Bhogilal Bahilalbhai Patel, Vadodara V. The Pr. CIT -1, Vadoadar

ITA 231/AHD/2021

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8996 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2024
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-01-2024
• Assessment Year: 2015-2016
• Appeal Filed On: 30-09-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Revision of order; Opportunity of being heard; Reasonable cause; Benefit of exemption; Condonation of delay; Set aside; Capital Gains
• Section: 263; 143(3); 54B

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘A’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, AHMEDABAD BEFORE SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER ITA No.231/Ahd/2021 Assessment Year : 2015-16 Bhogilal Bhailalbhai Patel 475/2 Sagar Faliya At & Post Bhayali Vadodara 391 410. PAN : BKKPP 3136 R Vs. The Pr.CIT-1 Vadodara. (Applicant) (Responent) Assessee by : Shri Hemant Suthar, AR Revenue by : Shri Akhilendra Pratap Yadaw, CIT-DR स ु नवाई क तार ख/D a t e o f H e a r i n g : 2 4 / 0 1 / 2 0 2 4 घोषणा क तार ख /D a t e o f P r o n o u n c e m e n t : 3 1 / 0 1 / 2 0 2 4 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present appeal has been filed by the assessee against order passed by the ld.Pr.Commissioner of Income Tax-1, Vadodara [hereinafter referred to as “Ld.Pr.CIT”]dated 24.2.2020 passed by invoking provisions of section 263of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short]for the Asst.Year 2015- 16. 2. At the outset, it was pointed out that the appeal filed by the assessee was time barred by 525 days, and an application for condonation of delay has been filed explaining the reasons for the delay in filing appeal before the Tribunal. Briefly put, main reason ITA No.231/Ahd/2021 2 given by the assessee was that the appeal could not be filed in time by the assessee before the Tribunal due to Covid pandemic, during which period, normal life was come a grinding halt, and no activities could be carried out during this period. The assessee relied on the decision of the Hon’ble Supreme Court in Misc. Application No.21 of 2022 in Misc.Application No.665 of 2021 in Suo Motu Writ Petition(c) No.3 of 2020 in Re: Cognizance for Extension of limitation dated 10.1.2022, which extended the period of limitation in filing litigations before the various judicial forum as per the directions contained therein. 3. The ld.DR opposed the maintainability of appeal before us, stating that the assessee has no sufficient and reasonable cause so as to justify the condonation of delay before us and the delay was attributable completely to laxity on the part of the assessee. 4. We have heard both the parties and gone through the material placed before us. The revisionary order was passed by the ld.Pr.CITon 24.2.2020 and served on the assessee on the same date. The assessee ought to have filed appeal against the same within 60 days. However, the appeal was filedbefore us on 01.10.2021 resulting in delay of 525 days. However, we havenoted that due to the pandemic of Covid-19, the limitation prescribed for filing appeals was extended till further orders by the Hon’ble Supreme Court vide its order dated 23/03/2020 in Suo Moto Writ Petition (Civil) No.(s) 3/2020. And the same was ultimately extended upto 28th February 2022 in M.A No.21 of 2022 dated 10th January 2022. This period of extension given by the Supreme Court is therefore to be excluded for the purpose of limitation in filing appeal before the various authorities. Therefore, considering the same, the delay in filing the present appeal attributed to the COVID period, is to be excluded for ITA No.231/Ahd/2021 3 the purpose of quantifying the period of delay, and accordingly the appeal of the assessee requires to be admitted for adjudication on merit. We condone the impugned delay in filing appeal before the Tribunal, and proceed to adjudicate the matter on merit. 5. The assessee has challenged order raising the following grounds before us. “1. The Ld. Pr. CIT - 1, Vadodara has erred in law and in facts in holding that the assessment order passed by the Ld. A.O. u/s. 143(3) dated 22.06.2017 is erroneous and prejudicial to the interest of the revenue so as to justify the invocation of powers u/s. 263 and directing to revise the assessment order to verify and consider the allowance of deduction u/s 54B. The order of the Pr. CIT being erroneous in law and in facts is prayed to be cancelled / revoked. 2. That having regard to the facts and circumstances of the case, Pr. CIT - 1, Vadodara has erred in law and on facts in assuming jurisdiction in passing the order u/s 263, more so when the assessment order passed under section 143(3) dated 22.06.2017 is neither erroneous nor prejudicial to the interest of Revenue. 3. That having regard to the facts and circumstances of the case, Pr. CIT has erred in setting aside the assessment order passed under section 143(3) of the Act by the Assessing Officer on the ground that the enquiries and verification which should have been made has not been conducted in terms of Explanation -2 to Sec. 263 and that the assessment order doesn't become erroneous. 4. That the PCIT has failed to consider that the assessment as framed by the Assessing Officer was after due application of mind and after considering the detailed replies on various dates as filed before him during the course of assessment proceedings. 5. That having regard to the facts and circumstances of the case, Pr. CIT has erred in invoking the provision of Section 263 in reference to disallowing of deduction u/s. 54B of the Act without appreciating that Assessee is eligible for the claim of the deduction as the assessee has fulfilled the conditions'as required by the statue and hence no disallowance was warranted u/s 54B of the Act. 6. That without prejudice, the Pr. CIT has exceeded his jurisdiction in setting aside the assessment order and directing the AO to make fresh assessment when his notice and the order passed is limited to certain issues only. Hence the order passed u/s 263 is illegal and bad in law. 7. The Ld. Pr. CIT - 1, Vadodara has further erred in law and in facts in directing the conduct of enquiry and verification which are beyond the scope ITA No.231/Ahd/2021 4 of powers vested u/s 143(3) and consequently u/s. 263 of the I.T. Act, 1961. 8. Your appellant craves liberty to add, alter, amend, substitute or withdraw any of the ground of appeal hereinabove contained.” 6. Above grounds of appeal demonstrate that they are not in consonance with the Rule 8 of the Income Tax (Appellate Tribunal) Rules, 1963, as they are a blend of descriptive and argumentative contents. In fact, these grounds of appeal, solely focus on challenging the validity of the revisionary order of the ld.Pr.CIT passed under section 263 of the Act and invocation of provisions of section 54B of the Act holding that the assessment order passed by the ld.AO under section 143(3) of the Act is erroneous and prejudicial to the interest of the Revenue. Our discussions for adjudication of this issue as follows. 7. A perusal of the order of the ld.Pr.CIT reveals that the assessee’s case was reopened for revision by the ld.Pr.CIT noting that the AO had wrongly allowed the assessee exemption of capital gains claimed under section 54B of the Act. The ld.Pr.CIT noted from the records that immovable property sold by the assessee was non-agriculture land, and therefore, the capital gains earned thereon were not eligible for exemption under section 54B of the Act, which, however was allowed by the AO. 8. This fact mentions at para-2 of the ld.Pr.CIT’s order as under: “2. This assessment order u/s. 143(3) of the I-T Act, passed by the Assessing Officer on 22.06.2017 for A.Y. 2015-16, is erroneous as well as prejudicial to the interest of revenue on account of the following: On verification of records, it is seen that during the year under consideration assessee had sold immovable property and claimed exemption u/s. 54B of the Act however, the same is not allowable as the land in question was converted from agricultural land to non - agricultural land on 07/05/2012 and the same was sold vide registered sale deed dated 21/04/2014, thus the basic conditions for claiming exemption u/s.54B of the Act have not been fulfilled by the ITA No.231/Ahd/2021 5 assessee in the instant case. Therefore, the grant of exemption u/s. 54B of the Act is not found allowable to the assessee.” 9. The ld.Pr.CIT accordingly issued show cause notice to the assessee, and afterconsidering thesubmissions filed by the assessee in this regard, he held the assessment order passed to be erroneous causing prejudice to the Revenue on account of having allowed an apparently ineligible claim of exemption to the assessee under section 54B of the Act. The ld.Pr.CIT set aside the assessment with the direction that it should be framed afresh after proper inquiry and verification. 10. During the course of hearing before us, the provisions of section 54B were brought to our notice regarding conditions to be fulfilled to be eligible to claim exemption thereon. The same are reproduced hereunder: 54B. (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes (hereinafter referred to as the original asset), and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,— (i) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced, by the amount of the capital gain. (2) The amount of the capital gain which is not utilised by the assessee for the purchase of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable ITA No.231/Ahd/2021 6 in the case of the assessee for furnishing the return of income under sub- section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset: Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase of the new asset within the period specified in sub-section (1), then,— (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. 11. As noted from the same, the essential conditions to be fulfilled to qualify for exemption of capital gains under section 54B of the Act is • capital gain ought to be earned on transfer of land which, in the two years immediately preceding the date of transfer ,was being used by the assessee for agriculture purpose, and • the capital gain earned on transfer of such land is invested in other land to be used for agriculture purpose. 12. The ld.counsel for the assessee contended that it is apparently non-fulfillment of the first condition by the assessee, which was noted by the ld.Pr.CIT, for finding the assessee ineligible to claim exemption u/s 54B of the Act. In this regard, he pointed out that the ld.Pr.CIT had noted that the assessee had converted his agriculture land to non-agriculture land (NA) prior to sale and on this basis he arrived at the conclusion that the assessee had not fulfilled the criteria prescribed by section 54B of the Act.Ld. Counsel for the assessee contended that the conditions to be fulfilled as per the section 54B of the Act was not with regard to the nature of the ITA No.231/Ahd/2021 7 land, but with respect to its user i.e. whether it was used for agriculture purpose for two years immediately preceding the date on which the transfer took place. 13. At this juncture, the attention of the ld.counsel for the assessee was drawn to the finding of the ld.Pr.CIT at para 4.5 of his order to the effect that the case records revealed that no inquiry had been made by the AO regarding the user of the land for agriculture purpose for two years prior to the date of transfer. The relevant part being para-4.5 is reproduced as under: “4.5 On examination of case records, it is seen that in the instant case no inquiries were made by the Assessing Officer, during the course of assessment proceedings, to ascertain as to whether the land in question was used for agricultural purpose at least for a period of two years immediately preceding the date of transfer Besides, no evidence/document had been furnished by the assessee to show that he was conducting agricultural operations or was cultivating crops on the land in question for a period of two years immediately preceding the date of transfer. Further, in this case the assessee sold the land after getting it converted from agricultural land to non agricultural land thereby violating the condition prescribed for availing the benefit of exemption u/s. 54B of the Act. Also, no inquiries seem to have been conducted by the Assessing Officer to ascertain as to whether land purchased by the assessee was agricultural land and whether the same was purchased from the sale proceeds of sale of agricultural land. Thus, in the given facts of the case, it can be undoubtedly said that the impugned assessment order was erroneous and prejudicial to the interest of revenue. Accordingly, the Assessing Officer is directed to decide this issue afresh keeping in view the provision of Section 54B of the Act and also after giving the assessee an opportunity of being heard. 14. The ld.counsel for the assessee was asked at bar whether this fact noted by the ld.Pr.CIT was correct , that neither any inquiry was made by the AO regarding fulfillment of the basic conditions for eligibility to claim exemption under section 54B of theActnor any documents were placed by the assessee before the AO establishing the same. To this, the ld.counsel for the assessee categoricallyaffirmed the fact and stated that neither any inquiry ITA No.231/Ahd/2021 8 was conducted by the AO regarding user of land for agricultural purposes two years preceding the date of sale nor any documents filed by the assessee to the AO demonstrating the same. 15. In the light of the same, we find no infirmity in the order of the ld.Pr.CIT, finding the AO to have erroneously allowed the assessee’s claim of exemption under section 54B of the Act, without even conducting basic inquiry regarding fulfillment of conditions prescribed by the section for being eligible to exemption under the said section. The ld.Pr.CIT’s order is accordingly confirmed, and the grounds of the appeal of the assessee are dismissed. 16. In the result, the appeal of the assessee is dismissed. Order pronounced in the Court on 31 st January, 2024 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad,dated 31/01/2024