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TMI Blog2019 (9) TMI 1234X X X X Extracts X X X X X X X X Extracts X X X X ..... would not help the assessee in view of the specific fact involved in the present case. Thus, on overall consideration of facts and the decision of the Hon'ble Jurisdictional High Court in Humayun Suleman Merchant [ 2016 (9) TMI 70 - BOMBAY HIGH COURT] we have no hesitation in holding that learned Principal Commissioner has correctly exercised his power under section 263 of the Act to revise the impugned assessment order. Accordingly, we uphold the order passed under section 263 of the Act by dismissing the grounds raised by the assessee. - ITA no.2440/Mum./2019 - - - Dated:- 25-9-2019 - Shri Saktijit Dey, Judicial Member And Shri N.K. Pradhan, Accountant Member For the Assessee : Shri Subhash S. Shetty For the Revenue : Shri Rajesh Kumar ORDER PER SAKTIJIT DEY, J.M. Captioned appeal has been filed by the assessee challenging the order dated 19th March 2019, passed under section 263 of the Incometax Act, 1961 (for short the Act ) by learned Principal Commissioner of Income Tax 21 ( the learned Principal Commissioner ), Mumbai, for the assessment year 2014 15. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er issued a show cause notice under section 263 of the Act to the assessee requiring him to explain as to why the assessment order being erroneous and prejudicial to the interest of Revenue should not be set aside. In response to the said notice, the assessee filed his reply on 5th February 2019, stating that he was unaware of the condition imposed by the statute requiring him to deposit the unutilized capital gain in capital gain account scheme. Further, it was submitted, he is still entitled to claim deduction under section 54(1) of the Act since he has invested capital gain in purchase of new house within the due date of return of income as per section 139(4) of the Act. The learned Principal Commissioner, however, did not find merit in the submissions of the assessee. He observed, ignorance of law cannot be an excuse for non compliance with the basic condition. He observed, while completing the assessment under section 143(3) of the Act, the Assessing Officer has completely failed to examine whether the conditions of section 54(2) of the Act has been fulfilled. Thus, he concluded, the assessee having not fulfilled the condition of section 54(2) of the Act is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome as provided under section 139(1) of the Act. In this context, he drew our attention to the following decisions: i) CIT v/s Rajesh Kumar Jalan, [2006] 286 ITR 274 (Gau.); ii) Fathima Bai v/s ITO, [2009] 32 DTR (Kar.) 243 (Kar.); iii) CIT v/s Jagriti Aggarwal, [2011] 339 ITR 610 (P H); iv) Kishore H. Galaiya v/s ITO, [2012] 137 ITD 229 (Mum.); v) Bina Indrakumar v/s ITO, [2012] 137 ITD 238 (Mum.); vi) Gajendra Kumar T. Agarwal v/s ITO, [2011] 11 ITR (Trib.) 640 (Mum.); vii) Anil Kumar Omkar Singh Aurora v/s ITO, ITA no.4648/ Mum./2013, dated 06.11.2013; and viii) Humayun Suleman Merchant v/s CIT, [2016] 387 ITR 421 (Bom.). 4. The learned Authorised Representative submitted, since the decision of the Assessing Officer in allowing deduction under section 54 is in consonance with the ratio laid down in the decisions cited before him, it is a possible view, hence, cannot be considered as erroneous. The learned Authorised Representative submitted, merely because learned Principal Commissioner does n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hase of new residential house within the actual date of filing of return of income, he should have deposited the capital gain in capital gain account scheme. Failure to do so disentitles the assessee to avail deduction u/s 54(1) of the Act. 7. We have considered rival submissions and perused material on record. We have also applied our mind to the decisions relied upon. As far as the basic facts are concerned, there is no dispute that the assessee had derived long term capital gain of ₹ 30,08,473, from sale of a residential flat. The long term capital gain has not been offered to tax by claiming deduction under section 54 of the Act towards investment in a new residential house. Admittedly, the assessee had filed his return of income for the impugned assessment year on 17th July 2014. Whereas, the payments towards purchase of new residential flat were made between 5th October 2015 and 15th February 2016. Thus, from the aforesaid facts, it is very much clear that before the actual date of filing of return of income by the assessee, capital gain was not utilized towards purchase of new residential house. Keeping in view the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as, the due date of filing of return of income under section 139(1) of the Act was 30th July 1988. However, from the facts of the said decision, it becomes very much clear that by the actual date of filing of return of income within the extended period provided under section 139(4) of the Act, the assessee had invested the unutilized capital gain in purchase of new flat. 11. In the case of Jagruti Agarwal (supra), the facts are more or less similar. Though, the due date of filing of return of income as per section 139(1) of the Act was 31st July 2006, however, the assessee had filed her return of income on 28th March 2007 under section 139(4) of the Act. Since, the unutilized capital gain was invested in purchase of new property by the actual date of filing of return of income by the assessee under section 139(4) of the Act, claim of deduction under section 54 of the Act was allowed,. 12. In Humayun Suleman Merchant (supra), the Hon'ble Jurisdictional High Court, after taking note of the decisions of Hon ble Gauhati High Court and Hon ble Karnataka High Court cited supra, has held that for claiming exemption under section 54F of the Act, the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the learned Authorised Representative that the Assessing Officer s decision in allowing deduction under section 54(1) of the Act is as per the legal position prevailing on the date of passing of the assessment order, in our view, is unacceptable. As discussed earlier, the ratio laid down in the decisions referred to above do not lead to the conclusion that the assessee is not required to deposit the unutilized capital gain in capital gain account scheme if it is utilized in purchase of new residential house within the time allowed under section 139(4) of the Act, irrespective of the actual date of filing of return of income by the assessee for the subject assessment year. On the contrary, the legal proposition which follows from the aforesaid decisions is, though, the provision of section 54(2) of the Act encompasses due date of filing of return of income not only as per section 139(1) but even section 139(4) and 139(5) of the Act, however, the condition of section 54(2) of the Act would stand satisfied if the assessee invests the unutilized capital gain in purchase of new house property before the actual date of filing of return of income for the subject assessment year eve ..... 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