Sh. Satinder Kumar Khera, Sangrur vs Assessee

of ld. CIT(Appeals) Patiala dated 26.09.2014 for

assessment year 2009-10 on the following ground :

"The Id. CIT(A) is wrong in not allowing the benefit of deduction u/s 54B amounting to Rs. l8,00,000/- by holding that the amount was not utilized before the due date of filing of Income Tax Return due to cancellation of purchase agreement ignoring the fact that the amount was duly utilized for purchase of agriculture land before filing of income tax return and it was received back only due to cancellation of agreement which was further utilized for purchase of agriculture land within prescribed period of 2 years from the date of sale of agriculture land."

2. The brief facts of the case are that the assessee

claimed deduction u/s 54B of the IT Act' 1961. However, 2

it was noted that the assessee actually advanced

Rs.18,00,000/- on different dates to Smt. Shantosh Hans

for purchase of agricultural land. However, it was

submitted that the said agreement could not mature due

to some dispute and Smt. Santosh returned

Rs.18,00,000/- and Rs.3,00,000/- as damages and finally

on 24.02.2011 land was purchased from one Sh.

Mohinder Singh for Rs.19,08,000/- The assessee

submitted that he has already utilized the amount of

capital gain by giving Rs.18,00,000/- to Smt. Santosh

Hans and that this amount was not under his possession

and control. During the assessment proceedings, the

assessee could not produce the agreement with Smt.

Santosh Hans. The A.O. held that the amount was not

deposited or utilized before the date of furnishing the

return u/s 139(1) and, therefore, the deduction claimed

u/s 54B was not allowed. Further, the assessee claimed

exemption u/s 54F. It was noted that the assessee has

purchased a flat for Rs. 54,24,061/-. Out of this,

Rs.46,87,5OO/- was paid to the owner of the flat from

08.06.2009 to 03.07.2009. Rs.7,16,561/- was paid to

JMD Ltd. from 03.09.2009 to 10.10.2010. The assessee

further claimed that Rs.2O,000/- was paid in cash to the

broker. The A.O., thereafter, held that investment of

Rs.46,87,5OO/- was made in time i.e. before the due date

of furnishing the return of income. However, the cash

payment to the broker is not reflected in the statement of

affairs and no documentary evidence in this connection 3

was submitted. Similarly, Rs.7,16,561/- was actually

utilized after the due date of filing the return. Further,

Rs. 7,16,561 and Rs.2O,000/- has not been claimed as

deduction u/s 54AF in the original computation of

income. The A.O., therefore held that these two amounts

are not allowable for deduction u/s 54F. Therefore, the

Assessing Officer allowed only proportionate deduction

on the basis of actual investment made before filing of

return and the balance was disallowed.

2(i) During the appellate proceedings, the

assessee reiterated the submissions made before the

A.O. The assessee also submitted that there was an

agreement with Smt. Santosh Hans and copy of the

agreement and cancellation of agreement were submitted.

3. The ld. CIT(Appeals) dismissed appeal of the

assessee. His findings in para 4.2 of the appellate order

are reproduced as under :

"4.2 I have considered the submissions made. For claim u/s 54B, the amount to be utilized bef ore the due date of f iling of return. In th is case, the amount is admittedly not utilized f or purchase of land bef ore the due date of return. Theref ore, as per scheme of section 54B, in my opinion, the claim of the appe llant u/s 54B is no t allo wab le. S imilar ly, the f act of the case sho ws that claim u/s 54F is also no t allo wable as the amo unt was not u til iz e d bef ore f iling of return. Theref ore, the appeal is hereby dismissed."

4. We have considered the rival submissions. The

Assessing Officer noted from the reply of the assessee

that an agreement was entered into by assessee with

Smt. Santosh Hans for purchase of agricultural land at 4

village Sakras Distt. Mewat (Haryana) and payment of Rs.

18 lacs has been made on different dates from 19th June,

2008 to 27th July, 2008. It was further stated that later

on, the agreement could not be matured and Smt.

Santosh Hans had returned Rs. 18 lacs alongwith

damages of Rs. 3 lacs for non performing to agreement in

question. The Assessing Officer asked the assessee to

prove the genuineness of the agreement or to produce

Smt. Santosh Hans for verification. The date of

compliance was fixed on 23.12.2011, though the order

has been passed on 27.12.2011. The assessee also filed

the agreement and cancellation of agreement before ld.

CIT(Appeals) as well. The ld. CIT(Appeals), instead of

giving any finding of fact has merely gone by the fact

that since amount is not utilized for purchase of land

before due date of return, therefore, appeal of the

assessee was dismissed.

5. The ld. counsel for the assessee, therefore, rightly

contended that assessee was not given sufficient time at

assessment stage to produce Smt. Santosh for

examination by the Assessing Officer. The ld. counsel for

the assessee, during the course of arguments submitted

that assessee is ready and willing to produce Smt.

Santosh Hans before Assessing Officer for her

examination 'on oath' by the Assessing Officer.

6. Consi deri ng the facts of the c ase in the l i gh t of

'Agreement to se l l ' and cancel l ati on of agreement and that 5

assessee's counsel has agreed to produce Smt. Santo sh

Hans for e xami nati on by the Assessi ng Offi cer, we are of

the vi e w the mat ter requi res re-c onsi derati on at t he l evel of

the Assessi ng Off i cer. We, accord i ngl y, set asi de t he orders

of authori ti es bel o w and restore thi s i ssue to the fi l e of

Assessi ng Offi cer wi th di recti on to re-deci de thi s i ssue by

gi vi ng factual fi ndi ng of facts for enteri ng the agreement or

for cancel l ati on of agreement in questi on by gi vi ng

reasonabl e suffi ci ent opportuni t y of bei ng heard to the

assessee. The a ssessee i s al so di rected to produce Smt.

Santosh Hans before Assessi ng Offi cer for e xami nation 'on

oath' by the Assessi ng Offi cer wi thout see ki ng any

unnecessar y adjournment i n the matter. I n case assessee

fai l ed to produce Smt. Santosh Hans before Assessi ng

Offi cer, Assessi ng Offi cer shal l be at l i bert y to take any

adverse i nference agai nst the assessee.

7. Wi th these observati ons, appeal of the assessee i s

al l o wed for stati sti cal purposes.

Order pronounced in the Open Court on 19 t h

June,2015.

Sd/- Sd/- (T.R.SOOD) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 19th June,2015. 'Poonam' Copy to:

The Appellant, The Respondent, The CIT(A), The CIT,DR

AR/ITAT/ Chandigarh