Ravindra Sambhajirao Thorat, Ahmadnagar V. Principal Commissioner of Income-Tax- 2, , Pune

ITA 108/PUN/2022

AI Insights

The case involves Ravindra Sambhajirao Thorat, the appellant, who contested the revision of his income tax assessment for the year 2016-17 by the Pr. CIT-2, Pune. The revision was based on the grounds that the original assessment by the Assessing Officer was erroneous as it failed to adequately investigate the eligibility of the assessee for a section 54B deduction, which allows for exemption from capital gains tax on the sale of agricultural land used for agricultural purposes. The Tribunal examined whether the Assessing Officer had properly considered the agricultural use of the land in the two years prior to its sale, which is crucial for the deduction under section 54B.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 137510 (ITAT-PUNE)
• Duration Of Justice: 12 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-11-2022
• Assessment Year: misc
• Appeal Filed On: 24-02-2010
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Revision of order; Earning of tax free income; Additional evidence; Capital Gains
• Section: 263; 54B; 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No.108/PUN/2022 िनधाᭅरण वषᭅ / Assessment Year: 2016-17 Ravindra Sambhajirao Thorat, Krushi Bhavan Near S. R. Thorat Dairy, Gunjalwadi, Rajapur Road, Tal: Sangamner, Dist: Ahmednagar- 422605. PAN : AAIPT3922G Vs. Pr.CIT-2, Pune. Appellant Respondent आदेश / ORDER PER S. S. GODARA, JM: This assessee’s appeal for assessment year 2016-17 arises against the Pr. CIT-2, Pune’s order dated 18.12.2020 passed in case no. Pn/PCIT-2/263/RST/2020-21/1177, involving proceedings u/s 263 of the Income Tax Act, 1961; in short “the Act”. Heard both the parties. The assessee’s as well as Revenue’s detailed paper books stand perused. 2. It emerges at the outset that the assessee has filed the instant appeal claiming himself to be aggrieved against the learned PCIT’s Assessee by : Shri Bharat Shah Revenue by : Shri Sardar Singh Meena Date of hearing : 02.11.2022 Date of pronouncement : 22.12.2022 ITA No.108/PUN/2022 2 section 263 revision directions terming the corresponding regular assessment framed by the Assessing Officer dated 27.12.2018 as an erroneous causing prejudice to interest of the Revenue. 3. We had heard this case way back on 7 th of July, 2022 at length wherein Mr. Shah vehemently reiterated the assessee’s stand all along that the Assessing Officer’s assessment rightly treated him as eligible for section 54B deduction. The matter was thereafter kept as part heard for today i.e. 02.11.2022, and once again, we allowed both the learned representatives to explain all the relevant facts vis- à-vis the records of the assessee’s land transferred i.e. original asset in the relevant previous year. 4. Mr. Shah raised nine folded arguments inter alia submitting therein that the Assessing Officer had fully applied his mind while accepting the impugned section 54B deduction claim in the light of relevant records filed before him during the course of scrutiny. He sought to buttress the point that this issue of section 54B deduction very well formed part of CASS/limited scrutiny wherein the necessary presumed of the Assessing Officer having given his due consideration thereto could very well be drawn. Mr. Shah further pinpoints the fact that the learned PCIT’s impugned revision direction had only gone by the alleged fact that the assessee’s land had been reserved for industrial expansion despite the fact that the ITA No.108/PUN/2022 3 entire revenue records to this effect had been placed before him. He further referred to the assessment discussion in paragraphs 2 and 3 of the assessment order as well as findings along with assessee’s stand that the impugned lands had always been used for agricultural purposes only. Learned counsel lastly submitted that even if all other arguments are rejected as devoid of any merit, the assessee deserves exemption from capital gains assessment since the asset in question never formed a capital asset once the revenue estate of Dholewadi had population less than 10,000 as per 2011 census. Mr. Shah indeed clarified that this population census data is in the nature of additional evidence only which has been filed for the first time in the instant second appellate proceedings on account of fact that this taxpayer’s auditor had wrongly sought section 54B deduction without the original asset forming a capital asset under the provisions of the Act. He thus prayed for reversing the learned PCIT’s impugned revision directions. 5. Learned CIT-DR Mr. Sardar Singh Meena has strongly supported the learned PCIT’s revision directions for the reason that the Assessing Officer had not carried out due enquiries during the scrutiny before accepting the assessee’s section 54B deduction claim. ITA No.108/PUN/2022 4 6. We have given our thoughtful consideration to the foregoing arguments. First we deem it proper to refer to the basic relevant facts. This assessee/individual had filed his return of income on 05.08.2016 stating total income of Rs.18,13,360/- followed by exempt income of Rs.6,56,938/- and other income of Rs.4,87,130/- respectively. The same was taken up for “limited” scrutiny. The Revenue’s paper book at page no.1 suggests that the specific issue of assessee’s deduction claim herein u/s 54B of the Act duly formed one of the points therein. The Assessing Officer thereafter issued scrutiny notices. One of the said notice dated 19.09.2018 u/s 142(1) of the Act indeed raised the specific issue of “details working of capital gain including copy of sale agreement, copy of purchase agreement of property sold”, details of deduction claimed u/s 54B, provide copy of purchase agreement” and “details of distance of land from nearest municipal limits”. It is further undisputed fact that the Assessing Officer thereafter framed his regular assessment herein dated 27.12.2018 accepting the assessee’s 54B deduction claim. Needless to say, it is in this factual background that the learned PCIT has assumed his section 263 revision jurisdiction in show cause and thereby treating the Assessing Officer’s foregoing assessment as an erroneous one causing prejudice to interest of the ITA No.108/PUN/2022 5 Revenue alleging lack of due enquiries during the course of scrutiny. This leaves the assessee aggrieved. 7. We make it clear that section 54B deduction provisions gets attracted when the assessee concern transfers the original asset which is a capital asset; being land which, in the two years immediately preceding the date on which the transfer took place, was being used for agricultural purposes. We sought to know from learned counsel as to whether the Assessing Officer had ever asked the assessee to produce on record the preceding two year’s revenue entries indicating transfer of land as used for agricultural purposes. Mr. Shah has admitted and again emphasized that not only the said land was treated as agricultural during the course of sale deed registration but also the assessee had been using it for agricultural purposes only. All these bare averments fail to satisfy our foregoing clinching question. It is thus clear that once the Assessing Officer had not even raised his specific query for verifying the assessee’s land as being used for agricultural purposes in the preceding two years’ time span from the date of transfer on 26.05.2015, the assessment herein dated 27.12.2018 has been rightly treated as an erroneous one causing prejudice to interest of the Revenue. We therefore conclude that the Assessing Officer’s failure in not having ITA No.108/PUN/2022 6 carried out any enquiry would hardly benefit the assessee’s in drawing support from the impugned assessment which has been rightly revised u/s 263 of the Act. We therefore upheld the learned PCIT’s revision directions in issue in entirety and leave it open for the Assessing Officer to frame his consequential assessment once again as per law after dealing with the entire facts available on record. 8. We further make it clear before parting that although learned counsel has placed on record the alleged census details (supra), the same could hardly be verified at this stage in the instant appeal arising against the learned PCIT’s revision directions. We therefore leave it open for the assessee to raise all corresponding factual as well as legal pleas before the Assessing Officer in consequential proceedings. 9. Delay of 368 days in filing of the instant appeal instituted on 25.02.2022 stands condoned since falling in Covid-19 Pandemic outbreak period. 10. This assessee’s appeal is dismissed in above terms. Order pronounced on this 22 nd day of December, 2022. Sd/- Sd/- (DR. DIPAK P. RIPOTE) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 22 nd December, 2022. Sujeet ITA No.108/PUN/2022 7 आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The Pr. CIT-2, Pune. 4. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, “B” बᱶच, पुणे / DR, ITAT, “B” Bench, Pune. 5. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.