ORDER
K.G. Bansal, A.M.
1. Appeal No. 631/Pn/2001 of the assessee for asst. yr. 1995-96 arises out of the order of CIT(A)-II, Pune, passed on 9th March, 2001. The corresponding order under Section 154 was made by the Asstt. CIT, Circle-1(2), Satara (hereinafter called the AO), on 1st May, 1999. The facts of the case, discernible from the assessment order, the appellate order and the paper book, are that the assessee filed his return of income on 29th June, 2005 declaring total income of Rs. 2,05,139. This included short-term capital gains of Rs. 94.78. Certain working sheets were filed along with the return, which showed that the assessee had earned long-term capital gains of Rs. 18,84,464. The assessee had also earned his share of goodwill amounting to Rs. 14,67,051. These incomes, aggregating to Rs. 33,51,515 were not included in computation of the total income. The AO passed an order of intimation in which the aforesaid amount of Rs. 33,51,515 was included in the total income. However, while working out the tax liability, the AO did not charge additional tax leviable under Section 143(1A) of the Act.
1.2 On discovering this omission, the AO issued notice under Section 154. The case of the assessee was that provisions of Section 154 cannot be invoked for levying additional tax under Section 143(1A) as that section does not empower the AO to levy or enhance the additional tax. The AO did not accept this argument. He pointed out that the assessee’s total income was enhanced in the order of intimation. Therefore, additional tax under Section 143(1A) was leviable. Accordingly, he concluded that there was a mistake apparent from record in the order of intimation to the aforesaid extent. In view of this finding, he levied additional tax on enhancement of income of Rs. 33,51,515.
1.3 Before the learned CIT(A), apart from the legal argument taken before the AO, it was argued that the assessee had declared total income of Rs. 35,56,655 and not Rs. 2,05,139, as stated by the AO in his order under Section 154. In this connection, it was pointed out that the adjustment sheet issued to the assessee, being order under Section 143(1)(a), did not show any adjustment to the income returned by him and that is why additional tax was not levied by the AO. The learned CIT(A) considered the aforesaid averments regarding facts and arguments. He also examined the return filed by the assessee. It was pointed out by him that the assessee had declared capital gains of Rs. 94 only in the return, and the impugned capital gains of Rs. 33,51,515 was not declared therein. The AO had ascertained the aforesaid capital gains from the other papers annexed to the return. Therefore, he gave a finding that the assessee had declared total income of Rs. 2,05,139 only. In view of adjustment made to the returned income, the learned CIT(A) held that omission to charge additional tax was a mistake apparent from record and, therefore, he dismissed the appeal of the assessee on this ground.
2.1 Before us, the assessee filed a paper book consisting of 25 pages. This, inter alia, consists of a summary marked ‘original’ on p. 16. In this summary, short-term capital gains is shown at Rs. 94.78 in column 6. Column 7 regarding long-term capital gains does not contain any figure and it is blank. Page 25 contains another summary marked ‘revised’ in which long-term capital gain is shown at Rs. 40,74,437 in column 7, but this amount or any other amount has not been included in the total income, which has been worked out at Rs. 2,05,139.74.
2.2 The arguments taken before us by the Learned Counsel of the assessee for non-levy of additional tax were the same as before the learned CIT(A). The Learned Counsel also relied on the decision of Hon’ble Tribunal, Ahmedabad Bench “B”, in the case of Asstt. CIT v. Manmohan D. Mehta (1996) 55 TTJ (Ahd) 135 : (1996) 57 ITD 461 (Ahd), in which it was inter alia, held that if interest under Section 139(8)/215/217 is not charged in original assessment, the same cannot be charged in any subsequent rectification, revision, reassessment, etc.
2.3 The learned Departmental Representative relied on the orders of the authorities below.
3.1. We have considered the facts of the case and the rival submissions. The first issue to be decided in this case is whether the assessee had declared total income of Rs. 2,05,139 or Rs. 35,56,655. According to the learned CIT(A), the assessee had left the column of long-term capital gains blank and the total income was worked out at Rs. 2,05,139.74. These facts are borne out by original summary at p. 16 of the paper book. Thus, it appears that revised summary at p. 25 of the paper book was not there before the lower authorities. In the revised summary also, the total income was computed at Rs. 2,05,139.74, though column 7 did show computation of long-term capital gains at Rs. 40,74,437. This amount was not carried to the outer column for aggregation with other incomes. Thus, in either case, the returned income was Rs. 2,05,139.74. The fact that the assessee had paid sufficient amount as advance tax to cover tax on the impugned capital gains or the details regarding capital gains had been annexed with the return does not alter the fact that the returned income was Rs. 2,05,139.74.
3.2. The second issue is whether the AO had made any adjustment to the returned income or not. On perusal of the order of intimation, it is seen that the AO started with the income of Rs. 2,05,140, which was the returned income. In the second column, he entered the figure of Rs. 33,51,515, which represents long-term capital gains. He did not aggregate these incomes probably because rates applicable to them were different. The tax was calculated accordingly and refund of Rs. 94,777 was determined as payable to the assessee. These facts clearly show that the adjustment was made to the returned income to include capital gain and taxes on both incomes were calculated and aggregated. But, additional tax was not levied.
3.3 The third issue is whether additional tax could be levied by invoking provisions of Section 154. We are of the view that reliance on the case of Manmohan D. Mehta (supra) is misplaced. Section 143(1A) mandates levy of additional tax in a case where income determined under Section 143(1)(a) is more than the returned income. Such was the case here. The AO omitted to levy additional tax in spite of clearly expressed mandate of law, which is completely unambiguous. Therefore, provisions of Section 154 are clearly applicable as mandatory additional tax was not charged. There is no authority vested in AO to waive this tax. This is also not a case of varying additional tax in subsequent orders. There cannot be any other liberal consideration in either of the matters in dispute as facts of the case are very clear. No discussion or debate is feasible to a duly instructed mind in either of the matters. Therefore, we are in agreement with the learned CIT(A) in this matter. Accordingly, ground Nos. 1, 2 and 3 of the appeal are dismissed.
4. In the result, the appeal of the assessee is dismissed. ITA No. 632/Pn/2001 for asst. yr. 1996-97
5.1 This appeal arises out of the order of CIT(A)-II, Pune, passed on 9th March, 2001. The corresponding order of the assessment was made by the Dy. CIT, Circle-3(4), Satara (hereinafter called the AO), on 2nd Feb., 1999, under the provisions of Section 143(3) r/w Section 147 of the IT Act, 1961. The assessee has taken up two substantive grounds of appeal, namely, that the learned CIT(A) erred in–(i) confirming addition of Rs. 9,15,928 under Section 54F(2), and (ii) holding that Sections 54F(1) and 54F(2) deal with two different situations. The facts of the case, as narrated by the learned CIT(A), which have not been disputed, are that the assessee sold a school building on 1st April, 1994, leading to liability under the head ‘Capital gains’. He did not own any residential property on that date. He purchased a house property on 9th Nov., 1994, i.e., within a year of sale of school building, and, therefore, claimed deduction under Section 54F. Such deduction claimed in the return of income for asst. yr. 1995-96 was allowed. The assessee purchased second residential house on 22nd Sept., 1995, i.e., within two years of the sale of school building. The AO invoked the provisions of Section 54F(2) and added the amount of exemption allowed under Section 54F(1) to the income of previous year, relevant to asst. yr. 1996-97, in which second residential property was purchased. The case of the assessee was that in view of Clause (ii) of proviso to Section 54F(1), he continues to enjoy the benefit of exemption under the aforesaid section. In other words, his case was that there was a conflict in the provisions of Section 54F(1) on one side and 54F(2) on the other. In such a situation, the benefit conferred under Section 54F(1) could not be denied to the assessee. For such beneficial and liberal construction, the assessee relied on the decision of Hon’ble Supreme Court in the case of CIT v. U.P. Co-operative Federation Ltd. and a host of other cases. 5.2 The learned CIT(A) pointed out that Clause (ii) of proviso to Section 54F(1) and Section 54F(2) deal with two different situations. The proviso deals with the situation where the assessee purchases second residential house within one year of the sale of original asset. In such a case, the assessee loses exemption under Section 54F(1) at the very threshold. Section 54F(2) deals with a situation where the assessee purchases second residential property within two years of the sale of original asset. In such a situation, the amount of exemption granted under Section 54F(1) is deemed to be income of the year in which second house property is acquired.
6.1 The arguments of the Learned Counsel before us were the same as before the learned CIT(A). It was pointed out that capital gains, not chargeable in asst. yr. 1995-96, are now sought to be taxed in asst. yr. 1996-97. It was argued that the provisions should be read down where the exemption continues to be available under proviso to Section 54F(1). On the other hand, the learned Departmental Representative relied on the order of authorities below and in particular that of learned CIT(A).
6.2. We have considered the facts of the case and rival submissions. Clause (ii) of the proviso to Section 54F(1) provides that nothing contained in this sub-section shall apply where the assessee purchases any residential property, other than the new asset, within a period of one year after the date of transfer of the original asset. From the wording of the clause, it is clear that on satisfaction of condition mentioned therein, the case of the assessee for exemption will be lost at the very outset. Provisions of Section 54F(2) provide that in a case where second residential property is purchased within a period of two years after the sale of original asset, the capital gains exempted under Section 54F(1) shall be deemed to accrue as income in the year of such acquisition. This sub-section does not lead to denial of exemption in the year of exemption, as argued by the Learned Counsel, but creates a fiction of accrual of the amount of exempted capital gains in the year of acquisition of second residential house. Thus, two sub-sections deal with two different aspects, one with denial of exemption and the other with accrual of income. Such interpretation flows from the language of respective provisions. Therefore, no external aid is required for the interpretation of the provisions. Therefore, we are in agreement with the learned CIT(A) in the matter. Accordingly, both the grounds of appeal of the assessee are dismissed.
7. In the result, the appeal of the assessee is dismissed.