TaxTMI 
TaxTMI 
2024 (11) TMI 1382
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..../-. The said income was selected for scrutiny. 3. The appellant (hereafter Assessee) had sold a residential property, 1/7 Shanti Niketan, New Delhi on 25.09.2014, for a consideration of Rs. 6,88,00,000/- and had earned a capital gain of Rs. 5,63,74,550/-. However, the assessee claimed exemption in respect of the said gains on the ground that he had constructed 'a residential house' within a period of three years. Therefore, the said gains were exempted under Section 54 of the Act. 4. The Assessing Officer (AO) made certain queries and found that the Assessee was not eligible for the exemption under Section 54 of the Act. The AO concluded that the Assessee had not constructed a residential house but purchased vacant agricultural land. The structure on the agricultural land, which the Assessee claimed was a constructed residential house, was only a makeshift structure that had been raised with a view to evade the tax liability. 5. The AO also caused the property 'Khewat No. 76, Khatoni No. 76, Village Bandhwari, Sohna, Distt. Gurgaon' (hereafter the subject property) to be physically inspected and confronted the Authorised Representative (AR) of the Assessee with the report ....
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....ct location of the land since the area was vast, uninhabited and comprise of hilly terrain. He also had given us the contact number of Patwari named Mr. Sawan (Mobile No. 9991160943), on contacting Mr. Sawan, he informed us that without Kila/Musti number, it is difficult to identify the exact location of the land. T. KHUP SUAN LIAN Inspector ACIT, Circle - 22(2) New Delhi." 9. The AO was of the view that it was necessary for the Inspector to once again visit the site and called upon the Assessee to arrange a visit to the site on 07.12.2017. The inspection (second inspection) of the site was conducted on 07.12.2017 and the report furnished by the Inspector as noted in the assessment order, is set out below: "INSPECTOR'S REPORT" (in the case of Shri. Sandeep Hooda) 1. One makeshift guardroom (make plywood) of7 x 6 feet, One cylinder and one gas stove along with some utensils were found in the guard room, on which guard Sh. Padam Singh prepares his daily food items. 2. One similar room of plywood of 16 x 12 feet was also there, with toilet attached, in which some furniture was lying. Nobody lives there except than guard. ....
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....t to sell dated 12.03.2015 with M/s Vera Edu Infra Pvt Ltd. for purchase of 1.75 acres of agricultural land on which assessee was desirous to construct a residential house. The learned ITAT also considered the responses of the AR of the Assessee as noted by the AO and reached a conclusion that the Assessee had not constructed a residential house till 25.09.2017. 14. The responses furnished by the AR to the questions posed by the AO on 27.11.2017 clearly indicated that there was no electricity connection or water connection to the subject property in question. It is also material to note that prior to 27.11.2017, on 13.11.2017, the AO had asked the Assessee to show cause why the deductions under Section 54 of the Act should not be disallowed as the construction of the house could not completed before 25.09.2017. However, the Assessee had not filed any written response at the material time. The learned ITAT also examined the Inspector's report and concluded that the assessee had not invested the capital gains in purchase of 'a residential house'. The learned ITAT held that the residential house whether situated in urban or rural locality is required to have the "basic amenities su....
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....whether a residential house was constructed or not within the stipulated period is a question of fact. The Assessee has not challenged the finding of the fact of the learned ITAT on the ground that it is perverse, and in our view, rightly so. 17. It is relevant to refer to Section 54 of the Act which is set out below: "54. Profit on sale of property used for residence. [(1)] [Subject to the provisions of sub-section (2), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of a long-term capital asset, [* * *] [being buildings or lands appurtenant thereto, and being a residential house, the income of which is chargeable under the head "Income from house property" (hereafter in this section referred to as the original asset), and the assessee has within a period of [one year before or two years after the date on which the transfer took place purchased], or has within a period of three years after that date [constructed, a 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 de....