No new agricultural land purchased in the name of a son or daughter-in-law is eligible for an exemption under Section 54B
Fact and issue of the case
This is an appeal filed by the assessee directed against the order of the ld. Commissioner of Income Tax (Appeals)- 2, Pune [‘the CIT(A)’] dated 04.01.2016 for the assessment year 2011-12.
At the outset, there is a delay of 58 days in filing the present appeal. The legal heir of the appellant filed an affidavit praying for condonation of delay by citing that the delay occurred on account of fact that the appellant was staying at Ahmednagar and he took some time to identify the counsel/tax consultant to file the appeal before the Income Tax Appellate Tribunal at Pune. There was no mala- fide and deliberate intention on the part of the appellant in filing the present appeal with delay.
On the other hand, ld. Sr. DR has no serious objection for condonation of delay.
In the circumstances, we are of the considered opinion that it is a fit case for condoning the delay and admit the appeal for adjudication.
The appellant raised the following grounds of appeal :-
On the facts and in the circumstances of the case the leaned CIT(A) has erred in not appreciation the fact the land sold in respect of which long term capital gain has arisen belonged to Hindu Undivided Family and hence the said LT Gain should not have been assessed in hands of appellant in status of Individual.
On the facts and in the circumstances of the case without prejudice to the above Ground No. 1 CIT(A) has erred in not allowing the claim of exemption made u/s 54B of the I.T.Act 1961.
On the facts and in the circumstances of the case leaned CIT(A) has erred in considering the fair market value as on 1.4.1981 at Rs.67,500/-.
On the facts and in the circumstances of the case leaned CIT(A) has erred in not appreciating the source explained for cash deposits of Rs. 19,42,000/- ( incorrectly taken as Rs.28,42,000 in computation of total income).
The above grounds of appeal may kindly be allowed to be amended, altered, modified etc., in the interest of natural justice.”
Briefly, the facts of the case are as under :-
The appellant is an individual deriving income under the head “salary”. The Return of Income for the assessment year 2011-12 was filed on 29.08.2011 declaring total income of Rs.2,83,360/-. Against the said return of income, the assessment was completed by the Income Tax Officer, Ward-3, Ahmednagar (‘the Assessing Officer’) vide order dated 24.03.2014 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.54,60,640/-. While doing so, the Assessing Officer had made addition under the head “capital gains” on sale of agricultural land of Rs.28,08,000/- and also made addition of Rs.28,42,000/- as unexplained cash deposits in the bank account. The factual matrix of the case is as under : During the course of assessment proceedings under consideration, the Assessing Officer found that the appellant made a cash deposit in savings bank account with ADCC Bank Ltd. of Rs.47,50,000/-. When the appellant was called upon to explain the source of said cash deposits, it was explained that he had sold the agricultural land situated at Survey No.8/3 having total area of 70R (out of this 30R) at Mauje & others for a consideration of Rs.28,08,000/- on 19.03.2011 and the cash deposits were made out the sale consideration received on sale of the above agricultural land. The appellant had also submitted that the sale proceeds were utilized for making the cash deposits in the savings bank account. The appellant had not offered the capital gains on sale of the said agricultural land. In the circumstances, the Assessing Officer had proceeded with the assessment of capital gains by adopting the fair market value of the property at 90,000/- per acre based on the ready reckoner valuation, where the land was situated and, accordingly, computed the long term capital gains of Rs.23,28,075/-. The appellant also failed to offered any explanation in support of the source of cash deposits of balance of Rs.28,42,000/-. In the circumstances, the Assessing Officer had brought to tax the capital gains of Rs.17,59,750/- and also a sum of Rs.28,42,000/- as unexplained cash deposits in the bank account. The Assessing Officer also denied the claim for exemption u/s 54B on the ground that new agricultural lands were bought in the name of son and daughter-in-law at Gat No.248 and Gat No.143. As regards the claim for deduction of construction, the same was also denied on the ground that it was utilized for the purpose of commercial building.
Being aggrieved by the above order of assessment, an appeal was filed before the ld. CIT(A), who vide impugned order confirmed the addition on the ground that the assessee had failed to offer any convincing explanation as to source of deposits. Similarly, the addition on account of capital gains was also confirmed.
Being aggrieved by the above decision of the ld. CIT(A), the appellant is in appeal before us in the present appeal.
The ground of appeal no.1 was not pressed during the course of hearing of the appeal, hence the same is dismissed as such.
The ground of appeal no.2 challenges findings of the ld. CIT(A) denial of claim for exemption u/s 54B of the Act. We fin that this issue does not emanate from the order of the ld. CIT(A), as no such ground of appeal was raised before the ld. CIT(A). It is only before us the appellant has sought the relief u/s 54B in the form of additional ground of appeal. It is stated that the sale consideration received on sale of agricultural land was invested in purchase of agricultural lands in the name of son and daughter-in-law as detailed below :-
| i) | Agricultural land at Gat No.248 at Akolner in the name of Shri Navnath Popat Rahinj and Mrs. Vaishali Navnath Rahinj | 04-07-2011 | 2,10,240 (including stamp duty) |
| ii) | Agricultural land at Gat No.143 at Vadgaon Gupta in the name of Mrs. Sangeeta Dattatraya Rahinj and Shri Haribhau Tukaram Tagad | 15-07-2011 | 2,62,500 (including stamp duty) |
It is further submitted that in respect of addition to above consideration, the appellant paid to on-money consideration for purchase of said agricultural land in cash as detailed below :-
| Sr.No. | Date | Amount (Rs.) |
| 1 | 26-05-2011 | 11,50,000/- |
| 2 | 13-06-2011 | 45,000/- |
| 3 | 02-07-2011 | 1,00,000/- |
| 4 | 08-07-2011 | 5,00,000/- |
| 5 | 22-08-2011 | 5,00,000/- |
| 6 | 09-11-2011 | 45,000/- |
| 7 | 14-11-2011 | 1,50,000/- |
| Total | 24,90,000/- |
It is further submitted that the appellant also invested the same consideration in construction of the house property at Kedgaon by withdrawing the said amounts as under :-
| Sr.No. | Date | Amount (Rs.) |
| 1 | 10-05-2012 | 60,000/- |
| 2 | 30-05-2012 | 1,00,000/- |
| 3 | 26-06-2012 | 1,00,000/- |
| 4 | 31-07-2012 | 1,00,000/- |
| 5 | 18-09-2012 | 1,00,000/- |
| 6 | 03-11-2012 | 1,00,000/- |
| 7 | 03-04-2012 | 4,00,000/- |
| Total | 9,60,000/- |
Therefore, the appellant also sought the claim for deduction u/s 54B of the Act. 14. We have carefully gone through the submissions made by the appellant. We are not inclined to accept the claim for the following reasons :-
(i) No claim for deduction u/s 54B or 54F was made in the return of income filed by the appellant.
(ii) Admittedly, new agricultural lands were purchased in the name of the assessee in view of the authoritative pronouncement of law by the Jurisdictional High Court in the case of Prakash vs. ITO, 312 ITR 40 (Bombay) and the Hon’ble Delhi High Court in the case of CIT vs. Kamal Wahal, 351 ITR 4 (Delhi).
Therefore, the appellant is not entitled for deduction in respect of section 54B of the Act. Following the above decisions, the Coordinate Bench of this Tribunal in the case of Vandana Maruti Pathare vs. ITO, 138 com 259 (Pune – Trib.) held that the deduction u/s 54B cannot be allowed in case where there was no purchase of the land/property in the name of the assessee. We do not find any reason to take a different view from the decision of this Tribunal in the case of Vandana Maruti Pathare (supra). The submissions made by the ld. Counsel that since income arisen out of the agricultural lands were assessable in the hands of the appellant by virtue of clubbing provisions, therefore, the exemption should be allowed u/s 54B, cannot be accepted for the reason that deeming provisions cannot be extended beyond the purpose for which they have been enacted.
Similarly, the submission made by the ld. Counsel that the Provision under the provisions of Benami Act, such transactions are permissible as no relevance in deciding the issue of allowability of deduction u/s 54B, as it is settled position of law that the exemption provisions should the construed strictly. Thus, we do not find any merit in the submissions made by the appellant for claiming deduction u/s 54B of the Act. As regard to the claim for deduction u/s 54F, the appellant had not adduced any evidence in support of the construction of residential property except making a bald submission as detailed above. Further from the submission made by the appellant, it is clear that entire money was spent on the construction subsequent to the date of filing of the return of income and the assessee had not deposited unutilized portion of the consideration in capital gain scheme as provided under the provisions of section 54F of the Act. Thus, the submissions made by the assessee are not supported by any evidence and devoid of any merits. In the circumstances, we do not find any merit in the ground of appeal no.2 filed by the assessee. Hence, ground of appeal no.2 stands dismissed.
The Ground of appeal no.3 challenges the addition of cash deposits in bank account. During the course of assessment proceedings, the Assessing Officer found that the appellant made cash deposits of Rs.47,50,000/- in the bank account. The Assessing Officer had called upon the appellant to explain the source for said cash deposits. The appellant had failed to offer any convincing or plausible explanation. The Assessing Officer taking into consideration that the appellant had sold the property/agricultural land for consideration of Rs.28,08,000/- which had been received in cash, had treated the cash deposits to the extent of Rs.28,08,000/- as explained and brought to tax the balance amount. Even on appeal before the ld. CIT(A), argument advanced before the ld. CIT(A) is that the cash deposits were made out of the past income without leading any proof in support of this contention. The ld. CIT(A) placing reliance on the decision of the Hon’ble Supreme Court in the case of Sreelekha Banerjee vs. CIT, 49 ITR 112 (SC) and Roshan Di Hatti vs. CIT, 107 ITR 938 (SC) had confirmed the addition.
Being aggrieved, the appellant is in appeal before us in the present ground of appeal no.3.
During the course of hearing of appeal, the ld. AR submits that the actual sale consideration on sale of agricultural land was Rs.19,42,000/- over and above were stated in the sale deed and the said consideration was utilized for the purpose of making deposits in the bank account. He further submits that only source of income for the appellant is only salary income as Wireman in the Electricity Department, Government of Maharashtra. He submits that no addition u/s 68 or section 69 can be made without showing for what source of cash deposits was made.
On the other hand, ld. Sr. DR supports of the orders of the lower authorities.
Observation of the court
We heard the rival submissions and perused the material on record. The issue in the ground of appeal no.3 is whether in the facts and circumstances of the case, the cash deposits made in the bank account held by the appellant with ADCC Bank Ltd. can be treated as unexplained. The provisions of 69 provides that where an assessee made investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. It is settled position of law that the unexplained cash deposits in the bank account of the assessee can be brought to tax invoking the provisions of section 69 of the Act. In the present case, on mere perusal of the assessment order, it would suggest that the appellant had failed to offer any explanation whatsoever before the Assessing Officer. It was only during the course of proceedings before the ld. CIT(A), the appellant took a plea that the cash deposits was made on past savings without leading necessary evidence on record in support of such contention. The same came to be rejected by the ld. CIT(A). Even during the course of hearing of appeal before us, the ld. AR took a plea for the first time that the said cash deposits were made out of sale consideration received on sale of land over and above the apparent consideration mentioned in the sale deed. However, the ld. AR had not adduced any evidence in support of this submission except making ipse dixit submissions.
Further, it must be mentioned that it is settled position of law that the consideration stated in the sale deed executed and registered is conclusive, unless and otherwise there is a material on record showing consideration was paid over and above stated consideration, as held by the Hon’ble Supreme Court in the case of K.P. Varghese vs. ITO, 131 ITR 597 (SC) and CIT vs. Shivakami Co. (P.) Ltd., 159 ITR 71 (SC) and also in view of the provisions of Registration Act. Thus, the explanation offered before us during the course of hearing of appeal is not tenable in the eyes of law as it is a mere bald submission without bringing any material on record in support of submission.
As regards to the other contentions of the appellant that the Assessing Officer without discharging the onus of proving the source from which the investments and cash deposits were made, had chosen to make addition. This submission is contrary to the well settled position of law that no burden lies on the Revenue to show the income is received from any particulars source before invoking the provisions of section 68/69 as held by the Hon’ble Supreme Court in the case of Roshan Di Hatti vs. CIT, 107 ITR 938 (SC), CIT vs. M. Ganapathi Mudaliar, 53 ITR 623 (SC) and A. Govindarajulu Mudaliar vs. CIT, 34 ITR 807 (SC). In view of the well settled position of law, the contentions urged by the ld. AR is devoid of any merit and the ground of appeal no.3 is highly misconceived.
In the result, the appeal filed by the assessee stands dismissed.
Order pronounced on this 06th day of January, 2023.
Conclusion
In the result, appeal of the assessee is allowed and ruled in favour of the assessee
