Dr. Ramesh K. Sonawane, Pune V. Income-tax Officer,

ITA 1959/PUN/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9363 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-05-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 05-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR CHAWARE
• Assessee Lawyers: PRASANN A L JOSHI
• Keywords: Capital asset; Additional evidence
• Section: 143(3); 54B; 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE , , , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI , AM . / I TA NO. 1959 /PUN/20 14 / ASSESSMENT YEAR : 2008 - 09 DR. RAMESH K . SONAWANE, 324, KRITI NAGAR, NEAR KANKALYA GAS AGENCY, SANGHVI, PUNE - 411 027 / APPELLANT PAN : AEGPS 3167N / V/S. INCOME TAX OFFICER, WARD - 5(1) , PUNE. / RESPONDENT A PPELLANT BY : SHRI PRASANNA L. JOSHI R ESPONDENT BY : SHRI A NIL KUMAR CHAWARE / DATE OF HEARING : 25 .05.2017 / DATE OF PRONOUNCEMENT : 07 .06.2017 / ORDER PER SUSHMA CHOWLA , JM : THIS APPEAL FILED BY THE ASSES SEE IS AGAINST THE ORDER OF CIT(A) - I II , PUNE DATED 06 .0 8 .20 1 4 RELATING TO ASSESSMENT YEAR 2008 - 09 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT). 2 ITA NO. 1959/PUN/2014 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1) THE LD. CIT(APPEALS) ERRED IN REJECTING ADMISSION OF ADDITIONAL EVIDENCE FURNISHED IN APPELLATE PROCEEDINGS PARTICULARLY WHEN SUCH ADDITIONAL EVIDENCE IS GERMANE WHILE DECIDING WHETHER OR NOT THE APPELLANT IS ENTITLED TO EXEMPTION U/S 54B. 2) IN THE FACTS AND CIRCUMSTANCES AND IN LAW, FROM CAPITAL GAIN OF RS. 47,96,313/ - COMPUTED BY LD. A O THE APPELLANT BE ALLOWED EXEMPTION U/S 54B OF RS. 38,53,402/ - BEING THE COST OF NEW AGRICULTURAL LANDS PURCHASED BY HIM WITHIN 1 YEAR UPON THE SALE OF AGRICULTURAL LAND HELD BY HIM. 3) IN THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) ERRED IN FACTS AS WE LL AS GAVE WRONG AND INCORRECT REASONS WHILE REJECTING THE APPELLANTS CLAIM FOR EXEMPTION U/S 54B. 4) WITHOUT PREJUDICE TO THE ABOVE, THE CAPITAL GAIN ARISEN TO THE APPELLANT BE HELD TO BE LONG TERM AND NOT SHORT TERM AS HELD BY THE LD. CIT(A). 3. THE FIRST ISSUE RAISED BY THE ASSESSEE IS AGAINST NON - ADMISSION OF ADDITIONAL EVIDENCE FURNISHED DURING THE COURSE OF APPELLATE PROCEEDINGS AGAINST THE CLAIM OF ASSESSEE FOR DEDUCTION UNDER SECTION 54B OF THE ACT. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD DECLARED INCOME FROM HIS PROFESSIONAL RECEIPT AND INCOME FROM SALE OF LAND. THE ASSESSEE HAD CLAIMED THAT THE SAID SALE OF LAND WAS EXEMPT FROM CAPITAL GAINS UNDER SECTION 2(14) OF THE ACT. THE ASSESSEE POINTED OUT THAT THE SAID AGRICULTURA L LAND WAS SOLD FOR RS.51 LAKHS AND WAS OUT OF MUNICIPAL CORPORATION AREA AND HENCE, WAS AN AGRICULTURAL LAND, ON WHICH NO CAPITAL GAINS TAX HAD TO BE PAID. THE ASSESSING OFFICER ON THE OTHER HAND, NOTED THAT THE SAID LAND WAS WITHIN PIMPRI CHINCHWAD MUNI CIPAL CORPORATION LIMITS AND WAS SITUATED IN URBAN AREA AND HENCE, WAS INCLUDABLE IN THE DEFINITION OF CAPITAL ASSET. FURTHER, THE ASSESSING OFFICER ALSO NOTED THAT THE SAID LAND WAS BARREN LAND AND NO AGRICULTURAL PRODUCE WAS GROWN THEREON AND NO AGRICUL TURAL ACTIVITIES TO CULTIVATE THE LAND HAD BEEN 3 ITA NO. 1959/PUN/2014 CARRIED OUT. IN VIEW THEREOF, THE ASSESSING OFFICER HELD THAT THE SAID LAND BEING NOT AGRICULTURAL LAND, WAS NOT ENTITLED FOR CLAIMING THE DEDUCTION UNDER SECTION 54B OF THE ACT. THE ASSESSING OFFICER COMPU TED THE INCOME FROM CAPITAL GAINS IN THE HANDS OF ASSESSEE. 5. BEFORE THE CIT(A), THE ASSESSEE FILED CERTAIN ADDITIONAL EVIDENCE AND POINTED OUT THAT THE SAID AGRICULTURAL LAND WAS UNDER CULTIVATION AND EVIDENCE IN THIS REGARD WAS PRODUCED. THE ASSESSEE ALSO FILED ON RECORD THE COPY OF PURCHASE DEED OF AGRICULTURAL LAND PURCHASED IN THE YEARS 2010 - 11 TO 2012 - 13. THE SAID ADDITIONAL EVIDENCE ALONG WITH SUBMISSIONS OF ASSESSEE WERE FORWARDED TO THE ASSESSING OFFICER, WHO OBJECTED TO ITS ADMISSION AS DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF ANY NEW INVESTMENT MADE DURING THE YEAR AND IN RESPONSE, THE ASSESSEE HAD NOT DECLARED THE SAID INVESTMENT IN PURCHASE OF NEW AGRICULTURAL LAND. THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS ALSO POINTED OUT THAT 7/12 EXTRACT FOR THE IMPUGNED LAND FOR THE YEAR 2006 - 07 WHICH WAS ATTACHED BY WAY OF EXHIBIT C TO THE REMAND REPORT, QUALIFIED LAND AS BARREN PAD . THE ASSESSEE ALSO ADMITTED THAT THE LAND WAS NOT CULTIVATED FROM AUGUST, 2006 TILL THE DATE OF SALE IN HIS REJOINDER TO THE REMAND REPORT. THE CIT(A) OBSERVED THAT THE SAID ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE DO NOT SATISFY THE REQUIREMENTS O F RU LE 46(1) OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES) AND THE SAME WAS HELD TO BE NOT ADMISSIBLE. HOWEVER, THE CIT(A) THEREAFTER, REFERRED TO THE ISSUE ARISING IN THE CASE AND DECIDED THE SAME ON MERITS . THE FIRST ISSUE WHICH WAS DECIDED BY THE C IT(A) WAS THAT WHERE THE LAND WAS NOT BEING USED FOR AGRICULTURAL PURPOSE IN THE TWO IMMEDIATELY PRECEDING YEARS FROM 4 ITA NO. 1959/PUN/2014 THE DATE OF TRANSFER, THEN THE ASSESSEE IS NOT ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 54B OF THE ACT. 6. IN RESPECT OF FRESH INV ESTMENT MADE IN AGRICULTURAL LAND, THE CIT(A) NOTED THAT THE ASSESSEE WAS AFFORDED SEVERAL OPPORTUNITIES BY THE ASSESSING OFFICER TO FURNISH THE DETAILS OF ANY FRESH INVESTMENTS MADE DURING THE YEAR, WHICH HE FAILED TO DO SO AND FURTHER SINCE THERE WAS NO CLAIM IN THE RETURN OF INCOME OF THE SAID DEDUCTION, THE ASSESSEE WAS HELD TO BE NOT ENTITLED TO CLAIM THE SAID DEDUCTION UNDER SECTION 54B OF THE ACT. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. THE LEARNED AUTHORI ZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT THE ASSESSING OFFICER HAD NOT ISSUED ANY SHOW CAUSE NOTICE AS TO NON - ACCEPTANCE OF THE CLAIM OF ASSESSEE THAT THE AGRICULTURAL LAND SOLD BY HIM WAS NOT CAPITAL ASSET. SINCE THE ASSESSING OFFICER HAD NOT IS SUED ANY SHOW CAUSE NOTICE, THEREFORE, NO CLAIM OF DEDUCTION UNDER SECTION 54B OF THE ACT WAS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. HE FURTHER POINTED OUT BEFORE THE CIT(A) THE ASSESSEE REFERRED TO THE INVESTMENT IN THE NEW AGRICULTURAL LAND A ND CLAIMED THE AFORESAID DEDUCTION. HE ADMITTED THAT THE ITP APPEARING BEFORE THE ASSESSING OFFICER DID NOT UNDERSTAND THE QUERY RAISED BY THE ASSESSING OFFICER IN RESPECT OF FRESH INVESTMENT AND HENCE, NO REPLY BEFORE THE ASSESSING OFFICER IN THIS REGARD . HOWEVER, THE CIT(A) IN THE FIRST INSTANCE, REJECTED THE ADDITIONAL EVIDENCE AND THEREAFTER, PROCEEDED TO DECIDE THE ISSUE ON MERITS. HE MADE A PRAYER THAT IN VIEW OF ADDITIONAL EVIDENCE BEING AVAILABLE WITH THE ASSESSEE IN 5 ITA NO. 1959/PUN/2014 RESPECT OF AGRICULTURAL OPERA TIONS BEING CARRIED ON, THE LAND SOLD BY THE ASSESSEE AND ALSO IN VIEW OF HIS INVESTMENT IN FRESH AGRICULTURAL LAND , THE MATTER BE SET ASIDE TO THE FILE OF ASSESSING OFFICER FOR FRESH DETERMINATION OF INCOME IN THE HANDS OF ASSESSEE. 9. THE LEARNED DEPART MENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, STRONGLY OBJECTED TO THE SAME AND POINTED OUT THAT EVEN THOUGH THE CIT(A) HAD REJECTED THE ADMISSION OF ADDITIONAL EVIDENCE , BUT HAD DECIDED THE ISSUE ON MERITS AND HENCE, THERE WAS NO BASIS FOR SETT ING ASIDE THE ISSUE. 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE HAD CLAIMED THAT THE ASSET SOLD BY HIM WAS AGRICULTURAL LAND AND WAS NOT ASSESSABLE TO CAPITAL GAINS, SINCE THE LAND DID NOT FALL WITHIN THE DEFINITION OF CAPITAL ASSET UNDER SECTION 2(14) OF THE ACT. THE ASSESSING OFFICER ON THE OTHER HAND, BECAUSE OF LOCATION OF PLOT, HELD OTHERWISE AND COMPUTED THE INCOME FROM CAPITAL GAINS IN THE HANDS OF ASSESSEE. HOWEVER, BEFORE DECIDING THE ISSUE AGAINST THE ASSESSEE, THE ASSESSING OFFICER DID NOT GIVE ANY SHOW CAUSE NOTICE TO THE ASSESSEE AS TO PUT FORWARD ITS CLAIM THAT ON SALE OF THE OLD ASSET, IT HAD PURCHASED NEW AGRICULTURAL LAND, AGAINST WHICH HE WAS ENTITLED TO CLAIM DEDUCTION UNDER SECTION 54B OF THE ACT. THE ADDITIONAL EVIDENCE IN THIS REGARD WAS FURNISHED BEFORE THE CIT(A), WHO OBTAINED THE REMAND REPORT AND DISMISSED THE ADMISSION OF ADDITIONAL EVIDENCE. THE EVIDENCE WHICH H AVE BEEN SOUGHT TO BE ADMITTED BY THE ASSESSEE AS ADDITIONAL EVIDENCE MERITS TO BE ADMITTED , IN ORDER TO ADJUDICATE THE ISSUE RAISED IN THE PRESENT APPEAL. THE PERUSAL OF ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER REFLECTS THAT THE ASSESSEE 6 ITA NO. 1959/PUN/2014 WAS NOT SHOW CAUSED AS TO BEFORE HIS CLAIM OF LAND BEING AGRICULTURAL LAND WAS REJECTED IN HIS HANDS. IN THE ABSENCE OF THE SAME, THE ASSESSEE WAS PREVENTED FROM FURNISHING NECESSARY EVIDENCE TO ESTABLISH ITS CLAIM THAT THE LAND SOLD WAS AGRICULTURAL LAND AND AGR ICULTURAL OPERATIONS WERE BEING CARRIED ON AND ALSO TO FURTHER CLAIM DEDUCTION UNDER SECTION 54B OF THE ACT ON ACCOUNT OF FRESH INVESTMENT IN PURCHASE OF AGRICULTURAL LAND. THE CIT(A) DID NOT ACCEPT THE ADDITIONAL EVIDEN CE FILED BY THE ASSESSEE UNDER RULE 46A OF THE RULES . HOWEVER, THE CIT(A) DISMISSED THE ISSUE ON MERITS AND HELD THE SAME AGAINST THE ASSESSEE. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE FIND MERIT IN THE PLEA OF ASSESSEE THAT THE ADDITIONAL EVIDENCE WHICH IS AVAILABLE WITH THE ASSESSEE TO FIRST ESTABLISH ITS CLAIM ON THE LAND SOLD BY IT WAS ENGAGED IN AGRICULTURAL ACTIVITIES AND FURTHER IT HAD MADE INVESTMENTS IN FRESH AGRICULTURAL LAND AND WHETHER THE ASSESSEE WAS ENTITLED TO CLAIM THE DEDUCTION UNDER SECTION 54B OF TH E ACT NEEDS TO BE LOOKED INTO AND CONSEQUENTLY, THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE NEEDS TO BE ADMITTED. ACCORDINGLY, WE HOLD SO. NO DOUBT, THE CIT(A) HAD DECIDED THE ISSUE ON MERITS BUT THE FIRST ISSUE WHICH WAS DECIDED BY THE CIT(A) WAS THE DISMISSAL OF ADDITIONAL EVIDENCE. HOWEVER, WE REVERSE THE FINDINGS OF CIT(A) IN THIS REGARD AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER, WHO SHALL LOOK INTO THE ADDITIONAL EVIDENCE, WHICH THE ASSESSEE SEEKS TO FILE AND ALSO DETERMINE THE ISSUE IN ACCORDANCE WITH LAW AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THE ASSESSEE IS ALSO DIRECTED TO CO - OPERATE AND APPEAR BEFORE THE ASSESSING OFFICER AND FURNISH THE NECESSARY ADDITIONAL E VIDENCE IN ORDER TO ADJUDICATE THE ISSUE RAISED IN THE PRESENT APPEAL. THUS, THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS THUS, ALLOWED. SINCE WE ARE ALLOWING THE PRELIMINARY ISSUE RAISED 7 ITA NO. 1959/PUN/2014 BY THE ASSESSEE AND THE MATTER BEING SET ASIDE TO THE FILE OF ASSESSING OFFICER, THERE IS NO MERIT IN THE ISSUES RAISED ON MERITS AND THE SAME BECOME ACADEMIC. 11. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED AS INDICATED ABOVE. ORDER PRO NOUNCED ON THIS 7 TH D AY OF JUNE , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI) ( SUSHMA CHOWLA) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 7 TH JUNE , 2017 . GCVSR / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (A) - III , PUNE. 4. THE CIT - II I, PUNE. 5. , , , / DR, ITAT, A BENCH, PUNE. 6. / GUARD FILE. / BY ORDER, // TRUE COPY // /ASSISTANT REGISTRAR , / ITAT, PUNE .