Rakesh Kumar Somani, Khandwa V. ITO-1, Khandwa, Khandwa

ITA 215/Ind/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 0583 (ITAT-INDORE)
• Duration Of Justice: 4 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 28-07-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 14-03-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Revised return
• Section: 147; 143(3); 2(14); 153A

Judgement Text

आयकर अपीलȣय अͬधकरण, इंदौर Ûयायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE SMC BENCH, INDORE BEFORE SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA No.215/Ind/2024 (Assessment Year: 2011-12) Rakesh Kumar Somani, 10, Ramganj Road, Khandwa (M.P) Vs. ITO-1, Khandwa (Appellant / Assessee) (Respondent/ Revenue) PAN: AZGPS3988J Assessee by Shri S.N. Agrawal, AR Revenue by Shri Ashish Porwal, Sr.DR Date of Hearing 29.07.2024 Date of Pronouncement 31.07.2024 O R D E R This appeal by the assesse is directed against the order dated 31.01.2024 of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centers,(NFAC), Delhi for A.Y.2011-12 which is arising from the assessment order u/s 147 r.w.s. 143(3) of the Act dated 24.12.2018. 2. The facts in brief are that the assessee is an individual and furnished his regular return of income for Assessment Year 2011- 12 on 25.9.2011 declaring income of Rs.3,76,900/-. A survey u/s 133A of the Act was conducted at the business premises of the ITA No.215/Ind/2024 Rakesh Kumar Somani 2 assessee on 27.7.2012 and so far as the relevant appeal is concerned a Saudha Chitthi dated 30.09.2010 was found at his premises which contained the transaction of sale of agriculture land situated at Gram Torni, Tehsil Khandwa for a consideration of Rs.91,00,000/- and the said land was jointly owned by 4 persons including the assessee. However as per registered sale deed dated 27.03.2011 the said land was transferred for a consideration of Rs.27,00,000/- by way of 3 sale deeds showing consideration of Rs.9 lakh in each. Though the transaction appearing in Sauda Chitthi and registered sale deed were both falling in the Financial Year 2010-11 relevant to assessment year 2011-12 but the Ld. A.O made the addition in the hands of the assessee in assessment year 2013-14. During the course of survey the assessee has stated that total consideration has been received by him and his wife and so the excess of consideration appearing in Sauda Chitthi over the registered sale deed is to be divided into two portions. Ld. A.O accordingly made addition of Rs.31,50,000/- in the hands of the assessee in Assessment Year 2013-14 and the same was challenged by the assessee before the CIT(A) and granted relief to be assessee firstly observing that the land in question is a rural agriculture land not taxable as per the provisions of the Income Tax Act and secondly the transactions have taken place during the Assessment Year 2011-12 and therefore the same could be taxed only in the assessment year 2011-12 and not in the assessment year 2013-14. ITA No.215/Ind/2024 Rakesh Kumar Somani 3 2.1 Taking into consideration the finding of CIT(A) the case of the assessee for the instant year i.e. Assessment Year 2011-12 under appeal was reopened and addition of Rs.31,50,000/- made in the hands of the assessee. Aggrieved with the order of Ld. A.O assessee preferred an appeal before CIT(A) but failed to succeed. Ld. CIT(A) confirmed the addition made by the A.O. but without controverting the fact that the land in question is an agriculture land and is not falling in the category of capital asset and only confined the finding to the difference between the sale consideration appearing in Sauda Chitthi and the registered sale deed. Further there is no whisper about the capital gain if any earned by the assessee calculated on the basis of sale consideration of Rs.27,00,000/-. 3. Aggrieved assessee has preferred an appeal before this Tribunal raising following grounds of appeal: “1.That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in upholding the validity of reassessment proceedings initiated under section 147 of the Income-Tax Act, 1961 even when reopening was done in absence of any tangible material and live link of concealment of income more so when it was held by the Ld. CIT(A) while deciding the appeal in the case of the appellant for the Assessment Year 2013-14 that Sauda Chitthi found during the course of survey related to sale of rural agricultural land which was not liable for tax under the Act. 2. That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition of Rs. 31,50,000/- made by the Assessing Officer to the total income of the appellant on the basis of Sauda Chitthi found during the course of survey without properly appreciating the facts of the case and submissions made before him/her more so when such Sauda Chitthi was related to sale of rural agricultural land which was not liable for tax under the Act. 3. The appellant reserves the right to add, alter and modify the grounds of appeal as taken by him” ITA No.215/Ind/2024 Rakesh Kumar Somani 4 4. Ld. Counsel for the assessee apart from taking us to through detailed paper book containing 89 pages and referring to the decisions of this Tribunal in the case of ACIT Vs. Shri Sudeep Maheshwari ITA No.524/Ind/2013 dated 13.02.2019 as well as other decision of Co-ordinate Bench dealt in the case of ACIT V/s Kamlesh Kumar Rathi ITA Nos. 822&823/Del/2018 order dated 16.05.2023 submitted that the land in question is a rural agriculture land and did not fall in the category of capital asset defined u/s 2(14) of the I.T. Act and since this fact has not been controverted by both the lower authorities, therefore considering the appellate order passed by Ld. CIT(A) for Assessment Year 2013-14, the immoveable property sold by the assessee is a rural agriculture land and any gain arising from sale thereof is exempt from tax. Therefore since the gain if any is exempt from tax than even the on- money received is also exempt from tax. 5. On the other hand Ld. DR vehemently supported the order of lower authorities and further stated that the assessee had not filed any evidence to prove that the land in question is an agriculture land not failing in the category of capital asset defined u/s 2(14) of the Act. 6. I have heard rival contentions and perused the record placed before us. Ground No.1 raised by the assessee challenges the re- opening proceedings on the ground that the reopening was not done on the basis of tangible material and that there is no live link of ITA No.215/Ind/2024 Rakesh Kumar Somani 5 concealment of income. However during the course of hearing Ld. Counsel for the assessee have not made any specific argument on this ground showing the intent of not pressing this ground. Therefore Ground No.1 is dismissed as not pressed. 7. As far as Ground No.2 is concerned the same relates to addition of Rs.31,50,000/- made by the A.O on the basis of Sauda Chitthi found during the course of survey. I note that the survey was conducted at the business premises on 27.07.2012 and Sauda Chitthi was found during the course of survey, a copy of which is placed at page 31 to 35 as per which rural land appearing in Khasra No.513 admeasuring 5.4 hectare at Village Chhegaon Makhan, Tehsil Khandwa was agreed to be sold by the assessee along with three other co-owners to three individuals for a total consideration of Rs.91,00,000/-. The Sauda Chitthi was prepared on 30.9.2010. As on 27.03.2011 the registered sale deed was prepared and the land in question was sold for a total consideration of Rs.27 lakhs (9 lakhs each in the name of buyers). Admittedly the difference between the consideration appearing in Sauda Chitthi and the total consideration received through registered deed amount to Rs.64,00,000/-. However the Ld. A.O adopted the figure of Rs.63 lakh and the same has been continued in all the proceedings in the past. It is also an admitted fact that during the survey the assessee admitted that the consideration has been received only by him and his wife and accordingly a sum of Rs.63 lakh is divided into two parts and the addition of Rs.31,50,000/- was made in the hands of the assessee in the year of survey i.e. ITA No.215/Ind/2024 Rakesh Kumar Somani 6 2013-14. The assessee challenged the order before Ld. CIT(A) and succeeded. The relevant observation of Ld. CIT(A) in the appellate order for Assessment Year 2013-14 reads as under: “3.14 Thus, first of all the agriculture land as sold by the appellant was a rural agricultural land and is clearly not taxable as per the provisions of the Income Tax Act. Secondly, the sale agreement was executed on 13.09.2010 and the final registry was executed on 26.03.2011 i.e. during the previous year relevant to the assessment year 2011-12 and not in the A.Y. 2013-14 i.e. the year in question and the year in which the A.O has added the same. Thus, action if any, should be taken for A.Y. 2011-12 and not for A.Y. 2013-14. Further, the land was owned by the four co- owners but the difference in the sale proceed has been added only in the hands of appellant and his wife. Thus, addition if any, should be made for A.Y. 2011-12 and is not tenable for the present assessment year. I have also considered the case laws so cited by the appellant. Accordingly, the additions so made by the AO are hereby deleted and this ground of appeal is allowed.” 7.1 Based on the above finding of Ld. CIT(A),the case of the assessee was reopened u/s 147 of the Act for the Assessment Year 2011-12 and the impugned addition was made. Before Ld. CIT(A) Ld. Counsel for the assessee has claimed that the land in question is a rural agriculture land and is not falling in the category of capital assets and therefore any gain from sale thereof is exempt from tax and as per Ld. CIT(A) in the appellate order for Assessment Year 2013-14 has observed that the land is a rural agriculture land and is not taxable as per the provisions of I.T. Act. He further referred to the computation of income where the assessee has been showing the income from agriculture. He has also submitted that the land in question is situated around 26 km away from Khandwa and 16 km away from Chhegaon Makhan and situated in Gram ITA No.215/Ind/2024 Rakesh Kumar Somani 7 Torni and is an agriculture land and is not falling in the category of capital asset. 7.2 I have carefully gone through the submissions filed by the assessee before the lower authorities and also the Sauda Chitthi and registered deeds. Admittedly the land in question is a rural agriculture land and the fact that it is situated around 26 km away from Khandwa and 16 km away from Chhegaon Makhan has not been disputed by the revenue authorities at any stage. Ld. CIT(A) in appellate order for Assessment Year 2013-14 has mentioned the land in question as rural agriculture land not liable to be taxed and the gain is not taxable as per the provisions of I.T. Act. Interesting part is that the Ld. A.O has limited the addition only to the extent of Rs.31,50,000/- being half share of the assessee against the consideration of Rs.91 lakh in Sauda Chitthi over the amount in registered sale deed. Had the Ld. A.O disputed the finding of Ld. CIT(A) given in the appellate order for Assessment Year 2013-14 then considering the land in question as a capital asset he should have also made addition for capital gain if any arising out of the sale consideration of Rs.27,00,000/-. It can be made more clear by an example. Suppose the cost of land is Rs.10 lakhs and as per registered sale deed the sale consideration is Rs.27 lakh and as per Sauda Chitthi it is Rs.91 lakh. Ld. A.O if treating the land as capital asset then should have also made the addition for the difference between the indexed cost of acquisition of land and consideration as per sale deed. But there is no discussion about the same. It means that Ld. A.O has accepted the rural land sold by ITA No.215/Ind/2024 Rakesh Kumar Somani 8 the assessee as an agricultural land not in the nature of capital asset. Ld. A.O merely adopted the figure of Rs.31,50,000/- from the assessment order for Assessment Year 2013-14 and as a formality made the addition in the reassessment proceeding for Assessment Year 2011-12. Under these given facts where the assessee has time and again mentioned the land in question as rural agriculture land and also retracted from the statement given during the course of survey stating to have been given under duress and pressure and further considering the finding of CIT(A) for Assessment Year 2013-14 along with the details of agriculture land filed by the assessee in the written submissions, clearly indicates that the land in question sold by the assessee is a rural agriculture land not falling under the category of capital assets as defined u/s 2(14) of the Act and therefore gain arising from sale of such land is exempt from tax. We find support from the finding of Co-ordinate bench, Delhi in the case of ACIT V/s Kamlesh Kumar Rathi (supra) dealing with the similar type of issue and finding of Tribunal reads as follows:- “8. We have considered rival submissions and perused the materials on record. The dispute in the present appeals is with regard to the taxability of the amount received by the assessee towards sale of agricultural land - whether as declared sale consideration or on-money. As far as the location of the land sold is concerned, there is no dispute that it is in the nature of agricultural land, situated at Gata No. 44, 102, 107, 108 and 109 at Surajpur in the State of Uttar Pradesh. It is the claim of the assessee that the land is in the nature of agricultural land, as it is situated beyond 8 kilometres from the limits of Nagar Panchayat, Dadri, having a population of less than 10 lacs, hence, not coming within the purview of capital asset. 9. On a careful reading of the assessment orders, we are unable to find any observation of the Assessing Officer controverting assessee's claim ITA No.215/Ind/2024 Rakesh Kumar Somani 9 regarding the nature and character of land sold. In fact, there is absolutely no observation of Assessing Officer regarding the nature and character of land sold. Thus, in a way, he has accepted assessee's claim that the nature and character of the land sold is agricultural land, hence, not coming within the purview of capital asset u/s. 2(14)(iii) of the Act. The only reason, on which Assessing Officer has added back the sale consideration as undisclosed income of the assessee is because, the assessee has not disclosed the sale proceeds of the land sold in the original return of income. Whereas, in the revised return of income filed in pursuance to the notice issued u/s. 153A of the Act, the assessee has offered the amount received from sale of land. This, in our view, cannot be a finding which is sustainable either on facts or in law. Firstly, Assessing Officer has not controverted the nature and character of land sold. Once, nature and character of land sold is established as agricultural land not to be treated as capital asset u/s. 2(14)(iii) of the Act, any income arising out of sale of such land whether by way of declared sale consideration or on account of on-money, would partake the character of exempt income, as the source of both the declared sale consideration and the on-money received is the same, viz., sale of agricultural land. That being the factual position, the income derived from sale of agricultural land, which is not a capital asset, cannot be made taxable. The decisions relied upon by ld. Counsel for the assessee fully supports this view. In view of the aforesaid, we do not find any infirmity in the decision of ld. Commissioner (Appeals) in deleting the additions made. Grounds are dismissed. 10. In the result, both the appeals are dismissed.” 7.3 Examining the facts of the instant case in the light of above decision cited (supra) and also considering the facts discussed above I find that the decision of Tribunal in case of ACIT V/s Kamlesh Kumar Rathi (supra), is squarely applicable. Thus the finding of Ld. CIT(A) on the merits of the case is set aside and impugned addition of Rs.31,50,000/- is deleted. Ground No.2 is allowed. ITA No.215/Ind/2024 Rakesh Kumar Somani 10 8. In the result appeal of the assessee is partly allowed. Order pronounced in the open court on 31.07.2024. Sd/- (MANISH BORAD) Accountant Member Indore,_ 31.07.2024 Dev/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore