Shri Somabhai A.Prajapati, Ahmedabad V. The ACIT.,Cent.Circle-2(2), Ahmedabad

CO 122/AHD/2012

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3352 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 10 month(s) 8 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 23-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 09-06-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 14-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R I PATEL
• Assessee Lawyers: PF JAIN
• Keywords: Capital asset; Document seized; Principle of natural justice; Additional evidence; Documents seized
• Section: 54B; 2(14); 153A; 148; 54

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD .., , !' BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER SN ITA/IT(SS)A/CO NO. AYS APPELLANT RESPONDENT 1 2 IT(SS)A NO.320/AHD/2012 IT(SS)A NO.321/AHD/2012 2006-07 2008-09 ACIT, CENTRAL CIRCLE-2(2), AHMEDABAD SOMABHAI A. PRAJAPATI, KHODAL BHAVAN, KHODIYAR KRUPA BUNGLOW, NR. S.B. TRUST WADI, NEW VADAJ, AHMEDABAD PAN : ABAPP 7646 Q 3 4 CO NO.122/AHD/2012 ( IN IT(SS)A NO.320/AHD/2012) CO NO.123/AHD/2012 ( IN IT(SS)A NO.321/AHD/2012) 2006-07 2008-09 SOMABHAI A. PRAJAPATI, VADAJ, AHMEDABAD PAN : ABAPP 7646 Q ACIT, CENTRAL CIRCLE-2(2), AHMEDABAD 5 6 7 IT(SS)A NO.322/AHD/2012 IT(SS)A NO.323/AHD/2012 IT(SS)A NO.324/AHD/2012 2006-07 2009-10 2010-11 REVENUE VISHNIBHAI A. PRAJAPATI 27, SHANKAR NAGAR SOCIETY NR.SB TRUST WARDI NEW VADAJ AHMEDABAD-13 PAN: ABAPP 7664G 8 9 10 CO NO.150/AHD/2012 (IN IT(SS)A NO.322/AHD/2012) CO NO.151/AHD/2012 (IN IT(SS)A NO.323/AHD/2012) CO NO.152/AHD/2012 (IN IT(SS)A NO.324/AHD/2012) 2006-07 2009-10 2010-11 VISHNIBHAI A. PRAJAPATI , REVENUE 11 12 IT(SS)A NO.325/AHD/2012 IT(SS)A NO.326/AHD/2012 2006-07 2008-09 REVENUE MANIBEN S. PRAJAPATI KHODAL BHAVAN, KHODIYAR KRUPA BUNGLOW NR.SB TRUST WADI NEW VADAJ, AHMEDBAD PAN:ABVPP 8910 A 13 14 CO NO.124/AHD/2012 ( IN IT(SS)A NO.325/AHD/2012) CO NO.125/AHD/2012 (IN IT(SS)A NO.326/AHD/2012) 2006-07 2008-09 MANIBEN S. PRAJAPATI REVENUE 15 IT(SS)A NO.327/AHD/2012 2006-07 REVENUE CHANDULAL A. PRAJAPATI KHODIYAR KRUPA BUNGLOW NR.SB TRUST WADI NEW VADAJ, AHMEDABAD IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 2 PAN: AEIPP 9281 J 16 CO NO.126/AHD/2012 (IN IT(SS)A NO.327/AHD/2012) 2006-07 CHANDULAL A. PRAJAPATI REVENUE 17 18 IT(SS)A NO.334/AHD/2012 IT(SS)A NO.335/AHD/2012 2006-07 2008-09 REVENUE PANKAJ S. PRAJAPATI KHODAL BHAVAN, KHODIYA KRUPA NR. SB TRUST WADI NEW VADAJ AHMEDABAD-380 013 PAN: AIOPP 0311 K 19 20 CO NO.127/AHD/2012 ( IN IT(SS)A NO.334/AHD/2012) CO NO.128/AHD/2012 (IN IT(SS)A NO.335/AHD/2012) 2006-07 2008-09 PANKAJ S. PRAJAPATI REVENUE 21 IT(SS)A NO.339/AHD/2012 2006-07 REVENUE PRAKASH C. PRAJAPATI KHODIYAR KRUPA BUNGLOW NEW VADAJ, AHMEDABAD-380 013 PAN: ABAPP 7635 D 22 CO NO.132/AHD/2012 (IN IT(SS)A NO.339/AHD/2012) 2006-07 PRAKASH C. PRAJAPATI REVENUE 23 IT(SS)A NO.336/AHD/2012 2008-09 REVENUE KAMLESH S. PRAJAPATI KODAL BHAVAN AHMEDABAD-380 013 PAN : AKIPP 0034 B 24 CO NO.129/AHD/2012 (IN IT(SS)A NO.336/AHD/2012) 2008-09 KAMLESH S. PRAJAPATI REVENUE 25 IT(SS)A NO.337/AHD/2012 2008-09 REVENUE NISHA PANKAJ PRAJAPATI KHODAL BHAVAN AHMEDABAD-380 013 PAN: ANJPP 8848 F 26 CO NO.130/AHD/2012 (IN IT(SS)A NO.337/AHD/2012) 2008-09 NISHA PANKAJ PRAJAPATI REVENUE 27 IT(SS)A NO.338/AHD/2012 2004-05 REVENUE ISWARBHAI A. PRAJAPATI 43, VAIBHAV BUNGLOW VIBHAG-3, NR.GULAB IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 3 TOWER SOLA ROAD, AHMEDABAD ALWPP 0878Q 28 CO NO.131/AHD/2012 (IN IT(SS)A NO.338/AHD/2012) 2004-05 ISWARBHAI A. PRAJAPATI REVENUE REVENUE BY : SHRI R.I. PATEL, CIT-DR ASSESSEE(S) BY : SHRI P.F. JAIN, AR / DATE OF HEARING : 09/06/2016 / DATE OF PRONOUNCEMENT: 23/06/2016 / O R D E R PER BENCH :- THIS BUNCH OF APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER OF THE LD.COMMISSIONER OF INCOME-TAX (APPEALS ) [CIT(A) IN SHORT] DATED 30/04/2012 AND ASSESSEES ARE IN CROSS OBJECTI ONS THEREOF. 2. AT THE OUTSET, LD.AR SUBMITTED THAT THOUGH THESE APPEALS BELONG TO DIFFERENT ASSESSEES AND DIFFERENT ASSESSMENT YEARS BUT ALL THESE ASSESSEES BELONG TO THE SAME FAMILY, THE ISSUES ARE IDENTICAL EXCEPT FOR THE ASSESSMENT YEARS AND AMOUNTS AND THEREFORE, SUBMISSION MADE BY HIM IN THE CASE OF ONE ASSESSEE WOULD BE EQUALLY APPLICABLE TO THE APPEALS OF OTHER ASSESSEES AND THEREFORE ALL THESE APPEALS CAN BE HEARD TOGETHER. LD.CIT-DR DID NOT OBJECT TO THE AFORESAID SUBMISSION MADE BY THE LD.AR. WE, THEREFORE, FOR THE SAKE OF CONVENIENCE PROCEED TO DISPOSE OF ALL THESE APPEALS AND CROSS OBJECTIONS OF THE ASSESSEE BY A CONSOLIDATED ORDER AND FOR REFERE NCE, WE PROCEED WITH THE FACTS IN THE CASE OF SHRI SOMABHAI A.PRAJAPATI FOR AY 2006-07. IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 4 3. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- 3.1 A SEARCH ACTION U/S.132 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') WAS CARRIED OUT IN THE GR OUP CASES OF PRAJAPATI GROUP ON 08/12/2009. A SEARCH WARRANT OF AUTHORIZATION U/ S.132 OF THE ACT WAS ISSUED IN THE NAME OF ASSESSEE. THEREAFTER, IN ACC ORDANCE WITH PROVISIONS OF 153A OF THE ACT, A NOTICE WAS ISSUED ON 09/04/2010 AND SERVED UPON THE ASSESSEE BY SPEED POST ON 12/04/2010 AND IN RESPONS E TO WHICH, ASSESSEE FILED HIS RETURN OF INCOME FOR AY 2006-07 ON 03/03/ 2011 DECLARING TOTAL INCOME AT RS.7,47,692/-. THEREAFTER, THE CASE WAS TAKEN UP FOR SCRUTINY AND ASSESSMENT WAS FRAMED U/S.153A R.W.S.143(3) OF THE ACT VIDE ORDER DATED 29/12/2011 AND THE TOTAL INCOME WAS DETERMINED AT R S.54,75,452/-. AGGRIEVED BY THE ORDER OF THE AO, ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO VIDE CONSOLIDATED ORDER DATED 30/04/ 2012 (IN APPEAL NO.CIT(A)-III/274, 275, 280, 282, 283, 284, 268, 26 9, 243, 265, 266, 271, 270, 279/AC-CC-2(2)/11-12) FOR THE ASSESSEE AND HIS OTHER FAMILY MEMBERS GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), REVENUE AND ASSESSEE ARE NOW IN APPEALS AND CROSS-O BJECTIONS RESPECTIVELY BEFORE US. GROUNDS RAISED BY THE REVENUE IN IT(SS) A NO.320/AHD/2012 FOR AY 2006-07 READ UNDER:- 1. THE LD.CIT(A) HAS ERRED IN LAW BY DIRECTING TH E ASSESSING OFFICER TO VERIFY THE REVENUE FORM NO.7 AND 12 AND ACCORDINGLY DECIDE THE MATTER OF ALLOWABILITY OF DEDUCTION U/S.54B OF THE ACT AS THIS AMOUNTS TO SETTING ASIDE OF THE ASSESSMENT ORDER TO THE A.O . IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 5 2. THE CIT(A) HAS ERRED IN LAW BY ADMITTING EVIDENC E I.E. 7/12 FORMS DURING APPELLATE PROCEEDINGS WITHOUT GIVING AN OPPO RTUNITY TO AO AS REQUIRED UNDER RULE 46A INCOME-TAX RULES. 3. THE LD.CIT(A) HAS ERRED IN LAW AND FACTS BY HOLD ING THAT, EVEN IF THE DEDUCTION UNDER SECTION 54B OF THE ACT HAS NOT BEEN CLAIMED IN ORIGINAL RETURN, THE ASSESSEE WOULD BE ELIGIBLE FOR THE SAME IF CLAIMED IN RETURN OF INCOME FILED UNDER SECTION 153A/153C O F THE ACT. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER O N THE ABOVE POINT, AS THE ASSESSEE HAS FAILED TO SUBSTANTIATE HIS REPL Y AND ALSO FAILED TO EXPLAIN THE SEIZED DOCUMENT. 3.2. ON THE OTHER HAND, ASSESSEE HAS RAISED THE GRO UNDS IN HIS CROSS OBJECTION NO.122/AHD/212 FOR AY 2006-07 [ARISING OU T OF IT(SS)ANO.320/AHD/2012 FOR AY 2006-07] WHICH READ A S UNDER:- 1. THE ASSESSING OFFICER HAS ERRED IN LAW AND ON FA CTS IN TAKING THE GROUND THAT THE ORDER OF CIT(A) AMOUNTED TO SETTING ASIDE OF ORDER IN AS MUCH AS THAT CIT(A) HAS ADJUDICATED THE ISSUE OF DEDUCTION U/S.54-B SUBJECT TO VERIFICATION OF FORM NO.7 AND 12 ALREADY ON RECORD. 2. THE A.O. HAS ERRED IN LAW AND ON FACTS IN TAKING THE GROUND THAT CIT(A) HAS ADMITTED EVIDENCE -7/12 FORMS WITHOUT GI VING OPPORTUNITY TO THE A.O. UNDER RULE 46A OF INCOME TA X RULES. 3. THE CIT(A) HAS CORRECTLY HELD AS PER LAW THAT DE DUCTION U/S.54B IS AVAILABLE EVEN IF CLAIMED FOR FIRST TIME IN THE RETURN FILED U/S.153A/153C OF THE ACT. 4. ON THE FACTS THE APPEAL OF THE DEPARTMENT DESERV ES TO BE DISMISSED. 3.3. SUBSEQUENTLY, LD.AR VIDE LETTER DATED 06/06/20 06 HAS RAISED ADDITIONAL GROUND WHICH READS AS UNDER:- IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 6 THE CROSS OBJECTOR BEING RESPONDENT WHO HAS FILED C O NO.123/AHD/2012 IN THE APPEAL NO. IT(SS)A-320/AHD/2 012 FILED BY THE DEPARTMENT PRAYS TO SUBMIT THE UNDER MENTIONED ADDI TIONAL GROUND TO BE CONSIDERED WHICH ARISES IN THIS APPEAL OUT OF TH E FACTS AVAILABLE ON RECORD FROM THE ASSESSMENT ORDER PASSED FOR AY 2006 -07 AND GOES TO THE ROOT OF THE MATTER. GROUND :- 1) THE AGRICULTURE LAND UNDER CONSIDERATION FOR AY 20 06-07 SITUATED AT VILLAGE BHADAJ IS SUBMITTED TO BE NOT LIABLE TO CAPITAL GAIN TAX BEING NOT AN ASSET U/S.2(14) READ WITH NOTIFICATION NO.9447 DATED 06/01/1994 ISSUED BY THE GOVERNMENT. 2) THE IMPUGNED AGRICULTURE LAND BEING SITUATED AT THE VILLAGE BHADAJ COMING UNDER THE JURISDICTION OF PANCHAYAT ON THE D ATE OF ISSUE OF NOTIFICATION NO.9447 DATED 06/.01/1994 IS SUBMITTED EXEMPT AND NOT LIABLE TO CAPITAL GAIN TAX. 3.4. DURING THE RELEVANT ASSESSMENT YEAR, ASSESSEE ALONG WITH HIS OTHER FAMILY MEMBERS HAD SOLD LAND BEARING BLOCK NO.494 & 504 AT BHADAJ, THE DOCUMENTED PRICE OF LAND WAS RS.1,51,000/- AND RS.1 1,10,900/- RESPECTIVELY. DURING THE COURSE OF SEARCH, VARIOUS DOCUMENTS AND LOOSE-PAPERS WERE FOUND AND SEIZED, WHEREIN THE TRUE PRICE OF SALE OF THE L AND WAS RECORDED. AS PER LOOSE-PAPERS FOUND, ASSESSEE AND OTHER CO-OWNERS HA D RECEIVED SALE CONSIDERATION OF RS.50,75,720/- AND RS.2,55,64,500/ - ON SALE OF LAND BEARING BLOCK NO.494 & 504 RESPECTIVELY. ON THE BASIS OF P APER FOUND, ASSESSEE ALONG WITH S/SHRI VISHNUBHAI A.PRAJAPATI AND CHANDU BHAI AMBALAL PRAJAPATI MADE DISCLOSURE OF RS.13.02 CRORES TOWARDS THE SALE OF VARIOUS PLOTS OF LAND AT BHADAJ. CONSEQUENT TO THE DISCLOSURE, ASSESSEE OFFE RED HIS SHARE OF RS.53,40,356/- AS LONG TERM CAPITAL GAIN (LTCG) IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.153A OF THE ACT. A O NOTED THAT AS PER THE ORIGINAL RETURN OF INCOME THAT WAS FILED BY THE ASS ESSEE U/S.139 OF THE ACT, IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 7 ASSESSEE HAS ONLY SHOWN CAPITAL GAINS TO THE EXTENT OF RS.1,44,925/- AND THAT ADDITIONAL CAPITAL GAINS OF RS.51,95,431/- WAS OFFE RED BY THE ASSESSEE ONLY CONSEQUENT TO THE DETECTION OF THE UNDISCLOSED INCO ME DURING THE COURSE OF SEARCH AND IN RESPONSE TO NOTICE U/S.153C OF THE AC T. HE WAS OF THE VIEW THAT ASSESSEE CANNOT USE THE RETURN FILED U/S.153C TO CL AIM BENEFITS/DEDUCTIONS THAT HAVE NOT BEEN CLAIMED IN THE ORIGINAL RETURN. AO A LSO NOTICED THAT ASSESSEE HAS CLAIMED AGGREGATE DEDUCTION U/S.54B OF THE ACT OF RS.47,27,760/-. THE ASSESSEE WAS ASKED TO JUSTIFY HIS CLAIM OF DEDUCTIO N U/S.54B OF THE ACT. ON THE BASIS OF SCRUTINY OF THE SUBMISSIONS FURNISHED BY THE ASSESSEE, AO NOTED THAT ASSESSEE WAS NOT ELIGIBLE FOR CLAIMING DEDUCTI ON U/S.54B OF THE ACT FOR REASON THAT THE ESSENTIAL CONDITIONS FOR CLAIMING D EDUCTION U/S.54B OF THE ACT WAS THAT THE LAND THAT WAS SOLD BY THE ASSESSEE ON WHICH CAPITAL GAIN HAD ARISEN SHOULD HAVE BEEN USED BY THE ASSESSEE OR HIS PARENTS FOR AGRICULTURAL PURPOSES FOR TWO YEARS IMMEDIATELY PRECEDING THE DA TE OF TRANSFER AND FURTHER ASSESSEE MUST PURCHASE ANOTHER LAND FOR AGRICULTURA L PURPOSES WITHIN TWO YEARS FROM THE SALE. AO NOTED THAT ASSESSEE HAS NO T FURNISHED EVIDENCE WHICH COULD PROVE THAT THE LAND SOLD BY ASSESSEE WAS AN A GRICULTURAL LAND AND IT WAS BEING USED FOR AGRICULTURAL PURPOSES BY THE ASSESSE E OR HIS PARENTS. WITH RESPECT TO THE AGRICULTURAL LAND PURCHASED ON WHICH ASSESSEE HAS CLAIMED DEDUCTION, AO WAS OF THE VIEW THAT ASSESSEE HAS FAI LED TO PROVIDE ANY PROOF WITH REGARD TO USE OF LAND FOR AGRICULTURAL PURPOSE S BY THE ASSESSEE OR HIS PARENTS. HE ACCORDINGLY DENIED THE CLAIM OF DEDUCT ION U/S.54B OF THE ACT. AGGRIEVED BY THE ORDER OF THE ORDER OF THE AO, ASSE SSEE CARRIED THE MATTER BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUB MISSIONS OF THE ASSESSEE, VIDE ORDER DATED 30/04/2012, DECIDED THE ISSUE BY H OLDING AS UNDER:- IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 8 4. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT AND ALSO PERUSED THE ASSESSMENT ORDER. IN SHORT, THE DEDUCTION UNDER SEC TION 54B OF THE INCOME TAX ACT IS DENIED BY THE AO FOR THE FOLLOWING REASONS: 1) THERE IS NO PROOF THAT THE LAND SOLD WAS USED BY THE ASSESSEE OR HIS PARENT FOR AGRICULTURE PURPOSES IN THE PAST TWO YEARS IMMEDIAT ELY PRECEDING THE YEAR OF SALE. . 2) FOR THE LANDS PURCHASED IT IS SEEN THAT IN NONE OF THE LANDS AGRICULTURAL OPERATION HAVE BEEN PERFORMED BY THE ASSESSEE OR A PARENT OF HIS. 3) THE NAME OF THE CULTIVATORS AS PER THE 7/12 EXTR ACTS IS DIFFERENT THAN THE LAND OWNERS. 4) AS PER DECISION OF MADRAS HIGH COURT IN THE CASE OF C.I.T . V/S. G. K. DEVRAGELU 56 TAXMAM 85, IT HAS BEEN HELD THAT THE USER OF THE LAND FOR AGRICULTURE PURPOSES CAN ONLY BE A NATURAL PERSON. 5) NO CLAIM HAS BEEN MADE BY THE ASSESSEE IN ITS OR IGINAL RETURN OF INCOME. 6) THE ASSESSEE CANNOT USE THE RETURN FILED U/S. 15 3-C TO CLAIM BENEFITS / DEDUCTION NOT CLAIMED IN THE ORIGINAL RETURN AND IN THIS REGA RD RELIANCE HAS BEEN PLACED BY HIM ON THE DECISION OF I.T.A.T. DELHI BENCH IN THE CASE OF CHARCHIT AGARWAL 34 S.O.T. 348 AND CASE OF SUN ENGG. WORKS (P) LTD. 198 LT.R 297 FOR THE PROPOSITION THAT SEARCH ASSESSMENT OR RE-AS SESSMENT PROCEEDINGS CANNOT BE PERMITTED TO BE CONVERTED INTO APPEAL OR REVISION PROCEEDING WHERE ITEMS NOT CLAIMED IN ORIGINAL RETURN CAN BE CLAIMED. 4.1. ONE OF THE POINTS RAISED BY THE AO FOR DISALLO WING THE CLAIM OF DEDUCTION UNDER SECTION 54B OF THE INCOME TAX ACT IS THAT THE APPELLANT HAS NOT CLAIMED THE DEDUCTION IN THE ORIGINAL RETURN OF INCOME. FOR THI S PURPOSE HE RELIED UPON THE DECISION OF ITAT DELHI IN THE CASE OF CHARCHIT AGRA WAL REPORTED AT 34 SOT 348. ON THE OTHER HAND THE CONTENTION OF THE APPELLANT I S THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE DECISION OF ITAT MUMB AI IN THE CASE OF EVERSMILE CONSTRUCTION COMPANY PVT LTD REPORTED AT 65 DTR 39 (MUMBAI) (TRIBUNAL) IS APPLICABLE ON THE FACTS AND CIRCUMSTANCES OF THIS C ASE. 4.2. IN MY OPINION, IF THE TOTAL INCOME COMPUTED BY THE AO UNDER SECTION 153A AFTER ALLOWING THE DEDUCTION UNDER SECTION 54B OF THE INC OME TAX ACT IS LESS THAN THE TOTAL INCOME DETERMINED BY THE AO ON THE BASIS OF T HE ORIGINAL RETURN OF INCOME, THEN THE DECISION OF ITAT DELHI IN THE CASE OF CHA RCHIT AGRAWAL WILL APPLY. IF HOWEVER, THE TOTAL INCOME COMPUTED BY THE AO UNDER SECTION 153A AFTER ALLOWING THE LEGITIMATE DEDUCTION UNDER SECTION 54B OF THE I NCOME TAX ACT IS MORE THAN THE TOTAL INCOME DETERMINED BY THE AO ON THE BASIS OF T HE ORIGINAL RETURN OF INCOME, THEN THE DECISION OF ITAT MUMBAI IN THE CASE OF EVE RSMILE CONSTRUCTION COMPANY WOULD APPLY. ACCORDING TO THE DECISION OF HON'BLE S UPREME COURT IN THE CASE OF SUN ENGINEERING, SINCE THE PROVISIONS OF SECTION 14 8 ARE BENEFICIAL FOR THE DEPARTMENT AND NOT FOR THE APPELLANT, THE APPELLANT IS NOT ALLOWED TO RAISE NEW GROUNDS NOT TAKEN IN ORIGINAL ASSESSMENT PROCEEDING S. SINCE THE PROVISIONS OF SECTION 148 ARE USED TO DETERMINE THE ESCAPED INCOM E OF AN ASSESSEE, ACCORDING TO IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 9 THE DECISION, THE REASSESSED INCOME UNDER SECTION 1 48 CANNOT BE LESS THAN THE ORIGINAL ASSESSED INCOME. BUT IN THE CASE OF THE AP PELLANT, THE PROOF THAT THE APPELLANT HAS SOLD THEIR AGRICULTURAL LAND BY ACCEP TING SOME CASH MONEY OVER AND ABOVE THE DOCUMENTED PRICE AND PURCHASED AGRICULTUR AL LAND BY PAYING SOME CASH OVER AND ABOVE THE DOCUMENTED PRICE WAS FOUND AT TH E TIME OF SEARCH BY THE DEPARTMENT AND IN FACT IS IN THE POSSESSION OF THE AO. IN MY OPINION, THE TOTAL INCOME OF THE ASSESSEE IS TO BE DETERMINED BY THE A O ON THE BASIS OF THE SEIZED DOCUMENTS AS WELL AS THE EVIDENCES COLLECTED DURING AND AFTER THE DATE OF SEARCH. IF ON THE BASIS OF SUCH DOCUMENTS, AN ASSESSEE IS ENTI TLED TO SOME DEDUCTION UNDER CHAPTER VI-A OF THE INCOME TAX ACT, THEN IN MY OPIN ION, THE AO IS DUTY BOUND TO ALLOW SUCH DEDUCTION. IF HOWEVER, THE TOTAL INCOME COMPUTED BY THE AO AFTER ALLOWING DEDUCTION IS LESS THAN THE ORIGINAL INCOME DETERMINED BY HIM, THEN, IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN TH E CASE OF SUN ENGINEERING, THE ORIGINAL INCOME ASSESSED BY THE AO HAS TO BE ADOPTE D AS THE TOTAL INCOME UNDER SECTION 153A OF THE INCOME TAX ACT ALSO. IN OTHER W ORDS, IF ON THE BASIS OF EVIDENCE AVAILABLE BEFORE THE AO, THE APPELLANT IS ENTITLED TO DEDUCTION UNDER SECTION 54B OF THE INCOME TAX ACT, THEN THE AO IS DUTY BOUND TO AL LOW SUCH DEDUCTION EVEN THOUGH NOT CLAIMED BY THE APPELLANT IN THE ORIGINAL RETURN OF INCOME SUBJECT TO THE CONDITION THAT THE TOTAL INCOME COMPUTED UNDER SECT ION 153A IS NOT LESS THAN THE TOTAL INCOME DETERMINED BY THE AO ORIGINALLY. IN AL L OTHER CASES, THE DECISION OF HON'BLE ITAT MUMBAI IN THE CASE OF EVERSMILE CONSTR UCTION COMPANY WILL APPLY AS PER WHICH THE APPELLANT CAN CLAIM NEW DEDUCTIONS IN THE RETURN UNDER SECTION 153A OF THE INCOME TAX ACT EVEN THOUGH SUCH DEDUCTI ON WAS NOT CLAIMED IN THE ORIGINAL RETURN OF INCOME. 4.3 ONE OF THE GROUNDS ON WHICH THE AO HAS DISALLO WED THE CLAIM OF DEDUCTION UNDER SECTION 54B OF THE INCOME TAX ACT IS THAT IN 7/12 EXTRACTS OF THE LAND THE NAME OF THE KHEDUT (FARMER) IS DIFFERENT. IN FACT, THE FIRST FOUR REASONS GIVEN BY THE AO ARE RELATING TO THE ISSUE WHETHER THE APPELLANT HIMSELF (INCLUDING HIS PARENTS) USED THE LAND FOR AGRICULTURE PURPOSES. ACCORDING T O THE AO, THE APPELLANT COULD NOT PROVE THAT THE AGRICULTURAL OPERATIONS WERE CAR RIED OUT BY THE APPELLANT HIMSELF OR HIS PARENTS. IN MY CONSIDERED VIEW, ONCE THE APP ELLANT HAS BEEN SHOWING THE AGRICULTURAL INCOME AND IN THE LAND REVENUE RECORD THAT IS, THE 7/12 STATEMENT THE NAME OF THE APPELLANTS APPEAR BOTH AS THE OWNER AND AS THE CULTIVATORS OF THE LAND, THEN IT IS A SUFFICIENT TO PROVE THAT THE LAND IN Q UESTION WAS BEING CULTIVATED BY THE APPELLANTS. FOR THIS PURPOSE, THE APPELLANT HAS SUB MITTED THE FOLLOWING CHARTS IN RESPECT OF THE INVESTMENTS MADE FOR THE PURCHASE OF AGRICULTURAL LAND OUT OF THE SALE PROCEEDS OF THE ORIGINAL LAND, THE EXTRACTS OF DETA ILS FROM 7/12 STATEMENT AND THE COMPUTATION OF THE CAPITAL GAIN IN RESPECT OF THE R ESPECTIVE LANDS. IF THE NAME OF THE APPELLANT APPEARS BOTH IN THE 7/12 STATEMENTS, THEN ONLY THE APPELLANT WOULD BE PRESUMED TO BE THE CULTIVATED OF THE LAND, OTHERWIS E NOT. IN THE FORMER CASE THE APPELLANT WOULD BE ENTITLED TO THE DEDUCTION UNDER SECTION 54BOF THE INCOME TAX ACT WHEREAS IN THE LATER CASE THE APPELLANT WOULD N OT GET THE BENEFIT OF DEDUCTION UNDER SECTION 54B. THE AO IS THEREFORE DIRECTED TO VERIFY THE CONTENTS OF THE CHARTS SUBMITTED BY THE APPELLANT AS UNDER: IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 10 4.4. ACCORDINGLY, THE AR SUBMITTED BEFORE ME THE R EVISED CLAIM OF DEDUCTION UNDER SECTION 54B OF THE INCOME TAX ACT AS UNDER: 4.5. FURTHER, THE AR, VIDE HIS LETTER DATED 26/4/20 12 STATED THAT IN SOME OF THE 7/12 STATEMENTS, THE NAME OF THE PREVIOUS OWNERS OF THE LAND IS APPEARING AND THEREFORE, THE AO HAS ERRED IN DISALLOWING THE CLAIM OF DEDUCT ION UNDER SECTION 54B OF THE INCOME TAX ACT. THE RELEVANT SUBMISSIONS OF THE APP ELLANT ON THIS POINT ARE REPRODUCED AS UNDER: .. 'THE ASSESSING OFFICER IN THE ASSESSMENT ORDER WHIL E DISALLOWING CLAIM U/S 54B HAS OBSERVED THAT LANDS ARE BEING OWNED BY THE ASSESSEE BUT THE NAME OF THE CULTIVATORS (KHEDUT) IS DIFFERENT THAN THE LAND OWN ERS AND HE HAS ALSO OBSERVED THAT LAND IS NOT BEING USED BY THE ASSESSEE OR ITS PARENTS FOR THE AGRICULTURAL PURPOSES BUT HAS BEEN GIVEN ON RENT. IT IS RESPECTF ULLY SUBMITTED THAT THE FACTS HAVE NOT BEEN PROPERLY APPRECIATED AS DISCUSSED BELOW: WHEN THE LAND IS PURCHASED NOTICE IS ISSUED U/S 135 D UNDER THE LAND REVENUE ACT AND OBJECTIONS ARE INVITED BY THE APPOINTED AUTHORI TY AND AFTER ENQUIRY AND ON THE BASIS OF 7/12 EXTRACT THE NAME OF-THE PURCHASER IS ENTERED IN THE 7 EXTRACT, IN THE SALE DEED EXECUTED IS ALSO SPECIFICALLY MENTIONED T HAT THE VACANT POSSESSION OF THE AGRICULTURAL LAND HAS BEEN HANDED OVER TO THE PURCH ASER. THEREBY THE PURCHASER BECOMES THE ABSOLUTE OWNER OF AGRICULTURAL LAND AND AGRICULTURAL OPERATIONS ARE CONDUCTED BY HIM. THE ENTRY IN EXTRACT 12 IS CONSEQ UENTIAL AND PROCEDURAL ONLY AND SOME TIME IT TAKES TIME BEFORE THE NAME OF THE ASSE SSEE IS ENTERED IN EXTRACT 12. BUT THE ABSENCE OF NAME IN THE EXTRACT 12 CANNOT BE CON STRUED THAT THE LAND HAS NOT BEEN USED FOR AGRICULTURAL PURPOSE BY THE ASSESSEE OR HIS PARENTS. IN THE CASE OF ASSESSEE IN EXTRACT 12 THE NAME OF KHEDUT MENTIONED IS THAT OF PREVIOUS OWNERS OR OWNER WHO IS ALREADY DECEASED LONG BACK AND THIS HA S CREATED CONFUSION AND SUSPICION BECAUSE WHEN THE PREVIOUS OWNER OR THEIR LEGAL HEIRS HAVE SOLD THE LAND WITH POSSESSION TO THE ASSESSEE THE QUESTION OF THE Y BEING USING THE LAND FOR AGRICULTURAL PURPOSES AND NOT THE ASSESSEE DOES NOT ARISE. THESE FACTS ARE EXPLAINED ON THE BASIS OF 7/12 EXTRACTS MENTIONED I N THE CHART PLACED ON RECORD. IT WILL ALSO BE RELEVANT TO NOTE THE DEFINITION OF AGRICULTURE BEING DONE BY HIMSELF AS DEFINED IN THE 'GANOT ACT' APPLICABLE TO THE STATE OF GUJARAT. IN THIS ACT THIS HAS BEEN DEFINED AS: IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 11 I BY OWN LABOUR OR II FROM THE LABOUR OF ANY MEMBER OF THE FA MILY OR III THROUGH LABOURERS THROUGH THE SUPERVISION OF SELF OR ANY FAMILY MEMBER AND SUCH LABOURERS ARE PAID, IN CASH OR IN KIND AND NOT AS SHARER OF AGRICULTURAL PRODUCTS. FROM THIS DEFINITION IT IS CLEAR THAT THE AGRICULTU RE OPERATIONS ARE NOT TO BE CONDUCTED BY THE ASSESSEE HIMSELF AND BECAUSE HIS N AME IS NOT FOUND IN EXTRACT 12 WILL NOT DISENTITLE HIM TO CLAIM DEDUCTION U/S 54 B BECAUSE THE LAND IS IN HIS POSSESSION AND USED BY HIM. THIS IS EXPLAINED AND I LLUSTRATED BY FOLLOWING FACTS IN FORM NO 12. SURVEY/ BLOCK NO. 265 PUNDRASAN BELONGING TO SOMABH AI, MANIBEN AND PANKAJ SOMABHAI PRAJAPATI TOTAL LAND 0.62.73 BELONGING TO ASSESSEE 31-36.5 : IT HAS BEEN SOLD BY SHAKRABHAI GOPALBHAI PATEL AND KARSANBHAI VITHALBHAI PATEL. IN FORM NO.7 NAME OF ASSESSEE AND HIS FAMILY MEMBER S AND NAMES OF SOMAJI JENAJI AND OTHERS APPEAR AND IN FORM NO. 12 NAME OF SOMAJI JENAJI ETC. APPEARS. NOW SOMAJI AND JENAJI, ETC. WERE OWNERS FROM WHOM THIS LAND HAS BEEN PURCHASED BY THE SELLERS WHO HAVE SOLD LAND TO THE ASSESSEE BY D EED EXECUTED ON 12-07-2005. NOW SOMAJI JENAJI WAS PREVIOUS OWNER AND HIS NAME S TILL APPEARS IN EXTRACT 12 EVEN THOUGH THIS LAND WAS SOLD BY THEM ON 28-05-199 7 TO SAKRABHI G.PATEL AND KARSANBHAI V PATEL FROM WHOM THE ASSESSEE HAS PURCH ASED THE SAID LAND. THEREFORE FROM THE NAME OF SOMAJI JENAJI IT CANNOT BE CONCLUDED THAT ASSESSEE HAS NOT UTILISED THE LAND FOR BEING USED FOR AGRICULTUR AL PURPOSES. SURVEY NO.1160 IN EXTRACT 7 THERE IS NAME OF ASSESSEE AND HIS FAMI LY MEMBERS AND IN EXTRACT 12 NAME APPEARS FROM F.Y. 2008-09. BEFORE T HAT THERE IS NAME OF PRAJAPATI BHIKHABHAI BABALDAS, ETC. AND THIS IS TO BE TREATED AS INCLUSIVE OF NAMES OF THE ASSESSEE ALSO. FURTHER PRAJAPATI BHIKHABHAI BABALDA S WHOSE NAME APPEARS IN EXTRACT 12 IS PREVIOUS OWNER OF THE LAND WHICH HAS BEEN SOLD TO THE ASSESSEE ALONG WITH ITS POSSESSION. SURVEY NO.74T IN EXTRACT 7 THERE IS NAME OF ASSESSEE AND HIS FAMI LY MEMBERS AND IN EXTRACT 12 HIS NAME APPEARS FROM F.Y. 2008-09. BEFO RE THAT THERE IS NAME OF PATEL VIPULBHAI GOVINDBHAI AND THIS IS TO BE TREATED AS I NCLUSIVE OF NAMES OF THE ASSESSEE ALSO. FURTHER PATEL VIPULBHAI GOVINDBHAI WHOSE NAME APPEARS IN EXTRACT 12 IS PREVIOUS OWNER OF THE LAND WHICH HAS BEEN SOLD TO T HE ASSESSEE ALONG WITH ITS POSSESSION AND THE QUESTION OF HIS NOW CONDUCTING A GRICULTURE OPERATION DOES NOT ARISE. IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 12 SUEVEYNO.616: IN FORM NO. 12 BEFORE ENTRY OF ASSESSEE AND HIS FAM ILY MEMBERS, THE NAME OF KANTABEN ISHAWARBHAI IS MENTIONED WHO IS PREVIOUS O WNER OF THE LAND WHICH HAS BEEN SOLD TO THE ASSESSEE. THEREFORE THE QUESTION O F HER USING THE LAND FOR AGRICULTURE PURPOSES AFTER SALE OF LAND TO THE ASSE SSEE DOES NOT ARISE. SUEVEY NO. 527: IN FORM NO. 12 BEFORE ENTRY OF ASSESSEE AND HIS FAM ILY MEMBERS, THE NAME OF HARISHKUMAR BIHARILAL AND OTHERS IS MENTIONED WHO I S PREVIOUS OWNER OF THE LAND WHICH HAS BEEN SOLD TO THE ASSESSEE. THEREFORE THE QUESTION OF THEIR USING THE LAND FOR AGRICULTURE PURPOSES AFTER SALE OF LAND TO THE ASSESSEE DOES NOT ARISE. SURVEY NO.L51,152 & 153/2: . IN FORM NO.12 BEFORE ENTRY OF ASSESSEE AND HIS FAMI LY MEMBERS, THE NAME OF JESANGJI CHUNATHAJI AND MANAJI MOTIJI IS MENTIONED. THE LAND HAS BEEN SOLD TO THE ASSESSEE BY LEGAL HEIRS OF JESANGJI CHUNTHAJI. JESA NGJI CHUNTHAJI HAS EXPIRED ON 20-11-2994 AND MANAJI HAS EXPIRED IN THE YEAR 1967 AS MENTIONED IN THE SALE DEED BUT IN FORM NO.12 THEIR NAMES STILL APPEAR WHO WERE ORIGINAL OWNERS AND EVEN THOUGH THEY ARE DECEASED THEIR NAME CONTINUED. THER EFORE THE QUESTION OF THEIR USING THE LAND FOR AGRICULTURE PURPOSES AFTER SALE OF LAND TO THE ASSESSEE DOES NOT ARISE. FROM ABOVE FACTS IT WILL BE APPRECIATED THAT SIMPLY BECAUSE NAME OF PREVIOUS OWNERS APPEAR IN FORM NO. 12 AFTER SALE OF LAND WHICH IS IN POSSESSION AND USED BY THE ASSESSEE AND HIS- FAMILY MEMBERS AN D THEIR NAME IS ENTERED SUBSEQUENTLY IF WILL NOT MEAN THAT THE SAID LAND HA S NOT BEEN USED BY THEM FOR AGRICULTURAL PURPOSES BECAUSE IN FORM NO.7 THEIR NA MES ARE DULY ENTERED AS PER THE LAW. THEREFORE THE CLAIM OF THE ASSESSEE U/S 54B DE SERVES TO BE ALLOWED.' 4.6. THE AO IS DIRECTED TO VERIFY THE ABOVE MENTION ED CLAIM OF DEDUCTION UNDER SECTION 54B OF THE INCOME TAX ACT AFTER EXAMINING T HE 7/12 EXTRACTS OF THE LAND. IF IN THE LAND REVENUE RECORDS, ALONG WITH THE NAME OF THE APPELLANT THE NAME OF THE PREVIOUS OWNERS OF THE LAND ALSO APPEAR, IN THAT CA SE ALSO, THE APPELLANT IS ENTITLED TO DEDUCTION UNDER SECTION 54B OF THE INCOME TAX AC T. HOWEVER, IF THE NAME OF THE APPELLANT IS NOT APPEARING IN 7/12 EXTRACTS, THEN I T CANNOT BE SAID THAT THE SAID LAND WAS CULTIVATED BY THE APPELLANT AND NOT BY OTHERS. THEREFORE, IN ORDER TO CLAIM DEDUCTION UNDER SECTION 54B OF THE INCOME TAX ACT, THE NAME OF THE APPELLANT OR HIS PARENT MUST APPEAR IN BOTH 7 AS WELL AS 12 STATEMEN T. IN SHORT, IF IN THE LAND REVENUE RECORD THAT IS, 7/12 STATEMENTS THE NAME OF THE APPELLANTS IS FIGURING, THEN ONLY THE APPELLANTS WOULD BE ENTITLED TO CLAIM DEDU CTION UNDER SECTION 54B OF THE INCOME TAX ACT. IF THE NAME OF THE APPELLANT DOES N OT FIGURE EITHER IN 7 OR THE 12 STATEMENT, IN THAT CASE, THE APPELLANT WOULD NOT BE ENTITLED TO DEDUCTION UNDER SECTION 54B OF THE INCOME TAX ACT. SIMILARLY, THE N AME OF THE APPELLANT SHOULD IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 13 APPEAR NOT ONLY IN THE LAND SOLD BUT ALSO IN THE LA ND PURCHASED. FOR THE PURPOSE OF CLAIMING DEDUCTION UNDER SECTION54B IT IS NECESSARY THAT THE LAND SOLD BY THE APPELLANT MUST HAVE BEEN CULTIVATED BY THE APPELLAN T OR HIS PARENTS IN THE PRECEDING TWO YEARS FROM THE DATE OF SUCH SALE. FOR THIS PURPOSE, THE NAME OF THE APPELLANT OR HIS PARENTS MUST APPEAR BOTH IN 7 AS W ELL AS 12_STATEMENT OF THE LAND RECORDS. FURTHER, IN THE LAST TWO PRECEDING YEARS FROM THE D ATE OF SALE OF THE LAND, IN THE 7/12 RECORDS OF THE LAND, SOME CROPS MUST BE SHOWN AS GR OWN BY THE APPELLANT OR HIS PARENTS. IF THE NAME OF THE APPELLANT OR HIS PARENTS APPEARS IN 7 AS WELL AS 12 STATEMENT THEN ONLY THE APPELLANT WOULD BE ENTITLED TO DEDUCTION UNDER SECTION 54B OF THE INCOME TAX ACT, OTHERWISE NOT. SIMILARLY THE LAND PURCHASED BY THE APPELLANT MUST BE USED FOR AGRICULTURAL PURPOSE BY THE APPELLANT. IN RESPECT OF SUCH LAND, THE 7/12 STATEMENTS MUST SHOW THAT SOME CROP WAS GROWN BY TH E APPELLANT AFTER IT WAS PURCHASED. IF NO CROP IS SHOWN AS GROWN IN THE 7/12 STATEMENTS, THEN ALSO IN RESPECT OF SUCH INVESTMENT IN LAND, THE APPELLANT WOULD NOT BE ENTITLED TO DEDUCTION UNDER SECTION 54B OF THE I NCOME TAX ACT. THIS VIEW IS SUPPORTED BY THE DECISION OF ITAT HYDERABAD IN THE CASE OF DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1(2), HYDERABAD VERSUS COROMA NDAL BIO TECH INDUSTRIES (I.) LTD. IN THE SAID DECISION, IT WAS HELD THAT 'WHERE LAND REVENUE RECORDS SHOWED NO CROP WAS CULT IVATED AND NO AGRICULTURAL ACTIVITY WAS UNDERTAKEN ON THE LAND O WNED BY THE ASSESSEE BEFORE SALE THEREOF AND ASSESSEE PRODUCED NO EVIDENCE OF USER FOR AGRICULTURAL PURPOSES OTHER THAN SKETCHY AND VAGUE STATEMENTS OF NEIGHBOU RS, DENIAL OF DEDUCTION BY AO UNDER SECTION 54B DESERVED TO BE UPHELD. ' [2012 ] 20 TAXMANN.COM 520 (HYDERABAD - TRIB.) 4.7. UNDER THE ABOVE MENTIONED PARAMETERS, THE AO IS DIRECTED TO VERIFY THE 7/12 STATEMENTS OF EACH AND EVERY LAND AND VERIFY THE CL AIM OF DEDUCTION UNDER SECTION 54B OF THE INCOME TAX ACT AS SUBMITTED BY THE AR BE FORE ME. SUBJECT TO THE VERIFICATION BY THE AO, THIS GROUND OF THE APPELLAN TS ARE PARTLY ALLOWED IN THE CASE OF NISHA PANKAJ PRAJAPATI IN ASSESSMENT YEAR 2008-0 9, SOMABHAI AMBALAL PRAJAPATI IN ASSESSMENT YEAR 2006-07 AND IN THE CASE OF MANIBEN SOMBHAI PRAJAPATI IN ASSESSMENT YEAR 2006-07. 3.5. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE REVEN UE AND ASSESSEE ARE IN APPEALS AND CROSS-OBJECTIONS RESPECTIVELY BEFORE US . 4. BEFORE US, LD.AR SUBMITTED THAT ASSESSEE HAS RAI SED AN ADDITIONAL GROUND. HE PRAYED FOR ADMISSION OF THE ADDITIONAL G ROUNDS RAISED AND SUBMITTED THAT THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE NOW BEFORE THE IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 14 HONOURABLE TRIBUNAL BE ADMITTED AS IT GOES TO THE R OOT OF THE MATTER OF THE IMPUGNED ADDITION AND THEREFORE THE SAME BE ADMITTE D AND FOR THIS PROPOSITION RELIANCE WAS PLACED ON THE DECISION IN THE CASE OF NTPC VS CIT 229 ITR 383 (SC) AND JUTE CORPORATION OF INDIA VS C IT 187 ITR 688 (SC). HE FURTHER SUBMITTED THAT IN CASE THE ADDITIONAL GR OUND IS DECIDED IN FAVOUR OF ASSESSEE, THEN THE OTHER GROUNDS RAISED BY THE AS SESSEE AND REVENUE WITH RESPECT TO TAXING THE CAPITAL GAINS ON SALE OF LAND WOULD BE RENDERED ACADEMIC. 4.1 ON THE OTHER HAND, ON THE ISSUE OF ADDITIONAL GROUND RAISED BY THE ASSESSEE IN ALL THE COS, LD DR SERIOUSLY OBJECTED T O THE PLEA OF ADMISSION OF ADDITIONAL GROUND AND SUBMITTED THAT THE ASSESSEE D ID NOT RAISE THIS GROUND BEFORE CIT(A) AND THEREFORE ASSESSEE CANNOT BE ALLO WED TO RAISE THE GROUND IN SECOND ROUND OF APPEAL MORE SO WHEN THE ASSESSEE HAD FULL KNOWLEDGE ABOUT THE FACTS AND WHEN HE IS RELYING ON NOTIFICAT ION OF 1994 ISSUED BY GOVERNMENT. ON THE GROUNDS RAISED BY THE REVENUE, L D.CIT-DR SUBMITTED THAT LD.CIT(A) HAD ERRED IN ADMITTING THE ADDITIONA L EVIDENCES IN FORM NO.7/12 EXTRACTS WITHOUT GIVING AN OPPORTUNITY TO A O AS REQUIRED UNDER RULE 46A OF THE IT RULES, 1962 AND THEREBY LD.CIT(A) VI OLATED THE PRINCIPLES OF NATURAL JUSTICE. HE FURTHER SUBMITTED THAT LD.CIT(A ) HAS SET ASIDE THE ISSUE FOR VERIFICATION TO THE FILE OF AO AND THEREBY DIRECTED THE AO TO DECIDE ON THE BASIS OF THE DIRECTIONS GIVEN BY HIM. LD DR SUBMITT ED THAT AS PER THE PROVISIONS OF S. 251 OF THE ACT, LD CIT(A) COULD HA VE EITHER CONFIRM, REDUCE, ENHANCED OR ANNULLED THE ORDER OF AO. HE SUBMITTED THAT CIT(A) DOES NOT HAVE POWER OF REMAND AND THEREFORE REMANDING THE MA TTER TO A.O IS NOT AS PER IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 15 THE PROVISIONS OF SECTION 251 OF THE ACT. LD CIT D R THUS SUPPORTED THE ORDER OF AO. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL ON RECORD. WE FIRST TAKE UP THE ISSUE OF ADDITIONAL GROUND RAI SED BY THE ASSESSEE BEFORE US. BEFORE US, IN THE ADDITIONAL GROUND THE ASSESSE E HAS RAISED A PLEA THAT THE LAND THAT HAS BEEN SOLD BY ASSESSEE AT VILLAGE BHAD AJ COMES UNDER THE JURISDICTION OF PANCHAYAT AND THEREFORE CANNOT BE C ONSIDERED TO BE AN ASSET U/S 2(14) OF THE ACT READ WITH NOTIFICATION NO 9447 DAT ED 6.1.1994 AND THEREFORE NOT LIABLE TO CAPITAL GAINS TAX. IT IS AN UNDISPUTE D FACT THAT THE AFORESAID GROUND WAS NOT RAISED BY THE ASSESSEE BEFORE LOWER AUTHORI TIES. WE FIND FORCE IN THE PLEA OF THE LD AR THAT THE ADDITIONAL GROUND RAISED GOES TO THE ROOT OF THE MATTER AND IN SUCH A SITUATION, RELYING ON THE DECI SION OF HBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS.PRUTHVI BROKERS AND SHA REHOLDERS PVT. LTD. 349 ITR 366 WHEREIN THE HBLE HIGH COURT AFTER CONSIDER ING THE DECISIONS OF APEX COURT IN THE CASE OF ADDL CIT V. GURJARGRAVURE S P. LTD., (1978) 111 ITR 1, JUTE CORPORATION OF INDIA LTD V. CIT (1991) 187 ITR 688, NATIONAL THERMAL POWER COMPANY LTD V. CIT (1998) 229 ITR 383 , GOETZE (INDIA) LTD V. CIT, (2006) 157 TAXMAN 1 AND OTHER DECISIONS OF HIGH COURT, HAS HELD THAT ASSESSEE IS ENTITLED TO RAISE NOT MERELY ADDITIONAL LEGAL SUBMISSIONS BUT ALSO ENTITLED TO RAISE ADDITIONAL CLAIMS BEFORE APPELLAT E AUTHORITIES, WE ADMIT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. WE ALSO FIND THAT THERE IS NO FINDING OF THE LOWER AUTHORITIES ON THE ISSUE AT TO WHETHER THE LAND THAT HAS BEEN SOLD BY THE ASSESSEE IS A CAPITAL ASSET U/S 2(14) OF THE ACT. 5.1. BEFORE US, ONE OF THE PLEA RAISED BY THE REVE NUE IS THAT THE LD CIT(A) HAD ADMITTED ADDITIONAL EVIDENCES, IN THE FORM OF E XTRACT OF 7/12 REPORT WHICH IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 16 PROVES THE OWNERSHIP OF THE LAND, WITHOUT OBTAINING THE COMMENTS FROM AO OR A REMAND REPORT FROM AO AND THUS THERE WAS A VIO LATION OF RULE 46A OF THE INCOME TAX RULES 1962. DURING THE COURSE OF HEARING A SPECIFIC QUERY WAS RAISED BY THE BENCH TO LD AR TO INQUIRE AS TO WHETH ER ANY REMAND REPORT WAS OBTAINED BY LD CIT(A) ON THE ADDITIONAL EVIDENCE SU BMITTED BY THE ASSESSEE BEFORE LD CIT(A) TO WHICH LD AR SUBMITTED THAT NO R EMAND REPORT WAS CALLED FOR FROM AO BY LD CIT(A). AT THIS MOMENT IT WILL BE USEFUL TO REFER TO THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES. PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [AND COMMISSIONER (APPEALS)]. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRODUCE BEFORE THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) ], ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUC ED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE [ASSESSING OFFICER], EXCEPT IN THE FOLLOWING CIRCUM STANCES, NAMELY: (A) WHERE THE [ASSESSING OFFICER] HAS REFUSED TO ADMIT EVIDENCE W HICH OUGHT TO HAVE BEEN ADMITTED; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE [ASSESSING OFFICER]; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE [ASSESSING OFFICER] ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHERE THE [ASSESSING OFFICER] HAS MADE THE ORDE R APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO ADDUCE E VIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE (1 ) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) ] RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE [ASSESSING OFFICER] HAS BEEN ALLOWED A REASONABLE O PPORTUNITY IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 17 (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS -EXAMINE THE WITNESS PRODUCED BY THE APPELLANT; OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITN ESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT THE POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MAY BE, THE COMMISSIONER (APPEALS) ] TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENABLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE EN HANCEMENT OF THE ASSESSMENT OR PENALTY (WHETHER ON HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFICER]) UNDER CLAUSE (A) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITION OF PENALTY UNDER SECTION 271. 6. A BARE PERUSAL OF THIS RULE INDICATE THAT THE ASSESSEE (BECAUSE IN THE SCHEME OF THE ACT, NO APPEAL IS BEING PROVIDED AT T HE END OF REVENUE AGAINST THE ASSESSMENT ORDER BEFORE CIT(A)] SHALL NOT BE EN TITLED TO PRODUCE ANY EVIDENCE BEFORE THE FIRST APPELLATE AUTHORITY EITHE R ORAL OR DOCUMENTARY UNLESS THE CONDITIONS ENUMERATED IN CLAUSE A TO D OF SUB R ULE EXISTS. UNDER CLAUSE (A) IT HAS BEEN PROVIDED THAT THE ASSESSEE CAN BE PERMI TTED TO PRODUCE ADDITIONAL EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED BY THE A O, BUT HE REFUSED TO ADMIT. CLAUSE (B) PROVIDES THAT WHERE THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH WAS CALLED UPON TO PRODUCE BY THE AO, CLAUSE (C) AND (D) PROVIDE THAT IF THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL OR THE AO HAS MADE THE ORDER APPEALED AGAINST WITHO UT GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO ADDUCE EVIDENCE RELE VANT TO ANY GROUND OF APPEAL, THEN CIT(A) WOULD ADMIT ADDITIONAL EVIDENCE . THE NEXT REQUIREMENT TO BE FOLLOWED BY THE LD FIRST APPELLATE AUTHORITY IS THAT THE ADMISSION OF ADDITIONAL EVIDENCE ON THE RECORD IS BY WAY OF AN O RDER IN WRITING ALONGWITH THE REASONS FOR ITS ADMISSION. ONCE THE EVIDENCE IS BEING ADMITTED THAN AN OPPORTUNITY TO THE AO WOULD BE GRANTED TO REBUT THA T EVIDENCE AS IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 18 CONTEMPLATED IN SUB RULE 3. SUB RULE 4 IS AN EXPLAN ATION TO ALL THESE SITUATIONS, THE LD COMMISSIONER FOR THE JUST DECISION OF AN APP EAL CAN DIRECT ANY PARTY TO SUBMIT ANY EVIDENCE THAT IS EITHER TO THE ASSESSEE OR TO THE AO. THE COMMENTS OF THE AO IN THAT CASE WOULD NOT BE REQUIRED TO BE CALLED FOR. PERUSAL OF SUB RULE 3 INDICATE THAT THE CIT(A) SHALL NOT TAKE INTO ACCOUNT ANY FRESH EVIDENCE FILED BY THE ASSESSEE BEFORE HIM UNLESS THE AO HAS BEEN ALLOWED A REASONABLE OPPORTUNITY TO EXAMINE SUCH EVIDENCE OR DOCUMENTS ETC FILED BY THE ASSESSEE OR TO PRODUCE ANY EVIDENCE OR DOCUMENT ETC IN REBUTTAL OF SUCH ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE. THUS IT CAN BE SEEN THAT UNLESS THE AO IS ALLOWED A REASONABLE OPPORTUNITY TO DO THIS, THE CIT(A) CANNOT TAKE INTO ACCOUNT SUCH ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE BEFORE HIM. THE EXPRESSION A REASONABLE OPPORTUNITY, AS HELD BY VARIOUS AUTHORITIES, WOULD MEAN AN EFFECTIVE OPPORTUNITY AN D NOT A MERE EYE WASH. 6.1. IN THE PRESENT CASE, WE FIND THAT ON THE ADD ITIONAL EVIDENCES SUBMITTED BY ASSESSEE IN THE FORM OF EXTRACT OF FORM 7/12 BE FORE CIT(A), NO REMAND REPORT OR COMMENTS FROM THE AO WERE CALLED FOR BY L D CIT(A) AND THUS THE PROCEDURE CONTEMPLATED IN RULE 46A HAS NOT BEEN ADH ERED TO AT THE END OF FIRST APPELLATE AUTHORITY. SINCE LD CIT(A) HAS NOT PROVIDED OPPORTUNITY OF HEARING TO THE AO AS CONTEMPLATED IN SUB RULE 3 OF RULE 46A, WE ARE OF THE VIEW THAT THE EVIDENCE SUBMITTED BY THE ASSESSEE BE FORE HIM CANNOT BE USED IN SUPPORT OF THE REASONING UNLESS SUCH AN OPPORTUN ITY IS BEING GIVEN TO THE AO AND IN SUCH A SITUATION WE ARE IN AGREEMENT WITH THE PLEA OF LD DR THAT THERE IS VIOLATION OF PROVISIONS OF RULE 46A. 6.2. BEFORE US, ANOTHER PLEA WHICH HAS BEEN TAKEN BY THE REVENUE IS THAT CIT(A) HAS REMANDED THE MATTER TO AO WITH CERTAIN D IRECTIONS AND THE POWER IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 19 OF REMAND IS NOT AVAILABLE TO LD CIT(A). AT THIS MO MENT IT WOULD BE RELEVANT TO REFER TO THE PROVISIONS OF S. 251 WHICH READS AS UNDER: POWERS OF THE COMMISSIONER (APPEALS) 251(1) IN DISPOSING OF AN APPEAL, THE COMMISSIONER (APPEALS) SHALL HAVE THE FOLLOWING POWERS- (A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT, HE MAY CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. 6.3. THE PERUSAL OF PROVISIONS OF SECTION 251(1)(A ) REVEALS THAT CIT(A) IN AN APPEAL AGAINST AN ORDER OF ASSESSMENT CAN CONFIRM, REDUCE, ENHANCE OR ANNUL THE ASSESSMENT. THE POWER OF SETTING ASIDE WHICH WA S AVAILABLE TO CIT(A) IS NO MORE AVAILABLE TO CIT(A) BY VIRTUE OF AMENDMENT MADE BY FINANCE ACT 2001 WITH EFFECT FROM 1.06.2001. 6.4. IN THE PRESENT CASE, IT CAN BE SEEN THAT CI T(A) HAS DIRECTED THE AO TO VERIFY THE 7/12 EXTRACT STATEMENTS OF EACH AND EVER Y LAND AS SUBMITTED BY THE ASSESSEE BEFORE LD CIT(A) AND VERIFY THE CLAIM OF D EDUCTION U/S 54B OF THE ACT AND SUBJECT TO VERIFICATION THE CLAIM OF ASSESS EE WAS ALLOWED. AS SEEN FROM THE PERUSAL OF PROVISIONS OF S. 251(1), THE PO WER OF SETTING ASIDE THE ISSUE TO THE FILE OF A.O, WAS NOT AVAILABLE TO CIT( A) AT THE RELEVANT TIME. 7. CONSIDERING THE FACTS AND IN VIEW OF OUR OBSE RVATIONS HEREIN ABOVE, WE ARE OF THE VIEW THAT THE MATTER NEEDS TO BE RE-EXAM INED AT THE END OF THE LD.CIT(A). WE THEREFORE RESTORE THE MATTER TO CIT( A) TO DECIDE THE ISSUE RAISED BY THE ASSESSEE IN THE ADDITIONAL GROUND AND THE GROUNDS RAISED BY THE REVENUE, AFTER COMPLYING WITH THE PROVISIONS OF RUL E 46A OF THE INCOME TAX RULES AND IN ACCORDANCE WITH LAW. NEEDLESS TO STATE THAT LD CIT(A) SHALL GRANT ADEQUATE OPPORTUNITY OF HEARING TO BOTH THE P ARTIES. IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 20 8. AS A RESULT, REVENUES APPEAL AND ASSESSEES CR OSS OBJECTION ARE ALLOWED FOR STATISTICAL PURPOSES. 9. AS FAR AS REMAINING REVENUES APPEALS AND ASSESS EES CROSS OBJECTIONS ARE CONCERNED, BEFORE US, BOTH THE PART IES SUBMITTED THAT THOUGH THE APPEALS RELATE TO DIFFERENT ASSESSMENT YEARS, B UT THE FACTS IN ALL THE APPEALS/COS ARE IDENTICAL EXCEPT FOR THE ASSESSMENT YEAR AND THE SUBMISSIONS MADE BY THEM WHILE ARGUING ONE CASE WOULD BE APPLIC ABLE TO THE OTHER APPEALS/COS ALSO. IN VIEW OF THE AFORESAID SUBMISSI ONS OF BOTH THE PARTIES, WE FOR THE SIMILAR REASONS STATED HEREINABOVE WHIL E DECIDING THE REVENUES APPEAL FOR A.Y. 2006-07 IN IT(SS)A NO. 320/AHD/2012 (SUPRA) AND IN ASSESSEES CO NO.122/AHD/2012 FOR AY 2006-07(SUPRA) AND FOR THE SIMILAR REASONS ALLOW THE GROUND(S) RAISED BY THE REVENUE I N ALL THE APPEALS AND THE GROUNDS RAISED BY THE ASSESSEE IN THEIR COS ARE ALL OWED FOR STATISTICAL PURPOSES. 10. IN THE COMBINED RESULT, REVENUES APPEALS AS W ELL AS ASSESSEES CROSS OBJECTIONS ARE ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 23/06/2016 SD/- SD/- .. () () ( R.P. TOLANI) ( ANIL CHATURVEDI ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 23/ 06 /2016 %..,.../ T.C. NAIR, SR. PS IT(SS)A NOS.320 & 321/AHD/2012 AND 12 OTHERS AND CO NOS. 122 & 123/AHD/2012 AND 12 OTHERS ACIT VS.SOMABHAI A. PRAJAPATI & OTHERS 21 / COPY OF THE ORDER FORWARDED TO : 1. '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. +,- . / CONCERNED CIT 4. . ( ) / THE CIT(A)-III, AHMEDABAD 5. /01),- , ,-2 , + / DR, ITAT, AHMEDABAD 6. 1456 / GUARD FILE. / BY ORDER, */) //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !', / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 9.6.16 (DICTATION-PAD 18- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 14.6.16/15.6.16/22.6.16 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.23.6.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.6.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER