Rajendra Bastimal Chordiya, Nashik V. Income tax Officer, Nashik

ITA 1295/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2835 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 31-01-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 22-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N ASHOK BABU
• Assessee Lawyers: P S SHINGTE
• Keywords: Opportunity of being heard; Principle of natural justice; Set aside
• Section: 143(3); 54B; 54

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.1295/PUN/2017 / ASSESSMENT YEAR : 2013-14 RAJENDRA BASTIMAL CHORDIYA, PLOT NO.48, SACHITANAND BUNGLOW, NEAR THAKARE ENGG. COLLEGE, SAUBHAGYA NAGAR, GANGAPUR ROAD, NASHIK 422013. PAN : AASPC0600Q. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 1(2), NASHIK. . / RESPONDENT ASSESSEE BY : SHRI P.S. SHINGTE. REVENUE BY : SHRI N. ASHOK BABU. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE O RDER OF COMMISSIONER OF INCOME TAX (A) 1, NASHIK DATED 01.03.2017 FOR THE ASSESSMENT YEAR 2013-14. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL HAVING INCOME FROM BUSINESS. ASSE SSEE ELECTRONICALLY FILED HIS RETURN OF INCOME FOR A.Y. 2013-14 ON 25.02.2014 DECLARING TOTAL INCOME AT RS.2,76,967/-. THE CASE WAS / DATE OF HEARING : 14.03.2019 / DATE OF PRONOUNCEMENT: 07.06.2019 2 ITA NO.1295//PUN/2017 SELECTED FOR SCRUTINY AND THEREAFTER, ASSESSMENT WAS FR AMED U/S 143(3) OF THE ACT VIDE ORDER DT.08.12.2015 AND THE TOTAL INCOME WAS DETERMINED AT RS.13,01,560/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A) WHO VIDE ORDER DATED 01.03.2017 (IN APPEAL NO.NSK/CIT(A)-1/588/2015-16) DISMISSED THE APP EAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE BASIS OF THE FACTS AND IN THE CIRCUMSTAN CES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) ERRED IN CONFIRMING DIS A LLOWANCE O F PROPORTIONATE EXEMPTION OF RS. 10 , 24,588/- C LAIMED U/S 54B OF THE I . T.ACT WITHOUT APPRECIATING THE FACT THAT AGRICULTURAL LAND WHICH WAS SOLD WAS USED FOR AGRICULTURE PURPOSES IN TWO YEARS IMMEDIATELY PRECE DING THE DATE OF ITS TRANSFER. THE APPELLANT PRAYS THAT DISA LLOWANCE MADE OF RS. 10,24,588/- MAY PLEASE BE DELETED. 2. WITHOUT PREJUDICE TO GROUND NO . 1 AND ON THE BASIS OF THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME TAX (APPE A LS) ERRED IN CONFIRMING THE DIS A LLOWANCE WITHOUT APPRECIATING THE FACT THAT OBSERVA TIONS IN ASSESSMENT ORDER THAT AUTHORISED REPRESENTATIVE OF THE APPE L LANT WAS CONFRONTED AND HE AGREED FOR THE DISALLOWA NCE, ARE WRONG AND CONTRARY TO THE FACTS ON RECORDS . NO OPPORTUNITY OF BEING HEARD WAS GIVEN T O APPELLANT BY TH E L E ARNED AO. THE APP E LLANT PRAYS THAT DISALLOWANCE MADE OF RS. 10,24,588 /- MAY PLEASE BE DELETED. 3. BOTH THE GROUNDS BEING INTER CONNECTED ARE CONSIDERED TOG ETHER. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD SOLD AGRICULTURAL LAND AT GUT NO.247 AT TITOL I FOR RS.50 LAKHS (ASSESSEES SHARE BEING 1/3 RD AMOUNTING TO RS.16,66,667/-). ASSESSEE HAD SHOWN LONG TERM CAPITAL GAINS OF RS.12,64,923/- BEING H IS SHARE. IT WAS STATED THAT ASSESSEE HAD INVESTED THE CAPITAL GAINS FOR PURCHASE OF ANOTHER AGRICULTURAL LAND AND ACCORDINGLY HAD CLAIMED EXEMPTION U/S 54B OF THE ACT. THE ASSESSEE WAS ASKED TO PRODUCE 3 ITA NO.1295//PUN/2017 7/12 EXTRACT OF LAND FOR SALE OF LAND AND JUSTIFY THE CLAIM OF EXEMPTION U/S 54B OF THE ACT. ON PERUSING 7/12 EXTRACT AND THE CONFIRMATION OF TALATHI OF TITOLI, AO NOTICED THAT OUT OF THE TOTAL AREA OF 1 HECTARE 12 R, RICE WAS GROWN ONLY ON 0.20 R PIECE OF LAND AND THE BALA NCE LAND OF 0.81 R WAS NON AGRICULTURAL LAND. AO NOTED THAT NO DOCU MENTARY EVIDENCE FOR CARRYING OUT ANY AGRICULTURAL ACTIVITIES ON T HE AFORESAID LAND WAS BROUGHT ON RECORD. AO FURTHER NOTED THAT THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE AGREED FOR PROPORTIONAT E DISALLOWANCE. AO ACCORDINGLY WORKED OUT THE INVESTMENTS AT RS.10,24,588/- BE ING NOT ALLOWABLE U/S 54B OF THE ACT AND DISALLOWED THE SAME. AGGRIE VED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE LD.CIT(A ), WHO UPHELD THE ORDER OF AO BY NOTING THE FACT THAT THE AUTHORISED REPRESENTA TIVE OF THE ASSESSEE HAD AGREED FOR PROPORTIONATE DISALLOWANCE A T THE TIME OF ASSESSMENT PROCEEDINGS AND THEREFORE HE CANNOT REVERT BACK. SHE THUS UPHELD THE ORDER OF AO. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW BEFORE US. 5. BEFORE US, LD.A.R. REITERATED THE SUBMISSION MADE BEFORE AO AND LD.CIT(A) AND SUBMITTED THAT NEITHER THE A.R. OF THE ASSESS EE WAS CONFRONTED NOR HIS A.R. AGREED FOR PROPORTIONATE DISALLOWANC E. HE FURTHER SUBMITTED THAT AO DID NOT GRANT OPPORTUNITY OF B EING HEARD BEFORE MAKING DISALLOWANCE OF PROPORTIONATE EXEMPTION U/S 5 4B OF THE ACT AND THEREBY VIOLATED THE PRINCIPLES OF NATURAL JUSTICE. IN SUPPORT OF HIS AFORESAID CONTENTIONS, HE POINTED TO COPY OF SUBMISSIONS MADE BEFORE LD.CIT(A) AND WHICH ARE PLACED AT PAGE 3 OF THE PAP ER BOOK. ON THE MERITS, HE POINTED TO THE MAP OF THE LAND WHICH IS PLA CED AT PAGE NO.39 OF THE PAPER BOOK. FROM THE AFORESAID MAP, HE POINT ED THAT THE 4 ITA NO.1295//PUN/2017 LAND IS ONE BUT HAVING DIFFERENT SURVEY NUMBERS. HE THE REAFTER POINTED TO THE COPY OF 7/12 EXTRACTS WHICH ARE PLACED AT PAGE NOS. 37 AND 39 OF THE PAPER BOOK AND POINTED TO THE CROP WHICH ARE GROW N IN THE AFORESAID LAND. HE THEREAFTER SUBMITTED THAT THE PROVISION S OF SEC.54B OF THE ACT MANDATES THAT THE LAND SHOULD BE USED FOR A GRICULTURAL PURPOSE IN THE IMMEDIATELY TWO PRECEDING YEARS PRIOR TO THE DATE OF TRANSFER. THE LAW DOES NOT REQUIRE THAT ENTIRE LAND SHOU LD BE USED FOR CULTIVATION PURPOSE OR THE LAND SHOULD BE USED FOR AGRICULT URE PURPOSE THROUGHOUT THE YEARS. HE SUBMITTED THAT EVEN IF A PA RT OF THE LAND IS USED FOR AGRICULTURAL PURPOSE BY THE ASSESSEE THEN ASSE SSEE IS ELIGIBLE FOR CLAIM OF DEDUCTION U/S 54B OF THE ACT AND IN SUPPORT O F HIS AFORESAID CONTENTION, HE PLACED RELIANCE ON THE DECISION OF P UNE TRIBUNAL IN THE CASE OF DCIT VS. SHRI MAHESH DANABHAI P ATEL (ITA NO.1534/PUN/2015 ORDER DATED 31.01.2018). HE THEREFORE SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN DENYING THE CLAIM OF DEDUC TION. LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF AO AND L D.CIT(A). HE FURTHER SUBMITTED THAT AS THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ADMITTED BEFORE AO FOR THE PROPORTIONATE DISALLOWANCE, TH E ASSESSEE NOW CANNOT TAKE A DIFFERENT STAND. HE THUS SUPPORTED T HE ORDER OF LOWER AUTHORITIES. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO THE DENIAL OF CLAIM OF DEDUCTION U/S 54B OF THE ACT FOR THE REASON THAT THE LAND WAS NOT CULTIVABLE. WE FIND THAT THE REASON FOR DENYING THE CLA IM OF DEDUCTION U/S 54B OF THE ACT WAS FOR THE REASON THAT OUT OF THE TOTAL AREA OF 1 HECTARE 12R, AGRICULTURAL ACTIVITIES WERE CARR IED OUT ON A 5 ITA NO.1295//PUN/2017 PORTION OF THE LAND AND THERE WAS NO EVIDENCE OF CROP G ROWN ON THE BALANCE PORTION OF THE LAND. BEFORE US, IT IS ASSESSEES S UBMISSION THAT THE ENTIRE LAND IS ONE LAND AND THE FACT THAT CROP WAS G ROWN IN PORTION OF LAND IS NOT DISPUTED. WE FIND THAT THE CO-ORDINATE BENC H OF THE TRIBUNAL IN THE CASE OF SHRI MAHESH DANABHAI PATEL (SUPRA) HAS HELD THAT PROVISIONS OF SEC.54B OF THE ACT DOES NOT SPECIFY TH AT THE ENTIRE LAND SHOULD BE USED FOR CULTIVATION FOR CLAIMING BENEFIT U/S 54 B OF THE ACT. IT HELD THAT IF ANY PART OF THE LAND IS UNDER CULTIV ATION FOR TWO YEARS IMMEDIATELY TWO PRECEDING YEARS PRIOR TO THE DAT E OF TRANSFER, IT WOULD BE SUFFICIENT TO CLAIM BENEFIT U/S 54B OF THE ACT. BEFOR E US, REVENUE HAS NOT PLACED ANY CONTRARY BINDING DECISION IN IT S SUPPORT NOR HAS PLACED ANY MATERIAL ON RECORD TO DEMONSTRATE THAT THE A FORESAID DECISION IN THE CASE OF DCIT VS. SHRI MAHESH DANABHAI PAT EL (SUPRA) HAS BEEN SET ASIDE OR STAYED BY THE HIGHER JUDICIAL AUTH ORITIES. WE FIND THAT AO HAS NOTED THAT A.R OF THE ASSESSEE AGREED FOR DISALLOWANCE AND THEREFORE THE AO PROCEEDED WITH PROPORTIONATE DISALLOWANC E. ON THE OTHER HAND, IT IS ASSESSEES CONTENTION THAT THE STATE MENT OF AO OF THE A.R HAVING AGREED FOR DISALLOWANCE IS FACTUALLY INCORRECT. IN THE PRESENT CASE, WE ARE OF THE VIEW THAT SINCE THE ISSUE ON MERITS IS COVERED IN ASSESSEES FAVOUR BY THE DECISION OF PUNE ITAT, CITED HE REINABOVE, THEN MERELY BECAUSE OF ADMISSION OF DISALLOWANCE, THE ASSESSEE CANNOT BE DENIED THE BENEFIT TO WHICH HE IS ELIGIBLE. WE THEREFORE FO LLOWING THE DECISION OF CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SHRI MAHESH DANABHAI PATEL (SUPRA) ARE OF THE VIEW THAT THE A O WAS NOT JUSTIFIED IN DENYING THE CLAIM OF DEDUCTION U/S 54B OF THE A CT AND WE THEREFORE DIRECT THE AO TO DEDUCT THE CLAIM. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 6 ITA NO.1295//PUN/2017 7. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 7 TH DAY OF JUNE, 2019. SD/- SD/ - ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) / JUDICIAL MEMBER ' / ACCOUNTANT MEMBER PUNE; DATED : 7 TH JUNE, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, NASHIK. PR. CIT-1, NASHIK. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &' , / ITAT, PUNE.