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ITAT held original assessment to be proper and set aside CIT’s order u/s 263 (of Income Tax Act, 1961)
ITAT held original assessment to be proper and set aside CIT’s order u/s 263 (of Income Tax Act, 1961)
Sh B V Satyanarayana Rao declared income of Rs 1.62 lakhs. AO noted that assessee had not disclosed cash deposit of Rs.30 lakhs from sale of four sites. Assessee offered STCG and LTCG after claiming exemption u/s 54F (of Income Tax Act, 1961) for investment in a residential property. AO made addition for STCG & LTCG. CIT u/s 263 (of Income Tax Act, 1961) directed AO to do reassessment. ITAT set aside CIT’s order u/s 263 (of Income Tax Act, 1961), and held AO’s assessment to be proper.-500360
1. Assessee, a document writer, had filed his return declaring income of Rs 1.62 lakhs.
2. During the course of assessment, AO noted that assessee had omitted to include his transactions in his bank account which had cash deposit of Rs.30 lakhs, from sale of four sites not disclosed in tax return.
3. Assessee thereafter offered Rs.11.5 lakhs as short term capital gains and Rs.5.5 lakhs as long-term capital gains after claiming exemption u/s 54F (of Income Tax Act, 1961) for investment in a residential property.
4. AO made addition for short-term and long-term capital gains.
5. CIT issued a notice u/s 263 (of Income Tax Act, 1961) stating that AO had not verified the nexus between sale consideration of the sites and the cash deposits in bank account. 5 CIT also noted that assessee was not eligible for exemption u/s 54F (of Income Tax Act, 1961) since admission of capital gains was after detection by Department and not voluntary.
6. CIT remitted the case back to the AO for redoing the assessment.
On appeal, the ITAT held as under:
7. CIT in his order mentions that assessee has sold two sites on 24.07.2008, whereas the first property against which exemption u/s.54F (of Income Tax Act, 1961) was purchased on 13.03.2008 and the second property was purchased on 06.08.2008.
8. Obviously the first property was purchased prior to the sale of the sites on 24.07.2008.
9. Disabling clauses (ii) and (iii) above only mentions purchase or construction within a period of one year/three years after the date of transfer.
10. It does not deal with a case where the purchase is prior to the date of transfer.
11. Even from this angle we cannot say that the AO's decision to allow the claim u/s.54F (of Income Tax Act, 1961) was based on a view which was unlawful or illegal or not possible.
12. In our opinion effort of the CIT was to substitute his view in place of a possible and lawful view taken by the AO, that too after enquiries.
13. In other words, we are of the opinion that the order of AO did not have any error which was prejudicial to the interests of Revenue.
14. Order of CIT u/s.263 (of Income Tax Act, 1961) is set aside.
Case Reference - Shri. B. V. Satyanarayana Rao, vs. Commissioner of Income-tax- IV.
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE
BEFORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND
SHRI. VIJAYPAL RAO, JUDICIAL MEMBER
I.T.A No.976/Bang/2014
(Assessment Year : 2009-10)
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