Shri Satyanarayan O Agrawal, Nagpur V. Addl.CIT,Rang-6, Nagpur

ITA 169/NAG/2012

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3207 (ITAT-NAGPUR)
• Duration Of Justice: 6 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 15-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR MILIND BHUSANI
• Assessee Lawyers: M MANI
• Keywords: Unexplained investment; Unexplained expenditure; Capital asset; Gift; Business income; Search and seizure; Set aside
• Section: 69C; 2(14); 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D. T. GARASIA, HONBLE JUDICIAL MEMBER I.T.A. NO .169 / NAG /1 2 ASSESSMENT YEAR: 2007 - 2008 SHRI SATYANARAYAN O. AGRAWAL, VS. ADDL. CIT, C/O M/S TEJRAM RAMNIWAS AGRAWAL, RANGE - 6, GHAT ROAD, NAGPUR. NAGPUR. PAN:ABUPA3472E (APPELLANT) (RESPONDENT) I.T.A. NO .170 / NAG /1 2 ASSESSMENT YEAR: 2007 - 2008 SHRI ANKIT KUMAR AGRAWAL, VS. ADDL. CIT, C/O M/S TEJRAM RAMNIWAS AGRAWAL, RANGE - 6, GHAT ROAD, NAGPUR. NAGPUR. PAN:AHMPA8384N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M. MANI, ADVOCATE RESPONDENT BY : DR. MILIND BHUSANI, C.I.T. (D.R.) DATE OF HEARING :18/10/2012 DATE OF PRONOUNCEMENT : 30/11/2012 ORDER PER P. K. BANSAL: BOTH THESE APPEALS HAVE BEEN FILED AGAINST THE RESPECTIVE ORDERS OF CIT(A) DATED 13/03/2012 AND 27/01/2012. THE GROUNDS OF APPEAL INVOLVED IN BOTH THE APPEALS ARE COMMON; THEREFORE, BOTH THE APPEALS ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. THERE IS CHANGE OF FIGURE IN GROUND NO. 2 AND 10. THE GROUNDS TAKEN IN EACH OF THE APPEAL BY THE RESPECTIVE ASSESSEE ARE REPRODUCED AS UNDER: I.T. NO. 169 & 170/NAG/2012 2 ITA NO. 169/NAG/2012 1. THE ORDER PASSED BY CIT(A) IS WITHOUT JURISDICTION AND IL LEGAL IN AS MUCH AS HE FAILED TO DEAL WITH THE VARIOUS POINTS RAISED BY THE ASSESSEE AND ALSO INCLUDED THE AGRICULTURE INCOME WHICH WAS NOT LIABLE TO TAX UNDER THE LAW. 2. THE LEARNED CIT(A) ERRED IN TREATING THE SURPLUS REALIZED OF RS 59,74,148/ - ON SAL E OF AGRICULTURAL LAND AS AN ADVENTURE IN THE NATURE OF TRADE AND CONSEQUENTLY AS INCOME UNDER THE HEAD INCOME FROM BUSINESS INSTEAD OF EXEMPTING THE INCOME U/S 10(1). 3. THE LEARNED CIT(A) ERRED IN NOT FOLLOWING THE UNDER MENTIONED BINDING DECISIONS HOL DING THAT THE SURPLUS REALIZED FROM THE SALE OF AGRICULTURAL LAND IS AGRICULTURAL INCOME ONLY. 128 ITR 86, 154 ITR 629, 159 ITR 775, 219 ITR 554(SC), 247 ITR 150(SC). 4. THE LEARNED CIT(A) ERRED IN NOT FOLLOWING THE DECISION OF S.C IN 297 ITR 17 IN AS MUCH AS THE EXEMPTED INCOME U/S 10 CANNOT FORM PART OF THE TOTAL INCOME U/S 14 OF THE I.T. ACT AND CONSEQUENTLY IT CANNOT BE CLASSIFIED UNDER ANY HEAD OF INCOM E. 5. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE EXPLANATION I TO SECTION 2(IA) WHEREIN IT IS DECLARED THAT THE WORD REVENUE INCLUDES THE EXCESS REALIZED ON SALE OF AGRICULTURAL LAND AS AGRICULTURAL INCOME IN AS MUCH AS THE EXPLANATION INCO RPORATES THE LAW DECLARED BY THE BOMBAY HIGH COURT IN 128 ITR 86 AND OTHER CASES TO REMOVE ANY DOUBT AS TO THE NATURE OF INCOME OF SURPLUS. 6. THE CIT(A) ERRED IN NOT FOLLOWING THE UNDER MENTIONED DECISIONS BINDING ON HIM THAT THE WORD TRADE DID NOT INCLUDE AGRICULTURE AT ALL. AIR 1999 SC 1867 AIR 1958 487 (BOM) AIR 1968 SC 554 70 ITR 730, 732 (SC) 7. WITHOUT PREJUDICE TO THE ABOVE THE CIT(A) ERRED IN HOLDING THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSEE IS A DEALER IN AGRICULTURAL LANDS. I.T. NO. 169 & 170/NAG/2012 3 8. CIT(A) ERRED IN HOLDING THAT THE AGRICULTURAL LANDS ARE TRADING ASSETS LIKE ANY OTHER COMMODITY AND CONSEQUENTLY STOCK - IN - TRADE. 9. THE CIT(A) ERRED IN NOT FOLLOWING THE DECISIONS OF THE SUPREME COURT IN 78 ITR 58 AND 60 ITR 435 WHEREIN IT IS HELD THAT AN INCOME PRODUCING ASSET IS A CAPITAL ASSET AND THE SURPLUS REALIZED IS CAPITAL GAIN AND NOT THE REVENUE RECEIPT. 10. THE LEARNED CIT(A) ERRED IN OBTAINING THE PHOTOGRAPHS TAKEN AS OF NOW OF NEARBY PLACES OF THE AGRICULTURAL LAND WHICH HAS INFLUENCED AND ENTERED INTO THE DECISION MAKING W ITHOUT GIVING AN OPPORTUNITY TO ASSESSEE. 11. THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1,00,000/ - U/S 69C AS THE UNEXPLAINED INVESTMENT IN THE PURCHASE OF BRANDED SEED S OF SOYA BEAN AND FERTILIZER IN THE CULTIVATION OF THE LAND. ITA NO. 170/NAG/2012 1. THE ORDER PASSED BY CIT(A) IS WITHOUT JURISDICTION AND ILLEGAL IN AS MUCH AS HE FAILED TO DEAL WITH THE VARIOUS POINTS RAISED BY THE ASSESSEE AND ALSO INCLUDED T HE AGRICULTURE INCOME WHICH WAS NOT LIABLE TO TAX UNDER THE LAW. 2. THE LEARNED CIT(A) ERRED IN TREATING THE SURPLUS REALIZED OF RS 2,09,58,374/ - ON SALE OF AGRICULTURAL LAND AS AN ADVENTURE IN THE NATURE OF TRADE AND CONSEQUENTLY AS INCOME UNDER THE HE AD INCOME FROM BUSINESS INSTEAD OF EXEMPTING THE INCOME U/S 10(1). 3. THE LEARNED CIT(A) ERRED IN NOT FOLLOWING THE UNDER MENTIONED BINDING DECISIONS HOLDING THAT THE SURPLUS REALIZED FROM THE SALE OF AGRICULTURAL LAND IS AGRICULTURAL INCOME ONLY. 128 ITR 86, 154 ITR 629, 159 ITR 775, 219 ITR 554(SC), 247 ITR 150(SC). 4. THE LEARNED CIT(A) ERRED IN NOT FOLLOWING THE DECISION OF S.C IN 297 ITR 17 IN AS MUCH AS THE EXEMPTED INCOME U/S 10 CANNOT FORM PART OF THE TOTAL INCOME U/S 14 OF THE I.T. A CT AND CONSEQUENTLY IT CANNOT BE CLASSIFIED UNDER ANY HEAD OF INCOME. 5. THE LEARNED CIT(A) ERRED IN NOT CONSIDERING THE EXPLANATION I TO SECTION 2(IA) WHEREIN IT IS DECLARED THAT THE I.T. NO. 169 & 170/NAG/2012 4 WORD REVENUE INCLUDES THE EXCESS REALIZED ON SALE OF AGRICULT URAL LAND AS AGRICULTURAL INCOME IN AS MUCH AS THE EXPLANATION INCORPORATES THE LAW DECLARED BY THE BOMBAY HIGH COURT IN 128 ITR 86 AND OTHER CASES TO REMOVE ANY DOUBT AS TO THE NATURE OF INCOME OF SURPLUS. 6. THE CIT(A) ERRED IN NOT FOLLOWING THE UNDER MENTIONED DECISIONS BINDING ON HIM THAT THE WORD TRADE DID NOT INCLUDE AGRICULTURE AT ALL. AIR 1999 SC 1867 AIR 1958 487 (BOM) AIR 1968 SC 554 70 ITR 730, 732 (SC) 7. WITHOUT PREJUDICE TO THE ABOVE THE CIT(A) ERRED IN HOLDING THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE ASSESSEE IS A DEALER IN AGRICULTURAL LANDS. 8. CIT(A) ERRED IN HOLDING THAT THE AGRICULTURAL LANDS ARE TRADING ASSETS AND CONSEQUENTLY STOCK - IN - TRADE 9. THE CIT(A) ERRED IN NOT FOLLOWING THE DECI SIONS OF THE SUPREME COURT IN 78 ITR 58 AND 60 ITR 435 WHEREIN IT IS HELD THAT AN INCOME PRODUCING ASSET IS A CAPITAL ASSET AND THE SURPLUS REALIZED IS THE CAPITAL GAIN AND NOT THE REVENUE RECEIPT. 10. THE CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1 ,00,000/ - U/S 69C AS THE UNEXPLAINED INVESTMENT IN THE PURCHASE OF BRANDED SEEDS OF SOYA BEAN AND FERTILIZER IN THE CULTIVATION OF THE LAND. 11. THE LEARNED CIT ERRED IN DISMISSING THE ADDITIONAL GROUND OF CHARGING OF INTEREST ON THE GROUND THAT LEVY OF INTEREST IS MANDATORY. 2. BOTH LEARNED A.R. AND LEARNED D. R. AGREED THAT THE FACTS INVOLVED IN BOTH THE APPEALS ARE COMMON, THEREFORE, BOTH THE APPEALS BE DECIDED ON THE BASIS OF THE FACTS INVOLVED IN I.T.A. NO. 169/NAG/2012. BOTH THE PARTIES AGREED THAT WHATEVER THE VIEW IS TAKEN BY THE TRIBUNAL IN I.T.A. NO. 169/NAG/2012 , THE SAME VIEW MAY BE TAKEN IN I.T.A. NO. 170/NAG/2012. IN RESPECT OF GROUND NOS. 1 TO 10 , IT WAS POINTED OUT BY LEARNED A. R. THAT THESE GROUNDS RELATE TO SAME ISSUE I.T. NO. 169 & 170/NAG/2012 5 I.E. T HE ADDITION OF THE PROFIT ON ACCOUNT OF SALE OF LAND AND TREATING IT AS ADVENTURE IN THE NATURE OF TRADE. FOR DISPOSING OF THIS ISSUE, WE ARE TAKING THE FACTS IN THE CASE OF SHRI SATYANARAYAN O. AGRAWAL. THE BRIEF FACTS OF THESE GROUNDS ARE THAT THE ASSE SSING OFFICER NOTED , DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS , THAT THE ASSESSEE HAD SOLD AGRICULTURAL LAND SITUATED AT MOUZA KHAIRY (KHURD) & MOUZA MANGRUL ON WARDHA ROAD. BASED ON VARIOUS REASONS, THE ASSESSING OFFICER TREATED THE PROFIT EARNED O N SUCH LAND TO BE THE INCOME FROM BUSINESS AND THE TRANSACTION OF THE LAND TO BE THE ADVENTURE IN THE NATURE OF TRADE. THE DETAIL OF THE PURCHASE AND SALE OF THE LAND ARE GIVEN AS UNDER: SR.NO. DETAILS OF LAND DATE OF PURCHASE & VALUE DATE OF SALE & CONS IDERATION PROFIT 1. AGRICULTURAL LANDS AT KHAIRI (KHURD), TAH. NAGPUR. 2.01 HECTORS RS.3,21,000/ - (09/05/2005) RS.11,21,098/ - (19/04/2006) RS.14,67,990/ - 2. AGRICULTURAL LANDS AT KHAIRI (KHURD), TAH. NAGPUR 1.20 HECTORS INCLUDED IN 1 ABOVE DUE TO COMMON DOCUMENTS OF PURCHASE RS.6,69,312/ - (19/04/2006) INCLUDED IN 1 ABOVE DUE TO COMMON DOCUMENTS OF PURCHASE 3. AGRICULTURAL LAND AT MANGRUL, TAH. NAGPUR 2.43 HECTORS RS.13,68,033/ - (22/02/2006) RS.69,00,000/ - RS.45,06,158/ - 4. AGRICULTURAL LAND AT MANGRUL, TAH. NAGPUR 1.94 HECTORS RS.10,25,809/ - (11/10/2006) INCLUDED IN 3 ABOVE AS COMMON SALE DEED IS DONE INCLUDED IN 3 ABOVE AS COMMON SALE DEED IS DONE 2.1 THE ASSESSEE HAS SHOWN THIS INCOME TO BE EXEMPT IN VIEW OF THE PROVISIONS OF SECTION 2 SUB SECTION 14 OF THE I.T. ACT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE OWNED SUBSTANTIAL AGRICULTURAL LAND, ABOUT 100 ACRE MOSTLY SITUATED NEAR NAGPUR ON WARDHA ROAD. DURING THE YEAR 7.58 HECTORS LAND WAS SOLD AND 2.42 H ECTORS LAND WAS PURCHASED. THE ASSESSEE ORIGINALLY HELD ABOUT 1.5 HECTORS AND 3.2 HECTORS OF LAND IN HINGNA / MONDHA NEAR HINGNA, WHICH WAS PURCHASED IN MID 90S. MOST OF THE PURCHASES WERE MADE FROM FINANCIAL YEAR 2002 - 2003 AND LATER ON THERE HAD BEEN L AND DEVELOPMENT ACTIVITIES IN THIS AREA IN THE LAST 5 - 6 YEARS BECAUSE OF THE PROPOSED CARGO HUB AND MIHAN I.T. NO. 169 & 170/NAG/2012 6 PROJECT AND PROPOSALS OF OTHER INDUSTRIAL HOUSES LIKE DLF BOEING. IT WAS ALSO NOTED THAT THE ASSESSEE ALSO PURCHASED LAND ON BEHALF OF HIS SONS ANKIT KUMAR AND GAURAVKUMAR JUST TO EXPLOIT THE MARKET CONDITIONS. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INTENTION OF THE ASSESSEE WAS TO INDULGE IN TRADING. THE LAND AT SL. NO. 1 & 2 ADMEASURING 2.01 & 1.2 HECTORS AND LOCATED AT KHASRA NO. 43/3 & 43/ 4, PH. NO. 68, KHAIRI (KHURD), TAL. HINGNA WAS PURCHASED ON 09/05/2005 WHEN THE OWNER GAVE THE POSSESSION. NO SALE DEED IS EXECUTED. ON 08/05/2005, THE ASSESSEE GOT THE POWER OF ATTORNEY ALONG WITH THE AGREEMENT TO SALE. THIS LAND WAS SOLD TO DIFFERENT PERSONS VIDE SALE DEED DATED 15/04/2006. THE LAND AT SL. NO. 3 & 4 WERE PURCHASED FROM SOME PERSONS ON 23/02/2006 AND THE ENTIRE CONSIDERATION WAS PAID ON THE SAME DATE. THESE TWO SEPARATE PIECES OF LAND WERE SOLD TO ONE PARTY ADIANUBHAV DEVELOPERS PVT. LTD. T HROUGH ITS DIRECTOR SUDHAKAR KOMAWAR FOR RS. 69 LAKHS. THE SALE DEED DATED 10/09/2006 WAS REGISTERED ON 10/10/2006. THE CONSIDERATION OF RS.69 LAKHS WAS RECEIVED FROM 13/02/2006 TO 10/10/2006. THIS PROPERTY WAS SOLD ABOUT SIX MONTHS AFTER THE PURC HASE. THE ASSESSEE RECEIVED THE SALE CONSIDERATION OF RS. 12 LAKHS EVEN BEFORE THE LAND WAS PURCHASED. ANOTHER RS. 20 LAKHS WAS RECEIVED WITHIN TWO MONTHS. THIS SHOWS THAT THE INTENTION OF THE ASSESSEE WAS NOT TO HOLD THE LAND AS INVESTMENT. THE 7/12 EX TRACT SHOWS CULTIVATION OF SOYABEEN, WHICH IS THE KHARIF C ROP WHILE THE LAND WAS PURCHASED AND SOLD EVEN BEFORE THE KHARIF SEASON WAS OVER. IT WAS ALSO NOTICED THAT IN THE LAST 3 - 4 YEARS, THE ASSESSEE PURCHASED SUBSTANTIAL NUMBER OF AGRICULTURAL LAND. HE STATED THAT IN FINANCIAL YEAR 2004 - 2005, 8 PIECES OF LAND WERE PURCHASED BY THE ASSESSEE. SIMILAR L Y 8 PIECES OF LAND WERE PURCHASED IN FINANCIAL YEAR 2005 - 2006. THE ASSESSEE WAS HOLDING 20 PIECES OF LAND AS ON 31/03/2006. DURING THE FINANCIAL YEAR 200 6 - 2007, THE ASSESSEE SOLD THREE PIECES O F LAND AND PURCHASED A NEW LAND. THE ASSESSEE HAS AGRICULTURAL HOLDING AS ON 31/03/2006 AND 31/03/2007 AT 39.78 HECTORS AND 34.62 HECTORS RESPECTIVELY. THE ASSESSEE EARNED INCOME ON SALE OF AGRICULTURAL PRODUCED AM OUNTING TO RS.3,86,375/ - . THE ASSESSEE HAS NOT RECORDED ANY EXPENDITURE IN THE BOOKS OF ACCOUNT. IT WAS ALSO NOTICED THAT THE ASSESSEE HAS PURCHASED THE AGRICULTURAL LAND IN THE NAME OF HIS MINOR SON MASTER ANKIT KUMAR I.T. NO. 169 & 170/NAG/2012 7 AND MASTER GAURAV KUMAR. ANKIT KUM AR BECAME MAJOR ON 30/10/2005. PART OF THE LAND WAS PURCHASED WHEN HE BECAME MAJOR. THAT LAND WAS ALSO LOCATED NEAR NAGPUR. ANKIT DISPOSED OF FOUR PIECES OF LAND DURING THE IMPUGNED ASSESSMENT YEAR. THE ASSESSING OFFICER HAS GIVEN THE DETAIL OF THE LAN D PURCHASED IN THE NAME OF THE MINOR SON GAURAV KUMAR. THE ASSESSING OFFICER, ON THE BASIS OF THIS INFORMATION TOOK THE VIEW AFTER GIVING OPPORTUNITY TO THE ASSESSEE THAT THE ASSESSEE HAS ENGAGED IN THE ADVENTURE OF THE NATURE OF TRADE. 3. WHEN THE MATTE R WENT BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE ORDER OF THE ASSESSING OFFICER AS PER HIS FINDING GIVEN UNDER PARA 6 TO 13.7 OF HIS ORDER. 4. THE LEARNED A. R., BEFORE US, REITERATED THE SUBMISSIONS MADE BEFORE THE CIT(A). IT WAS CONTENDED THAT THE AS SESSEE WAS DERIVING THE AGRICULTURAL INCOME FROM THE ACCOUNTING YEAR 94 - 95. FOR THIS OUR ATTENTION WAS DRAWN TO PAGE NO. 35 OF PAPER BOOK SHOWING THE AGRICULTURAL INCOME EARNED YEAR - WISE BY THE ASSESSEE. THE ASSESSEE SOLD AGRICULTURAL LAND DURING THE YEA R FOR A SALE CONSIDERATION OF RS.86,90,410/ - REALIZING A SURPLUS OF RS.59,74,148/ - . THE DETAIL OF THE LAND WITH THE DATE OF PURCHASE AND SALE ARE GIVEN AS UNDER: S. NO. NAME OF PLACE AREA OF LAND PURCHASE NAME OF SELLER PURCHASE VALUE SALE DT. NAME OF P URCHASE SALE VALUE 1. KHAIRI (KHURD) KHAIRI (KHURD) 2.01 1.02 09/05/2005 09/05/2005 WAMANRAO KUDAJI NARMADA WANANRAO 322420 19/04/06 19/04/06 DAMABAI JAGANNATH 1121098 2. MANGRED MANGRED 2.43 1.94 23/02/2006 23/02/2006 MURTAJA KOTHAWALE AKBAR KOTHAWALE AKBAR KOTHAWALE MURTAJA KOTHAWALE 1368033 1025809 11/10/06 ADIANBHAV DEVELOPERS 6900000 2716262 8690410 4.1 THE LAND WERE BEYOND 8 KM. AWAY FROM NAGPUR. THE ASSESSEE WAS OWNING ABOUT 100 ACRES OF LAND AS ON 31/03/2006. SOME LAND MEASURING 7.16 HECTORS WAS SOLD BY THE ASSESSEE DURING 2004 - 2005. IT WAS STATED THAT THE I.T. NO. 169 & 170/NAG/2012 8 PURCHASER EVEN CULTIVATED THE LAND. THIS I S THE SECOND TIME WHEN THE ASSESSEE SOLD THE LAND SINCE 94 - 95. AFTER THE SALE OF THE LAND, THE ASSESSEE PURCHASED THE LAND FOR A CONSIDERATION OF RS.2.29 CRORE. THUS, IT WAS CONTENDED THAT THE ENTIRE SALE CONSIDERATION WAS INVESTED IN THE PURCHASE OF LAN D. THE ASSESSEE IS AGRICULTURIST I.E. A PERSON WHO IS CULTIVATING THE LAND PERSONALLY. DURING THE YEAR, THE ASSESSEE HAS SHOWN THE AGRICULTURE INCOME AT RS.63,60,524/ - . THE ASSESSING OFFICER DID NOT DISTURB THE AGRICULTURAL INCOME BUT MADE THE ADDITION U/S 69C AMOUNTING TO RS. 1 LAKH ON ACCOUNT OF UNDISCLOSED AGRICULTURAL EXPENSES INCURRED BY THE ASSESSEE AS PER PARA 12 OF ITS ORDER. IT WAS POINTED OUT THAT THE ASSESSEE IS AN AGRICULTURIST. THE LAND WHICH WERE SOLD BY THE ASSESSEE WERE THE AGRICULTURA L LAND AS PER THE REVENUE RECORD AND WERE OUTSIDE 8 KM. FROM THE MUNICIPAL LIMIT OF NAGPUR. ALL THE LAND SOLD BY THE ASSESSEE WERE SITUATED OUTSIDE THE AREA MENTIONED U/S 2 SUB SECTION 14( III ) OF THE ACT AND, THEREFORE, THE SURPLUS ARISING THEREON ARE AGR ICULTURAL INCOME IN VIEW OF THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF SINGHAI RAKESH KUMAR V S . UNION OF INDIA [2001] 247 ITR 150 (SC) AND, THEREFORE, EXEMPT U/S 10 OF THE I.T. ACT. THE AGRICULTURAL LAND WAS HELD BY THE ASSESSEE AS AN INVESTMEN T. THERE IS NO QUESTION OF ASSESSING IT AS INCOME FROM BUSINESS AS HEADS OF INCOME U/S 14 ARE MUTUALLY EXCLUSIVE. THE AGRICULTURAL LAND SOLD BY THE ASSESSEE CANNOT BE TREATED LIKE ANY NON AGRICULTURAL LAND. IT CAN BE PURCHASED OR SOLD BY AN AGRICULTURIS T. THE LAND IS THUS TREATED AS CAPITAL ASSET OF THE PERSON WHO OWNS. IT CAN NEVER BE STOCK IN TRADE FREELY TRANFERABLE AT WILL TO ANYBODY. IF ANY SALE HAPPENED THE SURPLUS IS A REALISATION OF CAPITAL AND IF ANYBODY REINVESTS IT IN AGRICULTURAL LAND AGAI N THERE CAN BE NO QUESTION OF ANY ADVENTURE IN THE NATURE OF TRADE ASSESSABLE AS BUSINESS PROFIT UNDER THE I.T. ACT UNDER ANY SECTION. EVEN A COURT SALE, GIFT, EXCHANGE, LEASE OF A PROPERTY MORTGAGE IS PROHIBITED. OUR ATTENTION WAS DRAWN TO SECTION 2 SUB SECTION 14 TO STRETCH THE SUBMISSIONS THAT THE AGRICULTURAL LAND SOLD BY THE ASSESSEE WAS NOT A CAPITAL ASSET AND I T WAS ALSO NOT A STOCK IN TRADE. IT WAS CONTENDED THAT HON'BLE SUPREME COURT HAD OCCASION TO DEAL WITH THE WORD TRADE AND THE HON'BLE SUP REME COURT EXPLAINED IT AS I.T. NO. 169 & 170/NAG/2012 9 UNDER IN THE CASE OF STATE OF PUNJAB AD ANOTHER VS. BAJAJ ELECTRICALS LTD. 70 ITR 730, 732 (SC): ' TRADE ' IN ITS PRIMARY MEANING IS THE EXCHANGING OF GOODS FOR GOODS OR GOODS FOR MONEY ; IN ITS SECONDARY MEANING IT IS REPEATED ACTIVITY IN THE NATURE OF BUSINESS CARRIED ON WITH A PROFIT MOTIVE, THE ACTIVITY BEING MANUAL OR MERCANTILE, AS DISTINGUISHED FROM THE LIBERAL ARTS OR LEARNED PROFESSIONS OR AGRICULTURE. 4.2 THUS, IT WAS CONTENDED THAT THE AGRICULTURE IS EXCLUDED FROM TH E WORD TRADE. THE QUESTION OF ADVENTURE IN THE NATURE OF TRADE DID NOT INCLUDE AGRICULTURE OR ITS OPERATIONS. OUR ATTENTION WAS DRAWN TOWARDS THE DECISION OF THIS BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. SHAGUN INFRASTRUCTURE P. LTD., I.T.A. NO. 2 09/NAG/09 FOR THE PROPOSITION OF THE LAW THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS NOT ADVENTURE IN THE NATURE OF TRADE. THERE IS NO DISPUTE THAT THE LAND SOLD BY THE ASSESSEE WAS BEYOND 8 KM. OF THE MUNICIPAL LIMIT OF NAGPUR. IT WAS CONTENDE D THAT THE CASE OF THE ASSESSEE IS DULY COVERED BY THE DECISION OF I.T.A.T., NAGPUR BENCH IN THE CASE OF ACIT VS. SHAGUN INFRASTRUCTURE P. LTD. (SUPRA). 5. THE LEARNED D. R., ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT THE MAIN CONSIDERATION OF THE ASSESSING OFFICER WHILE HOLDING SALE OF LAND AS ADVENTURE IN THE NATURE OF TRADE IS THAT THE ASSESSEE HAS MADE A NUMBER OF PURCHASES OF THE LAND AND SOLD THE LAND. WE HAVE GONE THROUGH THE ORDER OF THIS TRIBUNAL IN THE CASE OF ACIT VS. SHAGUN INFRASTRUCTURE P. LTD. IN I.T.A. NO. 209/NAG/09 ON WHICH THE LEARNED A. R. HAS HEAVILY RELIED. IN THIS DECISION THE FACTS INVOLVED ARE THE SAME. THE ASSESSEE WAS AN AGRICULTU RIST. HE SOLD THE LAND, WHICH WAS BOUGHT EARLIER. THE LAND WAS BEING USED FOR AGRICULTURAL PURPOSES OF THE ASSESSEE AS SHOWN IN THE EARLIER YEAR AND THE AGRICULTURE INCOME SHOWN BY THE ASSESSEE WAS ACCEPTED BY THE REVENUE. UNDER THESE FACTS, THE ASSESSI NG OFFICER DID NOT ACCEPT THE CLAIM OF THE ASSESSEE THAT THE TRANSACTION WAS THE PROFIT ON THE SALE OF AGRICULTURAL LAND. NOT BEING THE CAPITAL ASSET THE I.T. NO. 169 & 170/NAG/2012 10 ASSESSING OFFICER TREATED THE TRANSACTION IN THE NATURE OF THE BUSINESS. WHEN THE MATTER TRAVELLED T O THE TRIBUNAL, THIS TRIBUNAL HELD AS UNDER: 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN THIS CASE, THE PRIMARY REASON WEIGHING WITH THE ASSESSING OFFICER TO TREAT THE PROFIT ON SALE OF AGRICULTURAL LAND AS BUSINESS INCOME IS THE FACT THAT THE ASSESSEE IS OTHERWISE ENGAGED IN BUSINESS OF LAND DEVELOPMENT. IN THE CASE OF AGRICULTURAL LAND IN QUESTION, THE FACTS ARE THAT THIS LAND WAS BOUGHT BY THE ASSESSEE IN THE YEAR 2000 AND SOLD DURING THE YEAR UNDER CONSIDERATION. AS PER THE ASSESSING OFFICER ON ACCOUNT OF REALITY BOOM, THE LAND WAS SOLD BY THE ASSESSEE AND, THEREFORE, THE INTENTION WAS TO RESELL AT CONTENTION PROFIT, WHICH SHOWED THAT THE TRANSACTION WAS IN THE NATURE OF BUSINESS. 8. WE ARE UNABLE TO CONVINCE OURSELVES WITH THE PROPOSITION ADVANCED BY THE ASSESSING OFFICER. FACTUALLY SPEAKING, THE CIT(A) IN PARA 4.2 AND 4.3 OF THE ORDER HAS DEDUCED AS UNDER: 4.2 THE LAND SOLD OUT BY THE APPELLANT IS DEFINITELY AGRICULTURAL LAND AS THE SAME IS SITUATED IN VILLAGE PANJARI WHICH I S 8 KM. AWAY FROM THE MUNICIPAL LIMIT. THE APPELLANT FROM THE SAID LAND HAS SHOWN AGRICULTURE INCOME IN VARIOUS YEARS AS UNDER: AY 2001 - 02 RS. 50,000/ - AY 2002 - 03 RS.3,50,000/ - AY 2003 - 04 RS.1,50,000/ - AY 2004 - 05 RS.1,50,000/ - AY 2005 - 06 RS.1,65,000/ - AY 2006 - 07 RS.2,50,000/ - THE SAME STANDS ACCEPTED BY THE IT DEPTT. THERE IS NO REASON TO DEVIATE FROM THE SAID APPROACH OR STAND WITH REGARD TO THE AGRICULTURE INCOME ALREADY TAKEN BY THE DEPTT. MOREOVER, AS MENTIONED BY THE APPELLANT AR, BOMBAY TENANCY & AGRICULTURAL LANDS (VIDARBYHA REGION) ACT, 1958, CHAPTER VIII - RESTRICTIONS ON TRANSFERS OF AGRICULTURE LANDS AD ACQUISITION OF HOLDINGS AND LANDS, CERTAIN RESTRICTIONS ARE PROVIDED AND IT IS CLEARLY SPELT OUT IN SECTION 89 OF THIS CHAPTE R THAT TRANSFER OF AGRICULTURAL LANDS TO NON - AGRICULTURIST IS BARRED. THIS IMPLIES THAT IN THE NAGPUR REGION THE APPELLANT WAS REGISTERED AND ACKNOWLEDGED AS A BONAFIDE AGRICULTURIST AND ACCEPTANCE OF ITS INCOME FROM SUCH AGRICULTURAL ACTIVITIES AS AGRICU LTURE INCOME BY THE IT DEPTT I.T. NO. 169 & 170/NAG/2012 11 ALSO CONFIRM APPELLANTS STATUS AS AGRICULTI8RIST. IT IS THE SAME AGRICULTURAL LAND WHICH WAS SOLD OUT AND THE SALE PROCEEDS THEREOF WERE REINVESTED IN ACQUIRING ANOTHER AGRICULTURE LAND IN PUNE WHERE AGAIN THE APPELLANT IS RE COGNIZED AS A BONAFIDE AGRICULTURIST. THE NEW LAND THUS ACQUIRED IN PUNE IS ALSO SITUATED MORE THAN 8 KM. AWAY FROM MUNICIPAL LIMITED. 4.3 THEREFORE, I AGREE WITH THE CONTENTION OF THE LD AR THAT THE APPELLANT IS A BONAFIDE CULTIVATOR AS PER THE RELEVANT LAW OF MAHARASHTRA GOVT. VIDE BOMBAY TENANCY & AGRICULTURAL LANDS (VIDARBHA REGION) ACT, 1958 AND THAT, IT CANNOT BE HELD AS TRADER OR DEALER IN AGRICULTURAL LANDS. IN VIEW OF THIS POSITION, THE ADDITION OF RS.94,96,455/ - AS BUSINESS INCOME ON ACCOUNT OF SALE PROCEEDS OF AGRICULTURE LAND IS ORDERED TO BE DELETED. GROUND NO. 2 IS ALLOWED. 9. A PERU S AL OF THE AFORESAID CLEARLY SHOWS THAT THE LAND IN QUESTION CONSTITUTES AGRICULTURAL LAND IS NOT INCLUDIBLE IN THE DEFINITION OF CAPITAL ASSET UNDER SECTION 2(14) OF THE ACT. THE FINDING OF THE CIT(A) IS THAT THE LAND IS SITUATED MORE THAN 8 KMS. FROM THE LOCAL MUNICIPAL LIMITS AND IS CLEARLY AGRICULTURAL LAND IN TERMS OF SECTION 2(14)(III) OF THE ACT. THEREFORE, ANY INCOME FROM SUCH LAND INCLUDING P ROFIT ARISING FROM SALE OF SUCH AGRICULTURAL LAND IS NOT ASSESSABLE AS INCOME. THE FACTUM THAT AGRICULTURAL OPERATIONS HAVE BEEN CARRIED ON SUCH LAND HAS BEEN BROUGHT OUT BY THE CIT(A) , TO WHICH THERE IS NO DISPUTE. THE CIT(A) HAS ALSO BROUGHT OUT THAT T HE ASSESSEE IS A BONAFIDE AGRICULTURIST QUA THE IMPUGNED LAND. CONSIDERING THE AFORESAID CIRCUMSTANCES, IN OUR VIEW, THERE IS NO MATERIAL WITH THE AO TO INFER THAT THE ASSESSEE WAS A TRADER IN AGRICULTURAL LANDS SO AS TO TREAT THE PROFIT ON SALE OF IMPUGN ED AGRICULTURAL LAND AS BUSINESS INCOME. THE FACTUM OF THE ASSESSEE ALSO BEING ENGAGED IN THE BUSINESS OF LAND DEVELOPMENT DOES NOT DISTRACT FROM THE FACT THAT THE IMPUGNED LAND DOES NOT FALL WITHIN THE DEFINITION OF CAPITAL ASSET U/S 2(14)(III) BEING AN AGRICULTURAL LAND AND FURTHER THAT AGRICULTURAL OPERATIONS HAVING BEEN CARRIED OUT ON SUCH LAND IN THE EARLIER YEARS, AND THEREFORE QUA THE IMPUGNED LAND, ASSESSEE CANNOT BE TREATED AS A TRADER. IN OUR VIEW, THE CIT(A) MADE NO MISTAKE IN HOLDING THAT ADDI TION OF RS.94,96,455/ - MADE BY THE AO AS BUSINESS INCOME ON ACCOUNT OF SALE PROCEEDS OF AGRICULTURAL LAND IS LIABLE TO BE DELETED. WE HEREBY AFFIRM THE ORDER OF THE CIT(A) ON THIS ASPECT. 6.1 IN THE CASE BEFORE US, THE FACTS ARE SIMILAR. THE ASSESSE E IS AN AGRICULTURIST. THE ASSESSEE DERIVED INCOME FROM AGRICULTURE SINCE 94 - 95. THE I.T. NO. 169 & 170/NAG/2012 12 ASSESSEE IS NOT REGULARLY ENGAGED IN THE PURCHASE AND SALE OF THE LAND. MERELY PURCHASING OF THE LAND BY THE ASSESSEE FOR THE PURPOSE OF THE INVESTMENT WILL NOT TAKE TH E TRANSACTION TO BE THE ONE ADVENTURE IN THE NATURE OF TRADE. THE WORD TRADE HAS BEEN DEFINED BY HON'BLE BOMBAY HIGH COURT IN AIR 1958 BOM 487 AS UNDER: UNDOUBTEDLY IN ITS PRIMARY SENSE THE WORD TRADE MEANS EXCHANGE OF GOODS FOR GOODS OR GOODS FOR M ONEY. BUT IN A SECONDARY SENSE IT INCLUDES ANY BUSINESS CARRIED ON WITH A VIEW TO PROFIT WHETHER MANUAL OR MERCANTILE AS DISTINGUISHED FROM THE LIBERAL ARTS OR LEARNED PROFESSION. PERMIT OF A SKILLED EMPLOYMENT WITH A VIEW TO EARN PROFIT SUCH AN EMPLOYME NT NOT BEING IN THE NATURE OF A LEARNED PROFESSION OR AGRICULTURE MUST BE REGARDED AS ENGAGING IN TRADE WITHIN THE MEANING OF ART. 276 OF THE CONSTITUTION. A SKILLED OCCUPATION WHICH INVOLVES THE APPLICATION OF A MANUFACTURING PROCESS TO A COMMODITY SUB MITTED TO THE PERSON CARRYING ON THE OCCUPATION MUST, THEREFORE, BE REGARDED AS TRADE. 6.2 THE FACTS INVOLVED IN THE IMPUGNED CASE BEFORE US ARE ALMOST SIMILAR TO THE FACTS IN THE CASE OF ACIT VS. SHAGUN INFRASTRUCTURE P. LTD. (SUPRA). RESPECTFULLY FOLLOWING THE SAID DECISION, WE HOLD THAT THE INCOME DERIVED BY THE ASSESSEE FROM THE SALE OF AGR ICULTURAL LAND IS NOT ADVENTURE IN THE NATURE OF TRADE. IT IS NOT IN DISPUTE THAT THE LAND IS SITUATED MORE THAN 8 KIM. FROM THE MUNICIPAL LIMITED AND, THEREFORE, INCOME ARISING FROM THE SALE OF SUCH LAND IS NOT ASSESSABLE TO TAX. AS SUCH AGRICULTURAL LA ND IS NOT A CAPITAL ASSET AS PER THE DEFINITION GIVEN U/S 2 SUB SECTION 14 OF THE I.T. ACT. THE DECISION OF THE COORDINATE BENCH IS BINDING ON US. WE ACCORDINGLY SET ASIDE THE ORDER OF CIT(A) AND DELETE THE ADDITION MADE BY THE ASSESSING OFFICER IN THIS REGARD. THUS, GROUND NOS. 1 TO 9 ARE ALLOWED. 6.3 SINCE THE FACTS INVOLVED IN THE CASE OF ANKIT KUMAR AGRAWAL, AS AGREED BY BOTH THE PARTIES, ARE SAME, FOLLOWI NG OUR AFORESAID FINDING, WE SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE ALSO IN THE CASE OF ANKIT KUMAR AGRAWAL AND ALLOW GROUND NO. 1 TO 9. I.T. NO. 169 & 170/NAG/2012 13 7. THE ONLY ISSUE NOW REMAINS FOR ADJUDICATION IS THE ADDITION OF RS. 1,00,000/ - U/S 69C OF THE ACT. THE FACTS RELATED TO THIS ISSUE ARE THAT THE AO HAS MADE AN ADDITION OF RS.1,00,000/ - U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED EXPENDITURE IN AGRICULTURE. THE AO HELD THAT THE ASSESSEE PROVIDED BRANDED SEEDS AND FERTILIZER TO THE BATAIDARS WHICH WAS NOT RECOR DED IN HIS BOOKS. THE STATEMENT OF ONE BATAIDAR SHRI RAJU NEWARE WAS RECORDED WHO ACCEPTED THAT THE ASSESSEE PROVIDED BRANDED SEEDS AND FERTILIZER TO HIM. 8. IN APPEAL BEFORE CIT(A), THE ASSESSEE, ON THE QUESTION OF ADDITION OF UNEXPLAINED EXPENDITURE OF RS.1,00,000/ - ON THE USE OF BRANDED SEEDS FOR AGRICULTURE, SUBMITTED THAT THE ASSESSEE HAS NEVER USED ANY BRANDED SEEDS FOR CULTIVATION AND THAT THE SEEDS USED FOR A PARTICULAR YEAR ARE FROM THE SEEDS PRESERVED FROM THE EARLIER YEARS CROP WHICH IS THE TRADITIONAL SYSTEM AND THERE IS A PRESUMPTION TO THAT EXTENT IN THE ABSENCE OF ANY THING CONTRARY. THE EXPENSES ON SEEDS IS OUT OF THE HARVEST OF THE TOTAL AGRICULTURAL PRODUCE AND THE VALUE OF WHICH IS INCLUDED IN THE VALUE OF GROSS AGRICULTURAL INCOME. IN THIS CONNECTION THE AO EXAMINED THE PERSONS TO WHOM THE LAND WAS GIVEN FOR CULTIVATION ON A SHARING BASI S FOR THAT YEAR. THE STATEMENT OF TWO PERSONS, WHO WORKED FOR THE ASSESSEE FOR 2006 - 2007, WERE RECORDED AFTER A PERIOD OF THREE YEARS WHEN THEY WER E NOT MORE IN SERVICE. THE STATEMENTS WERE FROM MEMORY AND NOT FROM ANY DOCUMENTS. THE CROSS EXAMINATION WAS NOT CONSIDERED NECESSARY. THERE IS WRITTEN AGREEMENT WITH THEM IN WHICH IT HAS BEEN MAINTAINED THAT THEY WILL BE SUPPLIED SEEDS ONLY. ALL OTHER EXPENSES WILL BE BORNE BY THE CONTRACTOR INCLUDING MANURE THAT IS BIO - MANURE. THOUGH THE AGREEMENTS ARE NOT SIGNED BY THE ASSESSEE BUT BY THE CONTRACTEE IT IS STILL A DOCUMENT SHOWING THE CONDITIONS OF THE TERMS OF CONTRACT. THE STATEMENT OF THE CONTRA CTEE ARE ORAL AND TO THAT EXTENT AGAINST WHAT HAS BEEN WRITTEN IN THE DOCUMENT. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT THE ADDITION OF RS.1,00,000/ - UNJUSTIFIED AND IT SHOULD BE REDUCED. AFTER CONSIDERING THE FACTS OF THE ISSUE, THE CIT(A) WAS OF THE VIEW THAT THE AO HAD ESTABLISHED THAT THE APPELLANT HAS PROVIDED BRANDED SEEDS AND FERTILIZER TO THE BATAIDARS. IN THE STATEMENT RECORDED OF SHRI RAJU NEWARE, THE I.T. NO. 169 & 170/NAG/2012 14 BARAIDAR HAS ACCEPTED THAT THE ASSESSEE HAS BORNE AGRICULTURAL EXPENSES FOR BRANDED S EEDS AND FERTILIZERS. COPY OF STATEMENT WAS GIVEN TO THE ASSESSEE, HOWEVER, THE ASSESSEE DID NOT CHOOSE TO CROSS - EXAMINE THE WITNESS. THE CIT(A) WAS OF THE VIEW THAT THE AO WAS JUSTIFIED IN MAKING AN ADDITION OF RS.1,090,000/ - U/S 69C OF THE ACT. THUS, THE CIT(A) DISMISSED THE GROUND. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT CIT(A), AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, HAS JUSTIFIABLY CONFIRMED THE ACTION OF THE AO AND NO INTERFERENCE IS CALLED FOR IN THE DECISION TAKEN BY CIT(A) ON THIS ISSUE. THUS, THE GROUND TAKEN BY THE ASSESSEE IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ( O RDER PRONOUNCED IN THE OPEN COURT ON 30/11/2012 ) SD/. SD/. ( D. T. GARASIA ) ( P. K. BANSAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 30/11/2012 * CL SINGH COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR