Income Tax Appellate Tribunal - Chandigarh
Sh. Baljit Singh, Ludhiana vs Pr. Commissioner Of Income Tax - 3, ... on 1 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER
AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER
ITA No.667/Chd/2010
(Assessment Year : 2005-06)
And
ITA No.954/Chd/2016
(Assessment Year : 2005-06)
S.Baljit Singh Ryait, Vs. The Income Tax Officer,
Prop. Ryait Enterprises, Ward-VI(1),
197-198F Saheed Bhagat Ludhiana.
Singh Nagar, Pakhowal Road,
Ludhiana.
PAN: AAZPR4972K
(Appellant) (Respondent)
Appellant by : Shri Ashwani Kumar, CA
Respondent by : Shri Ravi Sarangal, CIT DR
Date of hearing : 05.07.2017
Date of Pronouncement : 01.08.2017
O R D E R
PER ANNAPURNA GUPTA, A.M. :
Both the appeal s have been fi l ed by the same assessee. W h i l e t h e a p p e al i n I TA N o . 6 67 / C hd / 2 0 1 0 i s against t he o rd e r of C o mm i ss i o n e r of I n c om e Ta x - I I I , L u d h i a n a d at e d 2 3 . 3 . 2 0 1 0, p a s se d u / s 2 6 3 o f th e I nc o m e Ta x A c t , 1 9 61 ( i n s h o rt ' t he A ct ' ) r e l a t i n g t o as s e s s m e n t year 2 0 0 5 - 0 6, the appeal in I TA N o . 9 5 4 / Ch d/ 2 0 1 6 is against the o r de r p a s s e d b y t he C o m m i s s i o ne r o f I n co m e Ta x l e v y i n g p e na l t y u n d e r s ec t i o n 2 7 1 ( 1 ) ( c) o n a c c o u n t o f a d d i t i o n m a d e i n t h e or d e r p a s s ed u n d e r s e c ti o n 2 6 3 o f t he Act.
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2. S i n c e b o t h t h e a p p e a l s a r e i nt er c o n n e c t ed , t h e y w e r e h e a r d to g e th e r a n d a r e b ei ng d e c i d e d b y th i s c o m m o n order. W e s h al l b e f i rs t t a k i n g u p t h e a pp e a l fi le d b y t h e a s s e s s e e a g a i ns t t h e o rd e r pa s s ed b y CI T u n de r se c t i o n 26 3 o f t h e A ct i n I TA N o . 6 6 7 / C hd / 2 0 10 .
I T A N o . 6 67 / C h d/ 2 0 1 0 :
3. A t t h e o u t s e t , i t m a y b e p o i n te d o u t t h a t t h e present appeal was di s m i s sed in limine f or want of p r o s e c u t i o n v i de o r d e r d a te d 1 0 .6 . 2 0 1 3 b u t w a s t h e r e a f t er r e c a l l e d i n c on s eq u e n c e t o a M i s ce l l a n e o u s A pp l i ca t i o n f i l e d b y t h e a s s e ss e e , v i d e o r d e r o f t he I . T. A . T. d a t e d 2 1 . 1 0 . 2 0 16 i n M A / 1 1 /2 0 1 6 . I n p ur s u a n c e t o t h e sa i d or d er , t h e ca s e w a s f i x ed f o r h e ar i n g b e f or e u s .
4. Th e f a c t s o f t h e p r e s e n t c a s e a r e t h a t i n i t i al ly a s s e s s m e nt u n de r s e c t i o n 1 4 3 ( 3) o f t h e A c t w a s p a s s e d i n t h e c a s e o f t h e a s s e s s e e f o r t h e i m p u g n ed a s se ss m e n t y ea r i . e . a s s e s s me n t y e a r 2 0 0 5 - 0 6 v i d e o r d e r d a t e d 2 5 . 6 . 2 0 0 7. Th e r e a f t e r on perusal of the a s s e s s m en t re c o r d , t he L d . CI T( A p p e a l s ) found that th e o r d er p a sse d by the A s s e s s i n g O f f i c er w a s er r o n e o us c a u s i n g p r e j udi c e t o t h e interest of the R e v e n u e, s i nce the as s e s s ee had b ee n i n c o r r e c tl y a l l o we d c l a i m o f e x e mp t i o n o f L o n g Te r m C a p i t a l Gains under sec t i o n 54F of th e Act to the extent of R s . 1 5 , 0 6 ,4 5 7 / - . Th e L d . CI T( A p p e a l s ) f o un d f r om th e r e c o r ds that the a ss e s se e had s h o wn Long Te r m C a pi t a l Gains a m o u n t i n g t o R s. 3 5 , 1 3 , 5 72 / - d u ri n g t h e i m pu g n ed y e a r a nd h a s r e d u c e d t h er e f r o m a s u m o f R s . 1 5 , 0 6 , 4 57 / - w h i c h w a s 3 claimed as de d u c t i o n u / s 54 F of t he Ac t . Th e L d . CI T( A p p e a l s ) found from the r e co r d s t ha t in the p r e c e d i n g a s se s sm e n t y e a r a l s o i . e . a s s e s s m e nt y e a r 2 0 0 4 - 0 5 t h e a s s e ss e e h a d e a r n e d Lo n g Te r m C a p i t a l Ga i n s and h a d c l a i m ed d ed u c t i o n u /s 5 4 a n d 5 4 F o f the A c t . Th e a s s e s s e e , h e f ou n d , h a d s t a r t ed t h e c o ns t r u c ti o n o f t he house p r op e r t y in a s s e ss m e n t year 2 0 04 - 0 5 and h ad c l a i m e d d e d u ct i o n u n d e r s e c t i on 5 4 F o n t h e c a p i t a l g a i n s c o m p u t e d f o r t he s a i d a s s e s s m e nt y e a r i . e . a s s e s sm e n t y e a r 2004-05. I t wa s f u r t he r n o ti ce d t h a t t h e as se s s e e h ad c o n t i n u e d to t ak e e x e m p t i o n o f t h e s a m e c o n str u c t i o n i n a s s e s s m e nt y ea r 2005-06 al s o to the extent of R s . 1 5 , 0 6 ,4 5 7 / - , which claim had not e x h a u st e d in the preceding year. Th e Ld. CIT found the aforesaid c l a i m t o b e i nel i g i b l e a s p e r th e p r o v i si o n s o f l a w a n d, t h e r e f o r e, i ss u ed n o t i ce u n de r s e c t i o n 2 6 3 o f th e A c t f or r e v i e w i n g t h e o rd e r p a s s e d b y th e A s s e s s i ng O f fi c e r . Th e c o n t e n t s o f t h e no t i c e i ss u e d t o th e a s s e s se e a r e a s u n d e r :
II). After the perusal of the assessment record for the A. Y.2005-
06, the order is found to be erroneous so far prejudicial to the interest of revenue on the following point:-
During the year under consideration the assessee has sold various new Long Term Capital Gains assets on which deduction under section 54F of Rs.15,06,457/- has been claimed which pertains to transaction of original assets made in A.Y. 2004-05. The deduction of Rs.15,06,457/- pertaining to last year's transaction appears o have been wrongly claimed against the Long Term Capital Gains of this year. The details of the transactions shown in A. Y. 2004-05, as per the copy of computation of taxable income filed by the assessee for A. Y. 2004-05 is as under:-
Less : Loss b/fd A.Y 98-99 2.83,102 5,08,274 Add : ½ share in sales consideration of plot. 19,07,700 24,15,974 4 Less: under section 54 & 54F 39,81,050 Excess investment 15,65,076 In A.Y. 2005-06 In A.Y, 2005-06 against the Long Term Capital Gains arising out of sale of new assets has made the following deductions :
Long Term Capital Gains after indexed cost 35,13,572 Less: Exemption under section 54F Investment as per last return in residential 15,65,076 Add: Construction during the year 04-05 1,42,108 Add: Construction during the year 05-06 3,02,590 20,09,774 Less : 5,03,317 15,06,457 20,07,115 The deduction of Rs. 15,06,457/- claimed under section 54F in this year pertains to Long Term Capital Gains transaction conducted in A. Y. 2004-05. The original assets were transferred in A.Y. 2004-05. The cost of investments in new assets in A.Y. 04-05 was already more than the capital gain arising on a/c of original assets of A.Y.04-05. The excess investments made in the new asset in A.Y. 04-05 could not be carried forward (like the unabsorbed business loss/depreciation) to the next year. The sum of Rs.15,06,457- is in regard to new asset of A.Y. 04-05 where the investments were already more than the capital gain arising out of original assets in A.Y, 04-05. The deduction of Rs.75,06,457/- made in A.Y. 05-06 is against other assets (not the original assets of A. Y. 04-
05) which were sold in this year and that too is not against "net consideration" but against capital gains arrived at after adjustments of indexed costs. The deduction of Rs.15,06,457/- against the Long Term Capital Gains of this year is not as per Sect. 54F of the Act.
The Assessing Officer has erred in allowing deduction of Rs.15,06,457/- while computing the LTCG for this Assessment Year. It is also not apparent whether in regard to expenditure of Rs.3.02,590/- incurred for 05-06, the provisions of 54F(4) were satisfied/ applicable and whether the new asset was constructed within three years. There appears to be under assessment of LTCG/income.
Ill). The order has been passed by the Assessing Officer in a perfunctory manner Therefore, in view of the above, the order of the Assessing Officer passed u/s 143(3) of the IT Act is erroneous as we// as prejudicial to the interest of the revenue. You are given opportunity of being heard and show cause why the impugned order be not enhanced/modified/cancelled or set aside for fresh assessment u/s 263 of the Act In this office on 23-2-2010 at 3.30 pm."
5. Th e assessee res p o n d e d by filing reply to t he a f o r e s a i d n o t i c e s t a t i n g t ha t i t ha d n o t v i o l a t e d a n y o f t he c o n d i t i o ns / r e q ui r e m e n t s p ro v i d ed under s e ct i on 54F by 5 virtue of c l ai mi n g deduction under the said section a m o u n t i n g to R s. 1 5 , 0 6 , 4 57 / - a nd , t h e r e f or e , c h al l e n g e d t he p o w e r e xe r c i s e d b y t h e CI T u n de r s e c t i o n 2 6 3 of t h e A ct . Th e L d . C I T d i d n o t f i n d a n y m er i t i n t h e c o n t e nt i o n o f t h e assessee. Th e L d . CI T t h e r e af t e r held that d e d u c t i on c l a i m e d u n de r s ec t i o n 5 4 F o f R s .15 , 0 6 , 4 5 7 /- w a s n o t a s p e r l a w a n d di r e c t ed t h e A s se s s i n g O f f i c e r t o r e com p u t e t h e i n c o m e b y d e n y i n g t h e s ai d d e duc t i o n .
6. A g g r i e v e d b y t h e s a i d o r d e r t h e a ss e s s e e h a s c o m e u p i n ap p e a l b e fo r e u s . D u ri n g t h e c o u rs e o f h ea r i n g t he L d . c o u n se l f o r t h e a s s e ss e e a t t h e o u t s et s t at ed t h a t th e a s s e s s m e nt o r der h a d be e n s ub je c t t o r e v i e w b y t h e CI T o n t h e s a m e i s s ue e a r l i e r a l s o a n d a f t e r c o n s i d e r i n g t h e r e p l y f i l e d b y t h e a s s es s e e t h e p r oc e e di n g i n i t i at e d u n de r s e c t i o n 2 6 3 o f t h e A c t h a d b e e n d r o pp e d b y t h e C I T. Th e L d . c o u n s e l f o r th e as s e s s e e d r e w o u r a t t e n t i o n t o th e f o l l o w i n g d o c u m e n t s t o s ub s t a n t i a te i t s a bo v e c o n t en t i o n :
i) C o p y o f n o t i ce d a t e d 1 4 . 1 2. 2 0 07 i s s u e d b y t h e C I T-I I I , L u d h i a na p l a c e d a t P a per B o o k p ag e N o .1.
Th e c o n t e n t s o f th e a f o r e sa i d n ot i c e a r e a s u n d e r:
" O n g o n g th r o u g h yo u r as s e s s me n t r e c o r d s f or th e A . Y . 2 0 05 - 0 6 , i t i s s e e n th at yo u h av e c l ai me d e x e mp t i o n of R s. 1 5 , 0 6, 4 5 7 / - under s e c ti o n 5 4 F o u t of L o n g T e r m C ap i t al G ai n o f R s . 3 5 , 1 3 , 5 7 2 / - . T h e s u m o f R s . 1 5 , 0 6 , 4 5 7/ - is p e r ta i n i n g to tr a n s ac ti o n o f L o n g T e r m C ap i t al G ain of th e p r e v io u s ye ar r e l ati n g to th e as s e s s me n t ye ar 2004-05. T h us sum of Rs.15,06,457/- is in r e g ar d to th e o r ig i n al 6 as s e ts wh i c h we r e s o l d d u r in g th e as s e s s me n t ye ar 2 0 0 4 - 0 5 an d in th at as s e s s me n t ye ar th e i n v e s t me n ts al r e ad y e x c e e d e d th e c ap i tal g ai n ar is i n g out of s al e of or ig i n al as s e ts . The d e d u c ti o n of Rs . 1 5 , 0 6 , 45 7 / - c l a i me d for th e as s e s s me n t ye ar 2 0 0 5 - 0 6 is ag a i n s t th e o th e r o r ig i n al as s e ts wh i c h we r e sold in th e as s e s s me n t ye a r 2005-06. T he d e d u c ti o n of R s . 1 5 , 0 6 , 4 5 7 / - cl ai me d u n d e r s e c t io n 5 4 F in th e r e tu r n o f in c o me f or th e as s e s s me n t ye ar 2 0 0 5 - 0 6 is n o t c o r r e c t o n f ac ts an d l a w.
F r o m th e ab o v e f ac ts i t i s ap p ar e n t th a t th e as s e s s me n t order al l o wi n g e x e mp t i o n of R s . 1 5 , 0 6 , 4 5 7 / - un d e r s e c tio n 5 4 F f r ame d b y th e IT O , V I( 1 ) L u d h i an a v id e o r d e r u n d e r s e c ti o n 143(3) d ate d 25.6.2007 is erroneous an d p r e ju d i c i al to th e in te r e s t o f re ve n u e . H o we v e r , b e f or e in v o k in g t h e p r o v is i o n s o f s e c tio n 2 6 3 ( 1 ) of th e IT A c t, yo u ar e hereby g iv e n an o p p o r tu n i ty o f be in g h e ar d in p e r s o n o r th r o u g h yo u r A u th o r i z e d R e p r e se n ta t iv e o n 3 . 1 . 2 0 0 8 at 1 2 . 3 0 P . M. " s "
ii) C o p y o f r e pl y d at e d 3 . 1 . 2 00 8 f i l ed i n r e s p o ns e t o the notice of th e C o m m i s s i o n er of I n co m e Ta x -I I I p l a c e d a t P a p e r B o o k p a g e N o s . 2 a n d 3 , t h e c o n t en t s of w h i c h a r e a s u nde r :
"To The Commissioner of Income Tax-Ill, Aayakar Bhawan,Rishi Nagar, Ludhiana Ref No.CIT-III/Ldh/JB/07-08/ Subject: Reply to your notice u/s 263 (1) of the Income Tax Act, 1961 in case of Sr. Baljit Singh Prcp. M/s Ryait Enterprises, R/o 197-198-F, Shaheed Bhagat Singh Nagar, Pakhowal Road, Ludhiana PAN :
AAZPR4972K- Assessment year 2005-06.7
Sir In response to your notice in the abovesaid case it is humbly requested that:
As shown in the last income tax return out of the exceeded amount Rs.970000/- was the balance standing in capital gain account which was spent on construction after the sale of original asset during the assessement year 2005-06, Rs.105000/-was the construction expenses incurred during the month of May, 2004 and the balance was the excess investment in residential purchase As these investments were made prior to filing of income tax return these were clearly shown while the income tax return of the earlier year had been filed. On going, through the provisions of section 54F it is clear that the basic requirements for claiming deduction are:
i) Transfer of any long, term capital asset.
a) Within a period of one year before or two years after the date on which the transfer took place purchase, or with in a period of three years after that date construction of a residential house.
iii) Owning of one residential house on the date of transfer.
Thus the assessee has met with all the requirements provided u/s 54F and claimed deduction u/s 54F. There is nothing in the section which bars the assesses to claim the deduction regarding exceeded investment of earlier year. Bars provided u/s 54F regarding claiming of exemption are not applicable to assessee. On plain reading of section 54F it seems that the assessee is entitled to claim exemption on full investments again as the assessee has met with all the requirements provided u/s i4F but tills can never be the intention of the legislation so the assessee claimed deduction only on the exceeded investments.
Thus the deduction claimed in the return is correct on facts and law and assessment order allowing deduction is correct. There are some judgments also on the basis of which it is very much clear that the powers u/s 263 should not be used in the case present:
The assessing, officer had taken all the details of assessment year 2004-2005 which has been placed on file so the assessing officer rightly interpreted the provisions of Section 54F and allowed the exemption. So the judgment of lTAT Mumbai Bench (7007) 162 Taxmann 39 Mag. is applicable to this case. Judgment of Punjab and Haryana high court in Commissioner of Income Tax, Patiala Vs.Vinod Kumar Gupta, (2007) 165 Taxman 225, decided on Feb. 28,2007, is also relevant in which the Assessing Officer while framing assessment treated a receipt, to be a capital receipt. The Ho'nble high court held-merely because there was a second opinion possible on same facts. Commissioner could not, in those circumstances, exercise powers under section 263. Thus the provisions of section 263(1) should not be invoked.
Thanking you
Place : Ludhiana Yours sincerely,
Date : 03/01/08
(Sanjeev Garg Advocate)
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iii) Th e o r d e r p a ss e d b y t he l e ar n e d C I T dr o p p i ng t he
p r o c e e d i ng i n i ti a t e d under section 263 dated
2 6 . 3 . 2 0 0 8 p l a c ed a t P a p e r B o o k pa g e N o . 5
7. Th e L d . c o u ns e l f o r t h e as s e s s ee t h e r ea f t e r d r ew o u r a t t e nt i o n to t h e n o t i c e i s su e d i n t he s e co n d r o u n d w h i c h i s r e p ro du c e d i n t h e e a rl i e r p a r t o f o u r o r d e r . Th e L d . c o u ns e l f o r t h e as s e s s e e po i n t e d ou t fr o m t h e ab o v e d o c u m e n t s t ha t t h e o r d e r o f t h e A s s e s s i n g O ff i c er h a d b e e n s u b j e c t t o r ev i e w earlier also on the identical issue and a f t e r b e i ng c o n vi n c e d a n d s a ti s fi e d w i t h t h e rep l y o f t h e a s s e s s e e t h e p r oc e e d i n g h a d b e en d r o p pe d . Th e L d . c o un s e l for the a s s e sse e , t h er e f o r e, stated that t he review p r o c e e d i ng s a g a i n c o u l d n o t b e i n i t i a t e d o n t h e sa m e i s s u e.
I n s up p o r t o f i t s c o n t e n t i on t h e Ld . c o u n s e l f or t he a s s e s s e e r e l i e d o n t h e o rd e r o f t h e I . T. A . T. , D e l h i B e n c h i n t h e c a s e of Shri S a t ya P r a k a sh Gu p t a Vs. I TO in I TA N o . 2 7 3 0 / De l / 2 01 3 wherein, th e Ld. c o u n s el for the assessee p o i n t ed out, that it was categorically held in i d e n t i c a l s e t o f c i r c u ms t a n c e s t h a t t he s e co n d r o u n d o f r e v i s i o n ar y p r o ce e d i n g s w er e i l l e g a l a n d t h e o rd e r p a s s e d u n d e r s e ct i o n 263 o f t h e A c t w as n o t s u s t ai n a b l e.
8. Th e learned D .R . at t hi s j u nct u r e s t at e d t hat t h e r e m u s t b e n o b a r i n r e v i e w i n g a n a s s e s sm e n t o r d er twice on the identical i ss u e even when the e a r l i er p r o c e e d i ng s h a ve been d r o p p e d. Th e argument of the l e a r n e d D . R . w as t h a t b y pl a c i ng s u c h a b ar t he r e m a y be p o s s i b i l i t y o f a n e r r o r b ei n g p e rp e t u a t e d , w h i c h m a y h a ve 9 occurred by vi r t u e of the dropping of th e earlier p r o c e e d i ng , . Th e l e a r n e d D. R . pl a c e d r e l i a n c e on t h e o r d e r of the H o n' b l e Apex C o u rt in the case of Di s t r i b u t or s ( B a r o d a ) P .L t d . v s . U n i o n O f I nd i a & O r s ( 1 9 85 ) 1 5 5 I TR 120(SC)
9. W e h a v e h e ar d th e c o n t e n ti o n s of b o t h t h e p a r t i es a n d p e ru s e d t h e o r d e r s o f t h e a ut h o r i t i e s b e l o w . Th e i s s ue a n d t h e e r r or a s p e r th e L d. CI T w h i c h ha d o cc u rr e d i n t h e o r d e r o f t h e A s se s s i n g O f f i c e r wh i c h r e q u i re d i ni t i a t i o n o f review p r o c e ed i n g s in the p re s e n t ca s e was that the a s s e s s e e h ad w ro n g l y c l a i m e d an d b e e n a l l o we d d e d u c t i o n u n d e r s e c t i o n 54 F o f t h e A c t f r o m t h e L o n g Te r m C a p i t al G a i n e a rn e d by i t o n a c c o u nt o f c o ns t r u c ti on o f h ou s e u n d e r t a k en b y i t t o t h e e x t e n t o f R s . 1 5, 0 6 , 4 57 / - . The r e a s o n i n g b e i n g t h a t t h e d e d u c t i o n o n a c c ou n t of p u r c h a se o f l a n d a n d c on st r u c t i o n u nd e r t ak e n o n t h e s a i d l a n d , u / s 54 and 54F, had been claimed and been allowed to the a s s e s s e e i n t h e p r e c e d i n g a s s e s sm e n t y e a r i . e . as s e s s m e n t y e a r 2 0 0 4 - 0 5. Th e c o n t e n t i o n of t h e R e v e n u e i s t h a t o n c e d e d u c t i o n u / s 54 a n d 5 4 F o f the A c t h a s b ee n c l a i m e d o n a c c o u n t o f h ou se c o n s t r u c te d ag a i n s t c a p i t a l ga i n e a r n e d d u r i n g t h e y e a r, a n y s u r p l u s r e ma i n i n g t h e r ef r o m c a n n o t be c a r r i e d o v e r t o th e n e x t y e a r a n d c l a i m e d a s de d uc t i o n f ro m c a p i t a l ga i n e ar ne d i n t h e s u c c eed i n g y e a r.
10. C l e a r l y a n d u n di s p u t e d l y t h i s i s su e w a s e xa m i n e d b y t h e CI T i n p ro c e e d i n g i n i t i at ed u n d e r s ec t i o n 2 6 3 o f t h e A c t v i d e hi s n o ti c e d a t e d 14 . 1 2 . 20 0 7 a n d d ue r e pl y f i l e d b y 10 the a s s e s s e e, after c o n s i d er i n g which and after b e i ng satisfied by w hi c h the p r o c e ed i n g s were d rop p e d . Th e p r e s e n t p ro c e e d i n g h a v i n g b ee n i n i t i a t e d o n t he i d e n t i c al issue are c l e ar l y u n s u s t a i n ab l e in law since it simply t a n t a m o u nt s t o re v i e w o f t he o r d er o f t h e CI T a n d n o t o f t he A s s e s s i n g Of f i c er . Th e C o o r d i n a t e B e n c h o f t h e I . T. A . T. i n the case of S hr i Satya P r ak a sh Gupta ( s u pr a) has in identical c i r c um s t a n c e s h el d that the s u cc e s s o r CI T b e c o m e s f u n c tus o f f i c i o i n t h i s r e g a r d a f t e r t he e x e r c i s e c o n d u c t e d b y t he p r e d e c es s o r CI T. Th e r e f o r e , we h a v e n o h e s i t a t i on i n h ol d i n g t ha t th e or d e r p a ss e d un de r s e c ti o n 2 6 3 i s n ot s u s ta i n a b l e o n t h i s gr ou n d a l o n e.
11. A s f a r a s t h e a r g u m e n t o f t h e l e a r n e d D . R . t h at s u c h a fi n d i n g w o u l d l ea d t o p er p e t u a t i on o f an e r r o r , t h e L d . D R w a s a sk e d a t B a r t o d e m on s t r a t e i n th e p re s e n t c a s e a s t o w h a t e r r o r w o u l d be p e rp e tu a t e d . To t h i s , th e l e a rn e d D . R . r e sp o n d e d b y s a y i ng t h at th e c l a i m o f d e d uc t i o n u nd e r section 54F by the a s s e s se e was in c o n tr a ve n t i o n of p r o v i s i o ns o f l a w a n d by s et t i n g a s i d e t h e o r d e r o f t he CI T f o r t h e r e a s on t ha t t h e i s s u e h a d a l r e a d y b e e n e xa m i n e d by the earlier CI T, the error of al l o w i n g d e du c t i on to the a s s e s s e e un d e r se c t i o n 5 4 F o f t he A c t w o u l d c o n ti n u e t o be p e r p e t u a te d .
12. W e f i n d n o m e r i t i n th i s c o n t e n ti o n o f t h e l e a r n ed D.R. Th e e x p l an a t i o n g i v e n b y t h e a s s e ss e e i n t h i s r e ga r d v i d e i t s r e pl y s ub m i t t e d t o t he CI T i n t h e e a r l i e r p r o c e e d i ng a n d e v e n i n t h e p r e s e n t pr o c e e di n g , w e fi n d i s p l a u s i b l e an d 11 reasonable. A ba r e r e a d i n g of se c t i o n s 5 4 a nd 5 4 F o f t h e Act n o w h er e st a t e s t h at the surplus re m a i n i n g a f t er c l a i m i n g de d u c t i o n u / s 5 4 / 5 4F o n a c c o u n t o f c on s t r u c t i on of house p ro p e rt y u n d e r t ak e n in a year, w ou l d not be a l l o w e d s e t of f a g a i n s t L o ng Te r m C a p i t a l G ai n e a r n e d i n t h e s u c c ee d i n g ye a r . Th e r e i s n o s u c h s p ec i f i c b ar p r o v i d ed in section. Th e l e a r n e d D. R . al s o a g r e e d t o th i s . Th e r e f o r e , as long as the c o n d i t i o ns s p ec i fi e d u n d er s ec t i on 5 4 F a r e f u l f i l l ed , t h e i n t er p r e t a t i on a n d u n d e r s t a n di n g o f s e c t i o n as t a k e n b y t h e a sse s s e e a n d a l s o by t h e e a rl i e r CI T c a n n o t be s a i d t o b e p e r v er s e a n d g r o s s l y a g a i n s t l a w . Th e r e f o r e , t h e a r g u m e n t o f t h e l e a r n e d D . R . t hat a n e r r o r w o u l d b e a l l o w e d t o b e p e r pe t u a t ed b y s e t t i n g a s i d e t h e p r es e n t or d e r o f t he L d . CI T o n t e c h ni c a l g r o u nd s , w e fi n d h a s no m e r i t.
13. I n v i e w o f t h e ab o v e w e a l l o w th e a p p e a l o f t h e a s s e s s e e a nd s et a s i d e t h e o rde r p a s s e d b y t he L d . CI T under section 263 of the A c t. Th e addition made of R s . 1 5 , 0 6 ,4 5 7 / - i s , t h e r ef o r e , di r ec t e d t o be d e l et ed .
14. Th e appeal of the assessee in I TA N o . 6 6 7 / C hd / 2 0 10 i s a l l o w e d .
I T A N o . 9 54 / C h d/ 2 0 1 6 :
15. Th e p r e s e n t a p pe a l r e l a t es t o l ev y o f p e n a l t y o n t h e a d di t i o n m ad e o f R s . 1 5 ,0 6 , 45 7 / - b y d e n yi n g d e d u c ti o n u / s 5 4 F o f th e Ac t a g a i ns t L on g Te r m C a p i t a l G a i n s e a r n ed b y t h e a s s e ss e e. S i n c e t h e i mp u g n e d a d d i t i o n h a s b e e n d e l e t e d b y u s i n o u r o r d e r p a s s ed i n I TA N o . 6 6 7 /C h d / 2 0 1 0 , 12 t h e r e r e ma i n s no b a s i s f or l e v y o f p e n a l t y u / s 27 1 ( 1 ) ( c ) of the Act and penalty l ev i e d , t h e r e f o r e, a mo u n t i n g to R s . 3 , 3 8 , 05 0 / - i s a l s o d e l et e d .
16. Th e appeal of the assessee in I TA N o . 9 5 4 / C hd / 2 0 16 i s a l l o w e d .
17. I n t h e r e s ul t , b ot h t h e a p p e al o f t h e a s se s s e e a r e allowed.
O r d e r p r on o u n c ed i n t h e o p e n cou r t .
Sd/- Sd/-
(SANJAY GARG) (ANNAPURNA GUPTA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated : 1 s t August, 2017
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ITAT, Chandigarh