Income Tax Appellate Tribunal - Chennai
T.Saravanakumar, Kovilpatti vs Assessee on 30 June, 2014
आयकर अपील य अ धकरण,'डी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL "D" BENCH, CHENNAI
डॉ. ओ.के. नारायणन, उपा य एवं ी वकास अव थी, या यक सद य के सम
BEFORE Dr. O.K. NARAYANAN, VICE PRESIDENT &
SHRI VIKAS AWASTHY, JUDICIAL MEMBER
आयकर अपील सं. / I.T.A. No. 467/Mds/2014
नधारण वष / Assessment Year : 2009-10
Shri T.Saravanakumar, The Income Tax Officer,
1179, VIP Nagar, Vs Ward-I(3),
Rajiv Nagar, TUTICORIN
KOVILPATTI-628 501
[PAN: BUOPS 4208 P]
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ क ओर से / Appellant by : Mr. N.Devanathan, Advocate
यथ क ओर से / Respondent by : Mr. Hari Rao, JCIT
सन
ु वाई क तार ख / Date of hearing : 12-05-2014
घोषणा क तार ख / Date of Pronouncement : 30-06-2014
आदे श / O R D E R
PER VIKAS AWASTHY, J.M:
The appeal has been filed by the assessee against the order of Commissioner of Income Tax(Appeals)-I, Madurai, dated 10-02-2014 for the Assessment Year (AY) 2009-10.
2. The assessee is a building contractor. For the AY under consideration, the assessee filed his return of income on 2 I.T.A. No. 467/Mds/2014 07-04-2010 declaring his total income as `1,48,799/-. The case of the assessee was selected for scrutiny and notice u/s. 143(2) of the Income Tax Act, 1961 (herein after referred to as 'the Act') was issued to the assessee on 05-09-2011.
3. During the period relevant to AY.2009-10, the assessee sold capital asset inherited by him for a consideration of `50.00 Lakhs and utilized the sale proceeds towards construction of a new house at Kovilpatti. As per the details submitted by the assessee, the total cost of construction of the new house was `38,45,820/-. The Assessing Officer computed Long Term Capital Gain from the sale of inherited property as `49,21,473/-. The assessee deposited the un-utilized amount in his Savings Bank A/c and claimed exemption of the entire capital gains u/s.54 of the Act. The Assessing Officer held that, since the entire amount was not utilized in accordance with the provisions of section 54, therefore, the assessee is entitled to proportionate exemption u/s.54 of the Act. Thus, the Long Term Capital Gain liable for tax was computed as `30.56 Lakhs.
The Assessing Officer made another addition of `6,10,000/- u/s.68 as un-explained cash credits. The assessee had claimed un-secured loan from his friends and relatives to the extent of 3 I.T.A. No. 467/Mds/2014 `20,60,940/-. During the course of assessment proceedings, Assessing Officer was satisfied with the explanation furnished in respect of loans to the extent of `14,50,000/-. As regards remaining amount of `6,10,000/- secured from Shri Karuppasamy (`4.00 Lakhs) and Shri D. Selvin Jebaraj (`2,10,000/-), the Assessing Officer was not satisfied with the explanation furnished by the creditors and thus made addition of the said amount u/s.68 of the Act.
Aggrieved by the assessment order dt.29-11-2011, the assessee preferred an appeal before the CIT(Appeals). The CIT(Appeals) vide impugned order upheld the findings of the Assessing Officer and confirmed the addition.
Aggrieved by the order of First Appellate Authority, the assessee has come in second appeal before the Tribunal.
4. Shri N.Devanathan, appearing on behalf of the assessee reiterated the submissions made before the authorities below. The ld.Counsel submitted that the CIT(Appeals) has erred in sustaining the findings of Assessing Officer. The assessee had utilized the amount of Long Term Capital Gains in the construction of residential house within the time frame provided u/s.54 of the Act and the remaining amount was deposited by the assessee in 4 I.T.A. No. 467/Mds/2014 Savings Bank A/c. On the issue of additions made u/s.68 of the Act, the ld.Counsel submitted that the assessee was able to produce all the creditors from whom he had confirmed the loan extended to the assessee.
5. On the other hand, Shri Hari Rao, appearing on behalf of the Revenue strongly supported the order of the CIT(Appeals). The ld.DR contended that the assessee had only invested part of capital gains in the construction of house and has deposited the remaining amount in Savings Bank A/c. For claiming benefit of exemption, the assessee ought to have deposited the amount in notified scheme and not in the Savings Bank A/c. As far as addition u/s.68 is concerned, the ld.DR contended that the Assessing Officer has granted relief to the assessee to the extent he was satisfied that the loans have been extended by the relatives and friends of the assessee. As regards loan of `4.00 Lakhs from Shri Karuppasamy is concerned, there were contradictions in the statement made by the creditor and the assessee. In respect of Shri D. Selvin Jebaraj, the Assessing Officer observed that he does not have source to extend loan. 5 I.T.A. No. 467/Mds/2014
6. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below. In appeal, the ld.Counsel for the assessee has raised only two issues:
i. Assessee's entitlement to claim exemption u/s.54F on the entire amount of capital gains; and ii. Addition made u/s.68 on account of un-proved cash credits.
7. As far as first issue of exemption u/s.54 is concerned, it is an admitted fact that the assessee has earned Long Term Capital Gain from sale of immoveable property and only the part of sale proceeds was utilized towards construction of a residential house. The remaining amount was deposited by the assessee in his Savings Bank A/c. For claiming benefit of exemption u/s.54, the assessee was required to deposit un-utilized amount in Capital Gains Account Scheme. Since, the entire amount of Long Term Capital Gain is not utilized by the assessee in accordance with the provisions of section 54, the assessee is eligible for proportionate benefit only. The authorities below have rightly granted proportionate exemption to the extent of amount utilized in the construction of a new residential asset. We do not find any 6 I.T.A. No. 467/Mds/2014 infirmity in the findings of the CIT(Appeals). Accordingly, this ground of appeal of the assessee is dismissed.
8. The second issue raised in appeal is with regard to addition made u/s.68 of the Act. The assessee had taken loan to the extent of `20,60,000/- from his relatives and friends. The Assessing Officer examined all the creditors u/s.131 of the Act to verify the creditworthiness and genuineness of the transactions. All the creditors deposed in favour of the assessee. The Assessing Officer was satisfied with the creditworthiness of all the creditors except two i.e., Shri Karuppasamy and Shri D. Selvin Jebaraj. Shri Karuppasamy is related to the assessee and admitted giving loan to the tune of `4.00 Lakhs to the assessee on various dates. In his statement, he admitted that he had not maintained any record of extending loan to the assessee nor he has taken any promissory note from the assessee. On the contrary, the assessee had filed photo copies of promissory note dt.25-01-2008 executed in favour of Shri Karuppasamy. This clearly shows that the transaction with Shri Karuppasamy is fake and thus, no sanctity can be attached to the statement made by Shri Karuppasamy u/s.131.
7 I.T.A. No. 467/Mds/2014
Similarly, Shri D. Selvin Jebaraj, who is a friend of the assessee made statement u/s.131 admitting extending loan of `2,10,000/- to the assessee on various dates. However, Shri D. Selvin Jebaraj was unable to prove source of funds for extending loan to the assessee. The Assessing Officer has given a categoric finding that he has no means to give loan. The ld.Counsel for the assessee has not able to controvert the findings of the authorities below. Accordingly, this ground of appeal of the assessee is dismissed being devoid of merit.
9. In the result, the appeal of the assessee is dismissed being devoid of merit.
Order pronounced on Monday, the 30th June, 2014 at Chennai.
Sd/- Sd/-
(डॉ. ओ.के. नारायणन) ( वकास अव थी)
(Dr. O.K. NARAYANAN) (VIKAS AWASTHY)
उपा य /VICE PRESIDENT या यक सद य/JUDICIAL MEMBER
चे नई/Chennai,
दनांक/Dated: 30th June, 2014
TNMM
आदे श क त ल प अ े षत/Copy to:
1. अपीलाथ /Appellant 2. यथ /Respondent
3. आयकर आयु त (अपील)/CIT(A) 4. आयकर आयु त/CIT
5. वभागीय त न ध/DR 6. गाड फाईल/GF