in SBBJ, Jodhpur to Vijaya Bank, Jaipur, which was explained by the withdrawals made. The CIT(A) rightly deleted the addition, considering the explanation provided by the assessee. The Tribunal upheld the CIT(A)'s decision, finding no fault in it.

Charging of Interest u/s 234A and 234B:
The final issue addressed in the judgment was the charging of interest u/s 234A and 234B, which was deemed consequential in nature. The Tribunal decided on this issue in accordance with its findings on the previous matters discussed. Consequently, the Department's appeal was dismissed, and the assessee's appeal was partly allowed.

This comprehensive summary highlights the key points and decisions made in the judgment regarding the issues of denial of exemption u/s 54F, addition of unexplained deposit in a bank account, and charging of interest u/s 234A and 234B.