Anar Avnidhar Shah, , Ahmedabad vs Assessee

Anar Avnidhar Shah, V/s. ITO, 172/1, Premchand House, Circle-10, Old High Court, Ahmedabad Ashram Road, Ahmedabad PAN: AFBPS 1988 K

अपीलाथ / अपीलाथ / (Appellant) ू यथ यथ / थ / (Respondent)

Assessee(s) by : Shri P.F. Jain, AR Revenue by : Shri Nimesh Yadav, Sr. DR.

सुनवाई क# तार%ख/ / Dateof Hearing : 26/05/2015 घोषणा क# तार%ख / Date of Pronouncement: 29/05/2015

आदे श/O R D E R

PER G.D. AGRAWAL, VICE PRESIDENT:

This is an appeal filed by the assessee and is directed against the order of the Ld. Commissioner of Income-tax (Appeals), Ahmedabad-5, dated 28.01.2015, pertaining to Assessment Year 2011-12.

2. Ground Nos. 1, 2 & 3 of the assessee's appeal read as under:-

1. The Ld. CIT(appeals) has erred in law and on facts in upholding the disallowance of Rs.1,46,11,826/- being denial of exemption u/s 54F without properly appreciating/considering the facts, evidence and the relevant provisions of the Act.

ITA No. 672/Ahd/2015 Anar Avnidhar Shah vs. ITO For AY 2011-12 2

2. He has erred in law and on facts in not properly appreciating the fact that no sufficient time was granted for reply to the show cause notice resulting into violation of principles of natural justice.

3. He has erred in law and on facts in not appreciating the facts that the field report of the inspector, photograph, panchnama, prominently highlighted and relied upon were not provided to the assessee for explanation/rebuttal rendering the disallowance as bad in law.

3. Ground Nos. 4 to 10 are only arguments in respect of above Ground Nos. 1, 2 and 3.

4. At the time of hearing before us, it is submitted by the ld. Counsel that during the year under consideration, the assessee claimed exemption u/s 54F against the Long Term Capital Gain of Rs.1,46,11,826/-. That the Assessing Officer denied the exemption claimed by the assessee u/s 54F on the ground that the assessee did not make the investment for the acquisition of new residential house within the period of two years after the date of transfer. In support of his contention, the Assessing Officer has relied upon the Inspection Report of the Inspector dated 24.01.2014 and another report dated 29.01.2014 which was prepared in the form of Panchnama in the presence of two witnesses. That the Assessing Officer did not supply the copies of Inspector Report dated 24.01.2014 and Panchnama dated 29.01.2014 to the assessee and did not allow adequate opportunity to furnish the evidence in rebuttal or opportunity to examine the witnesses mentioned in Panchnama. He, therefore submitted that the matter may be sent back to the file of the Assessing Officer with the direction that the material collected by the Assessing Officer through Inspector should be supplied to the assessee and the assessee should be allowed adequate opportunity to ITA No. 672/Ahd/2015 Anar Avnidhar Shah vs. ITO For AY 2011-12 3

furnish the evidence in rebuttal of the above evidences collected by the Assessing Officer behind the bank of the assessee.

5. The ld. Departmental Representative, on the other hand, relied upon the order of the Assessing Officer and he referred to page No.10 & 11 of the assessment order and pointed out that the Assessing Officer gave opportunity to the assessee in which it was informed by the Assessing Officer that by site verification on 24.01.2014 by the Inspector of Income-tax it was revealed that the plots were still open and no construction activities were carried out on the said plots. Thereafter, the assessee did furnish the reply on 31.01.2014 and the Assessing Officer, after considering the said reply, has completed the assessment.

6. In the rejoinder, it is submitted by the ld. Counsel that since the adequate time was not allowed by the Assessing Officer, the assessee was not able to give any factual details and only furnished the legal arguments in its reply dated 31.01.2014. He stated that ultimately the building has been constructed on the aforesaid plot and therefore, the contention of the Assessing Officer that no building was constructed is factually incorrect.

7. We have carefully considered the arguments of both the sides and perused the material placed before us. From page No.6, paragraph No.5 of the assessment order, it is evident that physical inspection of the plots was done by the Inspector of Income-tax on 24.01.2014 for which he furnished the field inquiry report with the Assessing Officer on the same day. Again on 29.01.2014, the Inspector of Income-tax prepared a Panchnama in the presence of two witnesses. At page No.10, in last paragraph, the Assessing Officer has referred to some show-cause notice to the assessee in which the ITA No. 672/Ahd/2015 Anar Avnidhar Shah vs. ITO For AY 2011-12 4

site verification by Inspector dated 24.01.2014 is mentioned. However, there is no mention about the Panchnama drawn by the Inspector of Income-tax in the presence of two witnesses on 29.01.2014. Moreover, it is also not mentioned by the Assessing Officer whether the copy of the report of the Inspector dated 24.01.2014 was annexed alongwtih the show-cause notice. The date of show-cause notice and the date of service thereof are not mentioned in the assessment order. The assessment was completed on 31.01.2014. From these facts, it is evident that the inquiries were conducted through Inspector of Income-tax till 29.01.2014. The outcome of these inquiries has been used by the Assessing Officer against the assessee to arrive at the conclusion that no construction was made by the assessee so as to be entitled to exemption u/s 54F. The assessment was completed on 31.01.2014 i.e., within two days from conducting the enquiries by the Inspector of Income-tax. When the inquiry was conducted almost in the last week of January 2014, naturally it cannot be possible to confront the outcome of the inquiry to the assessee and allow him sufficient time to furnish the reply in rebuttal. Therefore, in our opinion, it would meet the ends of justice if the orders of the authorities below are set aside and the matter is restored back to the file of the Assessing Officer. We order accordingly and direct the Assessing Officer to supply the copy of the Inspector Report, Panchnama and any other material if collected behind the back of the assessee which the Department proposes to utilize against the assessee. The Assessing Officer is also directed to allow adequate opportunity to the assessee for submission of his reply as well as any evidence in support of his claim that construction of residential house was done within stipulated time as per Section 54F. Thereafter, he will re- adjudicate the issue in accordance with law.

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8. The only other ground raised in this appeal by the assessee is Ground No. 11 which is with regard to charging of interest u/s 234B. Both the parties agreed that the charging of interest u/s 234B is consequential. We, therefore, direct the Assessing Officer to re-compute the interest in accordance with law, after the re-determination of income.

9. In the result, the assessee's appeal is deemed to be allowed for statistical purposes.

Order pronounced in the Court on 29th May, 2015 at Ahmedabad.

Sd/- Sd/-

(KUL BHARAT) (G.D. AGRAWAL) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 29/05/2015 Biju T., PS

षत Copy आदे श क# ूितिल+प अमे+षत/ of the Order forwarded to : 1. अपीलाथ / The Appellant 2. ू यथ / The Respondent. 3. संबंिधत आयकर आयु- / Concerned CIT 4. आयकर आयु-(अपील) / The CIT(A)

5. +वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad

6. गाड फाईल / Guard file.

आ आ आ / BY ORDER, दे शानुसार आ

TRUE COPY Dy./Asstt.Registrar) उप/सहायक पंजीकार ( उप/ अिधकरण, अहमदाबाद / आयकर अपीलीय अिधकरण, ITAT, Ahmedabad