Surendra Keshvlal Shah, Pune V. Dy. Comm. of Income-tax, Pune

ITA 1308/PUN/2011

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1073 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 9 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 05-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 20-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P S NAIK SINGH
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Capital asset; Business income; Opportunity of being heard; Cost of acquisition; Competent authority
• Section: 142(1); 10

Judgement Text

] IQ.KS IQ.KS IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE ! ' BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM / ITA NO.1308/PN/2011 !# $ %$ / ASSESSMENT YEAR : 2005-06 SHRI SURENDRA KESHAVLAL SHAH, S.NO.34/34A, PLOT NO.13, DEALING CENTER, VELANKAR NAGAR, NEAR MITRA MANDAL CHOWK, PUNE 411 009 PAN NO.ARJPS8424L . / APPELLANT VS. DY.CIT CENTRAL CIRCLE-1(1), PUNE . / RESPONDENT / APPELLANT BY : SHRI SUNIL PATHAK & SHRI NIKHIL PATHAK / DEPARTMENT BY : SHRI P.S. NAIK . SINGH & / ORDER PER R.K. PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 17-01-2011 OF THE CIT(A)-I, PUNE RELATING TO ASSES SMENT YEAR 2005-06. / DATE OF HEARING : 09.06.2015 / DATE OF PRONOUNCEMENT:24.07.2015 2 2. GROUNDS OF APPEAL NO.1 TO 5 BY THE ASSESSEE WHICH RE LATES TO A SINGLE ISSUE READ AS UNDER : 1. WITHOUT CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CI RCLE-1(1), PUNE (DCIT) HAS ERRED IN ASSESSING INCOME RETURNED BY THE ASSE SSEE OF RS. 17,24,730/- AT A HIGHER AMOUNT OF RS.84,93,333/- AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I HAS ERRED IN C ONFIRMING THE SAME. 2. WITHOUT CONSIDERING THE LAW AND FACTS OF THE CA SE, THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), PUNE (DCIT) HAS ERRED IN MAKING AGGREGATE ADDITIONS OF RS. 67,68,603 TO THE TOTAL INCOME RETURNED BY THE ASSESSEE AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -I HAS ERRED IN CONFIRMING THE SAME. 3. THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE- 1(1), PUNE (DCIT) HAS ERRED IN TREATING AGRICULTURE INCOME EARNED FROM SALE OF AGRICULTURAL LANDS OF RS.65,67,973/- AS TAXABLE INCOME, WITHOUT CONSIDERING PROVISIONS OF THE LAW AND FACTS OF THE CASE AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - I HAS ERRED IN C ONFIRMING THE SAME. 4. WITHOUT CONSIDERING PROVISION OF SECTION 2, SECTION 10 AND OTHER SECTIONS OF THE ACT AND THE POWERS OF THE CENTRAL GOVE RNMENT, THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CI RCLE-1(1) PUNE (DCIT) HAS ERRED IN TREATING SALE OF AGRICULTURAL LAN D WHICH IS OUTSIDE THE PURVIEW OF TAX, AS THE SAID LAND IS SITUATED OUTSIDE TH E MUNICIPAL LIMIT, AS TAXABLE INCOME AND THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) -I HAS ERRED IN CONFIRMING THE SAME. 5. WITHOUT CONSIDERING THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE TEAMED DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 1(1), PUNE (DCIT) HAS ERRED IN HOLDING THAT ASSESSEE IS ENGAGED IN B USINESS ACTIVITY OF PURCHASING AND SELLING LAND AND ASSESSING THE INCOME F ROM SALE OF AGRICULTURAL LAND AS TAXABLE INCOME AND THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS) - I HAS ERRED IN CONFIRMING THE SAME. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS A N INDIVIDUAL AND FILED HIS RETURN OF INCOME ON 21-10-2005 DECLARING TOTA L INCOME OF RS.17,24,730/- AND AGRICULTURAL INCOME OF RS.5,25,630/-. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFIC ER NOTED THAT THE ASSESSEE HAS SOLD AGRICULTURAL LAND FOR A CONSIDE RATION OF RS.78,90,000/- AND CLAIMED THE SAME TO BE EXEMPT FROM TAX . ON BEING QUESTIONED BY THE ASSESSING OFFICER, IT WAS STATED TH AT THE LAND BEING AGRICULTURAL ONE IS OUTSIDE THE PURVIEW OF TAX. THE A SSESSING OFFICER OBSERVED THAT THERE WAS A SEARCH U/S.132 OF THE I.T. ACT IN THE 3 CASE OF SUYOG GROUP AND ALONG WITH THE GROUP THERE WAS A SURVEY ACTION U/S.133A OF THE I.T. ACT, 1961 AT THE BUSINESS PRE MISES OF THE ASSESSEE. DURING THE SAID SURVEY IT WAS NOTICED THAT TH E ASSESSEE WAS REGULARLY SELLING AGRICULTURAL LANDS. THE ASSESSEE IS A PARTNER IN COUPLE OF CONSTRUCTION FIRMS ENGAGED IN THE CONSTRUCTION A CTIVITIES. LOOKING AT THE FREQUENCY OF TRANSACTIONS RELATING TO SALE OF AGRICULTURAL LAND THE ASSESSING OFFICER ASKED THE ASSESSEE TO CLARIFY AS TO WHY THE PROFITS ON ACCOUNT OF AGRICULTURAL LAND SHO ULD NOT BE BROUGHT TO TAX. 4. IN RESPONSE TO THE SAME THE ASSESSEE FILED A NOTE ON AGRICULTURE WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN PAG E 2 OF THE ASSESSMENT ORDER AND WHICH READS AS UNDER : A NOTE ON AGRICULTURE : 1. THE ASSESSEE IS ENGAGED IN AGRICULTURAL ACTIVITIES AN D FOR PAST SEVERAL YEARS DOING AGRICULTURE AND PRESENTLY CONTINUE S TO CARRY ON AGRICULTURE. WHATEVER AGRICULTURE PRODUCE GENERATE D HAS BEEN USED FOR SELF CONSUMPTION AND HAS ALSO BEEN SOLD. THE SAME HAS BEE N ASSESSED IN THE PAST, AS WELL. 2. THE ASSESSEE IS NOT IN THE BUSINESS OF PURCHASE AND SALE OF LANDS. THE ASSESSEE WAS ENGAGED IN CONSTRUCTION ACTIVITY, DURIN G THE RELEVANT PREVIOUS YEAR. HOWEVER, THIS ENGAGEMENT WAS AS SUPERVISIO N OVER A CONSTRUCTION PROJECT. NO ACTIVITY OF PURCHASE AND SALE OF LAND WAS CARRIED OUT. NO ACTIVITY OF DEVELOPMENT OF LAND WAS CARRIED OUT. 3. THEREFORE, ANY CONCLUSION THAT THE ASSESSEE IS TRA DING IN LAND IS NOT BASED ON FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE AGRICULTURE LANDS ARE REQUIRED BY THE ASSESSEE RIGHT FROM THE PERIOD OF A DECADE AGO. AFTER ACQUISITION OF AGRICUL TURAL LANDS, AGRICULTURE ACTIVITY HAS BEEN CONTINUOUSLY CARRIED ON BY THE ASSESSEE FOR SEVERAL YEARS PAST. THE ASSESSEE IS ALSO MEMBER OF 'SANT TUKARAM SAHAKARI SAKHAR KARKHANA MAYRADIT'. THE ASSESSEE HAS BEEN SUPPLYIN G SUGARCANE TO THIS CO-OPERATIVE SUGAR FACTORY. 5. THE ASSESSEE HAS ALSO TAKEN PRODUCTION OF RICE, VEG ETABLES LIKE TOMATO, KAKADI, ONION, LEAFY VEGETABLES, CHILLY, CAU LIFLOWER, ETC. DEPENDING UPON SEASON. SUGAR CANE IS ALSO GROWN. 6. THE ASSESSEE HAD TO PURCHASE RESIDENTIAL HOME AND AN OFFICE AND DIVERSIFY INTO SOME BUSINESS ACTIVITY. SUBSTANTIAL FINANC IAL OUTLAY WAS REQUIRED FOR THE PURPOSE OF PURCHASE OF A RESIDENTIAL HOUSE AND AN OFFICE PLACE, AND CAPITAL FOR BUSINESS WITH A VIEW TO GENERAT E RESOURCES, THE ASSESSEE HAS SOLD SOME OF HIS HOLDING OF AGRICULTURAL LANDS. 4 7. YOUR HONOUR, WILL THEREFORE, APPRECIATE THAT THE ASSESSEE HAS ACQUIRED THE LANDS FOR AGRICULTURE. HE HAS CARRIED O UT AGRICULTURAL ACTIVITIES. HE CONTINUES TO CARRY ON AGRICULTURAL ACT IVITIES. FOR CERTAIN NEEDS OF RESOURCES, THE ASSESSEE HAS SOLD SOME OF THE AGRICUL TURAL LANDS. ON SALE OF AGRICULTURAL LANDS NO INCOME-TAX IS ATTRACT ED. ACCORDINGLY, THE ASSESSEE HAS COMPILED HIS RETURN OF INCOME. IT IS, THEREFO RE, CORRECT RETURNING OF INCOME TAXABLE AND EXEMPT. THE SAME DO ES NOT REQUIRE ANY CHANGE.' 5. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE ABOVE EXPLANATION GIVEN BY THE ASSESSEE. HE NOTED THAT THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF AGRICULTURAL LAND SOLD BY HIM TILL DATE A ND HAS FURNISHED ONLY DETAILS OF LAND HELD BY HIM DURING THE YEAR A ND THE SUBSEQUENT SALE OUT OF THESE LANDS. FROM THE DETAILS FURN ISHED BY THE ASSESSEE THE ASSESSING OFFICER FURTHER NOTED THAT TH E AGRICULTURAL LAND HAS BEEN SUB-DIVIDED BY THE ASSESSEE AND THE SAME HAS BEEN SOLD. FROM THE DETAILS OF LAND SOLD SUBSEQUENT TO A.Y. 2004 -05 HE NOTED THAT THE FREQUENCY OF THE SALE IS CONSIDERABLE. AS R EGARDS THE CLAIM OF THE ASSESSEE THAT HE IS ENGAGED IN AGRICULTURAL AC TIVITIES HE OBSERVED THAT IT MAY BE TRUE THAT THE ASSESSEE HAS D ONE SOME ACTIVITY BUT NOT ON THE ENTIRE LAND HELD BY HIM. HE REFERRED TO THE REPLY OF THE ASSESSEE TO QUESTION NO. 14 PUT TO HIM DURING THE COURS E OF SURVEY BY THE INVESTIGATION WING WHICH READS AS UNDER : 'AS FAR AS I REMEMBER, THE THINGS I HAD STARTED PURCHASI NG AGRICULTURAL LANDS FROM 1986 TILL DATE AT THE CHANDKHED AND PACHA NE. THE APPROXIMATE AREA OF THE LAND PURCHASED BY ME FROM VA RIOUS LAND OWNERS IS 40 ACRES. OUT OF THESE LANDS, I HAVE SOLD SOME OF THE LAND TO VARIOUS BUYERS FROM THE YEAR 1995 TILL DATE. I HAVE SOLD APPR OXIMATELY 30-32 ACRES OF LAND. APPROXIMATE COST OF LAND PURCHASED IS AR OUND RS.80 LACS WHEREAS THE TOTAL CONSIDERATIONS OF LANDS SOLD IS AROUND RS.310 LAKHS. I HAVE PURCHASED LANDS FROM NEARLY 30-35 LAND OWNERS AND SOLD THE LANDS TO NEARLY 6-8 BUYERS. SOME OF THE LANDS PURCHASED BY M E ARE THE CO- OWNERS. I WILL SUBMIT THE DETAILS OF LAND PURCHASED AND SOLD WITHIN 8 DAYS' 6. HOWEVER, THE AO NOTED THAT ASSESSEE DID NOT FURNISH THE INFORMATION TO THE INVESTIGATION WING FOR WHICH HE ASKED THE ASSESSEE TO FURNISH ALL THE LAND SALE DETAILS EFFECTED TILL DATE. FROM TH E DETAILS SUBMITTED BY HIM, HE NOTED THAT ASSESSEE WAS SELLING THE LAND SINCE 5 1995. THEREFORE, ACCORDING TO HIM, THE MOTIVE TO SELL THE LA ND WAS ALWAYS THERE AND THE ASSESSEE WAS JUST WAITING FOR A P ROFITABLE PROPOSAL. TILL THAT TIME, THE ASSESSEE MAY BE DOING SOME A GRICULTURAL ACTIVITIES TO EARN SOME ADDITIONAL INCOME. HE FURTHER NOTE D THAT THE ASSESSEES BROTHER IS A REPUTED BUILDER ENGAGED IN THE CONSTRUCTION ACTIVITY. FOR ONE OF HIS FIRMS, THE ASSESSEE HAS DONE SUPE RVISION ACTIVITY FOR WHICH RS.10 LAKHS HAS BEEN RECEIVED DURING THE YEAR. HE FURTHER NOTED THAT THE ASSESSEE IN HIS STATEMENT RECOR DED ON 18-12-2007 HAS STATED THAT IN SOME OF THE LANDS HIS BR OTHERS ARE CO-PURCHASERS BUT THE ASSESSEE HAS NOT GIVEN THESE D ETAILS. HE THEREFORE CALLED FOR THE DETAILS OF SALES EFFECTED TILL DATE AN D DETAILS OF PROPERTIES PURCHASED WITH HIS BROTHERS. FROM THE DETAILS FURNISHED BY THE ASSESSEE, HE NOTED THAT MAJORITY OF THE LANDS HA S BEEN SOLD AS OF NOW. THEREFORE, THE MOTIVE OF SELLING THE AGRICULTURAL LAN D IS ABSOLUTELY CLEAR. THE ASSESSEE, ACCORDING TO THE AO, HA S SOLD THE AGRICULTURAL LAND FOR SIMPLE REASON THAT HE GOT THE REQUIRE D RATE ON ACCOUNT OF BOOM IN REAL ESTATE PRICES. ACCORDING TO HIM, IF THE INTENSION OF THE ASSESSEE WAS TO RETAIN THE AGRICULTURAL LAND FOR AGRICULTURAL ACTIVITY, HE WOULD NOT HAVE SOLD THE LAND UNDER ANY CIRCUMSTANCES. THEREFORE, THE ACTIVITY OF THE ASSESSEE AC CORDING TO THE AO IS NOTHING BUT AN ADVENTURE IN NATURE OF TRADE. HE THEREFORE WAS OF THE OPINION THAT THE PROFIT ON ACCOUNT OF SUCH ACT NEEDS TO BE TAXED UNDER THE HEAD. HE OBSERVED THAT DURING THE YE AR THE ASSESSEE HAS SOLD THE FOLLOWING LANDS : SR. NO. DETAILS OF PROPERTY PURCHASES COST SALE CONSIDERATION 1. PART OF GAT NO. 140, CHANDKHED 5,75,686 3,83,791 1,00,000 6,00,000 2. GAT NO. 556, PUSANE 75,000 3,00,000 3. GAT NO. 347, 353 AND 361, PUSANE 1,58,300 23,90,000 6 4. GAT NO. 351, 352, 350 AND 354 1,29,250 36,00,000 13,22,027 78,90,000 AFTER DEDUCTING THE COST OF THE LAND FROM THE SALE PRICE, T HE AO TREATED THE SURPLUS OF RS.65,67,973/- AS THE BUSINESS INCO ME OF THE ASSESSEE. 7. BEFORE CIT(A) THE ASSESSEE STRONGLY CHALLENGED THE AC TION OF THE AO IN TREATING THE INCOME FROM SALE OF AGRICULTURAL LAND AS BUSINESS INCOME. IT WAS SUBMITTED THAT THE AGRICULTURAL LAND SOLD A RE SITUATED OUTSIDE THE MUNICIPAL LIMITS. IT WAS EMPHASIZED THAT THE AS SESSEE HAS BEEN ENGAGED IN AGRICULTURAL ACTIVITY FOR THE PAST 10 YEARS AND THE PART OF THE SAID LANDS WERE SOLD FOR PURCHASING THE R ESIDENTIAL HOUSE AND AN OFFICE PLACE TO DIVERSIFY HIS BUSINESS ACTIVITIE S. IT WAS ARGUED THAT THE ASSESSEE WAS ONLY ENGAGED AS SUPERV ISOR IN THE CONSTRUCTION PROJECTS AND HE HAD NOT INDULGED IN SALE AN D PURCHASE OF LAND AS CLAIMED BY THE AO. THE ASSESSEE HAD NOT CARR IED OUT ANY DEVELOPMENT WORK OF REAL ESTATE IN HIS INDIVIDUAL CAPACITY. HOWEVER, THE ASSESSEE IN SUBSEQUENT YEAR HAD BECOME A PARTNER IN FIRMS WHICH ARE ENGAGED IN THE CONSTRUCTION AND DEVELOPMENT ACTIVITY . THE ASSESSEE ALSO FURNISHED COPIES OF CERTAIN DOCUMENTS FOR ELECTRIC CONNECTION, SALE OF SURGARCANE, PURCHASE OF SEEDS ETC. IN S UPPORT OF HIS CLAIM FOR CARRYING OUT AGRICULTURAL ACTIVITY IN LANDS PURCH ASED BY HIM. THE ASSESSEE FURTHER SUBMITTED THAT THE RECORD OF SALE AND PURCHASE OF LAND PRIOR TO 2000 HAS NOT BEEN RETAINED B Y HIM AS IT IS NOT NECESSARY TO MAINTAIN THE RECORDS FOR A PERIOD OF MO RE THAN 6 YEARS. IT WAS ARGUED THAT MERELY BECAUSE HIS BROTHER IS ENGAGED IN THE BUSINESS OF CONSTRUCTION INFERENCE CANNOT BE DRAWN T HAT THE ASSESSEE IS ALSO ENGAGED HIMSELF IN THE ACTIVITY OF TRADING O F LAND. THE ASSESSEE FURTHER PRODUCED 7/12 EXTRACTS, COPY OF IN TIMATION 7 ISSUED U/S.143(1)(A) AND A CERTIFICATE FROM TALATHI THAT AGRICULT URAL LAND IS SITUATED OUTSIDE THE MUNICIPAL AREA TO SUPPORT HIS CLAIM. 8. HOWEVER, THE CIT(A) ALSO WAS NOT SATISFIED WITH THE EXPLA NATION GIVEN BY THE ASSESSEE AND UPHELD THE ACTION OF THE AO. WHILE DOING SO, HE NOTED THAT THE ASSESSEE DURING THE COURSE OF SU RVEY AND EVEN THEREAFTER HAD ADMITTED THAT APPROXIMATELY 40 ACRES OF LAND WERE ACQUIRED BY HIM FROM VARIOUS LAND OWNERS FROM APPROXIMATEL Y 1986 ONWARDS AND FROM 1995 ONWARDS APPROXIMATELY 30 TO 32 ACRES OF LAND WERE SOLD TO DIFFERENT PERSONS IN DIFFERENT YEARS OUT OF THE SAME. IT WAS ALSO ADMITTED IN HIS STATEMENT THAT HE RECEIVED A PPROXIMATELY RS.3.10 CRORE ON SALE OF THE ABOVE REFERRED LANDS AGAINST THE COST OF RS.80LAKHS. IT WAS ALSO ADMITTED IN THE SAID STATEMENT TH AT THE LAND PURCHASED FROM 30 TO 35 OWNERS WERE SOLD TO 6 TO 8 BU YERS. AO HAS ALSO POINTED OUT IN THE ASSESSMENT ORDER THAT DURING TH E COURSE OF SURVEY IT WAS REVEALED THAT ASSESSEE WAS ALSO ENGAGED IN THE SUB- PLOTTING OF THE LAND. HOWEVER, THE SAME WAS DENIED BY T HE ASSESSEE DURING THE COURSE OF APPEAL. FINALLY THE LD.CIT(A) WHILE UPHO LDING THE ACTION OF THE AO HAS OBSERVED AS UNDER : 4.4. AFTER CONSIDERING THE ABOVE REFERRED ISSUE IN TH E FACTS AND CIRCUMSTANCES OF THE CASE I AM OF THE CONSIDERED OPINIO N THAT THE GROUND OF APPEAL UNDER CONSIDERATION CANNOT BE ALLOWED. IT IS CLEAR FROM THE FACTS AVAILABLE ON RECORD THAT THE APPELLANT BELONGS TO A GROUP WHICH IS ACTIVELY ENGAGED IN DIFFERENT BUSINESS ACTIVITIES INCLU DING REAL ESTATE AND LAND. THE APPELLANT HAS NOT INHERITED THE AGRICULTUR E LAND WHICH HAS BEEN SOLD. HE HAS PURCHASED THEM FROM 1985 ONWARDS FROM SEVER AL PERSONS OVER A PERIOD OF TIME. IN THE PROCESS, HUGE AMOUNT WA S INVESTED. THIS GROUP WAS COVERED UNDER SEARCH/ SURVEY AFTER CARRYING OUT NECESSARY PRE-SEARCH INVESTIGATION. DURING SURVEY, IT WAS FOUND T HAT THE APPELLANT IS ENGAGED IN REGULAR SALE AND PURCHASE OF LAND. THE APP ELLANT ADMITTED AND AGREED TO SUBMIT ALL THE DETAILS IN RESPECT OF SALE AND PURCHASE DURING THE COURSE OF THE SURVEY AFTER TAKING SOME TIME FOR COLLEC TING DETAILS. HOWEVER, AFTER UNDERSTANDING THE IMPLICATION OF THE SE DETAILS, HE HAS STARTED DRAGGING HIS FEET. DETAILS WERE NOT SUBMITTED FULLY. IRRELEVANT STANDS WERE TAKEN FOR NOT SUBMITTING THOSE DETAILS AND A LSO FOR DECIDING THE ISSUE ON CERTAIN OTHER CONSIDERATIONS. IT HAS TO BE UNDERSTOOD IN THIS CONTEXT THAT THE APPELLANT IN THE FACTS OF THE CASE H AS CLAIMED IN HIS RETURN THAT THE SALE CONSIDERATION RECEIVED IS NOT TAX ABLE UNDER THE INCOME TAX ACT AND THEREFORE, AS PER THE ESTABLISHED P RINCIPLE OF TAXATION LAW, THE APPELLANT HAD THE LEGAL RESPONSIBILITY CAST U /S 143(2) TO SUBMIT 8 EVIDENCES BEFORE THE ASSESSING OFFICER IN SUPPORT OF THE CLAIM MADE IN THE RETURN TO THE SATISFACTION OF THE ASSESSING OFFICER A ND ALSO TO SUBMIT DETAILS AND EVIDENCES REQUIRED U/S 142(1) BY THE ASSESSIN G OFFICER TO ENABLE HIM TO ARRIVE AT THE PROPER DECISION. HAVING FAILED ON BOTH THESE ACCOUNTS, HE CANNOT CLAIM RELIEF AT ANY STAGE. IT IS A LSO A TRITE LAW THAT TAXING PROVISIONS AS WELL AS THE PROVISIONS RELATING TO E XEMPTION, DEDUCTION OR RELIEF IS TO BE CONSTRUED STRICTLY. MANY COURTS INCLUDING THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. HANSUR PL YWOOD WORKS PVT. LTD. (1998) 229 ITR 112 (SC) HAS HELD THAT IF AN EXE MPTION IS CONFERRED BY THE STATUTE, SUBJECT TO CERTAIN CONDITIONS, THESE C ONDITIONS MUST BE STRICTLY FULFILLED. THEREFORE, IF THE ASSESSEE WANTED TH E SALE RECEIPT TO BE CONSIDERED OUTSIDE THE TAXATION PROVISIONS, HE NOT ONLY WAS REQUIRED TO SUBMIT THE NECESSARY DETAILS IN SUPPORT OF THE CLAIM BUT WAS ALSO REQUIRED TO SUBMIT DETAILS CALLED FOR BY THE ASSESSING O FFICER FOR DERIVING HIS SATISFACTION. THE OBJECTION RAISED IN RESPECT OF TH E TIME LIMIT UPTO WHICH A DOCUMENT IS REQUIRED TO BE MAINTAINED, CANNO T BE ENTERTAINED AS THE SAID RESTRICTIONS HAVE BEEN IMPOSED IN DIFFERENT CO NTEXT AND THESE RESTRICTIONS ARE DEFINITELY NOT AVAILABLE FOR AN ASSESSE E TO OBLIVIATE FROM HIS LEGAL RESPONSIBILITY, MORE SO WHEN IT RELATES TO HIS CLAIM. FURTHERMORE, THE NATURE OF THE INFORMATION RELATED TO PURCHASE AND SALE OF LAND AND THOSE DETAILS ARE NOT DIFFICULT TO BE GAT HERED AND OBTAINED EVEN IF NOT RETAINED IN REGULAR COURSE, AS THE APPELL ANT MUST BE KNOWING THE PERSONS WHO SOLD THEIR LANDS OR HIS AGENTS OR THE PER SONS OR THE AGENTS WHO PURCHASED THE LANDS. THESE DETAILS COULD ALSO HAVE BEEN OBTAINED BY HIM FROM REVENUE RECORDS AS HE WAS PARTY TO THOSE TRANSACTIONS. FURTHERMORE, CONSIDERING THE IMPORTANCE OF THESE DOCUMENTS, THESE ARE GENERALLY PRESERVED AND RETAINED SAFELY BY THE INVOLVED PERSONS. THEREFORE, ON THESE CONSIDERATIONS, I T CANNOT BE ACCEPTED THAT THE APPELLANT HAD ANY DIFFICULTY IN O BTAINING AND SUBMITTING SUCH DETAILS. IN SUCH A VIEW OF THE MATTER, NONE COMPL IANCE ON THESE ISSUES HAS TO BE CONSIDERED ADVERSELY ASSUMING THAT THE AP PELLANT DELIBERATELY PREVENTED ITS SUBMISSION AS HE WAS KNOWING T HAT ITS PRODUCTION BEFORE THE COMPETENT AUTHORITY WOULD NAI L HIM WITH THE TAXATION OF THE RECEIPTS CLAIMED EXEMPT. IT IS ALSO AN ESTABLISHED PRINCIPLE OF LAW THAT THE BURDEN OF PROVING THAT A PARTICULAR INCOME IS WHOLLY OR PARTLY EXEMPT UNDER A PARTICULAR PROVISION LIES ON TH E ASSESSEE, AS HE ALONE IN LAW IS CONSIDERED TO BE FAMILIAR WITH THE FA CTS OF THE CASE [SHRI RANGNATH ENTERPRISES VS. CIT (1998) 232 ITR 568 (KAR) ]. THE AGRICULTURAL ACTIVITY HAS BEEN CLAIMED TO HAVE BEEN CARRIED OUT BY THE APPELLANT BUT THE FACTS OF THE CASE CLEARLY SHOW THAT THE SAME WAS ONLY INCIDENTAL. THE APPELLANT HAS ALSO CLAIMED THAT THE L ANDS WERE SOLD AS HE NEEDED MONEY FOR HIS PERSONAL USE AS WELL AS THE USE OF H IS FAMILY. IT WAS ALSO CLAIMED THAT THE SALE PROCEEDS WERE USED FOR BUYIN G THE HOUSE, OFFICE AND DIVERSIFICATION OF BUSINESS. ON CONSIDERATION OF FA CTS AVAILABLE ON RECORD, THESE ARE IRRELEVANT ISSUES. IF, HOWEVER, THE APPELLANT WANTED TO CONVEY THE COMPELLING CIRCUMSTANCES FOR CARRYING OUT THESE SALES, THESE ARE NOT CORRECT. APPELLANT IS DEFINITELY A MAN OF ME ANS. HE IS A PERSON WHO HAS INVESTED HUGELY IN THE PURCHASE OF THE LAND A ND THEREFORE, THE ACTS DO NOT SUGGEST THAT THE SO CALLED AGRICULTURE LAND S WERE SOLD TO MEET THE DAY TO DAY REQUIREMENT OF FUNDS. THEY DEFINITELY HAVE BEEN SOLD TO EARN MONEY IN THE BUSINESS OF LAND TRADE CARRIED OUT IN AN ORGANIZED MANNER. HOW THIS PROFIT WAS UTILIZED WAS IMMATERIAL. T HE WHOLE PROCESS OF PURCHASE AND SALE OF LAND CARRIED OUT BY THE APPEL LANT CLEARLY SHOWS THAT THIS ACTIVITY WAS CARRIED OUT IN AN ORGANIZED MA TTER. IT IS NOT EASY TO ORGANIZE PURCHASE FROM NUMEROUS SELLERS AND THEN SALE IT TO DIFFERENT PERSONS. FROM WHATEVER DETAILS SUBMITTED ALSO, IT IS CLEA R THAT THE SALE AND PURCHASE WERE FREQUENT AND IN CERTAIN CASES WITHIN THE SAME YEAR. THE CLAIM OF THE APPELLANT THAT HE WAS ONLY AN AGRIC ULTURIST AND WAS NOT ASSOCIATED WITH REAL ESTATE IS INCORRECT. IT IS VERY C LEAR THAT THE ENTIRE 9 GROUP WAS ENGAGED IN REAL ESTATE AND OTHER BUSINESSES. ASSE SSEE HIMSELF ADMITS THAT HE HAS ACTED AS SUPERVISOR WITH HUGE EARNING FROM THIS SOURCE BEFORE BECOMING PARTNER IN MANY FIRMS ENGAGED IN THE BUSINESS OF REAL ESTATE. ALL THESE FACTS VERY CLEARLY SHOW THAT THE APPELLANT WAS INVOLVED IN THIS ACTIVITY FROM VERY EARLY PERIOD AND HAS CARRIED OUT THE BUSINESS OF TRADE IN LAND AND THE ASSESSMENT MADE BY THE A SSESSING OFFICER IS CORRECT IN FACTS AND LAW. IN THE CASE OF RA JA I. RAMESHWAR RAO VS. CIT (SC) 42 ITR 179, IT HAS BEEN HELD THAT WHEN A PERSON ACQUIRES LAND WITH A VIEW TO SALE IT LATER, AFTER DEVELOPING IT PROFIT THE ACTIVITY IS A BUSINESS VENTURE. IN THE CASE OF SMT. PARVATIDEVI AND O THERS VS. CIT (AP) 164 ITR 675, IT HAS BEEN HELD THAT JOINT PURCHASE OF LAND BY FOUR PERSONS AND JOINT SALE THEREOF OF LANDS FIT FOR HOUSING IS AN ADVENTURE OF THE NATURE OF TRADE. IN THE CASE OF HEMCHAND HIRACHAND SHAH VS . CIT, GUJARAT, 206 ITR 55, IT WAS HELD THAT AGRICULTURIST PURCHASING LAND IN A SERIES OF TRANSACTIONS AND SELLING THEM WITHIN A REASONABLE SHORT PERIOD WOU LD BE OF THE NATURE OF BUSINESS. IN THE CASE OF APPELLANT ALSO, IT WAS SHOW N THAT IN MANY CASES LANDS WERE JOINTLY PURCHASED. ALL THESE JUDGMENTS ALSO SU PPORT DIFFERENTLY THE INFERENCE DRAWN BY THE ASSESSING OFFICER IN THE AVA ILABLE FACTS OF THE CASE. THEREFORE, GROUND NO. 1 IS TREATED AS DISMISSED. 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 10. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALLENGE D THE ORDER OF THE CIT(A). REFERRING TO PAGE 242 OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE DETAILS OF RURAL AGRICULTURA L LAND PURCHASED AND SOLD BY THE ASSESSEE. HE SUBMITTED THA T THE MAIN ACTIVITY OF THE ASSESSEE IS AGRICULTURE AND TRANSPORTATION BUSINESS. TO MEET HIS BUSINESS REQUIREMENT THE ASSESSEE SOLD SOME OF THE AGRICULTURAL LAND. REFERRING TO THE COPY OF THE PARTNERSHIP DEED DATED 14-02-2005, A COPY OF WHICH IS PLACED AT PAGES 33 TO 55 OF THE PAPER BOOK, HE SUBMITTED THAT HE HAS BECOME A PARTNER IN TH E FIRM SUYOG DEVELOPERS W.E.F., 14-02-2005 AND THE BUSINESS OF THE PARTN ERSHIP FIRM IS TO CARRY ON THE BUSINESS OF DEVELOPMENT AND CONST RUCTION BUSINESS, DEVELOPMENT OF LAND, REAL ESTATE DEVELOPMENT, CONS TRUCTION OF BUILDINGS FOR RESIDENTIAL AND COMMERCIAL PURPOSES ETC. 11. AS REGARDS THE ALLEGATION OF THE AO THAT THE ASSESS EE IS TRADING IN LAND HE SUBMITTED THAT IT IS THE PARTNERSHIP FIRM WHICH IS ENGAGED IN THE TRADING OF LAND AND NOT THE ASSESSEE IN HIS INDIVIDU AL CAPACITY. 10 REFERRING TO THE COPY OF THE ASSESSMENT ORDER FOR A.Y. 20 08-09, A COPY OF WHICH IS PLACED AT PAGES 227 AND 228 OF THE PAPE R BOOK, HE SUBMITTED THAT THE AO IN THE ORDER PASSED U/S.143(3) ON 27-02-2010 HAD ACCEPTED THE SALE OF AGRICULTURAL LAND AMOUNTING TO RS.96,61,250/- AS EXEMPT AND THE GAIN HAS NOT BEEN TAXE D BY HIM. REFERRING TO PAGES 230 TO 237 OF THE PAPER BOOK, HE DRE W THE ATTENTION OF THE BENCH TO THE COPY OF THE RETURN OF INC OME AND COMPUTATION STATEMENT WITH ANNEXURES FILED GIVING THE ABOV E DETAILS. REFERRING TO THE COPIES OF THE ASSESSMENT ORDERS FOR A.YR S. 2001-02 AND 2003-04 PASSED U/S.143(3) AND COPIES OF WHICH ARE PLAC ED AT PAPER BOOK PAGES 215 TO 226, HE SUBMITTED THAT NO ADDITION HAS BEE N MADE ON ACCOUNT OF SURPLUS FROM SALE OF AGRICULTURAL LAND. REFERRING TO PAGES 156 TO 188 OF THE PAPER BOOK HE DREW THE AT TENTION OF THE BENCH TO THE 7/12 EXTRACTS GIVING THE AREA OF LAND AND THE DETAILS OF AGRICULTURAL PRODUCE. REFERRING TO PAGE 27 OF THE PAPER B OOK DREW THE ATTENTION OF THE BENCH TO THE AMOUNT RECEIVED FROM THE SUGAR SOCIETY BY CHEQUE. REFERRING TO PAGES 238 TO 241 OF TH E PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE SALE OF AGRICU LTURAL PRODUCE AND THE EXPENSES INCURRED FOR THE YEAR 2004-05 AND 20 05-06. REFERRING TO PAGE 246 OF THE PAPER BOOK HE DREW THE AT TENTION OF THE BENCH TO THE CERTIFICATE OBTAINED FROM THE TALATHI STATING THAT THE LAND SITUATED IN THE VILLAGE IS BEYOND 8 KMS FROM ANY MUNICIP AL CORPORATION AND THE POPULATION OF THE VILLAGE IS LESS THAN 1 0,000. REFERRING TO PAGE 17 OF PAPER BOOK NO.2 THE LD. COUNSEL FO R THE ASSESSEE DREW THE ATTENTION OF THE BENCH TO THE DETAILS OF RURAL AGRICULTURAL LAND PURCHASED AND SOLD AFTER YEAR 2000 TILL 2 006 EXCEPT FOR LAND SOLD IN A.Y. 2005-06 AND 2006-07, THE DETAILS OF WHICH ARE AS UNDER : DETAILS OF RURAL AGRICULTURE LAND PURCHASED AND SOL D AFTER YEAR 2000 TILL 2006 EXCEPT FOR LANDS SOLD IN A.Y. 2005-06 & 2006-07 11 SR. NO. VILLAGE GAT NO DATE OF SALE NAME OF BUYER SALE CONSIDERATION DATE OF ACQUISITION COST OF ACQUISITION N 1 CHANDKHED 145 22/09/2000 SOPAN JAGANNATH BHAGWAT 225,000 21.01.1994 22,000 2 PUSANE 102 19/08/2002 DHYANESHWAR BALWADKAR 6,10,000 21.08.1998 3 CHANDKHED 140 19/08/2006 BHAGWAT 1,65,000 20.04.1998 139,124 4 CHANDKHED 135 AND 18/10/2006 DR.ARJUN RAO 15,600,000 16.06.2005 450,000 137 11.09.2000 1,380,000 5 CHANDKHED 140 23/08/2006 MISTRI SANTOSH 2,00,000 20.04.1998 95,948 12. REFERRING TO THE ORDER OF THE TRIBUNAL IN THE CASE OF THE BROTHER OF THE ASSESSEE FOR A.Y. 2007-08 VIDE ITA NOS. 551 AND 55 4/PN/2012 ORDER DATED 30-07-2013 HE SUBMITTED THAT THE TRIBUNAL HAS DISMISSED THE APPEAL FILED BY THE REVENUE. HE SUBMITTED TH AT THE REVENUE HAD CHALLENGED THE ORDER OF THE CIT(A) WHEREIN T HE CIT(A) HAS HELD THAT THE PROFIT ON SALE OF SUCH LAND IS EXEMPT FR OM TAX BEING AGRICULTURAL LAND. HE SUBMITTED THAT THE ASSESSEE DID N OT CARRY OUT ANY DEVELOPMENT WORK AND THE CIT(A) HAS WRONGLY OBSERV ED THAT THE ASSESSEE IS ENGAGED IN DEVELOPMENT ACTIVITIES AND HAS SUB-DIVIDED THE LAND INTO PIECES. FOR THE ABOVE THE LD. COUNSEL FOR THE ASSESSEE FILED AN AFFIDAVIT OF THE ASSESSEE STATING THAT HE HAS NEITHER S UB-DIVIDED THE LAND INTO PIECES NOR DONE ANY PLOTTING ON THE SAID AG RICULTURAL LAND. 13. RELYING ON THE FOLLOWING DECISIONS HE SUBMITTED THAT T HE INCOME ARISING ON SALE OF AGRICULTURAL LAND IS NOT TO BE TRE ATED AS BUSINESS INCOME : 1. BHOGILAL H. PATEL VS. CIT REPORTED IN 74 ITR 6 92 (BOM.) 2. CIT VS. DELHI APARTMENTS PVT. LTD., REPORTED IN 3 52 ITR 322 (DEL.) 3. S.K. KAINTAL REPORTED IN 231 CTR 531 (P&H) 4. CIT VS. SURESH CHAND GOYAL REPORTED IN 298 ITR 27 7 (MP) 5. CIT VS. KASTURI ESTATES PVT. LTD., REPORTED IN 62 ITR 578 (MAD.) 6. SRI GAJALAXMI GINNING FACTORY LTD. VS. CIT REPOR TED IN 22 ITR 502 (MAD.) 7. CIT VS. PRINCIPAL OFFICER, LAXMI SURGICAL PVT. L TD., REPORTED IN 202 ITR 601 (BOM.) 8. SAROJ KUMAR MUZUMDAR REPORTED IN 37 ITR 242 (SC ) 12 14. HE SUBMITTED THAT THE ASSESSEE HAS NOT UTILISED ANY BORROWED FUNDS AND THE LANDS WERE CULTIVATED BY HIM SINCE LAST 7 TO 8 YEARS AND THE ASSESSEE WAS NOT IN CONSTRUCTION BUSINESS. EVE N IN THE LATER YEAR, EXEMPTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF SA LE OF AGRICULTURAL LAND HAS BEEN ACCEPTED BY THE AO IN THE ORD ER PASSED U/S.143(3) AND IN THE CASE OF THE BROTHER OF THE ASSESSEE THE TRIBUNAL HAS ALLOWED EXEMPTION BY DISMISSING THE APPEAL FILED BY THE R EVENUE. UNDER THESE CIRCUMSTANCES THE CLAIM OF THE ASSESSEE THA T THE PROFIT ON SALE OF AGRICULTURAL LAND IS EXEMPT FROM TAX HAS TO BE UPHELD. 15. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ASSESSEE IS REGULARLY ENGAGED IN THE BUSINESS OF PURCHASE AND SALE O F LAND. THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE IS INCIDENTAL T O THE LAND HOLDING. REFERRING TO THE DECISION OF THE TRIBUNAL IN THE CAS E OF SHRI DILIP PANRAJ SONIGARA HE SUBMITTED THAT THE TRIBUNAL IN THE SAID DECISION HAS HELD THAT THE PROFIT ON SALE OF AGRICULTURAL LAND IS BUSINESS INCOME. HE ACCORDINGLY SUBMITTED THAT THE ORDE R OF THE CIT(A) BE UPHELD AND THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE DISMISSED. 16. THE LD. COUNSEL FOR THE ASSESSEE IN HIS REJOINDER REFE RRED TO THE COPY OF THE ASSESSMENT ORDER FOR A.Y. 2001-02, A COPY O F WHICH IS PLACED AT PAGES 215 TO 217 OF THE PAPER BOOK, AND SUBM ITTED THAT THE ASSESSEE HAS INCURRED LOSS. HE SUBMITTED THAT THE ASSE SSEE THEREFORE HAD TO SELL A PART OF HIS AGRICULTURAL PROPERTY FOR BUSINESS PURPOSE. REFERRING TO THE COPY OF THE ASSESSMENT ORDER FOR A.Y. 20 03-04 HE SUBMITTED THAT BECAUSE OF THE BROUGHT FORWARD LOSS THE BUSINESS INCOME HAS BEEN DETERMINED BY THE AO AT NIL. REFERRING TO PAGE 242 OF THE PAPER BOOK HE SUBMITTED THAT THE HOLDING PERIOD O F THE LAND IS MORE THAN 8 YEARS. SO FAR AS THE DECISION RELIED ON BY THE LD. 13 DEPARTMENTAL REPRESENTATIVE IS CONCERNED HE SUBMITTED T HAT THE FACTS IN THAT CASE ARE DISTINGUISHABLE AND ARE NOT APPLICAB LE TO THE FACTS OF THE PRESENT CASE. HE SUBMITTED THAT EACH CASE HAS TO BE DECIDED ON ITS OWN SETS OF FACTS. HE ACCORDINGLY SUBMITTE D THAT THE ORDER OF THE CIT(A) BE SET ASIDE AND THE INCOME FROM SALE OF AGRICULTURAL LAND BE TREATED AS EXEMPT. 17. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. FROM T HE VARIOUS DETAILS FURNISHED BY THE ASSESSEE IN THE PAPER BOOK AT P AGE 242 WE FIND THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR H AS SOLD THE AGRICULTURAL LAND AT RS.78,90,000/- AND THE PURCHASE COST OF THE SAME IS RS.13,22,027/- AS MENTIONED BY THE ASSESSING OFFICE R. WE FIND THE ASSESSEE CLAIMED THE SAME AS EXEMPT FROM INCOME TAX TREATING THE SAME AS AGRICULTURAL LAND WHICH IS SITUATED AT A DISTANCE OF MORE THAN 8 KMS FROM THE LIMIT OF ANY MUNICIPALITY. ACCORD ING TO THE ASSESSING OFFICER THE ASSESSEE IS REGULARLY ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF LAND. THE AGRICULTURAL INC OME SO DECLARED BY THE ASSESSEE IS ONLY INCIDENTAL TO HOLDING OF SUCH AGRICULTURAL LAND. HE THEREFORE TREATED SURPLUS FROM SALE O F AGRICULTURAL LAND AS BUSINESS INCOME WHICH HAS BEEN UPHELD BY THE CIT(A). IT IS THE CASE OF THE ASSESSEE THAT THE LAND HA S BEEN HELD BY HIM FOR AGRICULTURAL PURPOSE FOR MORE THAN 8 YEARS, HE IS N OT DIRECTLY ENGAGED IN ANY LAND TRADING AND IT IS ONLY THE PARTNERSH IP FIRM WHICH IS TRADING IN LAND. IT IS ALSO THE CASE OF THE ASSESSEE THAT NO BORROWE D FUND HAS BEEN UTILISED AND IN THE SUBSEQUENT YEAR THE AS SESSING OFFICER IN THE ASSESSMENT ORDER PASSED U/S.143(3) HAS ACCE PTED SUCH SURPLUS AS EXEMPT BEING SALE OF AGRICULTURAL LAND. IT IS ALS O THE CASE 14 OF THE ASSESSEE THAT THE TRIBUNAL IN THE CASE OF THE BRO THER OF THE ASSESSEE HAS UPHELD THE ORDER OF THE CIT(A) TREATING SUC H SURPLUS AS EXEMPT BEING SALE OF AGRICULTURAL LANDS. 18. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE, W E FIND THERE IS NO DISPUTE TO THE FACT THAT THE LAND SOLD IN QUE STION ARE AGRICULTURAL LANDS. WE DO NOT FIND LOGIC BEHIND THE ARGUMENT OF THE REVENUE THAT THE ASSESSEE IS DEFINITELY A MAN OF MEANS A ND THERE WAS NO COMPELLING CIRCUMSTANCE TO SALE THE LAND AND THEREFORE, SUCH INCOME HAS TO BE TAXED AS BUSINESS INCOME. IN OUR OPINIO N, IF ANY INCOME IS OTHERWISE EXEMPT FROM TAX AS PER THE STATUTE, THE SAME CANNOT BE BROUGHT TO TAX MERELY BECAUSE ASSESSEE IS A MAN OF MEANS OR THAT THE MONEY SO OBTAINED HAS BEEN UTILISED FOR SOME BUSINESS IN AN ORGANISED MANNER ETC. IT IS FOR THE ASSESSEE TO DEC IDE HIS AFFAIRS IN THE WAY HE LIKES AND THE REVENUE HAS NO BUSINESS TO DIR ECT OR ADVISE THE ASSESSEE TO MANAGE HIS AFFAIRS. WE FIND AN IDENTICAL ISS UE HAD COME UP BEFORE THE TRIBUNAL IN THE CASE OF THE BROTHER O F THE ASSESSEE WHEREIN THE ASSESSING OFFICER TREATED THE SURPLUS FROM SALE OF AGRICULTURAL LAND AS BUSINESS INCOME WHICH WAS HELD BY THE CIT(A) AS EXEMPT BEING SURPLUS FROM SALE OF AGRICULTURAL LAND. ON FURT HER APPEAL FILED BY THE REVENUE, THE TRIBUNAL DISMISSED THE APPE AL FILED BY THE REVENUE BY OBSERVING AS UNDER : 12. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. THE PERTINENT FACTS IN THIS CASE ARE THAT IN THE YEAR 2000-01 ASSESSEE PURCHASED CERTAIN AGRICULTURAL LAND WHICH HAS BEEN SOLD DURING THE YEAR UNDER CONSIDERATION. IN THE INTERREGNUM, ASSESSEE DECLARED AGR ICULTURAL INCOME FROM THE SAID LAND DURING THE ASSESSMENT YEARS 2002-03, 2 003-04 AND 2004-05. OSTENSIBLY, THERE IS NO DISPUTE TO THE FACT TH AT THE LAND IN QUESTION WAS AN AGRICULTURAL LAND. IT IS ALSO CLEAR FRO M THE ORDERS OF THE AUTHORITIES BELOW THAT AT NO STAGE, ASSESSEE UNDERTOOK AN Y DEVELOPMENT ACTIVITY ON SUCH LAND, AKIN TO A DEVELOPER, FOR INSTA NCE, THERE IS NO CONSTRUCTION OF COMPOUND WALL, LAYING OF INTERNAL RO ADS, SUB-PLOTTING, ETC.. THE LAND HAS BEEN SOLD BY THE ASSESSEE WITHOUT TAKI NG ANY STEPS TO FURTHER DEVELOP IT SO AS TO ADD VALUE TO IT, IN ORDE R TO MAXIMIZE THE PROFITS ON SALE. THE CIT(A) HAS ALSO BROUGHT OUT THAT IN THE S TATE OF MAHARASHTRA ONLY AN AGRICULTURIST CAN OWN AGRICULTURAL LAND, WHI CH INDICATES THAT THE CLAIM OF THE ASSESSEE THAT HE WAS AN AGRICULTURIST WAS BON AFIDE. THE CIT(A) HAS ALSO COME TO A FINDING THAT THERE WAS NO MA TERIAL TO SHOW THAT 15 LAND USE WAS SOUGHT TO BE CHANGED FROM AGRICULTURAL TO NON-AGRICULTURAL LAND. IT IS ALSO RELEVANT TO NOTE THAT ASSESSEE HELD THE LAND FOR ALMOST 7 YEARS BEFORE SELLING IT. ALL THE AFORESAID FEATURES AR E NOT IN DISPUTE. 13. NO DOUBT, ASSESSEE IS OTHERWISE ENGAGED IN THE BUSI NESS OF PROMOTERS/DEVELOPERS OF REAL ESTATE. NATURALLY, IN THE FIRST IMPRESSION, IT MIGHT SEEM THAT THE PRESENT TRANSACTION OF THE SALE OF AGRICULTURAL WAS UNDERTAKEN BY THE ASSESSEE IN THE COURSE OF REAL ESTATE BUSINESS. SO, HOWEVER, HAVING REGARD TO THE AFORESAID FEATURES, SUC H FIRST IMPRESSION CANNOT BE SUPPORTED BY FACTS. OSTENSIBLY, IF THE ASSESSEE WAS TREATING THE SAID AGRICULTURAL LAND AS A PART OF HIS ACTIVITY OF PR OMOTER/DEVELOPER OF REAL ESTATE, CERTAIN STEPS OR ACTIVITIES WOULD HAVE BEE N UNDERTAKEN BY HIM WHICH WOULD REFLECT SUCH AN INTENTION. FACTUALLY SPEAKING, THERE IS NO SUCH ACTIVITY UNDERTAKEN BY THE ASSESSEE AND WE FIND THA T THE CIT(A) HAS CORRECTLY ASSERTED THE SAME. IN-FACT, THERE IS NO SUCH A LLEGATION EVEN IN THE ASSESSMENT ORDER. THEREFORE, ON THIS FACT, WE FIND N O ERROR ON THE PART OF THE CIT(A) TO CONCLUDE THAT IN THE ABSENCE OF ANY DEVELOPMENT UNDERTAKEN OR RATHER IN THE ABSENCE OF ANY LEGALLY P ERMISSIBLE DEVELOPMENT OF THE IMPUGNED LAND, THE TRANSACTION OF SALE OF LAND CANNOT BE CONSIDERED AS A BUSINESS TRANSACTION. AT THIS POINT, IT WOULD ALSO BE APPROPRIATE TO NOTICE THAT THE LANDS HAVE BEEN HELD BY THE ASSESSEE FOR A FAIRLY LONG PERIOD OF TIME, NAMELY 7 YEARS (APPROX) AND IN THE INTERVENING PERIOD ASSESSEE HAD ALSO DECLARED AGRICULTURAL INCOMES. W E ARE CONSCIOUS OF THE FACT THAT INTENTION OF THE ASSESSEE IS AN IMPORTA NT INGREDIENT TO EXAMINE AS TO WHETHER THE TRANSACTION IS IN THE NATURE OF BUSINESS OR NOT. IN THE PRESENT CASE, THERE HAS BEEN NO ACTION ON THE P ART OF THE ASSESSEE TO DEVELOP THE LAND FOR A GOOD 7 YEARS AND IN OUR VI EW, THE HIGHER SALE VALUE REALIZED BY THE ASSESSEE IS ON ACCOUNT OF APPRECIA TION IN LAND VALUES DUE TO EFFLUX OF TIME. THEREFORE, CASE OF THE ASSESSING OFFICER THAT THE LANDS WERE PURCHASED TO EARN QUICK PROFIT CANNOT BE JUSTIFIED HAVING REGARD TO THE PERIOD OF HOLDING AND ALSO THE MANNER IN WHICH ASSESSEE HAS HELD THE AGRICULTURAL LANDS PRIOR TO ITS SALE. 14. WE MAY ALSO REFER TO THE DECISION OF THE PUNE BE NCH OF THE TRIBUNAL IN THE CASE OF GOPAL KASAT (SUPRA) RELIED UPO N BY THE ASSESSING OFFICER TO SAY THAT THE INCOME BY SELLING OF AGRICULT URAL LAND WAS TO BE ASSESSED AS A BUSINESS TRANSACTION. IN THE CASE OF GOPAL KA SAT (SUPRA), ASSESSEE PURCHASED CERTAIN LANDS WHICH WERE SUBJECT-MATTER OF ACQUISITION PROCEEDINGS BY THE GOVERNMENT. THE TRIBUN AL, IN THIS BACKGROUND, NOTED THAT THE ASSESSEE WAS AWARE, AT THE TI ME OF PURCHASE, THAT THE LAND COULD NOT BE HELD AS AN INVESTMENT FOR A LONG PERIOD AS THE SAME WAS UNDER ACQUISITION PROCEEDINGS. THE AFORESAID F ACTOR PREVAILED WITH THE TRIBUNAL TO HOLD THAT SURPLUS ON SALE OF SUCH LAND WAS TO BE TREATED AS BUSINESS INCOME AND NOT AS CAPITAL GAINS. IN THE PRESENT CASE, THE FACTS STAND ON AN ENTIRELY DIFFERENT FOOTING INASM UCH AS THERE IS NO MATERIAL TO SHOW THAT AT THE TIME OF PURCHASE ASSESSEE HA D ANY INTENTION OF DOING ANY BUSINESS OF DEALING IN AGRICULTURAL LANDS. IN-FACT, IN OUR VIEW, THE CIT(A) RIGHTLY RELIED UPON THE JUDGEMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. BOMBAY OILSEEDS & OIL EXCH ANGE LTD., 202 ITR 198 (BOM.) TO HOLD THAT IT WAS FOR THE REVENUE TO PR OVE THAT THE LAND IN QUESTION FORMED PART OF THE BUSINESS ASSET AND IN THE A BSENCE OF ANY SUCH EVIDENCE, THE PRESUMPTION IS THAT THE LAND WAS HEL D BY THE ASSESSEE MERELY AS AN INVESTOR AND INCOME FROM SUCH TRANSACTION WAS NOT TO BE TREATED AS CAPITAL GAIN. 15. HAVING REGARD TO THE AFORESAID DISCUSSION AND THE FACTUAL APPRECIATION AS BROUGHT BY THE CIT(A), WE FIND NO RE ASONS TO INTERFERE WITH THE IMPUGNED ORDER, WHICH WE HEREBY AFFIRM. AC CORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A). 16 19. SINCE IN THE INSTANT CASE THE ASSESSEE HAS SOLD THE AGRICULTURAL LAND IN THE YEAR 2005 WHICH WERE HELD BY HIM FOR MORE THA N 7 YEARS EXCEPT IN ONE CASE WHERE THE SAME WAS HELD FOR ABOUT 4 YEARS, THE DETAILS OF WHICH ARE EXTRACTED AT PARA 11 OF THE IMPUGNED ORDER AND SINCE THERE IS ALSO NO DISPUTE TO THE FACT THAT THE ASSE SSEE WAS DERIVING REGULAR AGRICULTURAL INCOME FROM THE SAME LAND AND FURTHER CONSIDERING THE FACT THAT THE ASSESSING OFFICER IN THE ASSE SSMENT ORDER FOR A.Y. 2008-09 PASSED U/S.143(3) ON 27-12-2010 HA S ACCEPTED THE CLAIM OF THE ASSESSEE THAT GAIN ON SALE OF A GRICULTURAL LAND AT RS.96,61,250/- IS NOT LIABLE TO TAX AND NO ADDITION H AS BEEN MADE IN ORDERS PASSED U/S.143(3) FOR A.YRS. 2001-02 AND 20 03-04, THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE CI T(A) WAS NOT JUSTIFIED IN BRINGING TO TAX THE SURPLUS ON SALE OF AGRICULTUR AL LAND AS BUSINESS INCOME. IN THIS VIEW OF THE MATTER WE SET ASIDE THE ORDER OF THE CIT(A) AND THE GROUNDS RAISED BY THE ASSESSEE ON T HIS ISSUE ARE ALLOWED. 20. SO FAR AS THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI DILIP PANRAJ SONIGARA RELIED ON BY THE LD. DEPARTMENTAL REPRE SENTATIVE IS CONCERNED, WE FIND THE FACTS IN THAT CASE ARE DIFFERENT. IN THAT CASE, THE TRIBUNAL FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF THE BROTHER OF THE ASSESSEE HAS HELD THAT THE SURPLUS ON SUCH SALE OF LAND HAS TO BE TREATED AS BUSINE SS INCOME. SINCE THE ASSESSEES LAND WAS ADJACENT TO THE LAND SOLD BY HIS BROTHER AND THE SURPLUS WAS HELD BY THE TRIBUNAL AS BUSINESS INC OME, THEREFORE, THE TRIBUNAL FOLLOWING THE DECISION IN THE CASE OF T HE BROTHER OF THE ASSESSEE HAS HELD THAT SUCH SURPLUS ON SALE OF LAND IS BUSINESS INCOME. HOWEVER, IN THE INSTANT CASE THE TRIBUNA L IN THE CASE OF THE BROTHER OF THE ASSESSEE HAS TREATED THE S URPLUS AS EXEMPT BEING SALE OF AGRICULTURAL LAND BEYOND A DISTANCE OF 8 KMS FROM THE 17 MUNICIPAL LIMITS. FURTHER, THE ASSESSING OFFICER IN THE ASSESSM ENT ORDER PASSED U/S.143(3) FOR A.Y. 2008-09 HAS NOT DISTURBED THE CLAIM OF THE ASSESSEE THAT SUCH INCOME IS EXEMPT FROM TAX BEIN G SALE OF AGRICULTURAL LAND. THEREFORE, THE DECISION RELIED ON BY THE L D. DEPARTMENTAL REPRESENTATIVE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THIS VIEW OF THE MATTER THE ORDER OF TH E CIT(A) IS SET ASIDE AND THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 21. GROUND OF APPEAL NO.6 BY THE ASSESSEE READS AS UNDER : 6. THE LEARNED DEPUTY COMMISSIONER OF INCOME TAX, CE NTRAL CIRCLE 1(1), PUNE (DCIT) HAS ERRED IN TREATING AGRICULTURE INCOME OF RS.2,00,630/- AS UNDISCLOSED INCOME UNDER SECTION 69A OF THE INCOME TAX ACT, 1961 WITHOUT CONSIDERING PROVISIONS OF THE LA W AND FACTS OF THE CASE AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) - I HAS ERRED IN CONFIRMING THE SAME. 22. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSING OFFIC ER NOTED FROM THE DETAILS FURNISHED BY THE ASSESSEE THAT THE ASSE SSEE HAD SHOWN GROSS RECEIPT ON ACCOUNT OF SALE OF AGRICULTURAL PRO DUCE AT RS.7,69,115/- AND THE EXPENDITURE ON ACCOUNT OF AGRICULTUR AL ACTIVITY AT RS.2,40,485/-. THUS, THE ASSESSEE HAS SHOWN NET AGRIC ULTURAL INCOME AT RS.5,25,630/-. THE ASSESSING OFFICER CONFRONTED T HE ASSESSEE TO JUSTIFY THE CLAIM OF SUCH HUGE AGRICULTURAL INC OME. HE FURTHER NOTED FROM THE DETAILS FILED BY THE ASSESSEE THAT ASSESSEE HAD SHOWN AGRICULTURAL INCOME OF RS.1,50,000/- IN A.Y. 2001-02, RS.3,26,478/- FOR A.Y. 2002-03, RS.47,011/- FOR A.Y. 2003-04 A ND RS.4,50,000/- FOR A.Y. 2004-05. FURTHER, FROM THE VARIOUS DE TAILS FURNISHED BY THE ASSESSEE HE OBSERVED THAT ASSESSEE H AS CLAIMED CERTAIN EXPENSES SUCH AS PURCHASE OF STEEL, BULDOZER WOR K, PRE-CABLE WORK, FABRICATION, SURVEY CHARGES, ETC., TOTALLING TO RS.77,122/ - WHICH ACCORDING TO HIM CANNOT BE TERMED AS AGRICULTURAL EXPENS ES. THEREFORE, HE HELD THAT THE EXPENDITURE ON ACCOUNT OF AG RICULTURAL ACTIVITY IS RS.1,66,363/- (I.E. RS.2,43,485/- - RS.77,122/-). SINCE THE 18 ASSESSEE HAD SHOWN GROSS AGRICULTURAL RECEIPT OF RS.7,69,11 5/- IN THE PROFIT AND LOSS ACCOUNT AND THE NET PROFIT OF RS.5,25,630/- THE ASSESSING OFFICER CALCULATED SUCH NET PROFIT MARGIN WHICH WOR KS OUT TO 68% WITH RESPECT TO GROSS RECEIPTS. THIS ACCORDING T O THE ASSESSING OFFICER WAS VERY HIGH. ACCORDING TO HIM THE ASSE SSEE HAS RECEIVED ONLY AN AMOUNT OF RS.3 LAKHS BY CHEQUE AND THE BALANCE AMOUNT WAS IN CASH. THEREFORE, HE CONSIDERED THE NET A GRICULTURAL INCOME OF THE ASSESSEE AT RS.3,25,000/- AS REASONABLE AS AGAINST RS.5,25,630/- CLAIMED BY THE ASSESSEE. THE BALANCE AMOUNT OF RS.2,06,030/- (I.E. RS.5,25,630/- - RS.3,25,000/-) WAS TREATED B Y THE ASSESSING OFFICER AS UNDISCLOSED INCOME OF THE ASSESSEE. 23. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE ASSES SING OFFICER BY OBSERVING AS UNDER : 5.3. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND LAW. FROM THE PERUSAL OF THE ASSESSMENT ORDER, IT IS CLEAR THAT THE AP PELLANT ADMITTED IN HIS STATEMENT RECORDED ON OATH BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT, THAT THE RELEVANT DETAILS WHICH CAN SUPPORT THE CLAIM OF AGRICULTURE INCOME IN TERMS OF RECEIPT AND EXPENSES ARE NOT COMPLETELY AVAILABLE. THEREAFTER HOWEVER THE APPELL ANT HAS TRIED TO COVER UP THE MATTER BY MAKING ROUND ABOUT SUBMISSIONS. HOWEV ER, THE ASSESSING OFFICER AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE ACCEPTED THE AGRICULTURE INCOME OF RS.3,25,000/- AND TREATED THE BALANCE INCOME OF RS.2,00,630/- INTRODUCED IN THE BOOKS IN THE GUISE OF AGRICULTURE INCOME AS CONCEALED INCOME. THE APPELLANT DURING TH E COURSE OF APPEAL ALSO HAS SUBMITTED SIMILAR DETAILS AND ON THE BASIS OF T HE SAME IT IS NOT POSSIBLE TO FIND ANY FAULT IN THE FINDING OF THE ASSESSING OFFICER. CONS IDERING THE SAME, GROUND NO. 6 IS TREATED AS DISMISSED. 24. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 25. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE RE ARE NO DEFECTS IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE WHO IS HOLDING AROUND 40 ACRES OF LAND. IN A.Y. 2004-05, THE ASSESSEE HAS DECLARED RS.4,50,000/- AS AGRICULTURAL INCOME WHICH WAS ACCEPTED BY THE ASSESSING OFFICER IN THE SUMMARY ASSESSMENT. HE SUBMITTED THAT THE 19 DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED AN D THEREFORE THE AGRICULTURAL INCOME DECLARED BY ASSESSEE SH OULD BE ACCEPTED. 26. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND HEAVILY RELIED ON THE ORDER OF THE CIT(A). 27. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS CITED BEFORE US. FROM THE VARIOUS DETAILS FURNISHED BY THE ASSESSEE WE FIND THE ASSESSEE H AD SHOWN AGRICULTURAL INCOME IN THE PRECEDING ASSESSMENT YEARS WHIC H ARE AS UNDER : SR.NO. ASSESSMENT YEAR AGRICULTURAL INCOME (RUPEES) 1. 2001-02 1,50,000 2. 2002-03 3,26,478 3. 2003-04 47,011 4. 2004-05 4,50,000 5. 2005-06 5,25,630 28. FROM THE ABOVE, IT IS SEEN THAT THE AGRICULTURAL INCOM E SHOWN BY THE ASSESSEE DURING THE IMPUGNED ASSESSMENT YEAR A PPEARS TO BE ON THE HIGHER SIDE. IT IS ALSO AN ADMITTED FACT THAT OUT OF THE TOTAL GROSS RECEIPT OF RS.7,69,115/- THE ASSESSEE HAS RECEIVED ONLY AN AMOUNT OF RS.3 LAKHS IN CHEQUE AND THE BALANCE AMOUNT HA S BEEN RECEIVED IN CASH. THE EXPENSES CLAIMED BY THE ASSESSEE ARE ALSO UNVERIFIABLE. CONSIDERING THE TOTALITY OF THE FACTS OF THE CAS E AND THE PAST RECORDS NET AGRICULTURAL INCOME OF RS.4,00,000/- FOR TH E IMPUGNED YEAR, IN OUR OPINION, WILL MEET THE ENDS OF JUSTICE. WE HOLD AND DIRECT ACCORDINGLY. THE GROUND RAISED BY THE ASSES SEE IS ACCORDINGLY PARTLY ALLOWED. 20 29. THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND WH ICH READS AS UNDER : WITHOUT PREJUDICE TO THE FOREGOING, THE ASSESSMENT ORD ER AND THE APPELLATE ORDER SUFFERS FROM PRINCIPLE OF NATURAL JUST ICE AND THE ASSESSEE BE ALLOWED ADEQUATE OPPORTUNITY OF BEING HEARD IN T HE MATTER. 30. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS THE SAME AT THE TIME OF HEARING. THEREFORE, THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 31. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24-07-2015. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER IQ.KS PUNE ; DATED : 24 TH JULY, 2015. LRH'K &'(!)*+%) / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. ! ! ' ( ) -I, IQ.KS / THE CIT(A)-I, PUNE ! ! ' -I, IQ.KS / THE CIT-I, PUNE 5 . %&' (()* , ! )* , IQ.KS / DR, ITAT, A PUNE; 6 . ',- . / GUARD FILE. !0 / BY ORDER , % ( //TRUE COPY// % ( //TRUE COPY// 123 (4 )5 / SR. PRIVATE SECRETARY ! )* , IQ.KS / ITAT, PUNE