SHRI NANDA RAM JAT, Jaipur V. ITO, Jaipur

ITA 1271/JPR/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 47959 (ITAT-JAIPUR)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 28-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M L BORAD
• Keywords: Capital asset; Opportunity of being heard; Additional evidence
• Section: 54B; 54F; 2(14); 144

Judgement Text

1 ITA 1271-10 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH A JAIPUR BEFORE SHRI R.K. GUPTA AND SHRI N.L. KALRA ITA NO. 1271/JP/2010 ASSTT. YEAR : 2006-07. SHRI NANDA RAM JAT, VS. THE INCOME-TAX OFFICER, S/O SHRI MOHRU RAM, WARD 7(4), R/O VILLAGE HEMAWALI DHANI, JAIPUR. VPO MAHAPURA, TEHSIL SANGANER, JAIPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.L.BORAD RESPONDENT BY : SHRI SUNIL MATHUR ORDER DATE OF ORDER : 08/07/2011. PER R.K. GUPTA, J.M. THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF LD. CIT (A) RELATING TO ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING SEVEN EFFEC TIVE GROUNDS :- 1. THAT THE LEARNED CIT (A) ERRED IN NOT GIVING HI S DECISION/FINDING ON THE GROUNDS OF APPEAL NO. 1 & 2 TAKEN BY THE ASSESSEE W HILE FILING THE APPEAL BEFORE THE LEARNED CIT (APPEALS) ON FORM NO. 35 AND ON ACC OUNT OF THIS OMISSION ENTIRE ORDER PASSED BY HIM IS LIABLE TO BE CANCELLED. 2. THAT THE LEARNED CIT (APPEALS) ERRED IN NOT CANC ELING THE EX-PARTE ASSESSMENT ORDER PASSED BY THE A.O. UNDER SECTION 1 44 OF THE IT ACT. 3. THAT THE LEARNED CIT (APPEALS) ERRED IN NOT ALLO WING THE ASSESSEE EXEMPTION FROM INCOME TAX ON THE GAINS ARISING TO T HE ASSESSEE FROM THE SALE OF RURAL AGRICULTURAL LAND BEARING KHASRA NO. 655, 656 , 657 ETC. IN VILLAGE HEMAWALI DHANI, VPO MAHAPURA, TEHSIL SANGANER, JAIPUR WHICH IS SITUATED AT A DISTANCE OF 2 MORE THAN 8 KM FROM THE LOCAL LIMITS OF JAIPUR NAGA R NIGAM AND HAS POPULATION OF LESS THAN 10,000. 4. THAT THE LEARNED CIT (A) ERRED IN HOLDING THE AG RICULTURAL LAND SOLD BY THE ASSESSEE AS SITUATED WITHIN 8 KM FROM THE LOCAL LIM ITS OF JAIPUR NAGAR NIGAM AND THEREBY GIVING THE FINDING THAT THE AGRICULTURAL LA ND SOLD BY THE ASSESSEE IS A CAPITAL ASSET UNDER SECTION 2(14) OF THE IT ACT AND CONSEQUENTLY DIRECTING THE AO TO CALCULATE THE CAPITAL GAINS ON SALE THEREOF. 5. THAT THE LEARNED CIT (A) GROSSLY ERRED IN FIRST OBSERVING THAT IN SUPPORT OF COST OF IMPROVEMENT INCURRED BY THE ASSESSEE DURING 1.4.1983 TO 31.3.1985 AT RS. 31.75 LACS (INDEXED COST OF IMPROVEMENT IS 91,93,60 8/-) THE ASSESSEE DID NOT FILE ANY EVIDENCE IN SUPPORT OF COST OF IMPROVEMENT/DEVE LOPMENT OF AGRICULTURAL LAND AND THEN HOLDING THAT IT IS NOT POSSIBLE FOR HIM TO ALLOW BENEFIT OF COST OF IMPROVEMENT, WHICH OBSERVATION AND HOLDING OF THE L EARNED CIT (A) IS UNJUST, UNTENABLE AND BAD IN LAW. 6. THAT THE LEARNED CIT (A) FAILED TO TAKE INTO CON SIDERATION THE AFFIDAVIT OF THE ASSESSEE DULY SIGNED AND SWORN BY THE ASSESSEE AND ATTESTED BY THE NOTARY PUBLIC ON 23.9.2009 IN SUPPORT OF VARIOUS EXPENSES INCURRED BY THE ASSESSEE AND HIS FATHER LATE MOHRU RAM ON IMPROVEMENT/DEVELOPMEN T OF AGRICULTURAL LAND DURING THE PERIOD 1.4.1983 TO 31.3.1985 AND THIS AF FIDAVIT DULY FILED BY THE ASSESSEE IN THE COURSE OF THE HEARING OF THE APPEAL BEFORE THE LEARNED CIT (A) ALONG WITH THE WRITTEN SUBMISSIONS. 7. THAT THE LEARNED CIT (A) ERRED IN NOT ALLOWING D EDUCTIONS UNDER SECTION 54B OF THE IT ACT IN RESPECT OF PURCHASE OF NEW AGR ICULTURAL LAND IN THE NAME OF ASSESSEES FAMILY MEMBERS INCLUDING ASSESSEES WIFE SMT. KELA DEVI FROM THE SALE CONSIDERATION OF RS. 2,40,90,768/- RECEIVED BY THE ASSESSEE FROM THE SALE OF OLD AGRICULTURAL LAND WHICH GAVE RISE TO ALLEGED LO NG TERM CAPITAL GAIN. 3. THE BRIEF FACTS OF THE CASE ARE THAT ON THE BASI S OF INFORMATION GATHERED FROM THE BANK, IT WAS NOTED THAT RS. 1,48,50,000/- HAS BEEN CREDITED DURING THE FINANCIAL YEAR IN ASSESSEES BANK ACCOUNT. NOTICE UNDER SECTION 142(1 ) WAS ISSUED WHICH WAS SERVED ON THE ASSESSEE WHEREBY ASSESSEE WAS REQUIRED TO FILE HIS RETURN OF INCOME BY 25.2.2007. HOWEVER, ASSESSEE DID NOT MAKE ANY COMPLIANCE OF TH E NOTICE. AGAIN ON 06.06.2007 AND 04.07.2008 NOTICES WERE ISSUED AND SERVED UPON THE ASSESSEE THROUGH REGISTERED POST. THESE NOTICES WERE ALSO REMAINED UNCOMPLIED WITH. T HEREFORE, THE AO PROCEEDED TO PASS/ 3 COMPLETE ASSESSMENT ORDER UNDER SECTION 144. AS AS SESSEE NEITHER APPEARED IN PERSON NOR ANY A/R OF THE ASSESSEE APPEARED, THEREFORE, THE EN TIRE DEPOSIT MADE IN THE BANK ACCOUNT OF THE ASSESSEE AT RS. 1,48,50,000/- WERE TREATED A S DEPOSIT FROM UNDISCLOSED SOURCES AND ACCORDINGLY THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE. ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A). BEFORE LD. CIT (A), IT WAS SUB MITTED THAT THE ASSESSEE SOLD AGRICULTURAL LAND FOR RS. 2,40,90,768/-. IT WAS TO LD THAT THE LAND WAS SITUATED AT VILLAGE HEMAWALI DHANI, VPO MAHAPURA, TEHSIL SANGANER. IT WAS ALSO SUBMITTED THAT THE LAND IN QUESTION SITUATED IN A VILLAGE WHERE TOTAL POPUL ATION IS LESS THAN 10,000 AND THE LAND IN QUESTION IS SITUATED BEYOND 8 KM OF MUNICIPAL LIMIT . ACCORDINGLY, IT WAS SUBMITTED THAT THE SAME IS NOT TAXABLE IN TERMS OF SECTION 2(14) O F THE IT ACT. IT WAS FURTHER SUBMITTED THAT AGAINST THE SALE CONSIDERATION OF LAND IN QUES TION, THE ASSESSEE MADE INVESTMENT FROM TIME TO TIME FOR IMPROVEMENT/DEVELOPMENT OF LA ND WHICH HAVE NOT BEEN ALLOWED BY THE AO. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAS INVESTED A SUM OF RS. 1,78,05,483/- ON A RESIDENTIAL HOUSE. NO DEDUCTION OF THE SAME H AS BEEN GIVEN BY THE AO. THE DETAILS OF INVESTMENT OF RS. 1,78,05,483/- WAS ALSO GIVEN O N BEHALF OF THE ASSESSEE. THE AFFIDAVIT OF THE ASSESSEE AS WELL AS HIS WIFE WERE ALSO FILED BY WHICH IT WAS CERTIFIED THAT THEY HAVE CONSTRUCTED RESIDENTIAL HOUSE, THEREFORE, THE DOCUM ENT SHOULD BE ADMITTED IN VIEW OF RULE 46A OF I.T. RULES. IT WAS ALSO ARGUED THAT NO PROPE R OPPORTUNITY HAS BEEN GIVEN BEFORE COMPLETING THE ASSESSMENT UNDER SECTION 144. 3.1. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, THE LD. CIT (A) OBSERVED THAT ADDITIONAL EVIDENCE WHICH GOES TO THE ROOT OF THE CASE SHOULD BE SENT TO THE AO FOR HIS COMMENTS. ACCORDINGLY, THEY WERE SE NT TO THE AO. THE AO SENT HIS REMAND REPORT VIDE LETTER DATED 16.3.2010 IN WHICH IT WAS SUBMITTED THAT AS PER GAZETTE 4 NOTIFICATION OF GOVERNMENT OF RAJASTHAN DATED 24.3. 1992 THE LAND IN QUESTION SOLD BY THE ASSESSEE IS SITUATED WITHIN 8 KM OF MUNICIPAL LIMIT . IT WAS FURTHER SUBMITTED THAT A MAP FROM NAGAR NIGAM HAS BEEN OBTAINED AND BY THIS MAP ALSO THE LAND IN QUESTION IS WITHIN 8 KM OF MUNICIPAL LIMIT. 3.2. IN RESPECT TO PASSING EX PARTE ASSESSMENT ORDE R UNDER SECTION144, IT WAS SUBMITTED THAT VARIOUS NOTICES WERE GIVEN TO THE ASSESSEE WHI CH WERE SERVED UPON HIM THROUGH REGISTERED POST. HOWEVER, NONE OF THE NOTICES WAS C OMPLIED WITH. THEREFORE, THERE WAS NO OTHER ALTERNATIVE LEFT EXCEPT PASSING EX PARTE ASSE SSMENT ORDER UNDER SECTION 144. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAS SOLD LAND F OR A CONSIDERATION OF RS. 2,40,90,768/- WHEREAS ASSESSMENT HAS BEEN COMPLETED ON A CONSIDER ATION OF RS. 1,48,50,000/-. ACCORDINGLY IT WAS REQUESTED THAT AMOUNT OF ADDITIO N SHOULD BE INCREASED TO RS. 2,40,90,768/-. THIS REPORT WAS SENT BY THE AO ON17 .5.2010. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, TH E LD. CIT (A) HELD THAT AMPLE OPPORTUNITIES WERE GIVEN TO THE ASSESSEE WHICH WERE NOT AVAILED, THEREFORE, THE AO WAS CORRECT IN PASSING ASSESSMENT ORDER UNDER SECTION 1 44. THE LD. CIT (A) FURTHER NOTED THAT SINCE LAND IN QUESTION SITUATED WITHIN 8 K.M. OF MUNICIPAL LIMIT, THEREFORE, IT WAS HELD THAT IN TERMS OF SECTION 2(14) THE SALE CONSIDERATI ON IS ASSESSABLE UNDER THE HEAD LONG TERM CAPITAL GAIN. IT WAS FURTHER OBSERVED BY LD. CIT (A) THAT SINCE THE SALE CONSIDERATION IS OF RS. 2,40,90,768/-, THEREFORE TH E AO WAS DIRECTED TO TAKE THIS AMOUNT INTO CONSIDERATION WHILE COMPUTING LONG TERM CAPITA L GAIN ON THE AMOUNT OF SALE OF AGRICULTURAL LAND. THE AO WAS ALSO DIRECTED THAT T HE VALUATION AS ON 1.4.1981 SHOULD BE ASCERTAINED AFTER AFFORDING OPPORTUNITY TO THE ASSE SSEE FOR COMPUTING THE LONG TERM CAPITAL GAIN. 5 4. REGARDING THE VARIOUS INVESTMENTS OF RS. 1,78,05 ,483/-, THE LD. CIT (A) NOTED THAT NO EVIDENCE IN SUPPORT OF THIS CONTENTION THAT THE ASSESSEE HAD MADE INVESTMENT IN THE LAND WERE FILED, THEREFORE, THIS CONTENTION OF THE ASSESSEE WAS REJECTED. 5. REGARDING THE DEDUCTION UNDER SECTION 54B ON THE GROUND THAT ASSESSEE AND HIS FAMILY MEMBER HAVE INVESTED THE AMOUNT IN PURCHASE OF AGRICULTURAL LAND, THEREFORE, THEY ARE ELIGIBLE FOR DEDUCTION UNDER SECTION 54B, THE L D. CIT (A) HELD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54B FOR THE IN VESTMENT MADE BY THE ASSESSEE IN PURCHASE OF AGRICULTURAL LAND. HOWEVER, IN RESPECT TO INVESTMENT MADE BY THE FAMILY MEMBERS OF THE ASSESSEE, NO DEDUCTION UNDER SECTION 54B IS ALLOWABLE. THE AO WAS ACCORDINGLY DIRECTED TO ALLOW THE DEDUCTION UNDER S ECTION 54B ON THE AMOUNT OF INVESTMENT MADE BY ASSESSEE IN HIS OWN NAME IN PURC HASE OF AGRICULTURAL LAND. 6. IN RESPECT TO INVESTMENT MADE IN CONSTRUCTION OF NEW RESIDENTIAL HOUSE, THE LD. CIT (A) HELD THAT ASSESSEE IS ELIGIBLE FOR DEDUCTIO N UNDER SECTION 54F AND AO WAS DIRECTED ACCORDINGLY THAT DEDUCTION UNDER SECTION 5 4F BE ALLOWED AS PER PROVISIONS OF LAW. 7. NOW THE ASSESSEE IS IN APPEAL HERE BEFORE THE TR IBUNAL AGAINST THESE FINDINGS OF LD. CIT (A). 8. THE LD. COUNSEL OF THE ASSESSEE FILED WRITTEN SU BMISSIONS AND ARGUMENTS MADE BEFORE THE LD. CIT (A) WERE REITERATED HERE BEFORE THE TRIBUNAL. 9. ON THE OTHER HAND, THE LD. D/R STRONGLY PLACED R ELIANCE ON THE ORDERS OF AO AND LD. CIT (A). 10. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED THEM CAREFULLY. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERI AL ON RECORD, WE FIND NO INFIRMITY IN 6 THE FINDING OF LD. CIT (A). LD. CIT (A) HAS PASSED A SPEAKING ORDER IN RESPECT OF EACH AND EVERY OBJECTION/GROUND RAISED ON BEHALF OF THE ASSESSEE. 10.1. THE LD. CIT (A) HAS NOTED THAT VARIOUS NOTICE S WERE GIVEN. HOWEVER, ASSESSEE CHOOSE NOT TO APPEAR BEFORE AO FOR THE REASONS KNOW N TO THE ASSESSEE ONLY. THEREFORE, WE CONFIRM THIS ACTION OF LD. CIT (A) IN THIS RESPE CT. 10.2. NEXT OBJECTION OF THE ASSESSEE IS THAT ORDERS OF AO AND OF LD. CIT (A) ARE LIABLE TO BE SET ASIDE. 10.3. NO MATERIAL WHATSOEVER WAS BROUGHT ON RECORD THAT HOW THE ORDERS OF AO AND LD. CIT (A) ARE LIABLE TO BE SET ASIDE, THEREFORE, THIS GROUND OF ASSESSEE IS ALSO REJECTED. 11. REGARDING THE CONSIDERATION OF RS. 2.40 CRORES OR ODD, THERE IS NO DISPUTE THAT ASSESSEE HAS SOLD THE AGRICULTURAL LAND FOR THIS AM OUNT. THERE IS ALSO NO EVIDENCE FILED BY ASSESSEE THAT THE LAND IN QUESTION IS SITUATED BEYO ND 8 K.M. OF MUNICIPAL LIMIT WHEREAS AO HAS FILED COPY OF MAP OBTAINED FROM NAGAR NIGAM AND COPY OF GAZETTE NOTIFICATION ISSUED BY THE STATE GOVERNMENT SHOWING THE LAND IN QUESTION IS WITHIN 8 K.M. OF MUNICIPAL LIMIT. NO MATERIAL WHATSOEVER WAS FILED HERE BEFORE THE TRIBUNAL TO REBUT THIS FINDING. THEREFORE, THERE IS NO REASON TO INTERFER E WITH THE FINDING OF LD. CIT (A). THE LD. CIT (A) WAS MORE THAN REASONABLE IN DIRECTING THE A O TO ASCERTAIN THE VALUE AS ON 1.4.1981 FOR COMPUTING LONG TERM CAPITAL GAIN AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THEREFORE, WE CONF IRM THIS FINDING OF LD. CIT (A). 12. REGARDING INVESTMENT OF RS. 1.78 CRORES OR ODD, THERE IS NO IOTA OF EVIDENCE FILED THAT HOW ASSESSEE HAS INVESTED SUCH A BIG AMOUNT FO R IMPROVEMENT OF AGRICULTURAL LAND. THEREFORE, THERE IS NO QUESTION OF ALLOWING THE SAM E. IT IS NOT A SMALL AMOUNT. IT IS A BIG 7 AMOUNT OF RS. 1.78 CRORES OR ODD. NOTHING HAS BEEN BROUGHT ON RECORD AS STATED ABOVE HOW THESE EXPENSES HAVE BEEN INCURRED. 13. THE LD. COUNSEL OF THE ASSESSEE HAS RELIED ON A DECISION OF TRIBUNAL WHEREIN ON SIMILAR FACTS THE TRIBUNAL HAS ALLOWED THE IMPROVEM ENT COST I.E. IN CASE OF ITO VS. SHRI BHONRILAL SHARMA IN ITA NO. 610 AND 1036/JP/2008. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL AND FOUND THAT TRIBUNAL HAS DECIDED TH E APPEAL ON THE FACTS OF THAT CASE AND TAKING INTO CONSIDERATION THE EVIDENCE IN RESPECT T O IMPROVEMENT COST. HOWEVER, IN THE PRESENT CASE NO EVIDENCE HAS BEEN FILED EVEN UPTO T HE STAGE OF TRIBUNAL. THEREFORE, AGAIN WE DO NOT FIND REASON TO INTERFERE WITH THE FINDING OF LD. CIT (A) THAT WITHOUT ANY EVIDENCE NO DEDUCTION WHATSOEVER CAN BE ALLOWED. A CCORDINGLY, WE CONFIRM THE FINDING OF LD. CIT (A) ON THIS ISSUE ALSO. 14. REGARDING DEDUCTION UNDER SECTION 54B, THE LD. CIT (A) HAS DIRECTED THE AO TO ALLOW DEDUCTION UNDER SECTION 54B ON THE INVESTMENT IN RESPECT TO PURCHASE OF ANOTHER AGRICULTURAL LAND IN THE NAME OF ASSESSEE. AS PER PROVISIONS OF LAW, DEDUCTION IS ALLOWABLE IN RESPECT OF INVESTMENT MADE IN THE NAME OF PERSON WHO SOLD THE LAND. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE F INDING OF LD. CIT (A) IN THIS RESPECT ALSO. ACCORDINGLY THE SAME IS CONFIRMED. 15. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AN D IN VIEW OF THE REASONING GIVEN BY US, WE CONFIRM THE ORDER OF LD. CIT (A) IN TOTO. 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. 17. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 08 -07-2011. SD/- SD/- ( N.L. KALRA ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR, 8 D/- COPY FORWARDED TO :- SHRI NANDA RAM JAT, HEMAWALI DHANI, MAHAPURA, JAIPU R. THE ITO WARD 7(4), JAIPUR. THE CIT (A) THE CIT THE D/R GUARD FILE (ITA NO. 1271/JP/2010) BY ORDER, AR ITAT JAIPUR.