AI Drafter 
TaxTMI 
TaxTMI 
2021 (6) TMI 96
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.... 14.90 lakhs to tax. Accordingly, the case of the assessee was reopened u/s 147 of the Act after taking prior approval u/s 151 of the IT Act. In response to the notice issued u/s 148 dated 26th March, 2018, the assessee furnished the return of income declaring the total income at Rs. 18,49,027/- which was the income originally returned. 2.1 During the course of assessment proceedings, the AO asked the assessee to explain the utilization of capital gain. The assessee stated that the capital gain was invested in time over a period of 36 months and the instalments were paid as demanded from time to time, but, he could not get the allotment/possession of the flat as required within three years. The assessee accordingly surrendered an amount of Rs. 14.90 lakhs for taxation with the condition that no penal action should be initiated against him. The AO accordingly determined the total income of the assessee at Rs. 33,39,030/- by making an addition of Rs. 14,90,000/- which the assessee could not utilize. 3. Before the CIT(A) the assessee submitted that the assessee had surrendered the income under some mistaken belief. It was argued that the assessee had paid the amount as demanded ....
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.... was paid later on after delays in the project. It has been submitted by the appellant in this regard- "Because of all this the part of the capital gain remains still to be invested in the flat. I also enclose certain decided cases where the courts have decided that where there is delay in giving possession by the builder the assesses have been granted relief in the matter" v. But, the AO is bound to follow the statute as laid down. Further, the appellant had surrendered the income on account of the unpaid funds to the builder per the deposits in the specified account of SBI. the fact of legal disputes in this regard, notwithstanding. The appellant has relied upon the ease of SATISH CHANDRA GUPTA vs. ASSESSING OFFICER (1995) 54 IT'D 0508- this decision is in context of proceedings of setting aside assessment under section 263 of the Income Tax Act 1961. The appellant invested to purchase the property to have a habitable dwelling unit. As per the documents filed, the appellant made part payments on account of the property but retained back balance consideration due to delay in delivery by the builder. vi. Considering the aforementioned and the principles with r....
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....to the tune of Rs. 35.10 lakhs were made from the capital gain account directly. Since the builder had committed defaults in the construction of the flat in time and did not give possession due to various reasons such as diversion of money for other land and building, inflation of cost by arbitrary means, curbs of the government due to environmental clearance, construction defaults and matters pending with Noida authorities and various other delay tactics followed by the builder, the remaining payment was held back since the matter was pending before the Hon'ble Supreme Court. He submitted that the amount of Rs. 14,90,000/- was lying in the capital gain account. Referring to the provisions of sections 54 and 54F of the IT Act, 1961,he submitted that these provisions should be construed liberally. Referring to the following decisions, he submitted that merely because the assessee could not obtain the possession of the property within a period of 36 months due to defaults committed by the builder, the assessee should not be penalized and deduction u/s 54 should not be denied. For the above proposition, he relied on the following decisions:- i. Bal Kishan Atal vs. ACIT, (2019....
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....t date constructed, one residential house in India, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced....
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....shall be entitled to withdraw such amount in accordance with the scheme aforesaid. Explanation.-[Omitted by the Finance Act, 1992, w.e.f. 1-4-1993.]" 8. As per the above provisions, the assessee has to utilize the amount deposited in the capital gain account for the purpose of purchase or construction of the new asset within the specified time for availing the benefit of capital gain. Here the assessee has made payments for purchase of a flat. He has paid an amount of Rs. 35.10 lakhs out of the capital gain of Rs. 50lakhs and the balance amount of Rs. 14.90 lakhs was lying unutilized in the capital gain account scheme which was brought to tax by the Assessing Officer and the assessee himself had agreed before him during the course of assessment proceedings. 9. A perusal of the details of payments made by the assessee shows that he has paid the following amounts after the assessment year:- (Amt. in Rs.) 07.05.2012 - 4,16,957/- 16.01.2013 - 4,60,809/- 30.04.2013 - 3,26,825/- 25.09.2013 - 3,26,826/- 12.02.2014 - 2,20,000/- 10. From the above, it is clear that the assessee has made payments subsequent....