9911796707
TMI Blog2019 (9) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... ither AD nor her husband, RL, was the owner of the subject property at any time, as well as the circumstances in which the name of RL came to be entered qua the said plot in the records of JDA. And, further, that her ownership in December, 2001, when RL was alive, only would validate the ATS dated 25/12/2001, on the basis of which the assessee makes a claim of transfer. Why, the house was admittedly constructed, and not purchased, by the assessee, disproving the said ATS, which is for the purchase of a built house property. The assessee s case, i.e., on the merits of the denial of claim u/s. 54, whichever way one may look at it, is completely unproved; in fact, disproved. The assessee has abysmally failed to exhibit the satisfaction of the conditions for claim of s. 54. Nothing has been brought on record to rebut the clear findings by the Revenue authorities which, being consistent with the material on record, have been endorsed - no case for allowing a deduction u/s. 54, claimed at 27.10 lacs, in respect of purchase of a residential house in December, 2001 by the assessee, is made out. The assessee is apparently the owner of the subject property, having constructed it, but that by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns recorded, i.e., prior to the issue of notice u/s. 148(1) on 10.3.2006 (served on 16.3.2006), conveyed by the Assessing Officer (AO) to the assessee vide his letter dated 16/17.11.2006 (PB pg. 4), are as under: 'The ACIT (HQ) vide his office letter No. 6358 dated 03-03-2006 passed on a consequential information in case of search and seizure operation in case of M/s Mahajan & Co., Group of cases. This information was received from the ADI (Inv.) Jammu for taking action u/s. 153C in respect of the following transactions:- Name & address of the person Particulars of Transactions Date of payment Amount Sh. Om Prakash Gupta S/o Sh. Jagri Mal R/o Sh. 16-F, Sector 14, Nanak Nagar, Jammu Sale of H. No. 559-A Gandhi Nagar, Jammu 01-06-2001 01-06-2001 20-07-2001 15.09.2001 12-12-2001 8,00,000/- 2,00,000/- 2,00,000/- 2,00,000/- 1,00,000/- 35,00,000/- As per this office record the above assessee has not filed any return of income for the above relevant assessment years. I have reason to believe that capital gain of ₹ 35 lac in the financial year 2001-02 has escaped assessment and hence the case is reopened u/s. 147 of the income tax act to assess the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. The information is relevant, from a reliable source, and specific, i.e., has a direct and live nexus with the reason to believe the assessee to have income in the form of capital gain, which had escaped assessment in-as-much as it was, on verification, found by the AO that the assessee had not returned any income for the relevant year, or otherwise disclosed this transaction to the Revenue. How could it be said that there is no application of mind? All the ingredients necessary for the issue of notice u/s. 148(1) are satisfied. That the AO can; rather, is obliged to rely on the information that comes to him from another wing of the Department, as the Investigation Wing in the instant case, is wellsettled, per a series of decisions, which were in fact communicated to the ld. counsel, Sh. Arora (viz. ITO v. Purushottam Dass Bangur [1997] 224 ITR 362 (SC); Frontier Trading Co. v. Choudhary (P.N.) v. ITO [1982] 136 ITR 503 (P&H); Hazi Amir Mohd. Mir Ahmed v. CIT [1997] 110 ITR 630 (P&H); Jash Bhai F. Patel v. CIT [1982] 136 ITR 799 (P&H); Kripa Ram Ramji Dass v. ITO [1982] 135 ITR 68 (P&H); Ranbir Engineering Mills Store v. ITO [1980] 126 ITR 512 (P&H), Varadarajulu Naidu (M.) v. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of J&K, further adding that she was resident of Village Barnala, Distt. Gurdaspur, Punjab. She, further, on being confronted with the ATS dated 25.12.2001, purportedly excecuted by her, categorically denied having executed any such document, clarifying to be an illiterate, having no knowledge of hindi or english alphabets - the agreement (ATS) being in English and 'her' signature in hindi. The statement of AD was confronted to the assessee vide show cause letter dated 20.12.2006 (PB pgs. 13-16), who questioned the evidentiary value of the said statement, being unilateral and, further, taken at his back, and without his cross-examination, which was asked for. The AO observed that he had already allowed several opportunities to the assessee, who in fact had failed to produce AD or even furnish her postal address, further stating that seeking her cross-examination at that late stage was only an attempt to frustrate the assessment which was getting time barred. In fact, the assessee's statement had been recorded on oath u/s. 131 on 27.3.2005 in connection with the search and seizure proceedings in the case of M/s. Mahajan & Co. (in the course of which the ATS dated 01.6.2001 was fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ast two years. Apart from the said affidavit, RL had made a declaration on oath before the Munsiff, Judicial Magistrate, first class, Jammu, again on 13.11.2003, to the same effect, also stating the circumstances under which his name had entered as an occupant of plot no. 358 (House No. 16), Sector 14, Nanak Nagar, Jammu, i.e., as OPG was not present at the time of survey made by the JDA for regularizing the said colony, so that his (Rattan Lal's) name, occupying the premises as a tenant, came to be entered in the list of the occupants. It is for the correction of this entry that OPG moved the JDA vide his application dated 06.8.2003 for correction/regularization of the said plot in his name. 5.2 The AO, in view of the fore-going, concluded as under: 'On comparing and perusal of all the above statements/declarations made by the assessee, Sh. Rattan Lal and Smt. Amriti Devi at different times revealed the crux that Sh. Rattan Lal alongwith his wife Smt. Amriti Devi were putting up as tenant in the above referred property and Sh. Om Parkash Gupta was the owner of the referred property. It was only inadvertently that the name of Sh. Rattan Lal was entered in the list of occupants of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee as claimed by him in his return of income for the relevant Asstt. Year. In fact examination has proved that "Agreement to Sell" entered into by the assessee with Smt. Amriti Devi was a bogus and a forged document which was fabricated by him with the sole intention of reducing his tax liability under the head Long Term Capital Gains arising from the sale of property at 559-A, Gandhi Nagar, Jammu. I, therefore, hold that the assessee will not be entitled for any deduction under section 54 of the Income Tax Act as claimed by him in his return of income filed on 21/06/2006 subsequent to issue of the notice u/s 148 dated 10/03/2006. Further for reasons already discussed in the preceding paras the benefit of the cost of improvement claimed by the assessee on the property at 559-A, Gandhi Nagar, Jammu in his return of income shall not be allowed while computing the Long Term Capital Gain arising from the sale of the above referred property. Hence the deduction claimed by the assessee u/s 54 of the Income Tax Act is hereby rejected and the long-term capital gain arised to the assessee on the sale of the above referred property of the assessee is recomputed as under.' (emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right. Thus, the documents submitted by the appellant have no legal validity. b) Secondly, the plot in question belongs to Jammu Development Authority and cannot be transferred without prior approval of Jammu Development Authority. It is only after the permission of the JDA that property and legal possession can be transferred after getting a transfer letter & possession letter from the JDA after paying requisite transfer fee. In view of above facts and legal position, I am of the opinion that the AO is justified in withdrawing the exemption claimed by the appellant u/s 54 of the Act. As per the certificate of the JDA, the plot was transferred on 03.01 2004, i.e., after the period specified u/s 54 of the Act for making the investment in the house property.' 6. Before me, the assessee's principal arguments were as follows: (a) No cross-examination (CE) having been provided by the AO, the statement of AD could not be relied upon. That is, the assessment must be set aside and the matter restored to the file of the AO to allow cross-examination to the assessee; (b) The matter in fact admits of no two views in light of the remand report dated 21.12.2009 (PB pg. 48), whereupon t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (also refer para 4.1 of the appellate order). The claim u/s. 54 is for ₹ 27.10 lacs, being the purchase consideration of a residential house at 16F, Sector 14, Nanak Nagar, Jammu, and in support of which he relies on the ATS dated 25.12.2001 entered into between him and AD, and the fact that the said house stands transferred in his name by the JDA, albeit subsequently. An examination of the assessee's claim during assessment proceedings, however, reveals the following: (a) the assessee's original return filed on 27.3.2003 does not bear reference to any income by way of capital gains (on sale of house property) or claim of deduction u/s. 54; (b) application dated 06.8.2003 by the assessee to the JDA for correction of the record in-as-much as he was the owner of the said house property (at plot no. 358, sector 14, Nanak Nagar, Jammu), having constructed a house thereat, substituting his name instead of that of Sh. Rattan Lal, whose name had wrongly been entered in its records as its occupant; (c) statement on oath u/s. 131 by the assessee on 27.03.2005, stating that he had not purchased or sold any house property at any time in the past, i.e., except the Gandhi Nagar, Jam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order (pgs. 2-9) and the remand report dated 04.02.2008 (PB pgs. 17-21). All this makes it abundantly clear that the assessee purchased/acquired the subject plot (at Sector 14, Nanak Nagar, Jammu) and constructed a residential house thereat. RL s/o Sh. Sant Ram, and his wife AD, lived in the said house as tenants for several (5-6) years, and apparently enjoyed good relations with the assessee (OPG) and his family. As, however, the assessee was not present at his residence at the time of the survey by the JDA for regularizing unauthorized colonies in and around Jammu, the name of Sh. Rattan Lal got entered in the list of the occupants (qua the subject property) by JDA. An application was accordingly moved by the assessee with JDA for correction of its' record. The affidavits by him and RL, as well as the statement on oath by the latter before the Court of JM, is only toward this, and agrees with the basis of the assessee's application to JDA for correction/regularization of the said house property in his name, i.e., as against the name of RL, inadvertently entered. In view thereof as well as no objection by RL, the property was transferred in the records of JDA in the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the JDA, and which was only subsequent to 25/12/2001! Clearly, therefore, the two families were in contact with each other, even as the onus to produce her was on the assessee, which has not been met at any stage. Why did, then, the assessee not produce AD, giving lame excuses instead? In fact, even the witnesses to the ATS were not produced, though were sought to be, again, contacted by the AO. The plea of her cross-examination, accepting which would require the matter being restored back to the file of the AO for allowing cross-examination to the assessee (refer ITO v. M. Pirai Choodi [2011] 334 ITR 262 (SC)), would accordingly be of no consequence. In fact, her locus standi is to be proved in-as-much as there is nothing on record to exhibit her title to the subject property and, thus, her capacity to execute any instrument of transfer. Again, only if she is the owner of the property in December, 2001, could she validly execute the ATS dated 25/12/2001. Further, as per the assessee's own admission, it is a case of construction of a residential house and not its' purchase. When was the plot purchased? From whom? For what consideration? No document toward this has been produced a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espite the proceedings having commenced in March, 2006, not produced any witness or document to prove or in support of his claim, with that produced, i.e., ATS dated 25.12.2001, being disproved or, in the very least, unproved. Rather, what, one wonders, explains the volte face attributable to AD per a statement dated 21/12/2009, i.e., days after reiterating her version (of 13/12/2006) on 14/12/2009. This is indeed quizzical, as is the need to, in the absence of any contrary material on record, record her statement again, the onus to do so being in any case on the assessee. Even so, as aforesaid, there is no document of title or any material on record evidencing her title to the subject property, for the statement ascribed to her, not on record, to be given any credence. Why, she admittedly being not a state subject, could not have held or transferred any immovable property in J&K, i.e., her locus standi, as afore-stated, is unproved or suspect. In fact, upon this, the ld. CIT(A) vide his letter dated 24/3/2010 (PB pg. 32) required the AO to bring on record any material to evidence the ownership of the subject property by AD, and which was replied to by the AO on 15/4/2010 (PB pg. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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