ACIT, Salem V. Shri S.Mohanraj, Hosur

ITA 176/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4988 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-05-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 04-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: S SRIDHAR ERODE
• Keywords: Unexplained investment; Capital asset; Income from undisclosed sources; Revised return
• Section: 44AD; 43B; 133A; 133(6); 69; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B : CHENNAI [BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER] I.T.A.NOS.175 & 176/MDS/2011 ASSESSMENT YEARS : 2005-06 AND 2007-08 THE ACIT CIRCLE III SALEM VS SHRI S.MOHANRAJ PROP. THE TELLUS ENTERPRISES NO.12/4 APPAVOO NAGAR THALLY ROAD HOSUR 635 109 (APPELLANT) (RESPONDENT) C.O.NO36 & 37/MDS/2011 ASSESSMENT YEARS : 2005-06 AND 2007-08 SHRI S.MOHANRAJ PROP. THE TELLUS ENTERPRISES NO.12/4 APPAVOO NAGAR THALLY ROAD HOSUR 635 109 VS THE ACIT CIRCLE III SALEM (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY : SHRI P.B.SEKARAN ASSESSEE BY : SHRI S.SRIDHAR, ERODE O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THESE APPEALS OF THE REVENUE AND THE CROSS OBJECTIONS OF THE ASSESSEE, FOR ASSESSMENT YEARS 2005-06 AND 2007-08, ARE DIRECTED ITA 175 & 176/2011 CO 36 & 37/2011 :- 2 -: AGAINST THE ORDERS OF THE LD. CIT(A), SALEM, DATED 26.11.2010, BUT PASSED SEPARATELY. I.T.A.NO. 175/MDS/2011 A.Y 2005-06 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL FOR ASSESSMENT YEAR 2005-06: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IS CONTRARY TO LAW, FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) HAS ERRED IN DELETING THE ADD ITION OF ` 5,50,000/- BY RELYING ON THE DECISION IN THE CASE O F CIT VS. S.KADHER KHAN REPORTED IN 300 ITR 157. AS THE PRINCIPLE CULLED OUT IN THE SAID DECISION IN P ARA 7(I), THE ASSESSEE HAS NOT PROVED THAT THE ADDITION MADE WAS INCORRECT. FURTHER, THE CIT(A) HAS FAILED TO NOTE THAT THE ABOVE SAID ADDITION WAS MADE NOT SOLELY ON THE GROUND OF ADMISSION IN SURVEY, BUT BASED ON A FAIR DISCUSSION AS FOUND IN PARA 1 OF PAGE NO.2 OF THE ASSESSMENT ORDER. 3. THE CIT(A) HAS ERRED IN RESTRICTING THE ADDITION ON ACCOUNT OF DISALLOWANCE OF ` 30,000/- UNDER LEAVE TRAVEL ALLOWANCES AND ` 1,16,200/- UNDER MEDICAL EXPENSES TO ` 10,000/- AND ` 29,050/- .RESPECTIVELY. THE CIT(A) HAS NOT GIVEN ANY FINDING S FOR SUCH RESTRICTIONS OF THE ABOVE DISALLOWANCES, A S AGAINST THE REASONING GIVEN IN THE ASSESSMENT ORDE R IN PARA 2 & 3. 4. THE C!T(A) HAS ERRED IN DELETING THE DISALLOWANCES OF ` 50,434/- BEING ESIC EMPLOYEES' CONTRIBUTION. 'SECTION 43B DEALS WITH THE MATTER OF 'EMPLOYERS CONTRIBUTIONS', WHEREAS SECTION 36(L)(VA ) DEALS WITH 'EMPLOYEES CONTRIBUTION', ITA 175 & 176/2011 CO 36 & 37/2011 :- 3 -: 5. THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANC E OF ` 7,42,873J- BEING EMPLOYEES' CONTRIBUTION TO P.F. S ECTION 43B DEALS WITH THE MATTER OF 'EMPLOYERS CONTRIBUTIO NS'; WHEREAS SECTION 36(L)(VA) DEALS WITH 'EMPLOYEES CONTRIBUTION'. 6. THE CIT(A) OUGHT TO HAVE NOTED THAT THE ISSUE ON THE HAND IS THAT OF NON REMITTANCE OF THE EMPLOYEES CONTRIBUTION AS PER THE WELFARE ACTS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 36 (1) (VA). 7. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDU CED AT THE TIME OF HEARING, THE ORDER OF COMMISSIONER OF INCOME -TAX (APPEALS) MAY BE CANCELLED AND THAT OF THE ASSESSING OFFICER RESTORED. 3. THE FIRST ISSUE OF THIS APPEAL TAKEN VIDE GROUND NO.2 IS REGARDING DELETION OF ADDITION OF ` 5,50,000/- . THE FACTS OF THIS ISSUE ARE THAT THERE WAS A SURVEY U/S 133A OF THE ACT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 2.3.2005. DURING THIS SURVEY, THE ASSESSEE ADMITTED THAT HE HAD INVESTED IN RENOVATIO N OF THE HOUSE TO THE TUNE OF ` 6 LAKHS. THE ASSESSEE STATED TO HAVE TAKEN ` 2 LAKHS AS LOAN FROM INDIAN OVERSEAS BANK FOR THIS PURPOSE AND AGREED TO OFFER ` 4 LAKHS AS ADDITIONAL INCOME FOR ASSESSMENT YEAR 20 05-06. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILE D CERTAIN BILLS IN CONNECTION WITH HOUSE RENOVATION TOTALLING TO ` 6,13,144 / - . APART FROM THE ABOVE, THE ASSESSEE ALSO FILED BILLS FOR THE PU RCHASE OF ELECTRICAL ITEMS FOR ` 36,676/- AND CEMENT AMOUNTING TO ` 15,100/-. THE TOTAL OF THE BILLS PRODUCED IS ` 6,64,920/-. THE ASSESSING OFFICER HAS ITA 175 & 176/2011 CO 36 & 37/2011 :- 4 -: ESTIMATED THE TOTAL COST OF RENOVATION AT ` ,7,50,000/- AND HAS ADDED ` 5,50,000/- TO THE TOTAL INCOME AS UNEXPLAINED INVES TMENT U/S 69 OF THE ACT. THIS ADDITION WAS DELETED BY THE LD. CIT( A) ON THE REASONING THAT APART FROM THE STATEMENT MADE DURING SURVEY, N OTHING MORE WAS WITH THE ASSESSING OFFICER TO SUPPORT THE IMPUGNED ADDITION. 4. BEFORE US, SIMILAR STAND WAS TAKEN BY BOTH THE PAR TIES. IT IS TRUE THAT THE ASSESSEE ADMITTED TO HAVE SPENT ` 6 LAKHS ON RENOVATION WORK. BUT AT THE SAME TIME, HE HAS PRODUCED BILLS FOR MORE THAN ` 6 LAKHS AS DISCUSSED ABOVE. WE FIND THE CONTENTION O F THE LD.AR THAT THE STATEMENT MADE DURING SURVEY DOES NOT CARRY MUCH WE IGHT UNLESS IT IS SUPPORTED BY ANOTHER MATERIAL EVIDENCE, TO BE IN LI NE WITH THE RULE LAID DOWN BY THE HON'BLE MADRAS HIGH COURT. SUCH STATEMENTS HAVE GOT NO EVIDENTIARY VALUE SAID THE HON'BLE JURISDICTIONA L HIGH COURT WHILE DECIDING THE CASE OF CIT VS S. KHADER KHAN, REPORTE D IN 300 ITR 157. THE ESTIMATION DONE BY THE ASSESSING OFFICER OTHERW ISE CANNOT BE SUSTAINED BECAUSE HE CAN NOT BE TREATED AS A TECH NICAL PERSON TO BE WELL VERSED IN CONSTRUCTION ACTIVITIES. WE FEEL T HAT THE ESTIMATION DONE BY THE ASSESSING OFFICER IS WITHOUT ANY MATERI AL TO PROVE THE SAME. CONSEQUENTLY, IN OUR OPINION, THE DELETION OF ADDITION OF ` 5,50,000/- WHICH IS ONLY BASED ON ADMISSION MADE DU RING SURVEY, IS ITA 175 & 176/2011 CO 36 & 37/2011 :- 5 -: QUITE IN ORDER AND DOES NOT WARRANT ANY INTERFERENC E. HENCE, WE DISMISS GROUND NO.2 OF THIS APPEAL. LEGAL POSIT 5. IN IN GROUND NO.3, THE REVENUE HAS TAKEN A PLEA THAT OUT OF ADDITIONS MADE ON ACCOUNT OF DISALLOWANCE OF ` 30,000/- UNDER THE HEAD LEAVE TRAVEL ALLOWANCE AND ` 1,16,200/- UNDER MEDICAL EXPENSES TO ` 10,000/- AND ` 29,050/-, RESPECTIVELY, ON THE REASONING THAT NO VALID LOGIC HAS BEEN GIVEN TO COME TO SUCH A CONCLU SION BY THE LD. CIT(A). 6. AFTER HEARING BOTH SIDES, WE FIND THAT IN THE LINE OF BUSINESS O F THE ASSESSEE WHICH IS GARDENING AND LANDSCAPING WHI CH IS A LABOUR ORIENTED BUSINESS, THESE EXPENSES ARE NECESSARY AND IN A WAY, THE ASSESSING OFFICER HIMSELF HAS ADMITTED THESE EXPENS ES IN PRINCIPLE. THE LD. CIT(A) WAS QUITE JUSTIFIED IN REDUCING THE ESTIMATED ADDITION TO THE LEVEL HE HAS DONE. HENCE, CONSIDERING THE NATU RE OF EXPENSES INCURRED UNDER THESE HEADS, IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY RESTRICTED THE SAME TO 20%. WE CONFIRM THE SAME AN D DISMISS GROUND NO.3 OF REVENUES APPEAL. 7. GROUND NO.4 RELATES TO DELETION OF DISALLOWANCE OF ` 50,434/- BEING ESIC EMPLOYEES CONTRIBUTION AND GROUND NO.5 DEALS WITH DISALLOWANCE OF ` 7,42,873/- BEING EMPLOYEES CONTRIBUTION TO PF. T HE ITA 175 & 176/2011 CO 36 & 37/2011 :- 6 -: CASE OF THE REVENUE IS THAT SECTION 36(1)(VA) WILL APPLY INSTEAD OF SECTION 43B. THE LD. CIT(A) HAS DISCUSSED THESE IS SUES IN PARA 10 OF HIS ORDER AS UNDER: 10. I HAVE CAREFULLY CONSIDERED THE FACTS ON REC ORD, GROUNDS OF APPEAL AND THE WRITTEN SUBMISSION FILED. I PROCEED TO DECIDE THE ISSUE AS UNDER. THE REASON F OR ADDITION BY THE A.O THAT PAYMENTS HAVING NOT BEEN M ADE UNDER SECTION 43B BUT UNDER SECTION 36(1)(VA)/2(24) (X) IS VALID, ONLY WHEN PAYMENT IS MADE BEYOND THE TIME AS PER SECTION 43B. IN OTHER WORDS, IN THE CASE OF EMPLOY EES CONTRIBUTION, IF THE PAYMENTS ARE NOT MADE WITHIN T HE TIME ALLOWED U/S 43B, THOSE CONTRIBUTIONS ARE TO BE DISA LLOWED, IF CLAIMED AS EXPENDITURE, BESIDES, BEING TREATED A S INCOME UNDER SECTION 2(24)(X). IN BOTH THE SITUATI ON, SECTION 43B IS PARAMOUNT. SINCE IN THE FACTS OF TH E CASE OF THE APPELLANT, THE PAYMENTS ARE MADE WITHIN THE TIME AS PER SECTION 43B, NO FURTHER CONSEQUENCE FOLLOWS AND ACCORDINGLY, THE REASON BY THE A.O FOR DISALLOWANCE , INDEPENDENT OF SECTION 43B, IS NOT ACCEPTED. THE DECISIONS RELIED ON BY THE LEARNED AR ARE APPLICABL E IN ALL FORCE TO THE CASE OF THE APPELLANT. HENCE, THE APP ELLANT IS ENTITLED TO SUCCEED AND ACCORDINGLY, THE DISALLOWAN CE OF ` 50,432/- IS ORDERED TO BE DELETED. 8. WE ARE ALSO AGREEABLE WITH THE ABOVE REASONIN G GIVEN BY THE LD. CIT(A AND HENCE, DISMISS GROUND NO.4, 5 & 6 OF THE APPEAL. 9. IN THE RESULT, I.T.A.NO. 175/MDS/2011 STANDS DISMIS SED. I.T.A.NO. 176/MDS/2011 - A.Y 2007-08 10. IN THIS APPEAL, THE FIRST EFFECTIVE ISSUE IS REGARD ING PART RELIEF GRANTED WITH REGARD TO DEPOSITS IN UNDISCLOSED BANK ACCOUNT. THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEAR 2007-08 ON ITA 175 & 176/2011 CO 36 & 37/2011 :- 7 -: 26.10.2007 ADMITTING TOTAL INCOME OF ` 20,17,130/- WHICH ALSO INCLUDED LONG TERM CAPITAL GAINS. THE ASSESSMENT WAS COMPLETED ON 30.11.2009 AT A TOTAL INCOME OF ` 42,53,356/-. THE ASSESSING OFFICER HAS MADE THE FOLLOWING ADDITIONS: (I) LONG TERM CAPITAL GAINS ` 11,72,303/- (II) CREDITS IN UNDISCLOSED BANK ACCOUNT ` 10,16,750/- (III)DIFFERENCE IN SALE CONSIDERATION OF LAND ` 8,42,000/- (IV) UNEXPLAINED INVESTMENT IN BORE-WELL AND MOTOR ` 50,000/- 11. AGAINST THESE ADDITIONS, APPEAL WAS FILED BEFORE TH E LD. CIT(A), WHO HAS GIVEN RELIEF TO THE ASSESSEE BY DELETING AL L THE ABOVE ADDITIONS. NOW THE REVENUE IS AGGRIEVED AND HAS RA ISED THE FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E- TAX(APPEALS) IS CONTRARY TO LAW, FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. THE CIT(A) HAS GIVEN PART RELIEF WITH REGARD TO DEPOSITS IN UNDISCLOSED BANK ACCOUNT. THERE IS NO EVIDENCE TO SUGGEST THAT MATERIAL PURCHASED/WAGES P AID FOR EARNING INCOME TO THE TUNE OF ` 7,30,802 WAS OUT OF EXPLAINED SOURCES. THE ASSESSEE UTILIZED HIS UNACCOUNTED INCOME FOR EARNING PROFITS OF ` 63,548. THE TOTAL AMOUNT ADDED BY A.O OUGHT TO HAVE BEEN CONFIR MED BY THE CIT(A). ITA 175 & 176/2011 CO 36 & 37/2011 :- 8 -: 3. THERE IS NOTHING TO SHOW HOW CIT(A) GOT SATISF IED THAT CREDITS IN UNDISCLOSED BANK ACCOUNT MADE IN C ASH TOTALING TO ` 2.22,400 WERE FROM 'EXPLAINED' SOURCES. 4. RELIEF IN RESPECT OF CAPITAL GAIN CAN BE ASSA ILED FOLLOWING RATIO OF GOETZ (INDIA) LTD., VS. CIT (28 4 ITR 323) (SC). 5. ON DIFFERENCE BETWEEN SALE PRICE SHOWN IN DEED A ND CLAIM OF ASSESSEE TO HAVE RECEIVED SALE AMOUNT OF ` 22 LACS, ONUS WAS ON ASSESSEE TO SHOW THAT ACTUAL SALE PRICE WAS ` 22 LACS. IN ABSENCE OF ANY EVIDENCE TO CONTRARY, IT IS TO BE ASSESSED AS INCOME FROM OTHER SOURCES. 6. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, THE ORDER OF COMMISSIONER OF I NCOME -TAX (APPEALS) MAY BE CANCELLED AND THAT OF THE . ASSESSING OFFICER RESTORED. 12. THE FIRST ISSUE OF THIS REVENUES APPEAL IS REG ARDING DEPOSITS IN THE BANK ACCOUNT TOTALING TO ` 10,16,750/-. THE FACTS APROPOS THIS ISSUE ARE THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE BOOKS OF ACCOUNT AND OTHER DETAILS FURNISHED BY THE ASSES SEE WERE VERIFIED BY THE ASSESSING OFFICE. HE NOTICED THAT THE ASSE SSEE WAS OPERATING ONE MORE BANK ACCOUNT WHICH WAS NOT REFLECTED IN TH E BALANCE SHEET. THEREFORE, NOTICE U/S 133(6) WAS ISSUED TO INDIAN O VERSEAS BANK, INDUSTRIAL COMPLEX BRANCH, HOSUR, AND THE BANK ACCO UNT DETAILS WERE OBTAINED. THE CREDITS APPEARING IN THIS BANK ACCOU NT FOR THE PERIOD 1.4.2006 TO 31.3.2007 WERE EXAMINED. IT WAS NOTICE D THAT THE ITA 175 & 176/2011 CO 36 & 37/2011 :- 9 -: ASSESSEE WAS OPERATING THE SAVINGS BANK ACCOUNT AND A CURRENT BANK ACCOUNT FOR HIS BUSINESS PURPOSES AND THEREFOR E, THE ASSESSEE WAS ASKED TO EXPLAIN AND FURNISH CLARIFICATION REGA RDING THE CREDITS APPEARING IN THIS ACCOUNT. AFTER ACCEPTING THAT TH IS ACCOUNT BELONGED TO HIM, IT WAS EXPLAINED THAT THIS ACCOUNT IS IN RE LATION TO A CONTRACT WORK UNDERTAKEN BY HIM FOR WHICH EXPENSES WERE ALSO INCURRED FROM THIS VERY SAME BANK ACCOUNT. IN THE WRITTEN SUBMIS SION DATED 27.11.2009, IT WAS FURTHER EXPLAINED THAT THE WITH DRAWALS FROM THE A/C REPRESENTED EXPENSES INCURRED IN THIS BUSINES S. FINALLY, THE ASSESSEE HAS OFFERED ` 40,000/- AS INCOME FROM THIS CONTRACT WORK AT THE RATE OF 4.3%. ALTERNATIVELY, WITH REFERENCE TO SECTION 44AD, INCOME WAS OFFERED @ 8% OF THE DEPOSITS AND ON THAT BASIS, A NET PROFIT HAS BEEN WORKED OUT TO ` 63,458/-. THE ASSESSEE HAS OFFERED A ROUND FIGURE OF ` 64,000/- AS INCOME. THE CASH CREDITS IN THIS ACCOUNT WERE ATTRIBUTED TO FUNDS WITHDRAWN FROM THE BOOKS OF TELLUS ENTERPRISES. THE CHEQUE DEPOSITS OF ` 7,94,350/- AND CASH DEPOSIT OF ` 2,22,400/- IN THIS ACCOUNT WERE NOT FOUND TO BE AC COUNTED FOR BY THE ASSESSING OFFICER, HENCE, HE HAS ADDED ` 10,16,730/-. ON THE CONTRARY, THE LD. CIT(A) HAS FOUND THAT NET PROFIT OF 8% OFF ERED BY THE ASSESSEE IN RELATION TO CONTRACT WORK AFTER TAKING GUIDANCE FROM SECTION 44AD IS QUITE JUSTIFIED. ITA 175 & 176/2011 CO 36 & 37/2011 :- 10 - : 13. WE HAVE ANALYZED THE FACTS AND EVIDENCE RELATING TO THIS ISSUE AND HAVE FOUND THAT THE ACTION OF THE LD. CIT(A) IS QUITE APT IN THE GIVEN FACTS. SINCE THE ASSESSEE HAS OFFERED ` 63,458/- ON TOTAL RECEIPTS OF ` 7,94,350/-, NO FURTHER ADDITION AND IN ANY CASE THE ADDITION OF ENTIRE AMOUNT CANNOT BE MADE WHEN THE A SSESSING OFFICER HAS NOT DISPUTED THIS BUSINESS ACTIVITY. REGARDING CASH DEPOSITS OF ` 2,22,400/- WHICH IS INCLUDED IN ` 10,16,750/-, THE EXPLANATION OF THE ASSESSEE IS THAT FROM THIS ACCOUNT TOTAL WITHDRAWAL S OF ` 6,36,205/- WERE MADE AND AFTER SPENDING ` 1,24,129/- TOWARDS HOUSEHOLD EXPENSES, HE RE-DEPOSITED ` 2,22,400/-. THE LD. CIT(A) HAS FOUND THIS EXPLANATION TO BE CORRECT AND HAS, THUS, DELETED TH E ADDITION OF ` 2,22,400/-. 14. BEFORE US SIMILAR ARGUMENTS WERE MADE BY BOTH THE P ARTIES. IN OUR CONSIDERED OPINION, THE RECEIPTS THROUGH CHEQUE IN THE BANK DEFINITELY STAND EXPLAINED AND THE ASSESSING OFFICE R HAS ALSO ACCEPTED THE SAME TO BE OUT OF THE CONTRACT WORK AS HE HAS N OT REFUTED THIS CONTENTION OF THE ASSESSEE. ON ANY BUSINESS RECEIP TS PARTICULARLY ON SMALL BUSINESS, SECTION 44AD IS APPLICABLE AND THE ASSESSEE HAS OFFERED THE SUM OF ` 63,458/- FOR TAXATION. IN OUR OPINION, THIS IS QU ITE JUSTIFIED AND THERE IS NO FALLACY IN THE APPELLATE FINDING. ITA 175 & 176/2011 CO 36 & 37/2011 :- 11 - : 15. IN SO FAR AS THE REMAINING AMOUNT OF ` 2,22,400/- IS CONCERNED, THERE IS NOTHING ON RECORD TO DISBELIEVE THAT THE A SSESSEE HAD WITHDRAWN A SUM OF ` 6,33,205/- AND AFTER SPENDING SOME PORTION OF THIS, MAY HAVE DEPOSITED ` 2,22,400/- IN CASH PARTICULARLY WHEN THERE IS NO OTHER EVIDENCE ON RECORD TO THE CONTRARY. CO NSEQUENTLY, WE DO NOT FIND ANY MERIT IN GROUND NOS. 2 & 3 OF REVENUE S APPEAL. 16. THE LAST ISSUE RAISED VIDE GROUND NOS.4 & 5 RELATES TO ADDITION MADE ON ACCOUNT OF CAPITAL GAINS. THE ASSESSEE HAD SOLD A PROPERTY DURING THE FINANCIAL YEAR 2006-07 FOR A CONSIDERATI ON OF ` 22 LAKHS. THE DETAILS OF THE ENTIRE TRANSACTION ARE AS UNDER: LONG TERM CAPITAL GAINS DATE OF TRANSFER 16.10.2006 SALE CONSIDERATION 22,00,000 F.Y COST INDEXED COST ACQUISITION DETAILS OPEN LAND 113975*519/406 2000-01 1,13,975 1,45,697 IMPROVEMENT DETAILS BENCH TERRACING WITH STONE MASONORY FOR SOIL RETENTION 250250*519/426 2001-02 2,50,250 3,04,882 RUNNING JCB & TRACTOR DOZER FOR LEVELING THE LAND 120400*519/447 2002-03 1,20,400 1,39,793 BOREWELL COST 65130*519/447 2002-03 65,130 75,621 ITA 175 & 176/2011 CO 36 & 37/2011 :- 12 - : CONSTRUCTION OF PUMP ROOM 85820*519/463 2003-04 85,820 96,200 SUPPLY OF STONE PILLER AND FENCING PLANTING OF TREES 160000*519/480 2004-05 1,60,000 1,73,000 COST OF TANK BUND SOIL FOR FILLING DEPRESSIONS 160660*519/497 2005-06 1,60,660 1,67,772 INDEXED COST OF IMPROVEMENT 9,57,268 CAPITAL GAINS 10,97,035 17. DURING ASSESSMENT PROCEEDINGS, IT WAS EXPLAINED THA T THE LAND IN QUESTION WAS AGRICULTURAL LAND SITUATED AWAY FROM T HE NOTIFIED AREA. IT WAS SUBMITTED THAT IN VIEW OF THE DECISION OF HON' BLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS AHMEDABAD KEIS ER-E-HIND MILLS CO. LTD., (128 ITR 486) AND THE BOARDS CIRCULAR NO .14(XI-35) DATED 11.4.1955, EVEN THE RELIEF WHICH COULD NOT HAVE BEE N CLAIMED BY THE ASSESSEE HAS TO BE ALLOWED AND THE OFFICERS OF TH E DEPARTMENT CAN NOT TAKE ADVANTAGE OF THE IGNORANCE OF THE ASSESSEE AS TO HIS RIGHTS. BUT THE ASSESSING OFFICER WAS NOT AGREEABLE AND AFT ER MAKING HIS OWN CALCULATIONS, HE HAS MADE THE IMPUGNED ADDITION, WH ICH HAS BEEN DELETED BY THE LD. CIT(A). 18. SIMILAR STAND WAS TAKEN BY BOTH THE PARTIES BEFORE US AS WAS TAKEN BEFORE THE LD. CIT(A). IT WAS FOUND THAT FRO M THE DATE OF PURCHASE, THE LAND WAS ONLY AGRICULTURAL IN NATURE AND THERE IS NO ITA 175 & 176/2011 CO 36 & 37/2011 :- 13 - : CONTRARY EVIDENCE IN THE POSSESSION OF THE DEPARTME NT TO COUNTER THIS FACT. WE HAVE PERUSED THE RELEVANT PROVISIONS OF THE REGISTRATION ACT, TRANSFER OF PROPERTY ACT VIS--VIS THE ORAL SUBMIS SIONS OF THE PARTIES. WE HAVE FOUND THAT THE PROPERTY BEING SITUATED IN MOOKANDAPALLI IN HOSUR IN KRISHNAGIRI DISTRICT AND ITS SALE CONSIDER ATION AS PER THE DEED OF SALE, IS ` 13,58,000/-. IT WAS ALSO FOUND THAT THE LAND IN QUESTION IS NOT A CAPITAL ASSET AND IS ONLY AGRICULTURAL LAN D. NO CAPITAL GAINS WOULD THUS, ARISE ON SALE OF AGRICULTURAL LAND WH ICH IS SITUATED BEYOND 8 KMS OF THE LIMITS OF A MUNICIPALITY. CONSEQUENTL Y, NO CAPITAL GAIN WOULD ARISE ON THE SALE THEREOF. THE INCORRECT STA TEMENT OF INCOME FILED BY THE ASSESSEE SHOWING ` 22 LAKHS AS SALE CONSIDERATION, TOWARDS CAPITAL GAINS SHOWN AT ` 8,42,000/- CANNOT BE TAXED IN THE GIVEN FACTS AND THE CIRCUMSTANCES OF THE CASE. THE DECISION OF HON'BLE APEX COURT IN GOETZ (INDIA) LTD (2006), 284 ITR 323(SC) RELIED ON IN GROUND NO.4 ITSELF, WOULD NOT HELP THE REVENUE. THEIR LOR DSHIPS HAVE CLEARLY OBSERVED THAT TO ENTERTAIN A CLAIM FOR DEDUCTION OT HERWISE THAN BY A REVISED RETURN DID NOT IMPINGE ON THE POWER OF THE APPELLATE TRIBUNAL U/S 254 OF THE ACT. THEREFORE, IN THE TOTALITY OF THE FACTS AND THE CIRCUMSTANCES OF THE CASE, WHERE THE NATURE OF LAND AS ESTABLISHED BY THE LD. CIT(A) HAS NOT BEEN DISPUTED IN GROUND NO.4 & 5, THE REVENUE ITA 175 & 176/2011 CO 36 & 37/2011 :- 14 - : HAS NO CASE. THEREFORE, WE DECIDE THIS ISSUE IN F AVOUR OF THE ASSESSEE ON THE SAME LINES AS HAS BEEN DECIDED BY T HE LD. CIT(A). 19. IN THE RESULT, I.T.A.NO. 176/MDS/2011 STANDS DISMIS SED. 20. FOR BOTH YEARS, CROSS OBJECTIONS HAVE BEEN FILED B Y THE ASSESSEE WHICH ONLY SUPPORT THE FINDINGS OF THE LD. CIT(A). NO MATERIAL GROUND HAS BEEN RAISED IN THESE CROSS OBJECTIONS, THEREFOR E, THE SAME HAVE TO BE DISMISSED. BOTH THE CROSS OBJECTIONS STAND DISM ISSED. 21. TO SUMMARIZE THE RESULT, THE APPEALS OF THE REVEN UE AS WELL AS THE CROSS OBJECTIONS OF THE ASSESSEE STAND DISMISSE D. THE ORDER PRONOUNCED IN THE OPEN COURT ON 7.6.2011. SD/- SD/- (ABRAHAM P GEORGE) ACCOUNTANT MEMBER ( HARI OM MARATHA ) JUDICIAL MEMBER DATED: 7.6.2011 RD COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR