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2016 DIGILAW 1728 (RAJ)

Nilofar Begum v. Union of India

2016-12-01

DINESH MEHTA, K.S.JHAVERI

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JUDGMENT : K.S. Jhaveri, J. 1. By way of this appeal, the assessee has assailed the judgment & order of the Tribunal whereby the Tribunal has dismissed the appeal preferred by the assessee and confirmed the order of AO & CIT(A). 2. This Court has admitted the matter on 20th April, 2009 but no question of law was framed therefore, all the questions of law which are framed by the counsel for the appellant in appeal memo are required to be answered which are as under:- "i. Whether the ld. ITAT has seriously erred in having upheld the initiation of proceedings u/s. 147/148 of the Act of 1961 with a view to tax an income, which has already been included within the fold of assessment by way of an appropriate order under sec. 154? ii. Whether the statutory authorities administering the Act of 1961 can be permitted to refuse to grant an exemption u/s. 54(1)/(2) of the Act of 1961 even though appellant has deposited the entire surplus of the capital gains earned by her in an independent savings account of a scheduled bank and has thereafter utilized the same in construction of her new residential house within the time frame specified therefore, solely because the surplus was not placed in a designated bank account specified by the rules? iii. Whether the Income Tax Authorities can be permitted to initiate proceedings for the levy of a penalty u/s. 271(1)(c) of the Act of 1961 in a case where the assessee has merely made a claim for the grant of an exemption by making a reference to a wrong provision of the Act of 1961? iv. Whether the ld. ITAT was justified in having upheld the validity of framing of two separate assessments, one u/s. 154 and another u/s. 147 in respect of the same income under the same head and that the assessment framed under section 147 will prevail over the one framed under section 154?" 3. The brief facts of the case is the assessee originally filed its return of income claiming exemption u/s. 54E being sale proceeds of house property situated at New Colony, Jaipur deposited in the bank account for acquisition/construction of new residential house. The Assessing Officer issued notice u/s. 154 dated 30.11.92 proposing to withdraw the claim of deduction u/s. 54E on the basis of details furnished alongwith the return. The Assessing Officer issued notice u/s. 154 dated 30.11.92 proposing to withdraw the claim of deduction u/s. 54E on the basis of details furnished alongwith the return. The assessee thereafter filed a revised return on 29.1.93 claiming the deduction u/s. 54(1) & 54(2) being the amount kept in bank account for acquisition and construction of residential house. The AO however, rejected the claim of the assessee and computed capital gain of Rs. 5,13,880/- on sale of this property without giving benefit of deduction u/s. 54(1) & 54(2) and computed the income at Rs. 5,53,520. The assessee preferred an appeal against the order u/s. 154 dt. 23.8.93. Before the Commissioner of Income Tax (Appeals) the assessee furnished a certificate from Branch Manager, State Bank of Bikaner & Jaipur, Chandpole Bazar, jaipur mentioning that the amount deposited in the bank account is under the capital gain scheme. On the basis of this certificate the Commissioner of Income Tax (Appeals) held that the certificate of Branch Manager, SBBJ, Chandpole, Jaipur cannot be admitted at this stage and accordingly it rejected the appeal of the assessee. However, it was advised to the assessee to file an application for rectification with proper evidence before the Assessing Officer so that assessee's claim u/s. 54 could be re-examined in light of the Board's circular. Thus finally the income of the assessee remained at Rs. 5,53,520/- After passing the order u/s. 154, the Assessing Officer issued notice u/s. 148 dt. 26.10.94. In pursuance to this notice the assessee requested to drop the proceedings as the issue for which assessment is reopened u/s. 148 has already been re-examined u/s. 154 hence there is no escapement. However, the AO still framed the order u/s. 148 and computed the income at Rs. 5,53,520/- which is the same amount at which the income was computed vide order u/s. 154. 4. Mr. Kasliwal contended that there is a substantial compliance of the requirement of capital gain under Section 54E. He further contended that view which has been taken by both the authorities is required to be interfered and the provision is required to be construed liberally and benefit of substantial compliance is required to be granted in favour of the assessee. 5. Kasliwal contended that there is a substantial compliance of the requirement of capital gain under Section 54E. He further contended that view which has been taken by both the authorities is required to be interfered and the provision is required to be construed liberally and benefit of substantial compliance is required to be granted in favour of the assessee. 5. He has relied upon following decisions:- "(i) Bajaj Tempo Ltd. v. Commissioner of Income Tax, (1992) 196 ITR 188 (ii) Decision of Karnataka High Court in Commissioner of Income Tax v. K. Ramachandar Rao, (2015) 203 Taxman 334 (kar) (iii) Guwahati High Court in Commissioner of Income Tax v. Rajesh Kumar Jalan. (iv) Delhi High Court in Balraj v. Commissioner of Income Tax. (v) Calcutta High Court in Commissioner of Income Tax v. Smt. Bharti C. Kothari" 6. Counsel for the respondent contended that the basic principal is that the things under the statute which is required to be done in particular manner have to be done in the manner prescribed. To avail the benefit of exemption, the assessee was required to deposit the amount as provided under capital gain scheme. Merely because the amount has been deposited in a separate account, the same will not fulfil the requirement. 7. We have heard the learned counsel for the appellant and counsel for the respondent. 8. While confirming the order of under 147 & 148, the Tribunal has observed as under:- "4. Considering the aforesaid arguments advanced by the parties in view of orders of the lower authorities and having gone through the decisions relied on by them, we find substance in the opposition of the ld. D/R that taking action for rectification of an assessment order under section 154 would not debar the department from taking separate steps for reassessment under Section 147 of the Act. We thus do not find reason to interfere with the order of the first appellate authority as the ld. CIT(A) has rightly upheld the action of the AO in computing the income of Rs. 5,53,520/- in the reassessment. The first appellate order is, thus upheld." 9. In our view, the view taken by the Tribunal is just and proper. Therefore, the first issue is required to be answered in favour of the department. 10. CIT(A) has rightly upheld the action of the AO in computing the income of Rs. 5,53,520/- in the reassessment. The first appellate order is, thus upheld." 9. In our view, the view taken by the Tribunal is just and proper. Therefore, the first issue is required to be answered in favour of the department. 10. Regarding second issue, the requirement under 54E are to be complied with strictly and for failure to make compliance, the benefit cannot be granted to the assessee. 11. In our view, both CIT(A) & Tribunal has not committed any error merely because separate account is opened. The capital account is required under the statute to be opened within six weeks. Therefore, the issue No. 2 is also required to be answered in favour of the department against the assessee. 12. On issue No. 3, in view of the bonafide mistake by the assessee, we are of the opinion that the provisions under 271C will not be attracted therefore, issue No. 3 is required to be answered in favour of the assessee. It is only that the assessee could not follow the procedure exactly. In that view of the matter, basic requirement of 271C (1)(c) of the Act are absent and hence, levy of penalty is unjustified. 13. Issue No. 4, in view of the decision of issue No. 1 & 2, issue No. 4 is answered in favour of the department against the assessee. In view of the fact that the 147 order is subsequent therefore so far 147 will prevail. 14. In that view of the matter, the issue is answered in favour of the assessee against the department. The appeal is accordingly disposed off.