Kedar Arvind Saraswate, Pune V. Income-tax Officer,

ITA 1319/PUN/2015

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5850 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-01-2018
• Assessment Year: 2011-2012
• Appeal Filed On: 05-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Additional evidence
• Section: 54; 54B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R.S.SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.1319/PUN/2015 / ASSESSMENT YEAR : 2011-12 MR. KEDAR ARVIND SARASWATE, S. NO.57/2B, FLAT NO.101, MANIKCHAND APARTMENT, KANCHAN GALLI, OFF. LAW COLLEGE ROAD, PUNE- 411 004. PAN : ADIPS8528E .... / APPELLANT / V/S. THE INCOME TAX OFFICER, (INTERNATIONAL TAXATION)-1, PUNE. / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 31.01.2019 / DATE OF PRONOUNCEMENT : 01.02.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF THE LD.CIT (APPEALS)-13, PUNE DATED 22.07.2015 FOR THE ASSESS MENT YEAR 2011-12 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 1 . THE LEARNED CIT(A)-13, PUNE AND THE LEARNED ITO (IT )-I, PUNE (HEREINAFTER REFERRED TO AS LEARNED AO) ERRED IN LA W AND ON FACTS IN DISALLOWING DEDUCTION CLAIMED BY THE APPELLANT U/S 54 B OF THE ITA, 1961 AMOUNTING TO RS.60,08,199/-. 2 ITA NO.1319/PUN/2015 A.Y.2011-12 2. THE LEARNED CIT(A)-13, PUNE ERRED IN LAW AND ON FACTS IN AFFIRMING THE DISALLOWANCE OF DEDUCTION U/S. 54B OF THE ITA, 1961 MADE BY LEARNED AO WITHOUT APPRECIATING THAT NO. OF COCONUT & MANGO TR EES EXIST ON THE LAND AND THAT THE SAID LAND IS AGRICULTURAL LAND AS PER REVENUE RECORDS. 3. THE LEARNED CIT(A)-13, PUNE ERRED IN LAW AND ON FACTS IN AFFIRMING THE DISALLOWANCE OF DEDUCTION U/S.54B OF THE ITA, 1961 MADE BY LEARNED AO WITHOUT APPRECIATING THAT THE CASE WAS DISCUSSED AN D HEARD ON 04/02/2014 AND THEREAFTER, NO ANY SHOW CAUSE NOTICE /LETTER/ COMMUNIQUE WAS ISSUED BY LEARNED AO TO THE APPELLAN T FOR DISALLOWING DEDUCTION U/S. 54B OF THE ITA, 1961. 4. THE APPELLANT CRAVES LEAVE TO ADD /MODIFY /DELET E /AMEND ALL /ANY OF THE GROUNDS OF APPEAL. 2. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS A NON-RESIDENT INDIAN. HE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YE AR 2011-12 DECLARING TOTAL INCOME OF RS.18,15,114/-. HE HAS DECLARED INCO ME EARNED FROM SALARY, HOUSE PROPERTY AND CAPITAL GAIN AND OTHER SO URCES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DECLARED INCO ME FROM CAPITAL GAINS, ON WHICH HE CLAIMED THE DEDUCTION U/S.54B OF THE INC OME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) BY INVESTING T HE AMOUNT OF CAPITAL GAIN BY PURCHASING AGRICULTURAL LAND. THE ASSESSING OFFICER IN THE ORDER PASSED U/S.143(3) OF THE ACT DENIED THE DEDUCTION CLAIMED U /S.54B OF THE ACT WHICH RESULTED IN TO THE ADDITION OF RS.60,68,199/- TO THE A SSESSEES TOTAL INCOME. WITH THE RESULT, THE ASSESSING OFFICER ASSESSED THE ASSESSEES TOTAL INCOME AT RS.78,23,313/- AS AGAINST HIS RETURNED TOTAL INCO ME OF RS.18,15,114/-. 3. THE ASSESSING OFFICER ON PERUSAL OF THE DOCUMENTS FILED B Y THE ASSESSEE OBSERVED THAT THE LAND SOLD BY THE ASSESSEE IS URBAN LA ND AND WAS NOT AN AGRICULTURAL LAND. ACCORDING TO THE 7/12 EXTRACT, THE TRA NSFERRED LAND WAS BARREN LAND AND WAS NOT USED FOR ANY AGRICULTURAL PURPO SES. THE ASSESSING OFFICER STATED THAT THE ASSESSEE DID NOT DECLARE AGRICULTU RAL INCOME IN HIS RETURNS OF INCOME FILED FOR AY 2007-08 TO AY 2010-11. THE ASSESSEE DID NOT 3 ITA NO.1319/PUN/2015 A.Y.2011-12 CLAIM ANY EXPENDITURE ON AGRICULTURAL ACTIVITIES CARRIED OUT BY HIM. THE ASSESSEE ALSO DID NOT FURNISH ANY DOCUMENTS IN SUPPORT O F ITS CONTENTION THAT HE CARRIED OUT AGRICULTURAL ACTIVITIES ON THE LAND SOLD BY HIM. 4. THE ASSESSEES CONTENTION WAS THAT THE SALE DEED S TATES THE TRANSFERRED LAND WAS AGRICULTURAL LAND. IT WAS USED FOR THE AGRICULTURAL PURPOSES AND THE AGRICULTURAL PRODUCE, WAS USED ONLY FOR THE HOUSEHOLD. HOW EVER, THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF ITS CLAIM. THE ASSESSING OFFICER STATED THAT 7/12 EXTRACT ATTACHED TO SALE DEED FURNISH ED B Y T HE ASSESSEE SHOWS THAT LAND I S A BARREN LAND AND WAS NOT USED FOR T H E AG R ICULTURAL PURPOSES . IT IS KNOWN THAT 7/12 EXTRACT RECORDS CROPS CULTIVATED , WATE R TAXES, LAND REVENUE ETC . THE ASSESSEE DID NOT PRODUCE ANY MATERIAL TO CONTRADICT THE CON T ENTS O F 7/12 EXTRAC T ISSUED BY TALATHI. 5. THAT BEFORE THE LD.CIT(APPEALS), THE ASSESSEE HAD FILED WRITTEN SUBMISSIONS WHICH ARE ON RECORD. THE FIRST LIMB OF SUBMISSIONS OF THE ASSESSEE BEFORE THE LD. CIT(APPEALS) WAS THAT THE PRINCIPLES OF NATURAL JUSTICE WAS NOT FOLLOWED BY THE ASSESSING OFFICER AND THAT SUFFICIENT OPPORTUNITY OF HEARING T O SUBSTANTIATE THE CLAIM OF THE ASSESSEE WAS NOT ALLOWED TO HIM. THE SECOND LIMB OF SUBMISSIONS OF THE ASSESSEE BEFORE TH E LD. CIT(APPEALS) WAS THAT ONLY RELYING ON 7/12 EXTRACT ISSUE D BY TALATHI, THE ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT LAND WAS NOT USED FOR AGRICULTURAL PURPOSE INSTEAD OF MAKING ANY PHYSICAL VERIFICATION. THEREAFTER, THE ASSESSEE RELIED ON CERTAIN CASE LAWS AND SUBMITTED THAT EVEN IF A PART OF THE LAND WAS ACTUALLY NOT USED FOR AGRIC ULTURAL ACTIVITIES STILL 4 ITA NO.1319/PUN/2015 A.Y.2011-12 SUCH LAND HOLDS THE CHARACTER OF AGRICULTURAL LAND EVEN TH OUGH THE INCOME WAS NOT DERIVED. TO SUBSTANTIATE THE LAND AS AGRICULTURA L LAND, THE ASSESSEE RELIED UPON THE FOLLOWING DECISIONS: I) CIT VS. SMT. DEBBIE ALEMAO 331 ITR 59 ( BOM.) II) ACIT VS. N RAGHU VERMA 142 ITD 421 ( ITAT HYD) 6. THE LD.CIT(APPEALS) OBSERVED AND HELD THAT IN ORDER T O CLAIM THE DEDUCTION U/S.54B OF THE ACT, THE LAND SHOULD HAVE BEEN USED FOR AGRICU LTURAL PURPOSES FOR TWO YEARS PRIOR TO THE DATE OF TRANSFER. WH ETHER THE LAND WAS USED FOR AGRICULTURAL PURPOSES FOR TWO YEARS PRIOR TO DAT E OF TRANSFER OR NOT IS A QUESTION OF FACT. THE ASSESSEE HAS ONLY RAISED LEGAL ARG UMENTS AS TO WHY THE DEDUCTION SHOULD NOT BE DENIED TO HIM. HOWEVER, NEITHER BE FORE THE ASSESSING OFFICER NOR BEFORE THE LD. CIT(APPEALS), THE ASSESSEE HAS FILED ANY EVIDENCE TO SUPPORT THAT TRANSFERRED LAND WAS USED FOR AGRICULTURAL PURPOSES FOR TWO YEARS PRIOR TO THE DATE OF TRANSFER. THEREAFTER, THE LD. CIT(APPEALS) MAKES DETAILED ORDER AND AS PER REASONS RECORDED THEREIN WHIC H IS ON RECORD CONFIRMED DISALLOWANCE OF DEDUCTION U/S.54B OF THE ACT. 7. AT THE TIME OF HEARING THE LD. AR OF THE ASSESSEE PRA YED FOR FILING ADDITIONAL EVIDENCES PLACED IN PAPER BOOK AT PAGE NO. 87 AND 216. PAGE NO.87 IS THE CERTIFICATE OBTAINED FROM GOVT. REGISTERED AGRIC ULTURAL VALUER AND PAGE 216 IS THE PHOTOGRAPH OF LAND SOLD AT BHUGAON. THE ASSESSEE WANTS TO SUBMIT THE SAME TO JUSTIFY THAT THERE WERE MANGO & COCONUT TREES AND ALSO VEGETABLE CROPS LIKE BRINJAL, TOMATOES ETC. ON THE LAND SOLD. 7.1 THE LD. AR OF THE ASSESSEE FURTHER SUBMITTED THAT IT WAS NEVER A BARREN LAND AND ONLY PLACING RELIANCE ON THE 7/12 EXTRACT SATISFA CTION SHOULD NOT BE 5 ITA NO.1319/PUN/2015 A.Y.2011-12 TAKEN RATHER DETAILED PHYSICAL VERIFICATION HAS TO BE DONE. HENCE, LD. AR OF THE ASSESSEE HAS PRAYED THAT IN VIEW OF THE ADDITIONAL EV IDENCES FILED, THE MATTER MAY BE RESTORED TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION AND RE- ADJUDICATION OF THE SAME. 8. THE LD. DR DID NOT OBJECT TO THE SAID PRAYER OF THE LD. AR. 9. WE HAVE PERUSED THE CASE RECORDS, HEARD THE RIVAL C ONTENTIONS AND ALSO ANALYZED THE FACTS AND CIRCUMSTANCES IN THE CASE. IN T HIS CASE, THE ASSESSEE HAS CLAIMED DEDUCTION U/S.54B OF THE ACT. IN ORDER TO CLAIM SUCH DEDUCTION, LEGAL INGREDIENT IS THAT THE LAND SHOULD HAVE BEEN USED FOR AGRICULTURAL PURPOSE FOR TWO YEARS PRIOR TO THE DATE OF TRANSFER. THE REVENUE AUTHORITIES HAVE RELIED ON THE 7/12 EXTRACT AND LACK OF EVIDENCE BY THE ASSESSEE AND HAVE COME TO THE CONCLUSION THAT THE LAND SOLD WAS NOT AGRICU LTURAL LAND AND THEREBY DENIED DEDUCTION U/S.54B OF THE ACT TO THE ASSESSEE. THAT ON OTHER HAND, THE ASSESSEE ALL THROUGHOUT STAT ES THAT THERE HAVE BEEN ONGOING AGRICULTURAL ACTIVITIES ON THE SAID LAND SOLD FR OM VERY BEGINNING. IN ABSENCE OF PHYSICAL VERIFICATION OF THE LAND AND WITHOUT A NY SPECIFIC REPORT OBTAINED, IT WAS NOT FAIR ON THE PART OF THE REVENUE AUT HORITY TO DENY THE DEDUCTION CLAIMED U/S.54B OF THE ACT. 10. BEFORE US, ADDITIONAL EVIDENCES HAVE BEEN PLACED WHICH NEEDS TO BE VERIFIED BY THE REVENUE AUTHORITIES. FURTHERMORE, IN THE TO TALITY OF FACTS AND CIRCUMSTANCES, THE MATTER DEMANDS DETAILED FACTUAL VERIFICAT ION AND ENQUIRY REGARDING THE NATURE OF LAND AND WHETHER IT WAS BEING US ED FOR AGRICULTURAL PURPOSE THROUGHOUT, MOST PARTICULARLY WITH REGARD TO S PECIFIED CONDITIONS LAID DOWN U/S.54B OF THE ACT. THE TWIN CONDITIONS OF THE SECTION 54B WHICH REQUIRES TO BE EXAMINED ARE: 6 ITA NO.1319/PUN/2015 A.Y.2011-12 I) THAT THE LAND WHICH WAS SOLD WAS USED FOR AGRICULTURAL PU RPOSE IN THE TWO YEARS IMMEDIATELY PRECEDING THE DATE ON WHICH THE SALE TOOK PLACE. II) THAT THE ASSESSEE HAS, WITHIN A PERIOD OF TWO YEARS AFTE R THAT DATE I.E. WHEN THE SALE WAS COMPLETED, PURCHASED ANY OTHE R LAND FOR AGRICULTURAL PURPOSE. WITH THESE ABOVE OBSERVATIONS, WE SET ASIDE THE ORDER OF THE LD. CIT(APPEALS) AND REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER TO COMPLY WITH OUR DIRECTIONS AS HEREIN ABOVE STATED A ND THEREAFTER, SHALL ADJUDICATE THE MATTER AFTER PROVIDING REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PUR POSES. ORDER PRONOUNCED ON 01 ST DAY OF FEBRUARY, 2019. SD/- SD/- R.S.SYAL PA RTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 01 ST FEBRUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-13, PUNE. 4. THE CIT (IT/TP), PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 7 ITA NO.1319/PUN/2015 A.Y.2011-12 DATE 1 DRAFT DICTATED ON 31 .01.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 01 .0 2 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER