Deepak Jyotiprasad Chiripal, Ahmedabad V. The Pr. CIT-3, Ahmedabad

ITA 124/AHD/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 8622 (ITAT-AHMEDABAD)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Appeal Filed On: 26-05-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY PRATAP SINGH
• Section: 143(3); 2(14); 13

Judgement Text

, ‘C’ । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, AHMEDABAD (Convened through Virtual Court) BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR & SHRI AMARJIT SINGH, ACCOUNTANT MEMEBR आयकर अपील सं./I.T.A. No. 124/Ahd/2021 ( Assess ment Ye ar : 2016-17) Dee p ak Jy ot ip ra sa d Ch iri p al 28 3, Ne w Cl ot h Ma rke t, O/ s. Ra ip ur G ate , R aip ur , Ah me da bd - 38 00 0 2 / V s . Th e Dy . Co mmi s si on er of In co me T ax , Cir cl e – 3( 1) (1 ), Ah me da bad & Th e Pr. C o mmi ss i on er of In co me T ax , Ah me da bad -3 , Ah me da bad यी ल सं./ ीआ आर सं./P A N / G IR N o . : A A R P A 2 9 8 2 Q (अपील Appellant) . . ( य / Respondent) अपील र स /Appellant by : Sh ri Ga ur av N ah ta, A. R. य क र स / Respondent by : Shri Ajay Pratap Singh, CIT. D.R. स क र D a t e o f H e a r i n g 15/02/2022 !"# क र /D a t e o f P r o n o u n c e m e n t 18/02/2022 ORDER PER MAHAVIR PRASAD, JM: The captioned ap peal has been filed at th e instan ce of the ass ess ee ag ainst the order of the Princip al Co mmissioner ITA No. 124/Ahd/2021 (Deepak Jyotiprasad Chiripal) AY. 2016-17 - 2 - of Inco me Tax ( Appeals) , Ah medabad-3 (‘PCI T’ in short) vide Appeal No . ITBA/REV/F/REV5/2020 dated 31.03.2021 arising in th e as sess ment ord er d ated 19.11.2018 passed by the Ass essing Of ficer (AO) under s. 143(3) of the Inco me Tax Act, 1961 (the Act) con cerning AYs . 2016-17. 2. The f acts of th e case are th at lear ned PCI T noticed that during the year ass essee h as sold land bearing Survey No. 350 admeasurin g 33387 sq. mtrs. situ ated at Villag e Rupgadh, Taluk a Bavla for Rs .9 5,20,000/- vide sale d eed No.2592 dated 03.10.2015. The ass essee h ad purchased this land on 31.03 .2014 for Rs .34 Lacs. On furth er v erification of return of in co me and other details filed by the ass essee, AO found that the assess ee h as n ot offered an y capital g ain on sale of this land by tr eating it agricultural lan d. It was further found that the said land was sold by the ass ess ee to a co mp an y i.e. Dholi Integrated Spinning Park Limited. As per the sale d eed, it has b een found that the land was purchas ed by th e said co mp an y fo r the purpose of industrial i.e. Integrated Sp inning Park. The Industrial Co mmissioner had given per mis sion on 03.05.2013 for the said purpose to the s aid co mp any. As p er villag e For m 7/12 , there was no information r eg arding agricultur al activity done during FY 2015-16 on the land pur chas ed fro m th e s aid co mp an y. Further, on verification of assess ment r ecords , no material eviden ces eith er submitted by the ass essee or is available on record which proves that the s aid land was us ed by the ITA No. 124/Ahd/2021 (Deepak Jyotiprasad Chiripal) AY. 2016-17 - 3 - ass essee for agricultural purpose. Hence, it was found that this land cannot be treated as agricultural land and the same attr acts capital g ain tax liability o n transf er of this land. 3. In view of th e above facts , learn ed PCI T opined that the A.O. h ad f ailed to v erify the allo wability of claim of ass essee that the property sold was an agricultural land. Hen ce, it was ap parent that to th at extent th e ord er p ass ed u/s 143(3) dated 19.11.2018 was erroneous in so far as it was prejudicial to the inter est of rev enue. Accor dingly, a show caus e notice was issued on 09.03.2021 to the ass ess ee requesting to show caus e as to why provisions of section 263 of the I T. Act, 1961 not be invoked directing the Assessing Officer to mak e a fr es h ass ess ment after proper examin ation and enquiry. The assess ee was also asked to furnish the follo wing d etails/documents: i) Cop y of Form 8 A for holding of agricultur al land for Blocks b earing Survey No.350 by you for the year und er consider ation. ii) Details of the land used for agricultural pur poses for Blocks b earing Survey No.350 f or the last two preceding and curr ent year s along with details of rev enue p aid and a certificate fro m the Talati for the crops tak en, etc. iii) Details of agricultural inco me earn ed for the last two preceding and current year alon g with details o f sale of crops with copies of sales bills and show wh ether the s ame ITA No. 124/Ahd/2021 (Deepak Jyotiprasad Chiripal) AY. 2016-17 - 4 - has b een dis closed for th e last two pr eceding an d curr ent year . 3.1 In response, th e ass essee h ad filed written submis sion vide letter dated 20.03.2021. With regard to per mission granted b y th e Industrial Co mmissioner dated 03 .05.2013, the ass ess ee mainly contended th at as p er the State Policy, when one has to set up an industrial park, h e has to apply for the p er mission of industrial park and as a part of procedur e, the comp an y h ad applied for and the per mission was granted on 03.05.2013. The ass essee further submitted that he had not signed anywh er e in the said per mission and he h as nothing to do with th at p er mission. 3.2 With r egard to use of agricultur al land , th e ass essee submitted copy of Return of Income filed for AY 2015-16 showing agricultural inco me off ered by him, copy of For m 8A as a proof of holding and extract of 7/12 stating that the land sold was used for agricultural activities for FY 2014-15 also. The ass ess ee further conten ded that when th e land as per rev enue r ecord was agricultural land, no presu mption can be mad e that the land was non-agricultur al land mer ely becaus e th e purchase was a co mpany. It has fur ther been submitted th at he was not con cern ed with the us e of land by purchas er as for him, it was agricultural land only and th e buyer can use th e land in the manner it wish ed to do but it would not hav e an y impact on the n atur e of land and ITA No. 124/Ahd/2021 (Deepak Jyotiprasad Chiripal) AY. 2016-17 - 5 - ther efore, the lan d cannot b e treated as non- agricultural land mer ely b ecaus e it was sold to an non-agriculturist. Th e ass essee h as r elied upon the decision in the cas e of CIT vs . Rajshibha Mera manbhai Odedra [ 2014] 42 taxmann.com 497 (Gujarat). 3.3 The P CI T did not agree with th e sub missions of the ass essee and h eld that on car eful ex amin ation of per mission dated 03.05.20 13 and Eligibility Cer tificate d ated 14.08.2015 granted by the Industr ial Co mmissioner attached with the sale d eed property sold , it is found that purchas er was in the proces s of acquiring the land purch ased by it and sold by the ass es see. Thus, it got the land use changed. So, in these cir cu mstan ces , land on the date of s ale i.e. on 03.10.2015 was no mor e agricultural land and as such the profit arising on transfer of th e land ar e tax able as long ter m capital g ain. 4. Now, the ass ess ee has co me b efor e us to challenge the order of th e learn ed P CIT. 5. We h ave gon e through the relevant r ecord and impugned order. The ass ess ee purchas ed the agricultural land in question on 31.03.2014 for Rs.34 Lakhs and shown hims elf as f ar mer as p er the Revenu e’s Laws in Gujarat stating only far mer can purchase the agricultu ral land . Same is evident f rom th e purch as e deed and sale d eed of the ITA No. 124/Ahd/2021 (Deepak Jyotiprasad Chiripal) AY. 2016-17 - 6 - land in qu estion . Undisputedly, the per mission for Dholi Integrate Spinnin g Park Limited wer e sought on 03.05.2013 and assess ee was doing cultivation on said land and same is evident fro m his inco me tax r etu rn wh erein he h as sho wn agricultural in co me of Rs.9 ,07,0 00/-. In this case, th e ass essee h ad sold the land as agr icultural land, if ther eafter sold land has been conv erted into non-agricultural purpose by th e bu yer of the land , so , in such cir cu mstances, th e ass essee cannot be h eld to pay long ter m capital g ain. Hon’ble Jurisdiction High Court in the matter of PCIT vs. Heenab en Bhadresh Mehta [ 2018] 96 taxmann.com 164 (Guj.), wh er ein it is held th at profits fro m sale of agricultural land was claimed as exempt on the ground that said land was not a capital ass et within the meaning of Section 2(14) of the Act and Ho n’ble Gujar at High Court granted r elief to the ass ess ee with following observ ations: “ S e c t i o n 2 ( 1 4 ) o f t h e I n c o m e - t a x A c t , 1 9 6 1 - C a p i t al g a i n - C a p i t a l a s s e t ( A g r i c u l t u r a l l a n d ) - A s s e s s m e n t y e a r 2 0 0 9 - 1 0 - D u r i n g r e l e v a n t y e a r , a s s e s s e e f i l e d h i s r e t u r n w h er e i n p r o f i t s f r o m s a l e o f a g r i c u l t u r a l l a n d w a s c l a i m e d a s e x e m pt o n g r o u n d t h a t s a i d l a n d w a s n o t a c a p i t a l a s s e t w i t h i n m e a n in g o f s e c t i o n 2 (1 4 ) - A s s e s s i n g O f f i c e r r e j e c t e d c l a i m o f a s s e s s ee m a i n l y o n g r o u n d t h a t l a n d i n q u e s t i o n w a s s o l d t o a n i n d u s t ri a l u n i t I a n d h a d p o t e n t i a l t o b e u s e d f o r i n d u s t r i a l p u r p o s e - T r i b u n a l , h o w e v e r , a l l o w e d a s s e s s e e ' s c l a i m - I t w a s n o t e d t ha t a s s e s s e e w a s a n a g r i c u l t u r i s t a n d , l a n d o w n e d b y h i m h a d b e e n sh o w n a s a g r i c u l t u r a l l a n d i n r e v e n u e r e c o r d s - M o r e o v e r , l a n d i n q u e s t i o n w a s s o l d b y a s s e s s e e a f t e r a p e r i o d o f a p pr o x i m a t e l y 1 5 t o 1 6 m o n t h s f r o m p u r c h a s e a n d , t h u s , i t c o u l d n o t b e a r e g a r d e d a s a c a s e o f ' a d v e n t u r e i n n a t u r e o f t r a d e - Wh e t h er i n a f o r e s a i d c i r c u m s t a n c e s , m e r e i n t e n t i o n o f p u r c h a s e r c o u l d n ot b e a d e t e r m i n a t i v e f a c t o r t o t r e a t p r o f i t e a r n e d b y a s s es s e e o n s a l e o f a g r i c u l t u r e l a n d a s b u s i n e s s , i n c o m e - H e l d , y e s - Wh e t h e r , t h e r e f o r e , T r i b u n a l w a s j u s t i f i e d i n a l l o w i n g a s s e ss e e ' s c l a i m - H e l d , y e s [ P a r a s 7 , 8 a n d 9] [ I n f a v o u r o f a s s e s s e e] ” ITA No. 124/Ahd/2021 (Deepak Jyotiprasad Chiripal) AY. 2016-17 - 7 - 5.1 It is pertin ent to mention her e th at during assess ment proceedings, sev er al notices wer e issued b y th e learned AO and a notice dated 20 t h Octob er, 2018 wherein learned AO specifically asked for th e following details: “ (i i i ) A s v e r i f i e d f r o m C o l u m n . B 7 o f s c h e d u l e - C G at t a c h e d t o t h e r e t u r n , t h e r e i s c a p i t a l l o s s o f R s . 4 , 3 1 , 1 9 9 / - , p l ea s e f u r n i s h c o m p u t a t i o n o f c a p i t a l g a i n w i t h s u p p o r t i n g e v i d e n ce s . ( i v ) A s p e r S c h e d u l e E I , y o u h a v e c l a i m e d e x e m p t i nc o m e o f R s . 7 7 , 7 2 , 4 1 3 / - . P l e a s e f u r n i s h d e t a i l s o f e x e m p t i nc o m e e a r n e d w i t h j u s t i f i c a t i o n / s u p p o r t i n g e v i d e n c e s f o r c l a i m o f e x e m p t i n c o m e . ( v ) A s p e r I T S d e t a i l s a v a i l a b l e w i t h t h i s o f f i c e , y o u h a v e s o l d a n i m m o v a b l e p r o p e r t y f o r t h e c o n s i d e r a t i o n o f R s . 9 5 , 2 0 , 0 0 0 / - . I n t h e m a t t e r , y o u a r e r e q u e s t e d t o f u r n i s h a s u n d e r : - ( a ) C o p y o f r e g i s t e r e d d o c u m e n t e x e c u t e d . ( b ) C o m p u t a t i o n o f c a p i t a l g a i n e a r n e d . ( c ) A s r e g a r d s c o n s t o f a c q u i s i t i o n o f p r o p e r t y s o ld s u p p o r t i n g e v i d e n c e s s u c h a s p u r c h a s e d e e d o f p r o p er t y s o l d / d e t a i l s o f e x p e n s e s i n c u r r e d . ( d ) C o p y o f r e l e v a n t b a n k a c c o u n t , r e f l e c t i n g t h e re c e i p t s o f t h e s a l e s p r o c e e d s o f t h e p r o p e r t y s o l d . ” 5.2 In reply to th at, assess ee filed a copy of sale deed , purchas e deed alongwith copy of ledger account of Dholi Gram Pan ch ayat specif ying the allocation of land and population of village wh er ein it is mention ed th at above said land is not in Municip al ar ea and is used for agricultural purpose only. After going through all above d etails, we ar e of the opinion that wh en alr eady learn ed AO has made detailed enquir y, then on s ame po int subsequent enquiry by ITA No. 124/Ahd/2021 (Deepak Jyotiprasad Chiripal) AY. 2016-17 - 8 - the PCIT is not enquired under the law. Thus, in view of the above f acts and r esp ectfully follo wing the Hon’ble Gujar at High Court’s order, we allo w th e app eal of the ass essee. 6. In the r esult, th e captioned app eal filed b y th e ass essee is allowed. Sd/- Sd/- ( AM ARJIT SI NGH) (MAHAVIR PRASAD) ACC OUNTANT MEMB ER JUDICIAL MEMBER Ahmedabad: Dated 18/02/2022 True Copy S.K.SINHA ेश ! " #े" / Copy of Order Forwarded to:- $. र / Revenue 2. आ दक / Assessee '. सं(ं)* आयकर आय + / Concerned CIT 4. आयकर आय + - अपील / CIT (A) .. / 0 1ीय 2 2 )*3 आयकर अपील य अ)*कर#3 अ45द ( द / DR, ITAT, Ahmedabad 6. 1 78 9 ल / Guard file. By order/आद श स 3 उप/स4 यक पं ीक र आयकर अपील य अ)*कर#3 अ45द ( द । This Order pronounced in Open Court on 18/02/2022