2023 (1) TMI 1079 - AT - Income Tax

Appellate Tribunal Upholds Short-Term Capital Gain Decision, Denies Section 54F Deduction

Shri Navghanbhai LaxmanRabari Versus ITO Ward-3 (1) (1), Vadodara

The Appellate Tribunal dismissed the appeal filed by the assessee, upholding the decisions of the lower authorities. The sale of land was treated as a ... Deduction U/s. 54F - period of holding of the asset(land) - considering Long Term Capital Gain as Short Term Capital Gain - Whether CIT(appeals) erred confirming action of the AO in treating the sale of land as Short Term Capital Gain by considering purchase deed dated 14.09.2009 & not considering notarized Banakhat dated 19.12.2007 for calculating period of holding of the asset(land), though actual possessing of land was obtained by the Appellant from the date of the Banakhat i.e. 19.12.2007 and payment have been made thereafter? - HELD THAT:- The transfer of property cannot take place on simple agreement. The transfer of the property only takes place when either the possession of the property is transferred or sale deed is executed. Documents like unregistered Banakhat, power of attorney are not the substitute of sale deed. So in present case the land has been sold and sale deed is executed on 14.09.2009 only. The sale of the piece of land within 36 months resulted in short term gain to the assessee. Even in the sale deed there is no mentioned of Banakhat. The issue of invoking the exemption under sec 54F was also held invalid by the lower authorities. The onus to proof the findings of the authorities below as not justified lies upon the assessee. However, the assessee has not brought anything contrary to the findings of the authorities below. As such, it seems that the assessee is not interested in pursuing his claims as he failed to appear despite giving so many opportunities by the Tribunal. Therefore, we are not inclined to interfere in the finding given by the Ld. CIT(A). Hence, the ground of appeal raised by the assessee is dismissed. Issues Involved:1. Treatment of sale of land as Short Term Capital Gain.2. Granting of deduction under section 54F.3. Validity of possession claim based on Banakhat.4. Ex-parte disposal of appeal due to non-appearance of assessee.Issue 1: Treatment of sale of land as Short Term Capital Gain:The assessee sold a piece of land and claimed it as a long term capital gain. The Assessing Officer (AO) found that the land was purchased on 14.09.2009, resulting in a holding period of less than 36 months, hence treated as short term capital gain. The AO sought clarification from the assessee regarding this. The assessee argued that possession of the land was transferred earlier based on a Banakhat dated 19.12.2007. However, the AO disregarded this claim, stating that the Banakhat was non-registered and not a valid document for property transfer. The AO added the sum to the total income of the assessee. The Commissioner of Income Tax (Appeals) upheld the AO's decision, emphasizing that the period of holding must be calculated from the physical transfer of the property, not merely based on a notarized Banakhat.Issue 2: Granting of deduction under section 54F:The assessee also claimed a deduction under section 54F, which was denied by the AO as the long term capital gain was treated as short term capital gain. The assessee submitted a possession letter for the purchase of a new house to support the deduction claim. However, the AO did not grant the deduction under section 54F, resulting in the denial of the claim.Issue 3: Validity of possession claim based on Banakhat:The assessee relied on a Banakhat dated 19.12.2007 to assert that possession of the land was transferred earlier, qualifying it as a long term capital gain. However, the AO dismissed this claim, stating that the Banakhat was not registered and not mentioned in the sale deed. The AO considered it a frivolous attempt to misguide the authority, leading to the addition of the sum to the total income of the assessee.Issue 4: Ex-parte disposal of appeal due to non-appearance of assessee:Despite multiple opportunities given by the Appellate Tribunal for the assessee to present their case, no one appeared on behalf of the assessee during the hearings. The Tribunal proceeded to dispose of the appeal ex-parte due to the continuous absence and negligence of the assessee. The Tribunal highlighted the obligation to decide the appeal after giving an opportunity to the parties, emphasizing the quasi-judicial function performed. The Tribunal relied on the proviso to Rule 24 of the Income-Tax (Appellate Tribunal) Rules, 1963, to proceed with the ex-parte disposal of the appeal.In conclusion, the Appellate Tribunal dismissed the appeal filed by the assessee, upholding the decisions of the lower authorities regarding the treatment of the sale of land as short term capital gain, denial of deduction under section 54F, and the validity of the possession claim based on the Banakhat. The ex-parte disposal of the appeal was conducted due to the continuous absence and negligence of the assessee during the proceedings.