Meka Kasi Viseswarudu, Vizianagaram V. The Income Tax Officer, Ward-1, , Vizianagaram

ITA 212/VIZ/2020

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The case involves Meka Kasi Visweswarudu, the appellant, who sold agricultural land and did not report the sale in his income tax returns, considering it outside municipal limits and thus not taxable. The Income Tax Officer (ITO) assessed the capital gains and taxed them, leading to an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], which was partly allowed. The appellant contested the CIT(A)'s decision, leading to this appeal before the Income Tax Appellate Tribunal, Visakhapatnam. The primary contention revolves around the classification of the land as agricultural and its distance from municipal limits, which affects its taxability under capital gains.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135938 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 8 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Next Hearing Date: 26-04-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 25-10-2020
• Other Referred Cases: ITAT Shabbir Hussain Pithawala Vs A.C.I.T, I.T.A.T I.T.O 5(1) Vs Ashok Shukla, C.I.T Vs Ashok Shukla, ITAT in Smt Subha Tripathi Vs D.C.I.T, ITAT Vizag in Jasti Vayunandan Rao Eluru and others Vs Department of Income Tax, ITAT Vizag in Jasti Veera Sampurnanand and others Vs Department of Income Tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 143(3); 250; 143(2)

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM श्री दुव्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No.212/Viz/2020 (ननधधारण वर्ा / Assessment Year : 2012-13) Meka Kasi Visweswarudu K-5 Pradeep Nagar VT Agraharam Vizianagaram [PAN : ABVPM2320H] Vs. Income Tax Officer Ward-1 Vizianagaram (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri YA Rao, AR प्रत्यधथी की ओर से / Respondent by : Shri ON Hari Prasada Rao, DR सुनवधई की तधरीख / Date of Hearing : 27.04.2023 घोर्णध की तधरीख/Date of Pronouncement : 14.07.2023 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)]-1, Visakhapatnam vide I.T.A.No.0178/2015-16/CIT(A)-1/VSP/2020-21 dated 18.08.2020, arising out of assessment order passed u/s 143(3) of the Income Tax Act, 1961 (in short ‘Act’) dated 30.03.2015 for the Assessment Year (A.Y.) 2012-13. 2 I.T.A. No.212/Viz/2020, A.Y.2012-13 Meka Kasi Visweswarudu, Vizianagaram 2. Brief facts of the case are that the assessee, an individual, filed his return of income on 31.03.2014, admitting total income at Rs.2,48,000/- after claiming Chapter VIA deductions of Rs.1,00,000/-. The case was selected for scrutiny under CASS to examine the cash deposits and capital gains. Accordingly, notice u/s 143(2) dated 05.09.2014 was issued and served on the assessee. The assessee had sold agricultural land at Dwarapudi near Vizianagaram to Sai Balaji Happy Homes for Rs.1,42,08,000/-, which he acquired for Rs.17,31,290/- on 06.01.2007. As the said land is considered by the assessee as an agricultural land which is situated at more than 8 km from Vizianagaram, the assessee has not considered sale of the same in his income tax returns. During the course of assessment proceedings, the Assessing Officer(AO) observed that the said land is hardly 1KM from the municipal limits. However, the AO noted that the assessee voluntarily agreed to pay tax on capital gains. The AO completed the scrutiny on 30.03.2015 and brought to tax the long term capital gains of Rs.1,15,89,382/-. The AO passed the assessment order u/s 143(3) and raised a demand of Rs.36,93,090/-. 3. Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) partly allowed the appeal of the assessee. 3 I.T.A. No.212/Viz/2020, A.Y.2012-13 Meka Kasi Visweswarudu, Vizianagaram 4. Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal : 1. The learned Commissioner (Appeals) is not justified in dismissing the ground raised against assessability of long term capital gains on sale of Agricultural Land. 2. The learned Commissioner (Appeals) is not justified in deciding the disputed issue without obtaining the remand report sought by him during the course of appeal proceedings vide letter dt.20/4/2018. 3. The learned Commissioner (Appeals) and the assessing officer are not justified in ignoring the certificate issued by the Tahsildar who confirmed that the lands sold were agricultural lands which are within distance of 8.5 kms from Vizianagaram Muncipial limits. 4. The authorities below erred in replying on the report furnished by the Commissioner Municipality, who committed a mistake by referring to unconnected particulars and Who has not mentioned that the Disputed Land covered by S.No.82/1 to 82/3 in Dwarapudi Village which has not been included in Muncipal limits of Vizianagaram even now. The learned Commissioner is not justified in relying on the data obtained from Google without giving an opportunity to the appellant to rebut the claim. 5. The learned Commissioner is not justified in disposing the appeal without giving adequate opportunity and without fixing another date for hearing the appeal. 6. The learned Commissioner is not justified in referring to amendment brought to Sec, which requires the, the department to measure the distance from Muncipal limits, which is effective from 1/4/2014 where as the disputed appeal relates to Asst year 2012/13 to which Notification No 9447 dated 6/1/1994 would be applicable. In fact the amendment supports the claim of the Appellant that the distance of the property from Municipal limits should be considered though existing connectivity of the land situated in 1994 when the said provisions and said rules were brought into the statute. The appellant relied on the following decisions in support of the claim. a. ITAT Shabbir Hussain Pithawala Vs A.C.I.T dated 12/07/2017 4 I.T.A. No.212/Viz/2020, A.Y.2012-13 Meka Kasi Visweswarudu, Vizianagaram b. I.T.A.T I.T.O 5(1) Vs Ashok Shukla c. High Court decision in C.I.T Vs Ashok Shukla 99 D.T.R 250 d. ITAT in Smt Subha Tripathi Vs D.C.I.T e. ITAT Vizag in Jasti Vayunandan Rao Eluru and others Vs Department of Income Tax f. ITAT Vizag in Jasti Veera Sampurnanand and others Vs Department of Income Tax 7. The authorities below failed to take into consideration that Dwarapudi village is located beyond 8.5 Kms Via road from the then Municipal limits Vide Notification issued in 1994 Via Gotland village which was clearly brought on record through a plan submitted during appeal proceedings. The subsequent notification brought in Sec2(14) vide Finance Act 2013 cannot be applied. 8. The Appellant prays for directions to authorities to allow the claim of exemption from taxation of Capital gains, made by the Appellant. 9. Without prejudice to the ground for relief made, the Appellant prays honourable members of Tribunal to set aside the disputed issue for fresh consideration by the assessing officer, who has not properly examined the issue and who has not given adequate opportunity to the Appellant,even by furnishing a copy of the certificate obtained from the Commissioner, Vizianagaram Municipality. 10. For these and grounds that may be urged at the time of hearing, the appellant prays for necessary relief. 5. At the outset, the only contention of the Ld.AR is that the disputed land in S.No.82/1 to 82/3 in Dwarapudi Village does not fall in the municipal limits of Vizianagaram. The Ld.AR further contended that disputed appeal relates to Asst. year 2012-13 to which Notification No. 9447 dated 6/1/1994 would be applicable, since the amendment brought to Sec.2(14)(iii) requires the department to measure the distance from Muncipal limits, prospectively from 1/4/2014 only. The certificate of 5 I.T.A. No.212/Viz/2020, A.Y.2012-13 Meka Kasi Visweswarudu, Vizianagaram Tehsildar, Vizianagaram dated 27.05.2010 which confirmed that the lands are agricultural lands was not considered by the AO. The Ld.AR further submitted that since the lands are agricultural lands and agricultural income is disclosed in the returns, they are not liable to capital gains tax. The Ld.AR further submitted that the assessee is not given opportunity of being heard before the AO to verify and bring facts on record. He, therefore, pleaded to set aside the order passed by the Ld.CIT(A) and afford an opportunity of being heard before the AO to substantiate his claim. 6. Per contra, Ld.DR relied on the order of the Ld.CIT(A), pleaded to uphold the same and dismiss the appeal of assessee. 7. We have heard both the parties and perused the material placed on record. The only issued involved in the instant case is to ascertain whether the land sold by the assessee is within municipal limits of Vizianagaram or not. The assessee had sold the disputed land at Dwarapudi near Vzianagaram to Sai Balaji Happy Homes for Rs.1,42,08,000/-, which he acquired for Rs.17,31,290/- on 06.01.2007. Taking our attention to the certificate obtained from Tahsildar, Vizianagaram as filed in page No.14 of the paper book, the Ld.AR submitted that the disputed land is situated more than 8 Kms from 6 I.T.A. No.212/Viz/2020, A.Y.2012-13 Meka Kasi Visweswarudu, Vizianagaram Vizianagaram Municipal limits, whereas, the endorsement given by the Commissioner, Vizianagaram Municipality as filed in page No.32 of the paper book shows that the Dwarapudi village, which is located in surrounding of Vizianagaram Municipality is not included during the merger of surrounding villages. As per the Ld.AO, the disputed land is not an agricultural land as it is within the municipal limits and held that the assessee is laible to pay capital gains tax of Rs.36,93,090/-. In view of the foregoing facts and circumstances of the case, since there is ambiguity in the certificates issued by both the revenue as well as the municipal authorities, we remit the matter back to the file of the AO to re-ascertain whether the land is within 8 kilometers of the municipal limits or not and pass appropriate orders accordingly. 8. In the result, appeal of the assessee is allowed for statistical purpose. Order pronounced in the open court on 14th July, 2023. Sd/- Sd/- (एस बालाकृ ष्णन) (दुव्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated : 14.07.2023 L.Rama, SPS 7 I.T.A. No.212/Viz/2020, A.Y.2012-13 Meka Kasi Visweswarudu, Vizianagaram आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Meka Kasi Visweswarudu, K-5 Pradeep Nagar VT Agraharam, Vizianagaram 2. रधजस्व/The Revenue – The Income Tax Officer, Ward-1, Siddhartha Nagar, LTB Road, Vizianagaram 3. The Principal Commissioner of Income Tax-1, Visakhapatnam 4 The Commissioner of Income Tax (Appeals)-1, Visakhapatnam 5. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 6.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam