Dy. Commissioner of Income Tax, Circle-6(1), Hyderabad V. Sri Y.Ravi Prasad, Hyderabad

ITA 1880/HYD/2013

• Counselvise Citation: 188022514 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 23-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2013
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Assessee Lawyers: S RAMA RAO
• Keywords: Capital asset; Business income; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER I.T.A. NO. 1880/HYD/2013 ASSESSMENT YEAR: 2009-10 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6(1), HYDERABAD VS SRI Y. RAVI PRASAD , PUNJAGUTTA COLONY, HYDERABAD [PAN: AAIPY5614Q] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI RAMA KRISHNA, BANDI DR FOR ASSESSEE : S HRI S. RAMA RAO, AR DATE OF HEARING : 23 - 0 4 - 201 5 DATE OF PRONOUNCEMEN T : 29 - 04 - 2015 O R D E R PER SAKTIJIT DEY, J.M. : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE OR DER DATED 25-09-2013 PASSED BY LD. COMMISSIONER OF INCOME TAX (APPEALS)-V, HYDERABAD FOR THE ASSESSMENT YEAR (AY) 2009-10. T HE ONLY EFFECTIVE GROUND RAISED BY THE DEPARTMENT IS AS UNDER: '2. THE HON'BLE CIT(A) OUGHT TO HAVE CONFRONTED THE ADDITIONAL EVIDENCE OF DOCUMENTS ABOUT LANDS NOT FALLING IN J URISDICTION OF MUNICIPAL AREAS WITH POPULATION BELOW 10,000 TO TH E ASSESSING OFFICER BEFORE ENTERTAINING THE ADDITIONAL EVIDENC E'. I.T.A. NO. 1880/HYD/2013 SRI Y. RAVI PRASAD :- 2 -: 2. BRIEFLY, THE FACTS RELATING TO ISSUE IN DISPUTE ARE THE ASSESSEE AN INDIVIDUAL FILED HIS RETURN OF INCOME ON 30-09-2009 DECLARING TOTAL INCOME OF RS. 29,68,880/-. IN THE COURSE OF ASSESS MENT PROCEEDINGS, ASSESSING OFFICER (AO) ON VERIFYING THE MATERIALS A VAILABLE ON RECORD NOTICED THAT DURING THE RELEVANT PREVIOUS YEAR THOU GH ASSESSEE HAS SOLD CERTAIN LANDS FOR A TOTAL CONSIDERATION OF RS. 1,60 ,87,500/- BUT IN THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEAR, HE HAS NOT DISCLOSED ANY INCOME RELATING TO THE SALE TRANSACTI ONS. HE FURTHER PROCEEDED TO TREAT THE PROFIT DERIVED FROM SALE OF THE AFORESAID LANDS AMOUNTING TO RS. 87,96,350/- AS 'BUSINESS INCOME'. BEING AGGRIEVED OF SUCH ADDITION, ASSESSEE PREFERRED APPEAL BEFORE THE LD.CIT(A). IN THE COURSE OF HEARING OF APPEAL, AS IT APPEARS, THE ASS ESSEE TOOK A STAND THAT THE LAND SOLD BEING AGRICULTURAL LAND SITUATED BEYO ND PRESCRIBED LIMIT OF THE NEAREST MUNICIPALITY IS NOT COVERED UNDER THE D EFINITION OF CAPITAL ASSET U/S. 2(14)(III) OF THE INCOME TAX ACT (ACT), HENCE, CANNOT BE SUBJECTED TO TAX EITHER AS BUSINESS INCOME OR AS CA PITAL GAIN. IN SUPPORT OF SUCH CONTENTION, THE ASSESSEE BEFORE THE FIRST A PPELLATE AUTHORITY SUBMITTED CERTAIN GOVERNMENT ORDERS OF THE STATE GO VERNMENT INDICATING THE POPULATION OF THE VILLAGE AS WELL AS THE DISTAN CE FROM THE MUNICIPAL LIMITS. RELYING UPON SUCH SUBMISSIONS AND EVIDENCE S PRODUCED BY THE ASSESSEE LD.CIT(A) HELD THAT THE LAND SOLD BEING AG RICULTURAL IN NATURE AND SITUATED BEYOND PRESCRIBED LIMIT OF A NEAREST M UNICIPALITY OR CANTONMENT BOARD IS NOT SUBJECT TO CAPITAL GAIN TAX . 3. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE MATERIALS ON RECORD. THE LIMITED GRIEVANCE OF THE DEPARTMENT, AS COULD BE GATHERED FROM THE GROUND RAISED AND THE SU BMISSIONS MADE BY LD. DR, IS LD.CIT(A) CONSIDERING CERTAIN ADDITIONAL EVIDENCES HAS ACCEPTED ASSESSEE'S PLEA THAT THE LAND SOLD BEING O F AGRICULTURAL NATURE AND SITUATED BEYOND 8 KMS., FROM THE LIMIT OF A NEA REST MUNICIPALITY IS I.T.A. NO. 1880/HYD/2013 SRI Y. RAVI PRASAD :- 3 -: NOT SUBJECT TO CAPITAL GAIN. HOWEVER, WHILE RELYIN G ON THOSE EVIDENCES, CIT(A) NEVER GAVE AN OPPORTUNITY TO THE AO TO VERIF Y THE SAME. THE LD. AR HOWEVER, SUPPORTED THE ORDER OF LD.CIT(A). HAVI NG CONSIDERED THE SUBMISSIONS OF THE PARTIES AND PERUSED THE ORDERS O F THE LD.CIT(A), WE ARE OF THE VIEW THAT CIT(A) WAS NOT JUSTIFIED IN AC CEPTING ASSESSEE'S CLAIM OF EXEMPTION FROM CAPITAL GAIN ON THE PLEA THAT THE LAND SOLD IS AN AGRICULTURAL LAND WITHOUT GIVING AN OPPORTUNITY TO THE AO TO VERIFY THIS ASPECT. AS IT APPEARS FROM THE DISCUSSIONS MADE IN THE ASSESSMENT ORDER, THE ASSESSEE NEVER TOOK A PLEA BEFORE THE AO THAT THE LAND IN QUESTION BEING AN AGRICULTURAL LAND AND SITUATED BE YOND THE PRESCRIBED LIMIT OF A NEAREST MUNICIPALITY CANNOT BE CONSIDERE D AS A CAPITAL ASSET. ONLY BEFORE THE FIRST APPELLATE AUTHORITY, FOR THE FIRST TIME THE ASSESSEE RELYING UPON CERTAIN GOMS OF THE STATE GOVERNMENT C LAIMED THAT THE LAND SOLD BEING IN THE NATURE OF AGRICULTURAL LAND AND SITUATED BEYOND THE PRESCRIBED LIMIT OF A NEAREST MUNICIPALITY CANN OT BE SUBJECTED TO CAPITAL GAIN. SINCE THIS SUBMISSION ALONG WITH THE EVIDENCES WERE PLACED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE LD.CI T(A), IT WOULD HAVE BEEN JUST AND PROPER ON THE PART OF LD.CIT(A) TO ALLOW A N OPPORTUNITY TO THE AO TO VERIFY ASSESSEE'S CLAIM ON THE BASIS OF THE D OCUMENTARY EVIDENCES SUBMITTED BY THE ASSESSEE. THE LD.CIT(A) HAVING NO T DONE SO, THERE IS A VIOLATION OF THE PROVISIONS CONTAINED UNDER RULE 46 (A) OF I.T.RULES. IN VIEW OF THE ABOVE, WE ARE INCLINED TO SET ASIDE THE IMPUGNED ORDER OF CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AFTER CONSIDERING ALL THE F ACTS AND MATERIALS AVAILABLE ON RECORD INCLUDING ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE IN SUPPORT OF HIS CLAIM THAT THE LAND SOLD BEING AGRICULTURAL LAND AND SITUATED BEYOND PRESCRIBED LIMIT OF MUNICI PALITY IS NOT SUBJECT TO CAPITAL GAIN. THE AO MUST AFFORD REASONABLE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. I.T.A. NO. 1880/HYD/2013 SRI Y. RAVI PRASAD :- 4 -: 4. IN THE RESULT, DEPARTMENTAL APPEAL IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 29 TH APRIL, 2015. SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 29 TH APRIL, 2015 TNMM COPY TO : 1. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 6(1), 7 TH FLOOR, 'D' BLOCK, I.T. TOWERS, A.C. GUARDS, HYDERAB AD. 2. SRI Y. RAVI PRASAD, 207, MAYURI APARTMENTS, PUNJ AGUTTA COLONY, HYDERABAD. 3. CIT(APPEALS)-V, HYDERABAD 4. CIT-VI, HYDERABAD 5. D.R. ITAT, HYDERABAD