Ita/11/2020 Of Pr Commissioner Of Income Tax v. Keshav Dutt Shreedhar

IN THE HIGH COURT OF HIMACHAL PRADESH AT SHIMLAON THE 27[th] DAY OF DECEMBER, 2021BEFORE HON’BLE MS. JUSTICE SABINA & HON’BLE MR. JUSTICE SATYEN VAIDYA INCOME TAX APPEAL NO. 11 OF 2020 Between:- PR. COMMISSIONER OF INCOME TAX,SHIMLA. ….APPELLANT (BY SH. VINAY KUTHIALA, SENIOR ADVOCATE WITH MS. VANDANA KUTHIALA, ADVOCATE) AND SH. KESHAV DUTT SHREEDHAR, LEGALIES,NEAR MARINA HOTEL, THE MALL SHIMLA. ..RESPONDENT (MR. VISHAL MOHAN, ADVOCATE) ________________________________________________________________________ This appeal coming on for orders this day, Hon’ble Mr. Justice Satyen Vaidya, passed the following: J U D G M E N T Heard. 2.By way of instant appeal, the appellant has assailed the orderdated 25.09.2019 passed by Income Tax Appellate Tribunal,Chandigarh in ITA No. 8/CHD/2016. 3.Respondent filed his income tax return for the A.Y. 2008-09on 30[th] September, 2008 and declared income of Rs.1,66,75,690/-This included income from long term capital gain of Rs.38,61,259/- (on sale of flat at Delhi for a consideration of Rs.54,00,000/-). An exemption under Section 54 of the Income Tax Act (for short ‘theAct’) was claimed. On 29.11.2010 assessment under Section143(3) of the Act was completed and returned income wasaccepted. 4.An objection was raised by the Revenue audit that assessee(respondent herein) had neither purchased the new residentialhouse before 30.09.2008 nor he had deposited capital gain amountin the capital gain deposit account scheme. On this premise,exemption allowed to the assessee was recommended to bedisallowed and the capital gain account of Rs.38,61,259/- wasproposed to be added back to the taxable income and charged totax. Accordingly, the case of respondent was reopened andassessment under Section 143(3)/147 of the Act was completed on26.11.2014. The exemption claimed by the respondent wasdisallowed and total income was assessed at Rs.2,05,36,949/-. TheAssessing Officer held that the assessee had neither invested saleproceeds of the asset in new residential house nor he had depositedthe capital gains to the capital gain account within the stipulatedperiod. 5.Respondent assailed the above referred order of AssessingOfficer before CIT(A), Shimla, but remained unsuccessful. CIT(A),Shimla vide order dated 09.11.2015 rejected the appeal ofrespondent. Respondent further assailed the order of CIT(A) beforethe ITAT, Chandigarh and vide order dated 25.09.2019, the ITAT, Chandigarh accepted the appeal of respondent/assessee. Theinstant appeal is against the aforesaid order of ITAT Chandigarh.6.The contention of the Revenue, in the instant appeal, is thatthe decision of ITAT is not acceptable on account of failure ofassessee to produce any credible evidence about thepurchase/allotment of flat before due date of filing return. On thisaccount, the Revenue seeks indulgence of this Court under Section260-A of the Act to answer the following question, which according to the Revenue forms substantial question of law:- “i)Whether on the facts and circumstances of the case, theHon’ble ITAT is right in holding that there should be a livelink between the amount of capital gain and in thepurchase of the new asset where the asset is purchasedbefore the time prescribed by law.”Hon’ble ITAT is right in holding that there should be a livelink between the amount of capital gain and in thepurchase of the new asset where the asset is purchasedbefore the time prescribed by law.” 7.The revenue has not assailed the findings of fact recorded bythe ITAT before this Court on any ground whatsoever muchless theground of perversity. Thus, the findings of fact recorded and takeninto consideration by the ITAT needs notice for disposal of instantappeal as under:- to the Revenue forms substantial question of law:- “i)Whether on the facts and circumstances of the case, theHon’ble ITAT is right in holding that there should be a livelink between the amount of capital gain and in thepurchase of the new asset where the asset is purchasedbefore the time prescribed by law.”Hon’ble ITAT is right in holding that there should be a livelink between the amount of capital gain and in thepurchase of the new asset where the asset is purchasedbefore the time prescribed by law.” 7.The revenue has not assailed the findings of fact recorded bythe ITAT before this Court on any ground whatsoever muchless theground of perversity. Thus, the findings of fact recorded and takeninto consideration by the ITAT needs notice for disposal of instantappeal as under:- “4. We have heard the rival submissions and perused thematerial available on record. A perusal of the record shows thatin the facts of the present case on account of sale of a specificproperty, capital gains to the tune of Rs.38,61,259/- arose to theassessee. The relevant facts relatable to the factum of sale andaccrual of amount of capital gains are not being referred to ingreater details as there is no dispute amongst the parties on the said issue. The fact that the assessee before the filing of thereturn i.e. before 30.09.2008 invested an amount of Rs.49,88,782/ vide cheque No. 765011-1 drawn on ICICI Bank foracquiring a residential flat is an admitted fact.] The specificcheque was cleared by the Bank on 29.09.2008 is also not indispute. The fact that said evidence was available to the AO asquestionnaires were issued by the AO during the originalscrutiny proceedings to justify the claim of deduction u/s 54 ofthe Act and the reply of the assessee are also facts on record.The fact that sale proceeds were deposited in Canara BankAccount which was probably a joint account of the assesseewith his wife and were further converted in Fixed Deposits andthe investment was not made from the bank. where saleproceeds were deposited and were instead made from ICICIaccount which was the assessee's account where professionalreceipts were deposited, are also the facts on record…...” 8.On the strength of aforesaid facts, it has been held by theITAT that there was substantial compliance with the provisions ofSection 54 of the Act as the respondent/assessee had invested anamount of Rs.49,88,782/- vide cheque No. 765011 drawn on ICICIbank for acquiring residential flat and the said cheque was clearedby the bank on 29.09.2008 i.e. before the last date for filing ofincome tax return i.e. 30.09.2008. Relying upon paragraph 22 ofthe judgment of Madras High Court in C. Aryama Sundaram vs.CIT (2018) 407 ITR 1 (Mad), the ITAT held that merely because the amount received by the respondent/assessee from the sale offlat was lying in deposit with Canara Bank by way of FDR and theamount invested for purchase of new flat by therespondent/assessee was from another account maintained by himwith ICICI bank cannot be a justifiable ground to deny the benefit ofSection 54(1) of the Act to respondent/assessee. It has furtherbeen held by the ITAT that the assessee having invested amount inthe purchase of new asset within the specified period, the assesseecould be said to have acquired substantial domain over theproperty, entitling him for claim of exemption. the amount received by the respondent/assessee from the sale offlat was lying in deposit with Canara Bank by way of FDR and theamount invested for purchase of new flat by therespondent/assessee was from another account maintained by himwith ICICI bank cannot be a justifiable ground to deny the benefit ofSection 54(1) of the Act to respondent/assessee. It has furtherbeen held by the ITAT that the assessee having invested amount inthe purchase of new asset within the specified period, the assesseecould be said to have acquired substantial domain over theproperty, entitling him for claim of exemption. 9.To qualify legal requirement to be called a substantialquestion of law, it has to be shown that the same emerges fromfoundation in the pleadings as also from the substantial findings offacts. Further, it is also required to be satisfied that the questionposed should not merely be a proposition of law, but should be adebatable question having bearing on the merits of the case. Inabsence of any challenge to the facts recorded by the ITAT, thequestion so posed by the Revenue cannot be termed as substantialquestion of law as it has no foundation in the factual matrix of thecase. The ITAT, in its impugned order, has recorded that law no-where requires existence of live link between the amount of capitalgain and in the purchase of new asset, where the asset ispurchased within the stipulated time of filing of return. It hasfurther been held that law does not require the assessee to hold onto the very same money and demonstrate that the very same money is utilized in the acquisition of the asset. Neither before theITAT nor in this Court the Revenue has been able to show on recordthat the legal position is otherwise. 10.In view of the above discussion, we do not find any illegalityor infirmity in the impugned order passed by the ITAT, Chandigarh.No substantial question of law arises in the instant appeal, hencethe same is dismissed. ( Sabina ) Judge December 27, 2021 (naveen) ( Satyen Vaidya ) Judge