The Delhi Bench of Income Tax Appellate Tribunal (ITAT) held that advance payment made for the purchase of land stand establish as the same was through a banking channels and the bank certificate of deposit in the capital bank account is duly established.
The assessee Sant Singh had filed a return of income and the assessment completed under Section 143(3) of the Income Tax Act,1961. The assessee had reflected the transaction of sale of land subsequently, there was a survey under Section 133A of the Income Tax Act at the business of Smt. Bhawna Jain Props. M/s. Aakash Metal Industries, Hansi from where copy of registration deed was found and impounded.
The Assessing Officer (AO) observed that while claiming exemption under Section 54B of the Income Tax Act benefit was also taken in respect of advance Rs. 55 lakhs made for purchase of a piece of land. It is also observed that in the sale deed executed by the vendor Balwant Singh advance Rs. 55 lakhs is not mentioned, the same is not correct.
The AO further observed that the assessee has claimed exemption of 2.22 crores under Section 54B(2) of the Income Tax Act on the ground that the said amount of Rs. 2.22 crores has been deposited in a capital gain scheme account.
But no proof of same was furnished and accordingly notice under Section 148 of the Income Tax Act was issued on for the assessment year 2008-09 after recording the reasons and obtaining necessary approval. The AO being unsatisfied made the addition and passed order under Section 143C/ 147 of the Income Tax Act.
Aggrived by the order the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], which held that the proceedings under Section 147 of the Income Tax Act were not justified and this is not a case where new material was found or came to the notice of the AO, therefore quashed the order passed under Section 143(3)/147 of the Income Tax Act.
Revenue being aggrieved by the order of CIT(A) filed an appeal before the Tribunal.
The Departmental Representative (DR) primarily submitted that CIT(A) has failed to appreciate the fact that under original assessment under Section 143(3) of the Income Tax Act the issue of allowability of exemption was not duly examined and CIT(A) has heavily relied Annotated Report of Deputy Commissioner of Income Tax (DCIT) which was a mere internal document.
The Authorised Representative of the assessee (AR) however, supported the findings of CIT(A).
The Bench comprising of M. Balaganesh, Accountant Member and Anubhav Sharma, Judicial Member observed that the CIT(A) has also taken into consideration the fact that even there were rectification proceedings under Section 154 of the Income Tax Act, initiated by the AO in which too the information provided by the assessee was duly taken into consideration and no mistake was found in the order.
It was further noted that the fact of payment of Rs. 55 lakhs to Sh. Balwant Singh stand establish as the same was through a banking channels and the bank certificate of deposit of Rs. 2.22 crores in the capital bank account is duly established, and the AR has also canvassed before us as to how the amount deposited in the capital gains account was used for purchase of the land.
The Tribunal was of considered opinion that the Annotated Report of DCIT, was not a mere internal document but formed the basis for the reopening, which the CIT(A) has rightly held to be a case of change of opinion.
Therefore the appeal of Revenue was dismissed and consequently the C.O stand allowed.
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