ACIT, Aurangabad V. Shri Govsrdhsn S Pawar, Aurangabad

ITA 1780/PUN/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7316 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 04-09-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 06-09-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARI KRISHAN
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Income from undisclosed sources; Rectification of order; Cost of acquisition; Tax effect; Revised return
• Section: 54B; 50C; 54F; 153A; 131; 54; 263

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . , , BEFORE SHRI D.KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1780/PUN/2012 / ASSESSMENT YEAR : 2006-07 ACIT, CENTRAL CIRCLE, AURANGABAD . /APPELLANT VS. SHRI GOVARDHAN S. PAWAR, 13-14, SAHYADRI HILLS, SHIVAJI NAGAR, GARKHEDA AREA, AURANGABAD PAN : ABFPP0880K . / RESPONDENT . / ITA NO.1784/PUN/2012 / ASSESSMENT YEAR : 2006-07 ACIT, CENTRAL CIRCLE, AURANGABAD . /APPELLANT VS. SMT. ANITA GOVARDHAN PAWAR, 13-14, SAHYADRI HILLS, SHIVAJI NAGAR, GARKHEDA AREA, AURANGABAD PAN : AKTPP0531C . / RESPONDENT / APPELLANTS BY : SHRI HARI KRISHAN / RESPONDENT BY : SHRI AJAY MODI / DATE OF HEARING :04.09.2017 / DATE OF PRONOUNCEMENT: 11.10.2017 / ORDER PER D. KARUNAKARA RAO, AM : THESE ARE THE 2 APPEALS FILED BY THE REVENUE RELATI NG TO TWO DIFFERENT ASSESSEES FOR THE COMMON ASSESSMENT YEAR 2006-07. THEY ARE AGAINST THE ORDERS OF CIT(A), AURANGABAD COMMONLY DATED 11-06-2012. T HE LEAD CASE BELONGS TO SHRI ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 2 GOVARDHAN S. PAWAR AND OTHER ONE BEING THE CASE OF SMT. ANITA G. PAWAR, THE WIFE OF SHRI GOVARDHAN S. PAWAR. IN PRINCIPLE, THE GROU NDS RAISED BY THE REVENUE ARE IDENTICAL. THE FACTS, RELATING TO THE SALE AND PUR CHASE TRANSACTIONS ARE ALSO COMMON. THEREFORE, FOR THE SAKE OF FACTS, WE PROCE ED TO EXTRACT THE GROUNDS RAISED IN CONNECTION WITH SHRI GOVARDHAN S. PAWAR F OR REFERENCE AND THE SAME READS AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN ALLOWING THE EXEMPTION CLAIMED BY THE ASSESSEE U NDER SECTION 54B OF THE ACT AMOUNTING TO RS.1,18,85,470/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE LAND SOLD BY THE ASSESSEE WAS C ULTIVATED LAND PRIOR TO SALE, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT PRODUCED ANY COGENT EVIDENCE IN SUPPORT OF SUCH CLAIM. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE WAS ENTITLED FOR EXEMP TION U/S.54B OF THE ACT ON INVESTMENT IN LAND AT GUT NO.73 WITHOUT APPRECIATIN G THE FACT THAT THE ASSESSEE HAS NOT PROVED WITH DOCUMENTARY EVIDENCE THAT THE SAID LAND WAS OWNED BY HIM. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN ALLOWING THE EXEMPTION CLAIMED UNDER SECTION 54F OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT FULFILLED THE CO NDITION LAID DOWN U/S.54F OF THE ACT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,13,642/- MADE ON A CCOUNT OF INCOME FROM UNDISCLOSED SOURCES. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) FAILED TO APPRECIATE THAT THE ASSESSEE HAS NOT PRODUCED ANY E VIDENCE REGARDING THE CLAIM OF AGRICULTURAL INCOME, THUS FAILING TO DISCHARGE THE ONUS AS PER THE SETTLED POSITION OF LAW. 2. THE GENERAL FACTS PERTAINING TO SHRI GOVARDHAN S. PAWAR INCLUDES THA T THE ASSESSEE IS A CIVIL CONTRACTOR AND ALSO ENGAGED IN PLYING THE GOODS CARRIAGES. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE R EPORTED EARNINGS OF LONG TERM CAPITAL GAINS ON SALE OF LANDS AT GUT NO.75/1 AND A LSO AGRICULTURAL INCOME. ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1.34 CRORES AND AGRICULTURAL INCOME OF RS.9.5 LAKHS. REGARDING THE SAID LONG TERM CAPITAL GAINS, ASSESSEE REPORTED NIL INCOME IN VIEW OF THE CLAIM O F EXEMPTION U/S.54B/54F OF THE I.T. ACT. DURING THE ASSESSMENT PROCEEDINGS, THE A O NOTICED THAT THE SAID CLAIM OF ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 3 EXEMPTION IS NOT PROPER IN SO FAR AS NON-FULFILMENT OF THE CONDITIONS SPECIFIED IN SECTIONS 54B AND 54F OF THE ACT. IN SHORT, THE AO IS OF THE OPINION THAT THE LAND IN QUESTION WAS NOT USED BY THE ASSESSEE OR HIS PARENT S AS SPECIFIED IN SECTION 54B OF THE ACT. AO CONSIDERED THE SALE VALUE AS PER SECTI ON 50C @ RS.3,82,60,000/-. ACCORDINGLY, THE AO REWORKED THE LONG TERM CAPITAL GAINS AND DETERMINED ASSESSEES 50% SHARE AT RS.1,64,80,160/-. FURTHER, THE AO ALSO DISTURBED THE CLAIM OF AGRICULTURAL INCOME AND REWORKED THE AGRICULTURA L INCOME OF THE ASSESSEE ON ESTIMATION BASIS. ON THIS ACCOUNT, AO MADE ADDITIO N OF RS.5,03,642/- OUT OF THE ORIGINAL CLAIM OF RS.9.5 LAKHS IN THE RETURN OF INC OME. THE TOTAL ASSESSED INCOME IS DETERMINED AT RS.1,75,70,410/- AGAINST THE RETURNED TOTAL INCOME OF RS.1.34 LAKHS. WE SHALL NOW TAKE UP THE FACTS RELEVANT TO THE CLAI M OF EXEMPTION U/S.54B/54F OF THE ACT. 3. FACTS PERTAINING TO THE SPECIFIC CLAIM OF DEDUCTION U/S.54B OF THE ACT ON THE LONG TERM CAPITAL GAINS INCLUDE THAT THE ASSESSEE AND HIS WIFE PURCHASED FROM SHRI KULDEEP SINGH THE SAID LAND ON 06-06-2000 ADMEASURING 10 ACRES AND 20 GUNTAS AT SURVEY NO.75/1. IN THE TITLE DEED, 75/2 WAS MENTIONED WRONGLY INSTEAD OF 75/1. FURTHER, THERE WAS ANOTHER MISTAKE WITH R EFERENCE TO THE ACTUAL AREA OF LAND. ON ACTUAL MEASUREMENT, ASSESSEE ARRIVED THE LAND AREA AT 10 ACRES 28 GUNTAS AND NOT 10 ACRES 20 GUNTAS AS APPEARED IN TH E TITLE DEED. THEREFORE, THE ORIGINAL TITLE DEED WAS CORRECTED BY WAY OF RECTIFI ED CORRECTION DEED ON 26-04-2005 INCORPORATING THE CORRECT SURVEY NUMBER AND THE REV ISED AREA OF THE SAID LAND. THEREFORE, CONSIDERING BOTH THE DEEDS, THERE IS NO DISPUTE ON THE OWNERSHIP OF LAND AND THE LAND IN SURVEY NO.75/1 IS OWNED BY THE ASSE SSEE AND HIS WIFE W.E.F. 06-06- 2000. THE TOTAL PURCHASE COST OF THE LAND WORKS OU T TO RS.61,78,470/-. ASSESSEE AND HIS WIFE HAS 50% SHARE EACH IN THE SAID LAND. THE SAID LAND OF 10 ACRES 28 GUNTAS WAS SOLD THROUGH A DEVELOPMENT AGREEMENT TO SHRI RAVINDRA KHINVASARA OF ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 4 M/S. KHINVASARA INVESTMENTS FOR A SUM OF RS.3,75,50 ,000/-. THE LAND IS SAID TO BE WITHIN MUNICIPAL LIMITS OF AURANGABAD. IN THIS TRA NSACTION, THE ASSESSEES EARNED LONG TERM CAPITAL GAINS. THE SAID GAINS WERE INVES TED BY THE ASSESSEES IN PURCHASE OF AGRICULTURAL LANDS SUCH AS PURCHASE OF LANDS AT GUT NO.73, GUT NO.257 AND GUT NO.304 INVOLVING 3 DIFFERENT SELLERS. 4. DURING THE ASSESSMENT PROCEEDINGS , AO NOTICED CERTAIN DISCREPANCIES WITH REGARD TO USE OF THE SAID LAND OF 10 ACRES 28 GUNTAS BEING USED FOR AGRICULTURAL PURPOSES BY THE ASSESSEES/THE PARENTS IN THE YEARS SPECIFIED IN THE SECTION 54B OF THE ACT. ACCORDING TO THE SAID PROV ISIONS, THE SAID LANDS SHOULD HAVE BEEN USED FOR AGRICULTURAL PURPOSES FOR A PERIOD OF 2 YEARS BEFORE THE TRANSFER OF THE LAND. EVENTUALLY, RELYING ON THE ENTRIES RELAT ING TO CROPS GROWN APPEARED IN 7/12 EXTRACTS, PROCURED BY THE AO RELATING TO THE S AID LANDS, AO CAME TO THE CONCLUSION THAT THE SAID LAND, BEING BARREN WAS NOT USED FOR AGRICULTURAL PURPOSES EITHER BY THE ASSESSEE OR BY HIS PARENTS DURING THE SAID YEARS. SUBSEQUENTLY, AO PROCURED A REVISED 7/12 EXTRACT. IN THE PROCESS, A O REJECTED THE REVISED 7/12 EXTRACTS FILED BY THE ASSESSEE. IT SHOWS THE CONTR ARY FACT OF GROWING OF DRY CROPS IN THE SAID 2 YEARS. FURTHER, REGARDING THE PURCHASE OF ANY OTHER LAND FOR BEING USED FOR AGRICULTURAL PURPOSES, AO HELD THAT THE SAID PURCHASES ARE NOT ELIGIBLE F OR DEDUCTION AS THE LANDS WERE NEVER REGISTERED FORMAL LY IN THE NAME OF THE ASSESSEE. ASSESSEES DID NOT FILE THE REGISTERED TITLE DEEDS. THEREFORE, AO PROCEEDED TO DENY THE CLAIM OF EXEMPTION OF CAPITAL GAINS U/S.54B OF THE ACT IN RESPECT OF BOTH THE ASSESSEES SHRI GOVARDHAN S. PAWAR AND SMT. ANITA G. PAWAR. 5. FURTHER, THE ASSESSEES MADE AN ALTERNATE CLAIM O F EXEMPTION U/S.54F OF THE ACT BY WAY OF FILING A LETTER DURING THE ASSESSMENT PROCEEDINGS IN RESPECT OF THE INVESTMENTS IN THE RESIDENTIAL HOUSE. THE AO DENIE D THE SAID ALTERNATE CLAIM OF EXEMPTION TOO OF SUCH REINVESTMENT IN THE HOUSE. F URTHER, AO IS OF THE VIEW, SUCH ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 5 CLAIMS CAN ONLY BE MADE BY WAY OF FILING THE REVISE D RETURN OF INCOME. AT THE END OF THE ASSESSMENT PROCEEDINGS, THE AO PROCEEDED TO TAX THE SUM OF RS.1,64,80,160/-, BEING 50% SHARE OF SHRI GOVARDHAN S. PAWAR IN THE SAID PROPERTY. SAME IS THE DECISION IN RESPECT OF OTHE R 50% SHARE OF HIS WIFE. 6. WE SHALL NOW TAKE UP THE FACT PERTAINING TO EACH OF THE MAJOR ALLEGATIONS BY THE AO IN THE SUCCEEDING PARAGRAPHS. I. AOS ALLEGATION OF NON-USE OF LAND AT S.NO.75/1 FOR AGRICULTURAL PURPOSES BY THE ASSESSEES IN THE TWO ASSESSMENT YEA RS : 7. DURING THE ASSESSMENT PROCEEDINGS, IN CONNECTION WITH THE ALLEGATION OF NON USAGE OF LAND FOR AGRICULTURAL PURPOSES BY THE ASSE SSEE OR HIS PARENTS, THE ASSESSEE MADE VARIOUS SUBMISSIONS, FURNISHED THE COPIES OF T HE RETURN OF INCOME FOR A.YRS. 2004-05 AND 2005-06 AND FURNISHED THE RECEIPTS DEMO NSTRATING THE EARNING OF AGRICULTURAL INCOME FROM THE SAID LANDS. DISBELIEVI NG THE SAME, AO PROCURED THE COPY OF 7, 7A & 12 EXTRACTS (HEREINAFTER CALLED EXTRACT) OF THE SAID LAND AT S.NO.75/1 BY INVOKING THE PROVISIONS OF SECTION 131 OF THE ACT FROM THE TALATIS OFFICE. AO NOTICED THAT THE SAID LAND WAS DESCRIBE D AS BARREN LAND IN THE SAID EXTRACTS. FURTHER, THE OWNER OF THE LAND IS MENTION ED AS SHRI KULDEEP SINGH. THE RELEVANT TABLE EXTRACTED FROM PARA 6.1 OF THE ASSES SMENT ORDER IS GIVEN AS UNDER: (A)THE ASSESSEE HAS PURCHASED THE LAND ON 11-05-200 0 AS PER DEED NO.3380 FOR RS.31.50,000/-. THE 7/12 EXTRACT COLLECTED FOR F.Y. 2004-05 IS IN THE NAME OF SHRI KULDEEPSINGH DHODY AND THE STATUS OF LAND IS SHOWN AS PADIT, I.E. BARRON AND NOT CULTIVATED. THE 7/12 ORIGINAL EXTRACTS COLLECTED S HOW FOLLOWING POSITION : FINANC IAL YEAR PERSON CULTIVATING LAND AREA UNDER CULTIVATION WHETHER OR NOT CULTIVATED 2003 - 04 KULDEEPSINGH PAD NOT CULTIVATED 2004 - 05 KULDEEPSINGH PAD NOT CULTIVATED 2005 - 06 SELF PAD NOT CULTIVATED SOURCE : ORIGINAL 7/12 EXTRACT FROM REVENUE RECORDS . ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 6 8. IN RESPONSE TO THE ABOVE DISCREPANCY, IN THE ABS ENCE OF ANY AGRICULTURAL USAGE OF THE LAND IN THE A.YS. 2004-05 AND 2005-06, I.E. TWO ASSESSMENT YEARS PRECEDING TO THE ASSESSMENT YEAR UNDER CONSIDERATIO N, THE ASSESSEES FILED A LETTER ENCLOSING A REVISED 7/12 EXTRACT WHICH DEMONSTRATES THE CONTRARY FACTS OF USAGE OF THE LAND FOR AGRICULTURAL PURPOSES FROM THE A.YRS. 2001-02 TO 2004-05 (RELEVANT TO A.YS. 2002-03 TO 2005-06). LANDS WERE SHOWN BARR EN LAND IN F.Y. 2005-06 AS THE ASSESSEES SOLD LANDS IN MAY, 2005. RELEVANT TAB LE IS EXTRACTED HERE AS UNDER (PAGE 60 OF THE PAPER BOOK) : FINANCIAL YEAR NAME OF CULTIVATOR AREA OF MIXED CROP AREA OF INDIVIDUAL CROP FROM MIX VIDE ORDER NO.2008/JAMA2/KV/459 DATED 19 - 04 - 08 PASSED BY HONBLE TAHSILDAR, AURANGABAD 2001 - 02 KULDEEPSINGH JAISINGH BAJARI - 2.00 TOOR - 1.50 2002 - 03 KULDEEPSINGH JAISINGH BAJARI - 1.50 BARREN LAND 2003 - 04 KULDEEPSINGH JAISINGH MAIZE - 3.00 TOOR - 1.00 2004 - 05 KULDEEPSINGH JAISINGH BAJARI - 2.00 MAIZE - 2.00 2005 - 06 SELF BARREN LAND BARREN LAND 2006 - 07 SELF BARREN LAND BARREN LAND 2007 - 08 SELF BARREN LAND BARREN LAND 9. ON HEARING ABOUT THE CRUCIAL DISCREPANCIES, I.E. OWNERSHIP, NAME OF THE CULTIVATOR AND DETAILS OF CROPS, THE ASSESSEES APPL IED FOR RECTIFICATION OF MISTAKES BY MAKING AN APPLICATION OF RECTIFICATION TO THE REVEN UE AUTHORITIES. EVENTUALLY, TAHSILDAR/TALATI VISITED THE SITE AND DREW THE PANC HANAMA. EVENTUALLY, TALATI ISSUED A REVISED 7, 7A & 12 EXTRACT . THE CONTENTS OF THE REVISED EXTRACT IS ALREADY EXTRACTED IN PARA ABOVE. THE SAID REVISED EXTRACTS OF THE SAID LAND WAS GRANTED TO SHRI GOVARDHAN S. PAWAR AS PER THE ORDER OF TAHSILD AR ORDER NO.2008- 5/JAMA/KA/VI/359 DATED 19-04-2008. IN THIS REGARD, ASSESSEE FURNISHED RELEVANT INCIDENTAL CORRESPONDENCE WITH THE REVENUE AUTHORIT IES THAT FINALLY LED TO THE ISSUE OF REVISED EXTRACT. ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 7 10. TO CROSS-VERIFY THE CONTENTS OF THE SAID REVISE D EXTRACT, THE AO ISSUED SUMMONS TO THE TALATI/THE MUNICIPAL ADHIKARI AND TH EIR STATEMENTS WERE RECORDED EVENTUALLY. THEY CONFIRMED THE FACT OF ISSUE OF RE VISED EXTRACT. HOWEVER, THE AO IS CRITICAL OF THE SAID REVISED EXTRACT. TO SPECIFYIN G THE OTHER IRREGULARITIES, THE AO NOTED WHILE ISSUING THE REVISED EXTRACTS, PROPER PR OCEDURE WAS NOT FOLLOWED AS SPECIFIED IN SECTION 175 OF THE RELEVANT ACT. REFE RRING TO THE PROCEDURE FOLLOWED BY THE TALATI/MANDAL ADHIKARI, AO MENTIONED THAT ONE O F THE PANCHAS WAS A MINOR AT THE RELEVANT POINT OF TIME, I.E. A.Y. 2001-02. AO WANTED THESE PANCHAS TO BE PRODUCED FOR EXAMINATION. EVENTUALLY, THE AO HELD THAT THE SAID REVISED EXTRACTS CONSTITUTES A PRODUCT OF AN AFTERTHOUGHT. THEREFOR E, HE RELIED HEAVILY ON THE ORIGINAL 7/12 EXTRACT. IN NUTSHELL, THE CASE OF TH E AO IS THAT THE ORIGINAL 7/12 EXTRACT MENTIONED ABOUT THE BARRENNESS OF THE LAND CONSTITUTES THE REAL AND CREDIBLE ONE. THE REVISED ONE CONSTITUTES A MANIPU LATED ONE OR AN AFTERTHOUGHT. AO WAS UNDER THE IMPRESSION THAT ASSESSEE MANIPULAT ED THE REVENUE OFFICIALS AND CREATED THE EVIDENCE IN HIS FAVOUR. 11. CONSIDERING THE ABOVEMENTIONED TWO TYPES OF 7/1 2 EXTRACTS, I.E. ONE OBTAINED BY AO AND (2) THE REVISED ONE SUBMITTED BY THE ASSESSEE, AO PROCEEDED TO GATHER ANY OTHER EVIDENCE IF ANY. THEREFORE, AO SENT HER INCOME-TAX INSPECTOR FOR SPOT INSPECTION OR ENQUIRY. INSPECTOR OBTAINED A STATEMENT FROM SHRI V.B. GAIKWAD, WHO IS LANDLORD OF NEIGHBOURING LAND. SHR I V.B. GAIKWAD GAVE A STATEMENT STATING THAT THERE WERE NO AGRICULTURAL A CTIVITIES IN THE SAID LAND FOR THE PAST 10 YEARS. HOWEVER, AO DID NOT BOTHER TO PUT TH E SAID EVIDENCE TO THE ASSESSEE FOR HIS COMMENTS OR TO PUT SHRI V.B. GAIKW AD FOR CROSS-EXAMINATION BY SHRI GOVARDHAN S. PAWAR. EVENTUALLY, AO INVOKED T HE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF MC DOWELL & COMPANY LT D. VS. CIT REPORTED IN 154 ITR 148 FOR THE PROPOSITION THAT THE TRANSACTION UN DER CONSIDERATION CONSTITUTES A ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 8 COLOURABLE DEVICE AND THE ASSESSEE NEVER INTERESTED TO PAY TAXES ON THE CAPITAL GAINS EARNED BY THE ASSESSEE ON SALE OF THE LANDS A T S.NO.75/1. ACCORDINGLY, AO HELD THAT THE CONDITIONS SPECIFIED IN SECTION 54B O F THE ACT WITH REGARD TO THE USAGE OF LAND BY THE ASSESSEE OR HIS PARENTS FOR AGRICULT URAL PURPOSES, IS NOT SATISFIED. THEREFORE, AO HELD THAT THE ASSESSEE IS NOT ENTITLE D FOR DEDUCTION U/S.54B OF THE ACT. ASSESSEES ALTERNATE CLAIM OF DEDUCTION U/S.5 4F OF THE ACT WAS ALSO REJECTED FOR WANT OF PROPER EVIDENCE. II. AOS ALLEGATION WITH REFERENCE TO PURCHASE OF A NY OTHER LANDS FOR AGRICULTURAL USE USING THE CAPITAL GAINS GUT NOS. 73, 257 AND 304. 12. FURTHER, THE SECTION 54B OF THE ACT PROVIDES FO R THE CONDITION OF PURCHASE OF ANY OTHER LAND FOR AGRICULTURAL PURPOSE FOR CLAIM O F DEDUCTION. THE AO DENIED THE BENEFITS OF SAID PROVISIONS OF SECTION 54B OF THE A CT IN RESPECT OF THE GAINS EARNED BY THE ASSESSEE FROM THE OTHER POINT OF VIEW OF APP ROPRIATION OF THE SAID GAINS IN PURCHASE OF THE NEW ASSETS. IN THIS REGARD, AO EXA MINED THE REINVESTMENT OF THE SAID CAPITAL GAINS AND HELD THAT ALL IS NOT WELL WI TH THE PURCHASE TRANSACTIONS OF THE SAME. ASSESSEE FAILED TO FILE THE REGISTERED TITLE DEEDS. OUT OF THE DIFFERENT PARCELS OF LAND PURCHASED BY THE ASSESSEE BY INVESTING THE SAID CAPITAL GAINS, AO ZEROED DOWN OF 3 SUCH PARCELS OF LAND LOCATED AT GUT NO.73 , GUT NO.257 AND GUT NO.304 FOR DEEPER INVESTIGATION. AO HELD THAT THERE THREE LANDS DO NOT QUALIFY THE CLAIM OF DEDUCTION. DETAILS ARE DISCUSSED AS UNDER. A. GUT NO.73 : 13. WE SHALL NOW TAKE UP THE FACTS RELATING TO EAC H OF THESE 3 PARCELS OF LAND. REGARDING THE LAND LOCATED AT GUT NO.73, IT IS MENTIONED THAT THE SAID LAND WAS PURCHASED BY THE ASSESSEE FROM SHRI SUDHAKAR B. GORE AGAINST THE CONSIDERATION OF AROUND RS.1.50 CRORES. ON THE DAT E OF AGREEMENT, ASSESSEE PAID RS. 10 LAKHS BY WAY OF CASH AND RS.1 LAKH BY WAY OF CHEQUE. AO DISPUTED THE SAID ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 9 TRANSACTION AND HELD THAT THE SAID LAND IS NOT EVEN TUALLY REGISTERED IN THE SUB- REGISTRAR OFFICE. ACCORDING TO AO, THE SAID LAND I S NOT TRANSFERABLE LAND AS THE SAME CONSTITUTES AN INAMI LAND (REWARDED LAND) . HE ALSO MENTIONED THAT THE DISPUTE ON THE OWNERSHIP OF THE LAND IN VIEW OF THE FACT TH AT THERE IS SOME LITIGATION BY ONE SHRI MOHAN PURANPATRE. TO VERIFY THE GENUINENESS O F THE OWNERSHIP, THE POSSESSION OF THE LAND, CORRECTNESS OF THE PAYMENTS ETC., AO SUMMONED THE SHRI SUDHAKAR B. GORE, WHO EVENTUALLY APPEARED AND CONFI RMED THE RECEIPT OF THE SAID CONSIDERATION. ASSESSEES ALSO FILED AN AFFIDAVIT O F SHRI SUDHAKAR B. GORE CONFIRMING THE RECEIPT OF THE CONSIDERATION OF RS.1.50 CRORES AS WELL AS THE FACT OF POSSESSION OF THE LAND WITH SHRI SUDHAKAR B GORE AND RULED OUT THE CLAIM OF SHRI MOHAN PURANPATRE ON THE LANDS. AO DID NOT ACCEPT THE ABO VE ASSERTIONS OF THE ASSESSEES AS WELL AS SHRI SUDHAKAR B. GORE AND REJECTED THE A FFIDAVITS FILED BY THEM BY STATING THAT THE SAME CONSTITUTES AN ARRANGEMENT. OTHERWIS E, AO DID NOT HAVE ANY INCRIMINATING EVIDENCE AGAINST THEM. EVENTUALLY, T HE AO SUMMED UP SAYING THAT THE CAPITAL GAINS EARNED BY THE ASSESSEE ON SALE OF THE LANDS ARE NOT INVESTED IN AGRICULTURAL LAND AS THE TRANSFER OF LAND AT GUT NO .73 IS NOT REGISTERED IN THE OFFICE OF THE SUB-REGISTRAR AND THE LAND IS NO IN P OSSESSION OF THE ASSESSEE. THUS, HE CONCLUDES AGAINST THE ASSESSEES ON THE APPLICABI LITY OF THE PROVISIONS OF SECTION 54B OF THE ACT. B. GUT NO.257 : 14. SIMILARLY, REGARDING THE INVESTMENT OF GAINS IN THE TRANSACTION OF THE PURCHASE OF THE GUT NO.257, THE CASE OF THE ASSESSE E IS THAT THE ASSESSEE PURCHASED THE SAID LAND FROM SHRI SHRICHAND HARICHA ND RATHOD AND OTHERS FOR A SUM OF RS.56,10,000/- AND A SUM OF RS.42.5 LAKHS WA S ALREADY PAID. ASSESSEES ALSO FURNISHED AFFIDAVITS OF SHRI SHRICHAND HARICHA ND RATHOD AND ASSESSEE CONFIRMING THE FACT OF POSSESSION OF THE LAND, FACT OF PAYMENT OF CONSIDERATION ETC. ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 10 HOWEVER, THE AO TOOK AN ADVERSE VIEW ON THIS TRANSA CTION TOO CONSIDERING THE FACT THAT THE SAID LAND WAS NOT REGISTERED IN THE OFFICE OF SUB-REGISTRAR. AO DENIED THE BENEFIT OF SECTION 54B OF THE ACT IN RESPECT OF THIS GUT TOO. C. GUT NO.304 : 15. SIMILAR IS THE CASE WITH REGARD TO GUT NO.304, WHICH WAS PURCHASED BY THE ASSESSEE IN OCTOBER, 2006 FOR A SUM OF RS.1.15 CROR ES. ON CONSIDERING THE FACT THAT THE ASSESSEE FAILED TO FURNISH THE REGISTERED TITLE DEEDS OF THE SAID TRANSACTION, AO DENIED THE BENEFIT OF SAID SECTION U/S.54B OF THE ACT. III. ALTERNATE CLAIM U/S.54F OF THE ACT : 16. WE SHALL NOW TAKE UP THE ASSESSEES ALTERNATE C LAIM OF EXEMPTION U/S.54F OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS, ASSESS EE FILED A LETTER MAKING AN ALTERNATE CLAIM OF ASKING FOR THE GRANT OF DEDUCTIO N U/S.54F OF THE ACT RELATING TO CAPITAL GAIN TRANSFER OF CERTAIN CAPITAL ASSETS NOT TO BE CHARGED IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE. IN SUPPORT OF REINVESTMENT OF GAINS AMOUNTING TO RS.55,42,310/- IN THE RESIDENTIAL HOUSE, ASSESSE E FILED A CERTIFICATE OF AN ARCHITECT-CUM-ENGINEERS SINGED BY SHRI G.H.YADKIKAR CERTIFYING THAT AN AMOUNT WAS SPENT IN CONSTRUCTION OF A RESIDENTIAL HOUSE ON THE SAID LAND. HOWEVER, NOTWITHSTANDING THE FACT OF EXISTENCE OF THE HOUSE ON THE LANDS, ON FINDING THAT THE ASSESSEE FAILED TO FURNISH DOCUMENTARY EVIDENCES IN SUPPORT OF THE SAID CONSTRUCTION OF RESIDENTIAL HOUSE, AO TOOK ADVERSE VIEW AND DISMISSED THE SAID ALTERNATE CLAIM OF EXEMPTION U/S.54F OF THE ACT TOO . HOWEVER, IT IS THE CASE OF THE AO THAT SUCH CLAIMS CAN ONLY BE MADE BY FILING THE REVISED RETURNS OF INCOME. 17. AT THE END, AO DENIED THE ASSESSEES CLAIM OF E XEMPTION U/S.54B AS WELL AS U/S.54F OF THE ACT IN RESPECT OF THE CAPITAL GAINS EARNED BY THE ASSESSEE. THUS, THE AO PROCEEDED TO TAX THE CAPITAL GAINS OF THE ASSESS EES SHARE OF 50% AS UNDER : ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 11 SALE VALUE TAKE N AS PER SECTION 50C RS.3,82,40,000/ - LESS : PURCHASE VALUE RS.36,75,000/ - AS ON 06 - 06 - 2000 PLUS OTHER PURCHASE EXPENSES AT RS.11,62,980/- (INDEXED COST) AS CLAIMED RS.52,79,682/ - LONG TERM CAPITAL GAINS RS.3,29,60,318/ - LESS : EXEMPTION ALLOWABLE U/S.54B AND 54F NIL TAXABLE LONG TERM CAPITAL GAINS RS.3,29 ,60,318/ - 50% CAPITAL GAINS RELATED TO THE ASSESSEE RS.1,64,80,159/ - ROUNDED TO R S .1,64,80,160/ - AO DETERMINED THE TOTAL INCOME OF SHRI GOVARDHAN S. PAWAR AT RS.1,64,80,160/-. IV. CLAIM OF AGRICULTURAL INCOME : 18. WE SHALL NOW TAKE THE DISPUTE RELATING TO THE E XTENT OF AN ALLOWABLE AGRICULTURAL INCOME TO THE ASSESSEE IN THIS YEAR. IN THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT ASSESSEE OWNS HUGE AGRICULTURAL LAND HOLDINGS AND CLAIMED THE AGRICULTURAL INCOME OF RS.9.5 LAKHS FOR THE YEAR UND ER CONSIDERATION. AO VERIFIED THE AGRICULTURAL RECEIPTS AND ALSO EXAMINED THE AGR ICULTURAL PRODUCE AS PER THE DISCUSSION GIVEN IN PARA NOS. 11 AND 12 OF HIS ORDE R AND HELD THAT THE SAID CLAIM OF AGRICULTURAL INCOME OF RS.9.5 LAKHS IS ON HIGHER SI DE. HE QUANTIFIED THE TOTAL SALES OF AGRICULTURAL PRODUCE AT RS.5,95,144/-. HE GAVE BENEFIT OF REDUCTION OF 25% OF THE ABOVE SALE PROCEEDS TOWARDS AGRICULTURAL EXPEND ITURE AND THE ALLOWABLE AGRICULTURAL INCOME OF THE YEAR IS DETERMINED AT RS .4,46,358/-. AO ADDED BALANCE SUM OF RS.5,03,642/- AS INCOME FROM OTHER SOURCES . IN THE PROCESS, AO IGNORED THE FACT THAT THE ASSESSEE MADE SIMILAR CLAIMS IN T HE PAST ASSESSMENT YEARS AND THE SAME WAS ALLOWED IN FAVOUR OF THE ASSESSEE. 19. EVENTUALLY, THE ASSESSMENT IS COMPLETED BY THE AO AT RS.1,75,80,410/- AGAINST THE RETURNED INCOME OF RS.1,34,000/-. AGGR IEVED WITH THE ABOVE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A), AURANGABAD. ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 12 BEFORE THE FIRST APPELLATE PROCEEDINGS : 20. ASSESSEE MADE VARIOUS SUBMISSIONS ON THE ISSUE OF (1) USE OF LAND BY ASSESSEE FOR AGRICULTURAL PURPOSE IN 2 YEARS PRIOR TO SALE, (2) APPROPRIATION OF GAINS ON PURCHASE OF GUT NOS. 7, 257 AND 304 AND FINALLY (3) ON THE CORRECTNESS OF AGRICULTURAL INCOME OF RS.9.5 LAKHS. EVENTUALLY, T HE CIT(A) ALLOWED FULLY THE CLAIM OF EXEMPTION U/S.54B OF THE ACT AND PARTLY ALLOWED THE APPEAL OF THE ASSESSEE ON THE ISSUE OF AGRICULTURAL INCOME. ON THIS ISSUE, T HE ASSESSEE GOT RELIEF OF RS.3,13,642/-. THE CONTENTS OF PARA NO.11 OF CIT(A ) IS RELEVANT. BEFORE THE ITAT : 21. AGGRIEVED WITH THE SAID ORDER OF THE CIT(A), T HE REVENUE FILED THE PRESENT APPEALS IN BOTH THE CASES OF SHRI GOVARDHAN S. PAWA R AND SMT. ANITA G. PAWAR. THERE ARE NO CROSS APPEALS/CROSS OBJECTIONS FILED B Y THE ASSESSEES. 22. BEFORE US, LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE NARRATED THE ABOVE REFERRED FACTS AND SUBMITTED THAT THE ASSESSE E FAILED IN NOT PAYING TAXES ON THE CAPITAL GAINS EARNED BY THE ASSESSEE IN RESPECT OF SALE OF LAND AT S.NO.75/1. JUSTIFYING THE AOS ORDER IN ALL RESPECT, LD. DR FO R THE REVENUE SUBMITTED THAT LAND PURCHASED BY THE ASSESSEE IN THE YEAR 2000 WERE NEV ER USED FOR AGRICULTURAL PURPOSES. REFERRING TO THE ORIGINAL 7/12 EXTRACT, WHICH WAS OBTAINED BY THE AO DURING THE ASSESSMENT PROCEEDINGS INVOKING THE PROV ISIONS OF SECTION 131 OF THE ACT, LD. DR SUBMITTED THAT THE ASSESSEE IS UNDISPUT EDLY THE OWNER OF THE LAND. REFERRING TO THE PORTION OF GOV. NAMUNA NO.7A (PAGE 59 OF THE PAPER BOOK), LD. DR SUBMITTED THAT SHRI KULDEEP SINGH IS THE CULTIVA TOR OF THE LAND DURING THE F.YRS. 2003-04 AND 2004-05. ASSESSEE IS THE CULTIVATOR IN THE F.Y. 2005-06. FURTHER, BRINGING OUR ATTENTION TO GOV. NAMUNA NO.12, LD. DR SUBMITTED THAT DURING THE F.YRS. 2003-04 TO 2005-06, THE AGRICULTURAL LAND WA S REMAINED BARREN AND NO CROPS WERE CULTIVATED DURING THE SAID YEARS. THEREFORE, SHRI KULDEEP SINGH WHO CULTIVATED ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 13 DURING THE SAID YEARS, AND INFACT, THE LAND REMAINE D BARREN AND NOTHING IS CULTIVATED AS PER THE RECORDS. 23. WHEN THE BENCH ASKED THE LD. DR HOW SHRI KULDEE P SINGH CAN BE THE CULTIVATOR OF THE LAND WHEN NO CROP IS CULTIVATED A ND HOW SHRI KULDEEP SINGH, THE PREVIOUS OWNER OF THE LAND CAN CONSTITUTE CULTIVATO R IN THE ABSENCE OF ANY LEASE DEED BETWEEN THE LANDLORD AND SHRI KULDEEP SINGH, I N RESPONSE, THE LD. DR MERELY RELIED ON THE ORIGINAL EXTRACT. REFERRING TO THE REVISED EXTRACT, LD. DR FOR THE REVENUE SUBMITTED THAT SHRI KULDEEP SINGH CONTINUE S TO BE THE CULTIVATOR EVEN IN THE REVISED 7/12 EXTRACT. ONLY CHANGE IS WITH REGA RD TO THE CROPS GROWN IN THE A.YRS. 2002-03, 2003-04, 2004-05 AND 2005-06. THE CROPS GROWN IN THE SAID LAND INCLUDES BAJRA, MAIZE AND TOOR. FURTHER, RELYING H EAVILY ON THE STATEMENT OF SHRI. V.B. GAIKWAD, WHO IS THE OWNER OF A NEIGHBOURING LA ND OF S.NO.75/1, LD. DR SUBMITTED THAT NO CROPS WERE GROWN IN THE SAID LAND FOR THE PAST 10 YEARS AND THE ASSESSEES NEVER USED THE SAID LAND FOR AGRICULTURAL PURPOSES. TO SUM UP, THE CASE OF THE LD. DR IS THAT THE ORDER OF THE AO SHOULD BE SUSTAINED REVERSING THE FINDING OF THE CIT(A) ON THIS ISSUE OF USE OF THE SAID LAND BY THE ASSESSEE FOR AGRICULTURAL PURPOSES IN THE IMMEDIATE TWO A.YRS. 2004-05 AND 20 05-06. 24. FURTHER, ON THE ASPECT OF USE OF CAPITAL GAINS FOR PURCHASING THE ANY OTHER LAND PARCELS INCLUDING THE ONES AT GUT NOS. 257 AND 304, LD. DR RELIED HEAVILY ON THE ORDER OF THE AO. AO HELD IN HIS ORDER THAT GUT NO.73 CONSTITUTES AN INAMI LAND WHICH IS NOT TRANSFERABLE AND THE ASSESSEE FAILED TO FURNISH THE PROOF THAT THE SAID LANDS WERE DULY REGISTERED IN THE OFFICE O F THE SUB-REGISTRAR AND FAILED TO FILE COPIES OF THE TITLE/REGISTRATION DEEDS. REFUT ING THE CIT(A)S CONCLUSION, LD. DR ARGUED THAT THE CLAIM OF ASSESSEE SHOULD NOT BE ALL OWED ON THE BASIS OF PAYMENT OF CONSIDERATION AND THE ACT OF REGISTRATION CONSTITUT ES THE DECIDING FACTOR AND WHAT MATTERS IS THE POSSESSION OF THE LAND BY THE ASSESS EE. RELYING ON THE STATEMENT OF ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 14 SHRI MOHAN PURANPATRE, LD. DR STATED THAT THE GUT N O.73 IS A NON-TRANSFERABLE LAND AND THE ASSESSEE IS NOT IN POSSESSION OF THE SAME. 25. REFERRING TO THE RELIEF GRANTED BY THE CIT(A) I N RESPECT OF THE ALTERNATE CLAIM MADE BY THE ASSESSEE INVOKING THE PROVISIONS OF SEC TION 54F OF THE ACT, IT IS THE CLAIM OF THE AO THAT THE ASSESSEE FAILED TO DISCHAR GE THE ONUS IN FURNISHING THE EVIDENCE IN SUPPORT OF THE ASSESSEES CLAIM OF INVE STMENT OF CAPITAL GAINS IN THE RESIDENTIAL HOUSE. FURNISHING MERELY A CERTIFICATE FROM ARCHITECT-CUM-ENGINEER IS NOT ADEQUATE. ACCORDING TO THE LD. DR, THE CIT(A) ERRED IN ACCEPTING THE SAME AS AN EVIDENCE AND THEREBY GRANTING THE DEDUCTION AND THE SAME IS UNSUSTAINABLE IN LAW. 26. REFERRING TO THE PART RELIEF GRANTED BY THE CIT (A) IN RESPECT OF CLAIM OF THE AGRICULTURAL INCOME, LD. DR CLAIMS THAT THE CIT(A) HAS ERRED IN GRANTING FURTHER RELIEF MERELY BASED ON THE ESTIMATION. 27. PER CONTRA, SHRI HARI KRISHAN, LD. AR FOR THE ASSESSEE ESSENTIALLY RELIED ON THE ORDER OF THE CIT(A) AND THE WRITTEN SUBMISSIONS MADE BY HIM BEFORE THE CIT(A). REFERRING TO HIS ARGUMENTATIVE SUBMISSIONS VIDE HIS LETTER DATED 03-11- 2009, LD. AR LISTED OUT VARIOUS ARGUMENTS. THE MAJ OR ONES INCLUDE THAT THE LAND SITUATED AT GUT NO.75/1 WAS USED FOR AGRICULTURAL P URPOSES DURING TWO YEARS PRIOR TO THE DATE OF TRANSFER OF THE SAID LAND TO SHRI RAVIN DRA C. KHINVASARA. ACCORDING TO HIM, THE ASSESSEES ARE THE OWNERS OF THE SAID LAND SINCE 2000. THE POSSESSION OF THE SAID LAND IS WITH THE ASSESSEE, HE NEVER LEASED OUT THE LAND TO SHRI KULDEEP SINGH AND HE ACTUALLY CULTIVATED THE DRY CROPS ON T HE SAID LAND DURING THE RELEVANT YEARS UNDER CONSIDERATION. ASSESSEE WAS NEITHER PR IVY OF THE REVENUE DOCUMENTS NOR IS AWARE OF THE DETAILS MENTIONED IN THE REVENU E RECORDS ESPECIALLY IN THE 7/12 EXTRACTS. AS PER LD. AR, THE 7/12 EXTRACTS OBTAINE D BY THE AO AT THE BACK OF THE ASSESSEE SUGGEST THE FACT THAT IT SUFFERS FROM VARI OUS DISCREPANCIES. ONE SUCH ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 15 DISCREPANCY RELATES TO THE NAME OF THE OWNER OF SAI D LANDS, I.E. PREVIOUS OWNERS NAME IS MENTIONED AS OWNER AT THE RELEVANT POINT OF TIME ON THE SAID EXTRACTS. IT SHOWS THE FACT THAT 7/12 EXTRACTS RELIED UPON BY TH E AO IS NOT PERFECT IN ALL RESPECT. HAVING COME TO KNOW OF THE DISCREPANCY OF OWNERSHIP AND CROPS, THE ASSESSEE DUTIFULLY FILED AN APPLICATION FOR RECTIFICATION OF THE SAID MISTAKES IN THE RECORDS OF REVENUE QUA 7/12 EXTRACTS. HE PLEADED THAT REVENUE AUTHORITIES HAS THE POWERS ON PAR WITH THE POWERS TO AO VIDE THE PROVISIONS OF SE CTIONS 153, 263 AND 264 OF THE INCOME TAX ACT. EXERCISING THE SAME, THE REVISED 7 /12 EXTRACTS WAS ISSUED BY THE REVENUE AUTHORITIES, I.E. TALATI, MANDAL OFFICE ADH IKARI, DY. COLLECTOR, COLLECTOR ETC., ARE INVOLVED IN THIS PROCESS. AO NOTICED MISTAKES IN THIS REVISED 7/12 EXTRACTS TOO WITH REFERENCE TO THE DETAILS OF THE CULTIVATOR. P REVIOUS LAND OWNER IS SHOWN AS CULTIVATOR. LD. AR QUESTIONED HOW IT IS POSSIBLE? IN ANY CASE, THE 7/12 EXTRACTS, PRE AND POST RECTIFICATION, ISSUED BY THE REVENUE A UTHORITIES ARE IMPERFECT IN ONE FORM OR OTHER AND THE REVISED ONE IS ALSO ISSUED AF TER DUE PROCESS OF RULES AND THE LAW IN FORCE. IN ANY CASE, THE ASSESSEE HAS NO ROL E TO PLAY IN THE PROCESS OF ISSUANCE OF THE SAID EXTRACTS. FURTHER, THE PROCED URE OF DRAWING PANCHANAMAS IS ALSO IN THE BEST KNOWLEDGE OF THE REVENUE AUTHORITI ES AND THE ASSESSEE IS NOT THE PRIVY TO THE SAME. IN ANY CASE, ACCORDING TO THE A SSESSEE, THE INCOME-TAX AUTHORITIES ARE NOT JUSTIFIED IN QUESTIONING THE AS SESSEE REGARDING THE DEFICIENCIES IN THE SAID 7/12 EXTRACTS AS WELL AS THE PROCEDURES OF PANCHANAMA ETC. RATHER, AS PER LD. AR, THE AO SHOULD TAKE UP THE ISSUE WITH THE RE VENUE AUTHORITIES. AO CANNOT USE SUCH REASONING FOR DENYING THE BENEFITS OF SECT ION 54B OF THE ACT. IN FACT, AO SUMMONED THE TALATI/MANDAL ADHIKARI ETC. U/S.131 OF THE ACT. THEY CONFIRMED THE BONAFIDE OF THE REVISED EXTRACT, THE OWNERSHIP, AS SESSEE AS A CULTIVATOR AND ALSO CROP DETAILS AS APPEARED ON REVISED 7/12 EXTRACTS. THIS IS FOR THESE REASONS THE ASSESSEE REQUESTED FOR CONFIRMING THE ORDER OF THE CIT(A) AND REJECT THE CONCLUSIONS OF THE AO AND LD. DR FOR THE REVENUE. ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 16 28. IF THE INCOME-TAX AUTHORITIES ARE NOT SATISFIED WITH THE STATEMENTS OF TALATI AND MANDAL ADHIKARI, THE OFFICER SHOULD HAVE TAKEN THE PROCEEDINGS FORWARDED TO THE DISTRICT COLLECTOR AND OTHER SENIOR OFFICERS E TC., IN THE SAME LINE OF DUTY. AS PER THE ASSESSEE, WITHOUT DOING THE SAME, TERMINATING T HE PROCEEDINGS PREMATURELY AND PENALISING THE ASSESSEE, AS DONE BY THE AO, IN THE ASSESSEES CASE, IS UNSUSTAINABLE IN LAW. THE FACTS MENTIONED AS PER T HE REVISED 7/12 EXTRACTS CONFIRM THE BASIC FACT THAT THE SAID LAND BELONGS TO THE AS SESSEE UNDER CONSIDERATION AND WAS UNDER CULTIVATION DURING THE TWO YEARS PRIOR TO THE DATE OF SALE OF THE SAID LAND AT GUT NO.75/1. APPEARANCE OF THE NAME OF SHRI KUL DEEP SINGH (THE EARLIER LANDLORD) CONSTITUTES A MISTAKE. NEITHER THE REVEN UE AUTHORITIES NOR THE AO HAS DONE ANYTHING TO CORRECT THE SAID PATENT MISTAKE. THEREFORE, AS PER THE LD. AR FOR THE ASSESSEE, THE AGRICULTURAL INCOME EARNED BY THE ASSESSEE IN THE F.YRS. 2003-04 AND 2004-05 IS OUT OF HIS AGRICULTURAL ACTIVITIES O N THE LAND AT SURVEY NO.75/1. LD. AR RELIED ON THE AGRICULTURAL INCOME DISCLOSED IN T HE RETURNS OF INCOME FOR THE RELEVANT A.YRS. 2004-05 AND 2005-06. IN SUPPORT, H E BROUGHT OUR ATTENTION TO THE DISCLOSED PARTICULARS OF AGRICULTURAL INCOME OUT OF THE SAID LAND AS SHOWN IN THE COMPUTATION OF INCOME APPENDED TO THE RETURNS OF INCOME FOR THE RELEVANT ASSESSMENT YEARS. 29. CONSIDERING THE ABOVE NARRATED SUMMARISED FORM OF THE ARGUMENTS, IT IS THE PRAYER OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE SAID LAND LOCATED AT GUT NO.75/1 WHICH IS SOLD BY THE ASSESSEE TO SHRI R.C. KHINVASA RA, CONSTITUTES AN AGRICULTURAL LAND USED BY THE ASSESSEE DURING THE RELEVANT YEARS SPECIFIED IN THE PROVISIONS OF SECTION 54B OF THE I.T. ACT, 1961. THE FACT OF GRO WING THE DRY CROPS, I.E. MAIZE, BAJRA ETC. ARE THE FACTS AS SUPPORTED BY THE REVISE D 7/12 EXTRACTS. 30. FURTHER, RELYING TO THE DRS ARGUMENT THAT THE LAND AT S.NO.75/1 IS USED FOR REAL ESTATE PURPOSE, LD. AR SUBMITTED THAT THE END USE OF THE LAND BY THE ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 17 SUBSEQUENT BUYERS FOR NON AGRICULTURAL PURPOSES WIL L HAVE NO ADVERSE IMPACT ON THE ASSESSEES CLAIM OF DEDUCTION U/S.54B OF THE ACT. WHAT IS RELEVANT IS THE NATURE OF LAND AT THE RELEVANT POINT OF TIME AND NOT OTHERWIS E. THIS IS FOR THE REASON THAT THE SECTION 54B SPECIFIES THAT, BEFORE THE SALE OF THE LAND, THE LAND SHOULD BE AN AGRICULTURAL LAND USED BY THE ASSESSEE OR HIS PAREN TS AND WHATEVER HAPPENS AFTER THE TRANSACTION OF SALE IS NOT A RELEVANT FACTOR FO R DECIDING THE NATURE OF THE LAND. THE FACT OF CIT(A) CALLING FOR A REMAND REPORT ON T HE ABOVE SAID SUBMISSIONS WHEREIN THE AO RELIED ON THE JUDGMENT OF HONBLE GU JARAT HIGH COURT IN THE CASE OF CIT VS. SIDDHARTH J. DESAI REPORTED IN 139 ITR 628 WHICH CONSIDERED THE 13 POINTS AS DETERMINED BY THE SUPREME COURT IS DISCUSSED IN HIS ORDER BEFORE HOLDING THAT THE SAID LAND WAS USED FOR AGRICULTURAL PURPOSES. THE ASSESSEE DISTINGUISHED THE SAID JUDGMENT AND FILED A COUNTER COMMENTS IN THIS REGARD BEFORE THE AO VIDE HIS LETTER DATED 27-03-2013. 31. REGARDING THE PURCHASE OF LAND AND APPROPRIATIN G OF THE CAPITAL GAINS IN GUT NOS. 73, 257 AND 304, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE IS NO SUSTAINABLE DISPUTE ABOUT PAYMENT OF RS. 1.5 CRORES TO SHRI SUDHAKAR B. GORE. THE PAYMENT INCLUDES CHEQUE PAYMENT PARTLY AND BALANCE IN CASH. REGARDING THE PURCHASE OF GUT NO.257, THE FACT OF PAYMENT OF RS.4 .5 LAKHS TO SHRI SHRICHAND HARICHAND RATHOD OUT OF THE TOTAL CONSIDERATION OF RS.56,10,000/- IS ALSO UNDISPUTED. THE AFFIDAVITS GIVEN BY SHRI SUDHAKAR B. GORE AND SHRI SHRICHAND HARICHAND RATHOD SUPPORT THE SAME. THIRDLY, THE PA YMENT OF RS.1.50 CRORES IN CONNECTION WITH GUT NO. 304 IS ALSO UNDISPUTED. 32. RELYING ON VARIOUS DECISIONS RELATING TO THE RE QUIREMENT OF REGISTRATION QUA THE PAYMENT OF CONSIDERATION, LD. COUNSEL FOR THE A SSESSEE RELIED ON JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. DR. LAXMICHAND NA RPAL NAGDA 211 ITR 804 AS WELL AS THE JUDGMENT OF DELHI HIGH COURT IN THE CASE OF BALRAJ 241 ITR 22 (DEL). ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 18 FURTHER, HE ALSO RELIED ON THE TRIBUNAL DECISIONS I N THE CASE OF CHAMANLAL THAKURDAS 39 ITR 159 (AHD.). T.SHIVEKUMAR 158 ITD 329 (BANG). ACCORDING TO THESE DECISIONS, REGISTRATION OF PROPERTY IN THE NAME OF THE ASSESSEE IS NOT A PRE- CONDITION BECAUSE OF THE WORD PURCHASE AS USED IN SECTION 54B OF THE ACT, A BENEFICIAL PROVISIONS, IS NOT USED IN A SENSE OF L EGAL TRANSFER AND THEREFORE, THE LEGAL TITLE WITHIN THE STIPULATED PERIOD IS NOT A C ONDITION PRECEDENT. LD. COUNSEL FOR THE ASSESSEE ALSO REASONED THAT THE AO FAILED TO EN FORCE THE ATTENDANCE OF SHRI SUDHAKAR B. GORE AND SHRI SHRICHAND HARICHAND RATHO D FOR CROSS VERIFYING THE FACTS OF THE AFFIDAVITS. FURTHER, ON THE ISSUE OF NOT GI VING THE BENEFIT OF CROSS EXAMINATION WITH SHRI V.B. GAIKWAD, LD. COUNSEL FOR THE ASSESSEE RELIED ON VARIOUS DECISIONS SUCH AS KRISHANCHAND CHALLARAM 125 ITR 71 3 (SC) ON THE ISSUE OF NON- ADMISSIBILITY OF EVIDENCE WHICH IS NOT CONFRONTED T O THE ASSESSEE. 33. FINALLY, IT IS THE SUMMARY OF THE LD. COUNSEL F OR THE ASSESSEE THAT THE ORDER OF THE CIT(A) IS FAIR AND REASONABLE AND IT SHOULD NOT BE DISTURBED SO FAR AS THE USE OF THE LAND FOR AGRICULTURAL PURPOSES BY THE ASSESS EE FOR THE YEARS UNDER CONSIDERATION. CONTENTS OF PARA NOS. 6 TO 6.2 ARE RELEVANT AND THE SAME ARE EXTRACTED AS UNDER : 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE AND THE RIVAL CONTENTIONS. TO SUM UP THE FIRST FIVE CONTENTIONS MADE BY THE A. O. AS STATED ABOVE, IN A NUTSHELL THE A.O. HAS QUESTIONED THE EVIDENTIARY VALUE OF TH E REVISED 7/12 EXTRACTS SUBMITTED BY THE APPELLANT BY RAISING PROCEDURAL DI SCREPANCIES IN THE LEGAL PROCESS TO RECTIFY THEM. THE A.O HAS QUESTIONED THE REASON FOR THE TAHASILDAR TO RECONSIDER THE 7/12 EXTRACTS AFTER A LAPSE OF 8 YEARS, FURTHER QUESTIONING THE CREDIBILITY OF THE PANCHAS. ALSO, THE A.O HAS ASKED AS TO HOW IS IT PO SSIBLE FOR A LAY MAN I.E THE PANCHA (WITNESS) TO RECALL WHETHER A CERTAIN LAND W AS CULTIVATED EIGHT YEARS AGO. STATING THE ABOVE REASONS, THE A.O. HAS STATED THE SAME TO BE AN AFTERTHOUGHT ATTEMPT TO CONVERT THE FALSE INTO TRUTH. 6.1 IN THIS REGARD, THE EXPLANATION GIVEN BY THE AP PELLANT IS DULY CONSIDERED. THE APPELLANT HAS STATED THAT THE SAID LAND WAS NOT UND ER CULTIVATION BEFORE PURCHASE OF THE SAME BY THE APPELLANT. SUBSEQUENT TO THE PURCHA SE BY THE APPELLANT SIMILAR ENTRIES WERE CONTINUED BY THE REVENUE AUTHORITIES B Y MISTAKE IN THE SUBSEQUENT YEARS WITHOUT VERIFYING THE ACTUAL FACTS. HOWEVER, THE MISTAKE WENT UNNOTICED BY THE APPELLANT AS HE WAS NOT IN NEED OF THE 7/12 EXT RACTS. THE MISTAKE WAS NOTICED BY THE APPELLANT ONLY WHEN THE APPELLANT WAS CONFRO NTED WITH THE 7/12 EXTRACTS DIRECTLY OBTAINED BY THE A.O. THEREFORE, HE MADE TH E NECESSARY APPLICATION WITH THE ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 19 REVENUE AUTHORITIES TO RECTIFY THE SAID MISTAKE. ON PERUSAL OF THE RECORDS IT HAS BEEN NOTICED THAT IN THE ORIGINAL 7/12 EXTRACTS COLLECTE D BY THE A.O. THE NAME OF THE OWNER IS STATED TO BE KULDEEPSINGH I.E THE PREVIOUS OWNER OF THE SAID LAND. THIS CLEARLY GOES TO EXPLAIN THAT THE SAID 7/12 EXTRACTS OBTAINED BY THE A.O. WERE NOT UPDATED. THUS, THE A.O. HAS WRONGLY MADE THE ASSESS MENT PLACING RELIANCE ON THE 7/12 EXTRACTS WHICH WERE NOT UPDATED. FURTHER, IT I S IMPORTANT TO NOTE THAT WHEN THE A.O. IS DOUBTFUL ABOUT THE CREDIBILITY OF REVIS ED 7/12 EXTRACTS PRODUCED BY THE APPELLANT HE COULD HAVE ONLY CONFIRMED WHETHER THE SAME ARE GENUINE OR FAKE FROM THE TAHASILDAR WHO DIRECTED THE RECTIFICATION. IT IS IN NO CASE THE JURISDICTION OF THE LD. A.O. TO CHECK WHETHER PROPER PROCEDURES HAVE BE EN FOLLOWED BY THE LAND REVENUE AUTHORITIES WHILE ISSUING THE SAID DOCUMENT S AND HE CANNOT PROCEED TO JUDGE THE GENUINENESS AND CORRECTNESS OF THE PROCED URES FOLLOWED THEREIN. IT MAY BE NOTED THAT IN EVERY LEGISLATURE THERE IS A PROVI SION FOR RECTIFICATION OF ORDER ALREADY PASSED AND SIMILARLY, EVEN THE REVENUE ACT CONTAINS EXPRESS PROVISIONS FOR CORRECTION OF MISTAKES IN ITS RECORDS. ALSO, IT IS A NORMAL PRACTICE TO RECTIFY THE ORIGINAL ORDERS IN THE REVENUE DEPARTMENT. THEREFOR E THE QUESTION RAISED BY THE A.O. SUCH AS WHAT MADE THE TAHASILDAR TO RECONSIDE R HIS STAND OF 8 YEARS AND FOR WHAT PURPOSE? OR HOW IS IT HUMANLY POSSIBLE FOR A LAY MAN TO REMEMBER CERTAIN SPECIFIC CROPS WERE GROWN ON THE SAID LAND THAT TOO WHEN SUCH LAND AND INCOME ARISING THEREFROM DOES NOT BELONG TO THE LAY MAN? WOULD GO DIRECTLY TO QUESTION THE LAWS MADE BY THE CONSTITUTION. THUS, THE APPELL ANT IN THIS CASE HAS DONE NOTHING WRONG BY FOLLOWING THE PROCEDURE LAID DOWN IN THE LAWS FORMED IN THIS REGARD TO OBTAIN THE SAID DOCUMENTS. IN VIEW OF THE ABOVE FACTS, THE CORRECTED 7/12 EXTRACTS WOULD RIGHTLY SERVE AS AN EVIDENCE IN DETE RMINING THE USE OF THE SAID LAND. 6.2 AS REGARDS THE STATEMENT RECORDED BY THE INSPEC TOR OF A PERSON RESIDING AT AN AREA NEARBY THE LOCATION OF THE LAND IN CONSIDER ATION, THE DECISION RELIED ON BY THE APPELLANT DELIVERED BY THE HONBLE DELHI HIGH C OURT IN JINDAL VEGETABLE CASE SQUARELY APPLIED TO THE CASE OF THE APPELLANT. ORIGINAL INCOME-TAX RETURNS CLAIM OF AGRICULTURAL INCOME IN A.YRS. 2004-05 AND 2005-06 34. FURTHER, REFERRING TO THE CLAIM OF AGRICULTURAL ACTIVITY IN THE A.YS. 2004-05 AND 2005-06, LD. COUNSEL FOR THE ASSESSEE BROUGHT O UR ATTENTION TO PAGE 478 OF THE PAPER BOOK AND COPY OF FORM 2D FOR THE A.Y. 2004-05 AND SUBMITTED THAT THE ASSESSEE FILED THE RETURN OF INCOME U/S.139(1) OF T HE ACT ON 22-02-2006 WITH ITO, WARD-2(2), AURANGABAD VIDE ACKNOWLEDGEMENT NO. 0221 011573. REFERRING TO ITEM NO.24 RELATING TO AGRICULTURAL INCOME (FOR RATE PUR POSES), LD. COUNSEL SUBMITTED THAT AN AMOUNT OF RS.9,14,450/- WAS CLAIMED AS AGRI CULTURAL INCOME EARNED OUT OF THE AGRICULTURAL LANDS HELD BY HIM WHICH INCLUDES 1 0 ACRES 28 GUNTAS AT S.NO.75/1. SIMILAR CLAIM IS EVIDENT FROM THE RETURN OF INCOME FOR THE A.Y. 2005-06 ALSO. BRINGING OUR ATTENTION TO ITEM NO.24 OF THE RETURN RELATING TO AGRICULTURAL INCOME FOR THE YEAR, LD. COUNSEL SUBMITTED THAT AN AMOUNT OF R S.10,87,750/- WAS CLAIMED AS ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 20 AGRICULTURAL INCOME (PAGE 480 AND 481 ARE RELEVANT) . THE CLAIMS OF THE ASSESSEES WERE ACCEPTED BY THE REVENUE AND THEREFORE IT CANNO T BE SAID THAT THE ASSESSEE HAS NOT EARNED ANY AGRICULTURAL INCOME OR THE SAID LANDS WERE NOT PUT TO USE BY THE ASSESSEE FOR AGRICULTURAL ACTIVITIES DURING THE SAI D A.YRS. 2004-05 AND 2005-06. SIMILAR CLAIMS WERE MADE IN THE CASE OF HIS WIFE MR S. ANITA G. PAWAR FOR THE SAID ASSESSMENT YEARS AND THE SAID CLAIMS WERE DULY ACCE PTED BY THE REVENUE WITHOUT ANY DISTURBANCE. FURTHER, THE ASSESSEE ALSO RELIED ON VARIOUS EVIDENCES GATHERED BY THE DEPARTMENT DURING THE SUBSEQUENT 132 OPERATI ON ON THE ASSESSEE. IT IS THE CLAIM OF AR THAT THE SAID EVIDENCES INCLUDE EVIDENC ES OF PAYMENT OF CONSIDERATION OF SHRI SUDHAKAR B. GORE. DECISIONS OF THE TRIBUNAL : 35. WE HAVE SO FAR NARRATED THE GENERAL FACTS OF TH E CASE, FACTS RELATING TO THE VARIOUS ASPECTS OF THE ASSESSEES, CLAIM OF DEDUCTIO N OF DEDUCTION U/S.54B OF THE ACT, AN ALTERNATE CLAIM U/S.54F OF THE ACT, AND FIN ALLY, THE ALLOWABILITY OF CLAIMS OF AGRICULTURAL INCOME. WE HAVE ALSO DEALT WITH VARIO US ARGUMENTS AND CASE LAWS RELIED BY BOTH THE PARTIES ON THESE ISSUES. WE SHA LL TAKE UP EACH OF THESE ISSUES IN THE SUCCEEDING PARAGRAPHS. TO START WITH, THE MAJO R ISSUE OF CLAIMS OF DEDUCTION U/S.54B OF THE ACT INVOLVES VARIOUS ASPECTS AND THE SAME ARE TAKEN UP AS UNDER : A. WHETHER ASSESSEES ARE THE OWNERS : ASSESSEES PURCHASED THE LAND AT SURVEY NO 75/1 IN THE YEAR 2000 ALONG WITH HIS WIFE WITH 50% SHARE IN IT. SHRI KULDEEP SINGH WAS THE PREVIOUS OWNER OF THESE LANDS . IN THE YEAR 2006, ASSESSEE AND HIS WIFE SOLD THE SAID LAND WHICH GAVE RISE TO THE IMPUGNED CAPITAL GAINS. THESE ARE UNDISPUTED FACTS. THEREFORE, THE OWNERSHIP OF THE PROPERTY IS UNDISPUTED AND THE ASSESSEE ALONG WITH HIS WIFE ARE THE OWNERS OF IT. OF COURSE, THE ENTRIES IN THE REVENUES RECORDS, WHICH SHOWS SHRI KULDEEP SINGH A S OWNER OR CULTIVATOR, CREATED UNNECESSARY SUSPICION IN THE MIND OF THE AO, WHO TO OK AN ADVERSE VIEW IN THE ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 21 MATTER AND AGAINST THE ASSESSEES. THESE OBSERVATIO NS DEMONSTRATE, HOW POORLY AND CASUALLY, THE REVENUES RECORDS ARE MAINTAINED BY THE REVENUES AUTHORITIES OF THE STATE GOVERNMENT. OTHERWISE, WE PERUSED THE TI TLE DEEDS OF LAND AT S.NO.75/1 AND THE CORRECTION DEED AND FOUND THE NAME OF THE A SSESSEES APPEARED IN THE TITLE DEEDS. THEREFORE, THE OWNERSHIP OF THE LANDS VESTS WITH ASSESSEE AND HIS WIFE ONLY. B. WHETHER ASSESSEES ARE THE CULTIVATORS : THE SAID LANDS DID NOT HAVE THE HISTORY OF THE WET LANDS AS PER RECORDS. THEY ARE KNOWN FOR DRY CROPS ONLY. REVENUES RECORDS EVIDENCES THE SAME. IT IS THE CLA IM OF THE ASSESSEE BEFORE US THAT CERTAIN DRY CROPS WERE GROWN IN THE SAID LANDS BY THEMSELVES TILL THE LANDS WERE EVENTUALLY SOLD IN 2006 TO KHINVASARA/KASLIWAL S. AO DID NOT ACCEPT THIS CLAIM IN VIEW OF THE RECORDED ENTRIES ON 7/12 EXTRACTS, W HICH DEPICT SHRI KULDEEP SINGH AS THE CULTIVATOR. HOW IT IS POSSIBLE? IT HAS NEVER B EEN THE CASE OF THE ASSESSEE THAT THE SAID LANDS WERE LEASED OUT TO SHRI KULDEEP SING H, THE PREVIOUS LANDLORD, AND, IN THAT CASE, THERE IS POSSIBILITY THAT SHRI KULDEEP S INGH CAN BE THE CULTIVATOR OF LANDS AT S.NO.75/1. WE ARE UNABLE TO UNDERSTAND HOW SHRI KULDEEP SINGH CAN BE THE CULTIVATOR WHEN HE IS NEITHER A LESSEE NOR THE OWNE R OF THE LAND. OTHERWISE, THE PREVIOUS OWNER CANNOT BE THE CULTIVATOR AFTER HE SE LLS THE LANDS TO THE ASSESSEES. THEREFORE, THE REVENUE RECORDS, WHICH CONTAINS HIS NAME AS THE CULTIVATOR, HAS TO BE ERRONEOUS. ON THIS ASPECT, ON THE SAID ENTRIES I N THE EXTRACTS, THE EXPLANATION OF THE ASSESSEE IS THAT THE REVISED 7/12 EXTRACTS MERE LY CONTAINS THE RECTIFICATION DONE IN THE 12 PORTION (DETAILS OF CROPS) OF THE SAID EX TRACT AND NOT IN THE 7 OR 7A PORTIONS OF THE 7/12 EXTRACTS. IN ANY CASE, AS ARGU ED BY THE LD. AR, THE ASSESSEE HAS NO ROLE IN MAINTENANCE OF THOSE REVENUES RECOR DS. FURTHER, AS PER LD. AR FOR ASSESSEES, THE PREVIOUS LANDLORD CANNOT BE THE CULT IVATOR OF LANDS AT S.NO.75/1 WHEN THE SAID LAND WAS CONCLUSIVELY PURCHASED BY TH E ASSESSEES IN YEAR 2000 AND THE ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 22 ASSESSEE HAS BEEN POSSESSION OF THE LANDS SINCE THE YEAR 2000. AS PER LD. AR, THE ASSESSEES NEVER LEASED THE SAID LANDS TO SHRI KULDE EP SINGH FOR GROWING CROPS. ACCORDING TO THE LD. AR, IT WAS THE ASSESSEES WHO GREW DRY CROPS IN THOSE LANDS AND USED THE SAME FOR AGRICULTURAL PURPOSES DURING THE A.YS 2004-05 AND 2005-06. THE FACT OF EARNING AGRICULTURAL INCOME AND DECLARI NG THE SAME IN THE RETURN OF INCOME BY BOTH THE WIFE AND HUSBAND WERE EVIDENCED AND THE COPIES ARE PLACED IN THE PAPER BOOK. IN ANY CASE, IT IS NOT THE CASE OF REVENUE THAT THE AO IS POSSESSION OF ANY DIRECT CREDIBLE INCRIMINATING EVI DENCE TO DEMONSTRATE THAT THE SHRI KULDEEP SINGH IS THE CULTIVATOR APART FROM THE SAID CONTROVERSIAL 7/12 EXTRACTS. WE HAVE ALREADY DISCUSSED THAT THE 7/12 EXTRACTS AR E THE CREATION OF REVENUE OFFICERS/TALATI ETC., AND THE ASSESSEES HAVE NO ROL E IN MAINTENANCE OF THE RECORDS. CONSIDERING THE FACT LANDS AT S.NO. 75/1 IS THE POS SESSION OF THE ASSESSEE SINCE THE YEAR 2000 ALONG WITH THE UNDISPUTED FACT THAT THE A SSESSEES NEVER LEASED THE LANDS TO SHRI KULDEEP SINGH, WE ARE OF THE OPINION THAT A LL IS NOT WELL WITH RECORDS MAINTAINED BY THE MRO/TALATI ETC., IT IS LIKELY THA T THE SHRI KULDEEP SINGH, BEING THE PREVIOUS OWNER-CUM-CULTIVATOR ON RECORDS, CONTINUES TO BE SHOWN BY THE REVENUE AUTHORITIES AS THE CULTIVATOR ERRONEOUSLY EVEN AFTE R HE SOLD THE LANDS TO THE ASSESSEES. OTHERWISE, IT IS NOT POSSIBLE THAT SHRI KULDEEPSINGH CULTIVATED THE LAND OF THE ASSESSEE LEGALLY. THUS, FROM THIS POINT OF V IEW, THE SAID RECORDS OF THE REVENUE ARE NOT FOOL-PROOF SO FAR AS THE 7/12 EXTRA CTS OF LANDS AT S.NO. 75/1, ARE CONCERNED. THEREFORE, IT IS NOT POSSIBLE THAT THE A SSESSEES ARE NOT THE CULTIVATORS AT THE RELEVANT POINT OF TIME AND, THEREFORE, SHRI KUL DEEP SINGH IS THE CULTIVATOR IN THE SAID LANDS. HENCE, WE DISMISS THE CONCLUSIONS DRAWN BY THE AO ON THIS ISSUE AND AGREE WITH THE CIT(A) ON THIS ISSUE. AS SUCH, THER E WAS ACTION U/S.132 OF THE ACT ON THE ASSESSEES AND IT DID NOT RESULT IN ANY INCRI MINATING MATERIAL AGAINST THE ASSESSEES ON THIS CLAIM U/S.54B OF THE ACT. C. WHETHER THERE WAS AGRICULTURAL ACTIVITY ON THE S AID LAND IN THE 2 A.YS PRIOR TO THE DATE OF TRANSFER OF LANDS IN 2006: THE ORIGINAL 7/12 EXTRACT GATHERED BY THE AO INDICATE BARRENNESS OF THE LAN DS AT S.NO.75/1 AND THEREFORE, ACCORDING TO AO, THE ASSESSEES WOULD NOT HAVE GROWN CROPS IN A.YRS 2004-05 AND 2005-06. HOWEVER, ASSESSEES FILED REVISED 7/12 EXTR ACT, WHICH WERE ISSUED BY THE REVENUE AUTHORITIES AFTER INCORPORATING CORRECTIONS AND ON COMPLYING WITH THE DUE ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 23 PROCESS OF RULES RELATING TO RECTIFICATION. THIS RE VISED ONE INDICATES GROWING OF DRY CROPS SUCH AS MAIZE, BAJRA ETC., IN THE AYS 2004-05 AND 2005-06. OF COURSE, THE REVENUE PICKS UP HOLES IN THE SAID 7/12 EXTRACTS TO O BY STATING THAT THERE ARE SOME PROBLEMS WITH THE PROCESS OF DRAWING PANCHANAMA, PANCHAS ETC. CONSIDERING DETAILED WRITTEN SUBMISSIONS GIVEN BY THE LD.AR BEF ORE US READ WITH THE JUDICIAL PRONOUNCEMENTS ON THIS ASPECT, IN OUR VIEW, THE AO HAS EXCEEDED HIS JURISDICTION IN SUSPECTING THE REVISED EXTRACT WHICH HAS THE BASI S OF THE RECORDS MAINTAINED BY THE STATE GOVT. IT IS ON RECORD THAT AO FAILED TO CONTINUE TO INVESTIGATE THE MATTER BY TAKING IT UP WITH THE DISTRICT COLLECTOR TO BRIN G THE ISSUE TO THE LOGICAL CONCLUSION. THEREFORE, WHILE REJECTING THE CLAIM OF ASSESSEES, THE RELIANCE OF THE AO ENTIRELY ON THE SAID 7/12 EXTRACTS, WHICH SUFFER FROM PATENT IM PERFECTIONS. IN OUR VIEW, THE AO HAS UNFAIRLY DENIED THE BENEFITS OF DEDUCTION U/S 5 4B OF THE ACT AND THE SAME IS NOT SUSTAINABLE. FURTHER, IT IS THE CASE OF THE ASSESS EES, THAT BOTH ASSESSEES FILED THEIR RETURNS OF INCOME U/S.139 OF THE ACT DECLARING THE AGRICULTURAL INCOME IN BOTH THE ASSESSMENT YEARS AND THE AOS ACCEPTED THE SAID CLAI MS OF THE ASSESSEES. HOWEVER, THE CLAIM OF THE ASSESSEE REGARDING EARNIN G OF AGRICULTURAL INCOME FROM THE GUT NO.75/1 WAS THE SUBJECT MATTER OF LITIGATIO N BEFORE THE CIT(A) IN CONNECTION WITH THE REASSESSMENTS MADE U/S.143(3) READ WITH SE CTION 153A OF THE ACT. DETAILS ARE DISCUSSED AS UNDER. 36. THERE WAS ACTION U/S.132 OF THE ACT ON THE ASSE SSEE AT LATER YEARS. FURTHER, WE FIND THAT THE AGRICULTURAL INCOME FROM GUT NO 75 /1 WAS ALSO SUBJECT MATTER OF THE INVESTIGATION BY THE AOS DURING THE REASSESSME NT PROCEEDINGS U/S.143(3) R.W.S. 153A OF THE ACT. IN THESE RETURNS TOO, ASSESSEE MA DE A CLAIM OF AGRICULTURAL INCOME. HOWEVER, THE AO DISALLOWED THE CLAIM OF EX EMPTION IN RESPECT OF LANDS AT GUT NO.75/1. IN THE FIRST APPELLATE PROCEEDINGS, T HE CIT(A) GAVE CLEAR CUT DIRECTION IN HIS ORDER REGARDING THE AGRICULTURAL INCOME FROM GUT.NO. 75/1 IN PARTICULAR AND IN FAVOUR OF ALLOWING THE CLAIM OF AGRICULTURAL LANDS ARE THE SAID AGRICULTURAL LANDS FOR ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 24 A.YS 2004-05 AND 2005-06. REGARDING THE AFOREMENTIO NED REPORTING OF AGRICULTURAL INCOME IN AYS 2004-05 AND 2005-06 IN THE REGULAR RE TURNS AND AVAILABILITY OF EVIDENCES IN SUPPORT OF SALE OF THE TRANSACTIONS OF AGRICULTURAL PRODUCE, WE FIND THAT THE ASSESSEE FILED THE RETURNS OF INCOME U/S 139(1) OF THE ACT BEFORE THE DUE DATE SPECIFIED IN THE STATE AND THE CONTENTS OF THE PAGE S 478 TO 489 OF THE PAPER BOOK ARE RELEVANT. DETAILS RELATING TO THE DATE OF FILI NG, ACKNOWLEDGMENT NUMBERS WERE ALREADY MENTIONED IN THE PRECEDING PARAGRAPHS OF TH IS ORDER. THE SAID ORIGINAL RETURNS AND THE APPENDED COMPUTATION OF INCOME FOR A.YRS 2004-05 AND 2005-06 CLEARLY INDICATE THE FACT OF REPORTING OF THE AGRIC ULTURAL INCOME. 37. RELEVANT EXTRACTS FROM THE SAID DOCUMENTS (AT P AGE 478 TO 489 OF THE PAPER BOOK) A.YS 2004-05 AND 2005-06 ARE INSERTED AS UNDER : EXTRACTS FROM ORIGINAL THE I.T. RETURNS FILED U/S.1 39 OF THE ACT FOR THE A.YS 2004-05 AND 2005-06: A] EXTRACT FROM THE ORIGINAL RETURN OF INCOME (PAGE 478 TO 489 OF THE PAPER BOOK) FOR THE A.Y 2004-05. (SHRI PAWAR GOVARDHAN SHAMRAO) 1. NAME : PAWAR GOVARDHAN SHAMRAO 2. FATHERS NAME : SHAMRAO PAWAR 3. ADDRESS : PLOT NO.3. BANJARA COLONY, AURANGABAD- PHONE :_ 4. PERMANENT A/C NO. : ABFPP0880K 5. BIRTH DATE : 26/07/1964 6. STATUS : INDIVIDUAL (01) 7. RES IDENT 8. WARD : 2(2) 9. SEX : MALE 10. INCOME FOR THE PREV.YEAR 1.4.2003-31.3.20054 11. ASSESSMENT YR : 2004-2005 13. DETAILS OF BANK ACCOUNT (FOR REFUND CASES) 12. RETURN : ORIGINAL . . .. 24. AGRICULTURAL INCOME RS.914450 B] EXTRACT FROM THE ORIGINAL RETURN OF INCOME (PAGE 480 TO 481 OF THE PAPER BOOK) FILED U/S.139 OF THE ACT FOR THE A.Y 2005-06. (SHRI PAWAR GOVARDHAN SHAMRAO) 1. NAME : PAWAR GOVARDHAN SHAMRAO 2. FATHERS NAME : SHAMRAO PAWAR 3. ADDRESS : PLOT NO.3. BANJARA COLONY, AURANGABAD- PHONE : 4. PERMANENT A/C NO. : ABFPP0880K 5. BIRTH DATE : 26/07/1964 6. STATUS : INDIVIDUAL (01) 7. RESIDENT 8. WARD : 2(2) 9. SEX : MALE 10. INCOME FOR THE PREV.YEAR 1.4.2004-31.3.2005 11. ASSESSMENT YR : 2005-2006 13. DETAILS OF BANK ACCOUNT (FOR REFUND CASES) 12. RETURN : ORIGINAL ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 25 . . .. 24. AGRICULTURAL INCOME RS.1087750 C] EXTRACT FROM THE ORIGINAL RETURN OF INCOME (PAGE 483 TO 484 OF THE PAPER BOOK) FILED U/S.139 OF THE ACT FOR THE A.Y 2004-05. (MRS.ANITA GOVARDHAN PAWAR) 1. NAME : MRS. ANITA GOVARDHAN PAWAR 2. FATHERS NAME : 3. ADDRESS : PLOT NO.3. BANJARA COLONY, AURANGABAD- PHONE : 4. PERMANENT A/C NO. : AKTPP0531C _ 5. BIRTH DATE : 15/10/1969 6. STATUS : INDIVIDUAL (01) 7. RESIDENT 8. WARD : 2(2) 9. SEX : FEMALE 10. INCOME FOR THE PREV.YEAR 1.4.2003-31.3.2004 11. ASSESSMENT YR : 2004-2005 13. DETAILS OF BANK ACCOUNT (FOR REFUND CASES) 1 2. RETURN : ORIGINAL . . .. 24. ADD : AGRICULTURAL INCOME (FOR RATE PURPOSES) RS.979450 D] EXTRACT FROM THE ORIGINAL RETURN OF INCOME (PAGE 485 TO 486 OF THE PAPER BOOK) FILED U/S.139 OF THE ACT FOR THE A.Y 2005-06. (MRS.ANITA GOVARDHAN PAWAR) 1. NAME : MRS.ANITA GOVARDHAN PAWAR 2. FATHERS NAME : 3. ADDRESS : PLOT NO.3. BANJARA COLONY, AURANGABAD- PHONE : 4. PERMANENT A/C NO. : AKTPP0531C 5. BIRTH DATE : 15/10/1969 6. STATUS : INDIVIDUAL (01) 7. RESIDENT 8. WARD : 2(2) 9. SEX : FEMALE 10. INCOME FOR THE PREV.YEAR 1.4.2004-31.3.2005 11. ASSESSMENT YR : 2005-2006 13. DETAILS OF BANK ACCOUNT (FOR REFUND CASES) 1 2. RETURN : ORIGINAL . . .. 24. ADD : AGRICULTURAL INCOME (FOR RATE PURPOSES ) RS.923250 38. WE HAVE EXTRACTED THE RELEVANT ITEM NO. 24 RELA TING TO AGRICULTURAL INCOME IN THE RETURN OF INCOME FILED ORIGINALLY U/S.139 OF TH E ACT FOR THE A.YRS 2004-05 AND 2005-06 I.E. 2 YEARS PRIOR TO THE DATE OF TRANSFER OF LANDS. NOW, WE SHALL PROCEED TO EXTRACT THE RELEVANT PARAGRAPH FROM THE ORDERS OF T HE CIT(A) WHICH CONTAINS THE FINAL FINDING ON THE ISSUES OF AGRICULTURAL INCOME WITH SPECIAL REFERENCE GUT NO.75/1. THESE ORDERS HAVE GENESIS IN THE REASSESSMENT ORDER S OF AO U/S.143(3) R.W.S. 153A OF THE ACT. IN THESE ORDERS, FOR BOTH THE YEARS, CIT(A) HELD THAT THE ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 26 GUT NO.75/1 WAS USED BY ASSESSEE FOR AGRICULTURAL PURPOSE AND ASSESSEE EARNED AGRICULTURAL INCOME. THIS FINDING HAS ATTAINED FIN ALITY TECHNICALLY AS THERE ARE NO APPEALS BY THE REVENUE DUE TO LOW TAX EFFECT. RELE VANT EXTRACTS ARE TYPED AS FOLLOWS : EXTRACT FROM THE ORDER OF THE CIT(A) (PAGE 10) FOR THE A.Y. 2004-05 DATED: 11/06/2012 : 6.5.3 . IN VIEW OF THE ABOVE FACTS, I AM OF THE CONSIDERED VIEW THAT THE A.O. IS NOT JUSTIFIED IN HOLDING THAT THE SAID LAND WAS NOT USED FOR AGRI CULTURAL PURPOSE FOR THE PRECEDING TWO YEARS. 6.5.4 HENCE, THE CONTENTION OF THE A.O. THAT THE A GRICULTURAL INCOME IS TO BE CALCULATED ONLY IN RESPECT OF GAT. NO.256 & 276 IS INCORRECT AND HENCE THE AGRICULTURAL INCOME IN RESPECT OF GAT NO 75/1 IS ALSO TO BE CONSIDERED. EXTRACT FROM THE ORDER OF THE CIT(A) (PAGE 9 & 10) FOR THE A.Y. 2005-06 DATED: 11/06/2012 : 6.5.3 .. HOWEVER, THE CASE IN HAND RELATES TO ALLOWABILITY O F EXEMPTION U/S 54B. HENCE, THE CASE RELIED ON BY THE HON'BLE A.O. IS CLEARLY ON DI STINGUISHABLE GROUNDS. IN VIEW OF THE ABOVE FACTS, I AM OF THE CONSIDERED VIEW THAT T HE A.O. IS NOT JUSTIFIED IN HOLDING THAT THE SAID LAND WAS NOT USED FOR AGRICULTURAL PU RPOSE FOR THE PRECEDING TWO YEARS. 6.5.4 HENCE, THE CONTENTION OF THE A.O. THAT THE AG RICULTURAL INCOME IS TO BE CALCULATED ONLY IN RESPECT OF GUT NO.256 & 276 IS I NCORRECT AND HENCE THE AGRICULTURAL INCOME IN RESPECT OF GUT NO.75/1 IS ALSO TO CONSIDERED. 39. LD.AR SUBMITTED THAT THE ABOVE EVIDENCES BY WAY OF THE RETURNS OF INCOME FILED U/S.139 OF THE ACT AND THE ORDERS OF CIT(A) F OR A.YS 2004-05 AND 2005-06, SUPPORT THE CLAIMS OF THE ASSESSEE THAT THE ASSESSE E USED THE LANDS AND EARNED AGRICULTURAL INCOME IN THE RELEVANT A.YS. 40. FURTHER, WE FIND SHRI AJAY MODI, LD.DR FAIRLY S UBMITTED THAT THE REVENUE ACCEPTED THE ORDERS OF THE AO IN THE REGULAR ASSESS MENT AS WELL AS THE ORDERS OF CIT(A) FOR BOTH YEARS RELATABLE TO THE REASSESSMENT S U/S.143(3) R.W.S. 153A OF THE ACT. THUS, THE CLAIM AGRICULTURAL INCOME FOR BOTH A .YRS 2004-05 AND 2005-06 HAS REACHED THE FINALITY AND IT IS IN FAVOUR OF THE ASS ESSEES. HENCE, WE ARE OF THE VIEW THAT THE ASSESSEE USED THE LANDS AT S.NO.75/1 FOR A GRICULTURAL PURPOSE AND ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 27 AGRICULTURAL INCOME OUT OF GUT NO.75/1 TOO OUT OF SALE OF THE AGRICULTURE PRODUCE OF THE DRY CROPS GROWN BY THEM. 41. TO SUM UP, THE ASSESSEES CLAIMS, THAT THEY ARE THE OWNERS, CULTIVATORS AND EARNED AGRICULTURAL INCOME, ARE ACCEPTABLE. WE AFF IRM THE ORDER OF THE CIT(A) ON THIS. D. WHETHER ASSESSEES PURCHASED ANY OTHER AGRICULTUR AL LANDS AS PER SECTION 54B OF THE ACT : THIS ISSUE RELATES TO THE CONDITION OF PURCHASE OF ANY OTHER AGRICULTURAL LAND WITHIN A PERIOD OF TWO YEARS AFTER THE DATE OF TRA NSFER OF LANDS, AS SPECIFIED IN THE PROVISIONS OF SECTION 54 B OF THE ACT. ON THIS ISSUE, THE DISPUTE BETWEEN THE PARTIES REVOLVES AROUND THE ACT OF REGISTRATION OF GUT NUMBERS 73, 257 AND 304 IN THE SUB REGISTRAR OFFICE AND FURNISHING OF THE T ITLE DEEDS TO AO. THE CASE OF THE REVENUE IS THAT, IN THE ABSENCE OF SUCH REGISTRATION OF THE ASSETS AND THE TITLE DEEDS, THE CLAIM OF PURCHASE OF THE S AID LANDS, IS INCOMPLETE AND THEREFORE, THE CLAIM OF PURCHASE OF LANDS IS NOT AL LOWABLE. IN TURN, THE ASSESSEE IS NOT ENTITLED TO THE DEDUCTION U/S.54B OF THE ACT. PER CONTRA , THE CASE OF THE ASSESSEE IS DIFFERENT. WHEN THE SUBSTANTIAL PAYMENT PURCHASE CONSIDERATION IS MADE TO THE SELLER AND WHEN THE ASSESSEES ARE IN PO SSESSION OF THE SAID PURCHASED LANDS, THE SAME SATISFIES THE LEGAL NEEDS OF PURCHA SE TRANSACTIONS. IN THIS REGARD, ASSESSEE RELIED ON THE CASE LAWS AND THE REASONING GIVEN BY THE CIT(A) IN HIS ORDER. FOR THE SAKE OF COMPLETENESS, WE PROCEED TO EXTRACT THE SAME HERE AS UNDER: A] REGARDING GUT NO.73, FINDING OF THE CIT(A) READS A S UNDER: (PAGE 27; PARA 8.3.4) IT IS ALSO SETTLED LAW THAT BENEFICIAL P ROVISIONS GRANTING DEDUCTION/EXEMPTION TO THE APPELLANT TO BE CONSTRUE D LIBERALLY. THIS PROPOSITION OF LAW IS SUPPORTED BY FOLLOWING DECISIONS. (I) BAJAJ TEMPO VS. CIT(1992) 196 ITR 188 (SC) (II) CIT VS. SULTAN & SONS RICE MILLS (2005) 272 ITR 181 (ALL) ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 28 (III) CIT VS. N.P.MATHEW & ORS (2006) 280 ITR 44 (KER) (IV) P.R.PRABHAKAR VS. CIT (2006) 284 ITR 548 (SC) (V) CIT VS. STRAWBOARD MANUFACTURING CO.LTD. (1989) 17 7 ITR 431 IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 54B IN RESPECT OF AMOUNT PAID TOWARDS PURCHASE OF LAND AT GUT NO.73 . THE SHARE OF THE APPELLANT IN PAYMENT OF RS.1,54,75,000/- IS 50%. THE A.O. IS, THEREFORE, D IRECTED TO ALLOW DEDUCTION OF RS.77,37,500/- U/S 54B IN RESPECT OF LAND AT GUT NO.73. 42. FURTHER, WE FIND THE CONTENTS OF PARA 7 ON PAGE 29 OF THE ORDER OF FIRST APPELLATE AUTHORITY IS RELEVANT AND THE SAME IS EXT RACTED HERE AS UNDER: (7) THE BENEFICIAL PROVISIONS ARE TO BE C ONSTRUED LIBERALLY. IN SUPPORT OF THIS PROPOSITION THE APPELLANT HAS RELIE D ON THE VARIOUS DECISIONS POINTED OUT IN SUBMISSION IN RESPECT OF DEDUCTION CLAIMED F OR PURCHASE OF LAND AT GUT NO.73 B] EXTRACT FROM CIT(A) PAGE 29; PARA 9.2 REG. GUT N O.257. 9.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND THE RIVAL CONTENTIONS. THE ISSUE TO BE DECIDED TO DETERMINE THE ALLOWABILI TY OF DEDUCTION U/S 54B IN RESPECT OF LAND AT GUT NO.257 IS AS UNDER IN VIEW OF THE ABOVE FACTS AND DISCUSSION, I AM OF THE CONSIDERED VIEW THAT THE APPELLANT IS ELIGIBLE FOR DEDUCTION U/S 54B IN RESPECT OF LAND AT GUT NO.257 IN RESPECT OF CONSIDERATION PAID AMOUNTING TO RS.33,66 ,000/- IN WHICH THE APPELLANTS SHARE IS 25%. THE STAMP DUTY & REGISTRY EXPENSES A RE RS.1,34,640/-. THE A.O. IS ACCORDINGLY DIRECTED TO ALLOW DEDUCTION U/S 54B AT RS.8,75,160/- TO THE APPELLANT IN RESPECT OF LAND AT GUT NO.257 . 43. CIT(A) ANALYSED THE INVESTMENT OF GAINS IN THE NEW ASSETS/LANDS AND ALSO THE LEGAL PRECEDENTS TO COME TO THE CONCLUSION THAT THE INVESTMENTS IN THE SAID GUTS, CONSTITUTES PURCHASE OF ANY OTHER LAND FOR BEING USED FOR AGRI CULTURAL PURPOSE. IN THE PRESENT APPEALS, THE REVENUE HAS A GRIEVANC E AGAINST THE ORDER OF THE CIT(A) ONLY WITH REGARD TO THE GUT NO.73 AND NOT THE OTHER GUT NOS. 257 AND 304. ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 29 44. THEREFORE, FOCUSING ON THE PURCHASE OF GUT NO.7 3, IT IS THE LEGAL REQUIREMENT THAT THE ASSESSEE MUST PURCHASE THE GUT NO.73. BOT H ASSESSEES, WITH 50% SHARE, PAID THE TOTAL CONSIDERATION OF RS.1,54,75,000/- AN D OBTAINED THE POSSESSION OF THE LAND AT GUT NO.73. FROM THE LEGAL POINT OF VIEW, T HE ASSESSEES PURCHASED THE SAID LANDS. ACT OF REGISTRATION AND THE FURNISHING OF T ITLE DEEDS IS A MATTER OF DOCUMENTATION AND IT IS MATTER OF TIME. THEREFORE, THE ASSESSEE SHOULD BE HELD AS PURCHASED THE LAND AT GUT NO.73 FOR THE PURPOSE OF SECTION 54B OF THE ACT. ON THIS REASONING, LD.CIT(A) ALLOWED THE ARGUMENTS OF THE A SSESSEES. WE AGREE WITH THE SAME. 45. FROM THE DISCUSSION GIVEN ABOVE, IT IS REQUIREM ENT OF THE LAW OF SECTION 54B OF THE ACT THAT THE ASSESSEES SHOULD HAVE UTILIZED THE GAINS FOR PURCHASE OF ANY OTHER LANDS FOR BEING USED FOR AGRICULTURAL PURPOS ES. ON ALL THESE CONDITIONS, THE CIT(A) EXAMINED AND HELD THAT THE ASSESSEES MET ALL THE CONDITIONS LEGALLY. IN OUR VIEW, THE ORDER OF CIT(A) CONSTITUTES A POSSIBLE VI EW AND THE SAME CONSTITUTES A FAIR AND REASONABLE ORDER AND THEREFORE WE AFFIRM THE SA ME. ACCORDINGLY, THE GROUND NOS. 1 TO 3 RAISED BY THE REVENUE IN CASES OF BOTH THE ASSESSEES ARE DISMISSED. 46. FOR THE DETAILED DISCUSSION AND THE ANALYSIS OF THE FACT, WE FIND THAT THE ASSESSEES HAVE COMPLIED WITH THE CONDITIONS SPECIFI ED IN THE SECTION 54B OF THE ACT, WE ARE OF THE OPINION THAT THE ASSESSEES ARE ENTITL ED TO CLAIM OF DEDUCTION U/S.54B OF THE ACT. E. ALLOWABILITY OF ALTERNATE CLAIM U/S.54F OF THE A CT: SECTION 54F OF THE ACT RELATES TO CAPITAL GAINS ON THIS TRANSFER OF CERTAIN CURRENT ASSETS NOT TO BE CHANGED IN CASE OF INVESTMENT IN THE RESIDENTIAL HOUSE. ASSESSEES RAISED THIS GROUND AS AN ALTERNATIVE GROUND FOR THE FIRST TIME BEFORE THE AO . ASSESSEE CLAIMED INVESTING RS.55,42,310/- OF THE GAIN IN A RESIDENTIAL HOUSE A ND CLAIMED DEDUCTION U/S.54F OF THE ACT. THE CLAIM IS MADE AS AN ALTERNATIVE GROUN D TO CLAIM U/S.54B OF THE ACT. ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 30 HOWEVER, AO DISMISSED THE SAME ON THE GROUND OF ASS ESSEES FAILURE TO DISCHARGE ONUS WITH RESPECT TO FURNISHING OF EVIDENCES IN SUP PORT OF INVESTMENT OF GAINS IN CONSTRUCTION OF THE RESIDENTIAL HOUSE. ASSESSEE FIL ED A CERTIFICATE FROM ARCHITECT ONLY. DURING THE ASSESSMENT PROCEEDINGS, AO REJECT ED THE SAID CERTIFICATE OF THE ARCHITECT CUM BUILDER OF THE SAID HOUSE. HOWEVER, C IT(A) ALLOWED THE CLAIM OF THE ASSESSEE AS PER HIS DISCUSSION IN PAGE 10 OF HIS OR DER. BEFORE US, THE AR RELIED ON THE RESPECTIVE ORDERS OF THE AO OR THE CIT(A) AS TH E CASE MAY BE. ON HEARING THE PARTIES, WE FIND THE ADJUDICATION OF THIS ISSUE BEC OMES A NECESSITY ONLY WHEN THE RELIEF UNDER THE PROVISIONS RELATING TO SECTION 54B OF THE ACT, IS DENIED. 47. THEREFORE, CONSIDERING THE RELIEF GRANTED BY US FOR THE DETAILED REASONS GIVEN IN THE PARAGRAPHS ABOVE, WE ARE OF THE OPINION THAT THE ADJUDICATION THIS GROUND CONSTITUTE AN ACADEMIC EXERCISE ONLY. THEREFORE, WE PROCEED TO DISMISS THE SAME AS AN ACADEMIC. ACCORDINGLY, GROUND NO.4 OF THE REVEN UE IS DISMISSED AS ACADEMIC. 48. GROUND NOS.5 AND 6 OF REVENUE IN THE CASE OF S HRI GOVARDHAN S. PAWAR AND GROUND NOS. 4 AND 5 OF REVENUE IN THE CASE OF SMT. ANITA G. PAWAR RELATES TO THE EXTENT OF AGRICULTURAL INCOME ALLOWABLE TO THE ASSE SSEES. 49. BRIEFLY STATED RELEVANT FACTS FROM THE FILE OF SHRI GOVARDHAN SHAMRAO PAWAR INCLUDES THAT AN AMOUNT OF RS.9.5 LAKHS IS CLAIMED AS AN AGRICULTURAL INCOME OUT OF HIS LAND HOLDING. AS DISCUSSED IN THE PRECEDING PA RAGRAPHS OF THIS ORDER, AO ESTIMATED THE AGRICULTURAL INCOME AND EXPENDITURE I N CASE OF SHRI GOVARDHAN SHAMRAO PAWAR BEFORE ALLOWING THE NET AGRICULTURAL INCOME OF RS.4,46,358/- OUT OF TOTAL CLAIM OF RS.9.50 LAKHS. HOWEVER, IN THE FIRS T APPELLATE PROCEEDINGS, THE CIT(A) HELD THAT THE DISALLOWANCE OF 20% OF RS.9.56 LAKHS IN THE CASE OF SHRI GOVARDHAN SHAMRAO PAWAR AND 20% OF 8.5 LAKHS IN CASE OF SMT. ANITA GOVARDHAN PAWAR MEET THE ENDS OF JUSTICE. THUS, HE ALLOWED THE 80% OF T HE CLAIM AS AN ALLOWABLE ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 31 AGRICULTURAL INCOME IN BOTH THE CASES. THUS, THE R EVENUE IS AGGRIEVED AND RAISED THE SAID GROUNDS BEFORE US. 50. BEFORE US, LD.DR RELIED HEAVILY ON THE NEAT AND THE SYSTEMATIC CALCULATIONS AND THE ESTIMATIONS OF THE AO IN BOTH THE CASES. PER CONTRA , THE LD.AR RELIED ON THE ORDER OF THE CIT(A). 51. WE HEARD BOTH THE PARTIES AND PERUSED THE DOCUM ENTS/ORDER PLACED BEFORE INVOLVING BOTH THE ASSESSEES ON THIS ISSUE OF EXTEN T OF AGRICULTURAL INCOME. FOR ADJUDICATING THE CORRECTNESS OF THE EXTENT OF AGRIC ULTURAL INCOME, WE FIND THE NEED OF EXTRACTING THE FACTS AND REASONING GIVEN BY THE CIT(A) IN THEIR ORDER : 52. TO START WITH, RELEVANT PARA 11 OF THE ASSESSME NT ORDER CONTAINS THE FACTS. FOR THE SAKE OF COMPLETENESS, THE SAID PARAGRAPHS A RE EXTRACTED AS UNDER: 11. INCOME FROM AGRICULTURAL ACTIVITY:- THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAS S HOWN AGRICULTURAL INCOME AT RS.9,50,000/-. IN THIS CONNECTION, IT IS TO POINT OUT THAT ALONGWITH THE RETURN OF INCOME, NO SUPPORTINGS WERE ENCLOSED IN R ESPECT OF AGRICULTURAL INCOME. DURING THE COURSE OF PROCEEDINGS, THE 7/12 EXTRACTS AND RECEIPTS HAD BEEN FURNISHED. THE DETAILS ARE TABULATED AS UNDER: SR.NO GUT NO. OWNER OF LAND AREA, (H-R) CROPS CULTIVATED 1 289. I. GOVARDHAN S.PAWAR II. TINKU GOVARDHAN PAWAR 0.66 NOT CULTIVATED 2 246 I. ABHIJIT GOVARDHAN PAWAR M/G ANITHA. PAWAR II. AKASH GOVARDHAN PAWAR M/G ANITH & G.S.PAWAR 1.70 BAJARI 3 236 GOVARDHAN S.PAWAR 2.53 1.60 COTTON 1.00 BAJRI 4 288 TINKU M/G.G.S.PAWAR 0.66 BAJRI 5 256 GOVARDHAN S.PAWAR 3.2 2.00 BAJRI, 1.25 WHEAT 6 251 GOVARDHAN S.PAWAR ANITA G.PAWAR 1 . 63 0.6 TUWAR, 1.03 MAKKA 7 253 GOVARDHAN S.PAWAR ANITA G.PAWAR 1.67 BAJRI 8 255 GOVARDHAN S.PAWAR ANITA G.PAWAR 4.2 2.0 BAJRI, 2.0 JAWAR, 0.2 TUWAR 9 199 GOVARDHAN S.PAWAR 7.00A NOT CULTIVATED ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 32 12. THE CLAIM OF AGRICULTURAL INCOME ON THE STRENGT H OF FOLLOWING A RECEIPT HAD BEEN PUT FORTH. SR.N O. BILL NO/.RECEIPT NO DT.OF SALE TO WHOM SOLD ITEM ITEM SOLD. AMOUNT OF SALE 01. 1520 26 - 12 - 2005 TIRUPATI TRADERS, NAGPUR ONION RS. 1,510 - 71 02. 492 05 - 12 - 2005 HUSSAIN & CO - RS. 5,907 - 50 03. 434/. 06 - 01 - 2006 KEWALRAM & SONS NGPUR ONION RS. 30,494 - 52 04. 5732 KAPSE & SONS,ABAD -- RS. 224 - 00 05. - DO - 23 - 08 - 2005 KAPSE & SONS ABAD -- RS. 5,581 - 00 06. -- 04 - 1 0 - 2005 RAMBHAU K.PERKA R ADRAK RS. 2,715 - 00 07. -- 27 - 09 - 2005 ---- DO ---- ADRAK RS. 6,130 - 00 08. -- 07 - 10 - 2005 ---- DO ---- ADRAK RS. 1630 - 00 09. -- 23 - 09 - 2005 ---- DO ---- ADRAK RS. 8,010 - 00 10. 023/8 - 82 03 - 01 - 2006 MARKET COMMITTEE TUWAR RS. 10,998 - 81 11. 069/4 - 30 05 - 01 - 2006 --- DO --- TUWAR RS. 5,180 - 81 12. 049/5 - 03 02 - 01 - 2006 --- DO --- WHEET/ TUWAR RS. 8,193 - 50 13. 098/7 - 98 02 - 01 - 2006 --- DO --- TUWAR RS. 10,346 - 64 14. 011/44 - 03 19 - 02 - 2006 --- DO --- TUWAR RS. 1,23,094 - 08 15. 862/043 01 - 02 - 2006 R.RAJENDRAKUMAR BASHA & SONS BAJRI RS. 95,589 - 95 16. 986/042 19 - 12 - 2005 --- DO --- MAKKA RS. 57,431 - 42 17. 862/039 08 - 05 - 2005 --- DO --- JAWARI 72,261 - 05 18. 896/043 23 - 12 - 2005 --- DO --- MATKI/ UDID 22,575 - 84 19. 628/60 04 - 04 - 2006 --- DO --- TUWAR 1,27,269 - 01 TOTAL AMOUNT OF SALE 5,95,143 - 8 4 AS THE ASSESSEE HAD PRODUCED AGRICULTURAL SALE RECE IPTS WORTH RS.5,95,143/-, THE GROSS AGRICULTURAL INCOME IS BEING ADOPTED TO T HAT EXTENT. THE EXPENDITURE REQUIRED TO EARN SUCH AGRICULTURAL INCOME IS BEING ESTIMATED @ 25% OF THE GROSS RECEIPTS. SUBJECT TO THE ABOVE, THE CLAIM OF AGRIC ULTURAL INCOME IS BEING COMPUTED AS UNDER: GROSS AGRICULTURAL RECEIPTS FILED AS CALCULATED ABO VE RS. 5,95,143/- LESS: DEDUCTION FOR EXPENSES @ 25% RS. 1,48,785/- ------------------ NET AGRICULTURAL INCOME RS.4,46,358/- ------------------ THE AO RELIED ON THE DETAILS OF THE SPECIFIC LANDS AND ALSO ON THE RECEIPTS OF SALE OF AGRICULTURAL PRODUCE BEFORE ARRIVING AT THE SAID SU M OF RS.4,46,358/-. 53. FURTHER, DURING THE FIRST APPELLATE PROCEEDINGS , THE CIT(A) HELD THE NEED OF GIVING PART RELIEF TO THE ASSESSEE GIVING THE REASO NING IN HIS OPERATIONAL PARAGRAPH ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 33 NO. 11.3 OF THE CIT(A) ORDER IN THE CASE OF SHRI GO VARDHAN SHAMRAO PAWAR. FOR THE SAKE OF COMPLETENESS THE SAME IS EXTRACTED AS U NDER : 11.3 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND THE RIVAL CONTENTIONS. ON PERUSAL OF THE SAME, IT HAS BEEN OBSERVED THAT T HE APPELLANT HAS CLAIMED TURNOVER OF RS.14,01,212/- IN RESPECT OF AGRICULTUR AL PRODUCE WHEREAS THE A.O. HAS CONSIDERED THE TURNOVER ONLY TO THE EXTENT OF SALE RECEIPTS PRODUCED OF RS.5,95,143/- COMPLETELY IGNORING THE SALES MADE IN THE OPEN MARKET. IT HAS BEEN OBSERVED THAT AS PER THE COMMON TRADE PRACTICE, IT IS NOT PRACTICABLE TO OBTAIN SALE RECEIPTS IN RESPECT OF ALL AGRICULTURAL TRANSACTION S. WHILE ESTIMATING THE TURNOVER, THE A.O. HAS NOT CONSIDERED THE LAND HOLDING EVIDEN CED BY THE 7/12 EXTRACTS FILED. THE A.O. HAS POINTED OUT THAT THE APPELLANT HAS HIM SELF ADMITTED THAT AGRICULTURAL INCOME OF THE FAMILY IS RS.15 LACS P.A. IN THIS RE SPECT, IT HAS BEEN NOTICED THAT AGRICULTURAL INCOME DECLARED BY THE APPELLANT AND H IS SPOUSE IS RS.9,50,000/- AND RS.8,50,0008/- RESPECTIVELY AGGREGATING TO RS.18,00 ,000/-. HENCE, CONSIDERING THE ABOVE FACTS AND IN ORDER TO MEET THE ENDS OF JUSTIC E, THE AGRICULTURAL INCOME OF THE APPELLANT TO THE EXTENT OF RS.1,90,000/- I.E. 20% O F AGRICULTURAL INCOME DECLARED, IS TREATED AS INCOME FROM OTHER SOURCES. THE APPELLAN T GETS RELIEF OF RS.3,13,642/-. THUS, GROUND NO.2 IS PARTLY ALLOWED. 54. FROM THE ABOVE EXTRACTS, IT IS EVIDENT, THE AO EXAMINED THE GUT WISE DETAILS AND ALSO THE AGRICULTURAL INCOME ON THE STRENGTH OF THE RECEIPTS AVAILABLE WITH THE AO. HE, ACCORDINGLY ARRIVED AT A SCIENTIFIC OUTPUT OF RS.4,46,358/- AS NET AGRICULTURAL INCOME OUT OF HIS EXERCISE AND THE BAL ANCE OF (RS.9,05,000/- - RS.4,46,358/-) IS ADDED AS INCOME OF THE ASSESSEE. 55. ON THE OTHER HAND, THE CIT(A) APPLIED FLAT RATE OF 20% IN BOTH CASE OF SHRI GOVARDHAN S. PAWAR AND SMT. ANITA G. PAWAR WITHOUT HAVING ANY BASIS. HE SUMMARILY DISALLOWED ONLY A SUM OF RUPEES I.E. 20% OF THE 9.5 LAKHS IN THE CASE OF SHRI GOVARDHAN SHAMRAO PAWAR AND I.E. 20% OF THE 8. 5 LAKHS IN THE CASE SMT. ANITA GOVARDHAN PAWAR. IN OUR VIEW, THE ORDER OF T HE AO IS MORE ANALYTICAL AND CREDIBLE ON THIS ISSUE AND IT HAS A BASIS OF DOCUME NTS IN THE FORM OF AGRICULTURAL RECEIPTS. THEREFORE, WE ARE OF THE VIEW THAT THE O RDERS OF THE AO IN BOTH THE CASES ON THIS ISSUE IS FAIR AND REASONABLE. TO THAT EXTE NT, THE ORDERS OF THE CIT(A) STAND REVERSED ON THIS ISSUE OF AGRICULTURAL INCOME FOR T HE REASONS GIVEN ABOVE. ACCORDINGLY, GROUND NOS. 5 AND 6 OF REVENUE IN THE CASE OF SHRI GOVARDHAN ITA NOS.1780 & 1784/PUN/2012 SHRI GOVARDHAN S. PAWAR & SMT. ANITA G. PAWAR 34 SHAMRAO PAWAR AND GROUND NOS. 4 AND 5 OF REVENUE IN THE CASE OF MRS.ANITA GOVARDHAN PAWAR STANDS PARTLY ALLOWED. 56. IN THE RESULT, BOTH THE APPEALS OF REVENUE FOR TWO DIFFERENT ASSESSEES ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 11 TH DAY OF OCTOBER, 2017. SD/- SD/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) /JUDICIAL MEMBER / ACCOUNTANT MEMBER PUNE; DATED : 11 TH OCTOBER, 2017. / COPY OF THE ORDER FORWARDED TO : BY ORDER // TRUE COPY // //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE THE APPELLANT THE RESPONDENT THE CIT(A) , AURANGABAD CIT , AURANGABAD , , B BENCH PUNE; / GUARD FILE.