COMMISSIONER OF INCOME TAX-V Vs. KAPIL NAGPAL

JUDGEMENT

(1.) THIS appeal under Section 260A(1) of the Income Tax Act, 1961 ('Act') by the Revenue is directed against the impugned order dated 29th January 2014 passed by the Income Tax Appellate Tribunal ('ITAT') in ITA No. 5077/Del/2011 for the Assessment Year ('AY') 2007 -08.

(2.) THE background facts are that the Respondent -Assessee filed his return of income for the AY 2007 -08 declaring his income of Rs. 2,78,53,090. The case of the Assessee was selected for scrutiny and notice under Section 143(2) of the Act was issued. In the assessment order passed under Section 143 (3) of the Act on 30th December 2009 the Assessing Officer ('AO') noted that in the computation of income for the AY 2006 - 07 the Assessee claimed deduction under Section 54F amounting to Rs. 62,47,576 against the long term capital gains of Rs. 63,96,328 arising from the sale of share of M/s. Perfect Buildwell Pvt. Ltd., by investing an amount of Rs. 63 lakhs in the purchase of residential building at Village Fatehpur Beri, Tehsil Hauz Khas, New Delhi by an agreement to sell dated 22nd July 2006. The Assessee was also having a residential house property at Gadaipur, Mehrauli, value of which was shown as Rs. 60,000. The Assessee showed that he was earning less income from the said property.

(3.) FROM the above facts the AO concluded that in the AY 2007 -08 the Assessee was having more than one residential house, i.e., both the property at Gadaipur and the property at Village Fatehpur Beri. Consequently, the Assessee was issued a questionnaire on 30th November 2009 in which Question No. 9 pointed out that the Assessee had sold 5,000 shares of VPPL on 8th November 2006 for a consideration of Rs. 3.75 crores; that the Assessee had claimed exemption under Section 54F of the Act in respect of purchase of residential house property at Gadaipur for Rs. 2.20 crores on 10th April 2007 from Mr. Prem Nath Nagpal; from the examination of the balance sheet it appeared that the Respondent -Assessee had already two house properties (i) at Gadaipur, value of which was at Rs. 60,000 and one at Village Fatehpur Beri purchased on 22nd July 2006 from M/s. M.K. Developers P. Limited for Rs. 63 lakhs; the purchase of the property at Gadaipur on 10th April 2007 was within two years from the date of transfer from the long term capital assets, i.e. shares of VPPL on 8th November 2006; that the Assessee had therefore violated the conditions for claiming exemption under Section 54F of the Act and therefore, the Assessee was required to show cause why exemption claimed under Section 54F amounting to Rs. 2,21,69,090 should not be disallowed and why penalty under Section 271(1)(c) should not be imposed.