Sri. Nagappa Nagaraj, V. DCIT,

ITA 245/BANG/2014

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4160 (ITAT-BANGALORE)
• Duration Of Justice: 4 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 22-01-2019
• Assessment Year: 2004-2005
• Appeal Filed On: 17-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR P V PRADEEP KUMAR
• Keywords: Unexplained investment; Additional evidence
• Section: 54B; 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN , ACCOUNTANT MEMBER ITA NO. 245/ BANG / 2014 ASSESSMENT YEAR : 2004 - 05 SRI NAGAPPA NAGARAJ, NO.69, GARUDACHAR PALYA, WHITE FIELD, MAHADEVAPURA, BANGALORE 560 048. PAN: AAIPN 8336L VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7(1), BANGALORE. APP ELL ANT RESPONDENT APPELLANT B Y : SMT. PRATIBHA R., ADVOCATE RES PO NDENT BY : DR. P.V. PRADEEP KUMAR, ADDL.CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 22 . 0 1 . 2 0 1 9 DATE OF PRONOUNCEMENT : 15 . 02 . 2 0 1 9 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORD ER DATED 29.10.2013 OF THE CIT(APPEALS), LTU, BANGALORE RELA TING TO ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE IS AN INDIVIDUAL. HE FILED RETURN OF INCOME FOR AY 2004-05 ON 5.7.2005 DECLARING INCOME OF RS.8,25,937 AND AGRICULTURAL INCOME OF RS.1,49,450/-. AN INTIMATION U/S.143(1) OF THE INCOME TAX ACT, 1961 (ACT) WAS ISSUED BY THE AO ON 26.12.2005 ACCEP TING THE RETURN OF INCOME. ITA NO. 245/BANG/2014 PAGE 2 OF 5 3. SUBSEQUENTLY A NOTICE U/S.148 OF THE ACT FOR MAK ING AN ASSESSMENT OF INCOME THAT HAS ESCAPED ASSESSMENT U/S.147 OF TH E ACT, WAS ISSUED BY THE AO ON 3.5.2007. IN GROUNDS NO.1 TO 3, THE ASSE SSEE HAS CHALLENGED THE VALIDITY OF INITIATION OF PROCEEDINGS U/S.147 O F THE ACT ON THE GROUND THAT THE AO DID NOT FURNISH THE REASONS RECORDED BEFORE ISSUING NOTICE U/S.148 OF THE ACT. THERE IS NO MATERIAL ON RECORD TO SHOW THAT THE ASSESSEE DEMANDED COPY OF REASONS RECORDED IN THE COURSE OF ASSESSMENT PROCEEDINGS, EXCEPT A STATEMENT BY THE LEARNED COUN SEL FOR THE ASSESSEE THAT IT WAS DEMANDED ORALLY IN THE COURSE OF ASSESS MENT PROCEEDINGS. THE LAW IS SETTLED THAT UNLESS SUCH REASONS ARE DEMANDE D, THE AO IS NOT OBLIGED TO FURNISH THE SAME. IN THAT VIEW OF THE M ATTER, GROUND NOS.1 TO 3 RAISED BY THE ASSESSEE ARE HELD TO BE WITHOUT ANY M ERIT AND DISMISSED. 4. IN GROUNDS NO.4 TO 8, THE ASSESSEE HAS CHALLENGE D THE ACTION OF THE REVENUE AUTHORITIES IN COMING TO THE CONCLUSION THA T THE ASSESSEE CARRIED OUT ADVENTURE IN THE NATURE OF TRADE IN THE MATTER OF BUYING AND SELLING LANDS AND THEREFORE THE GAIN ARISING FROM SUCH ACTI VITIES HAD TO BE REGARDED AS INCOME FROM BUSINESS. WITHOUT PREJUDICE TO THE AFORESAID CONCLUSION, THE REVENUE AUTHORITIES ALSO DENIED THE BENEFIT OF DEDUCTION U/S.54B OF THE ACT CLAIMED BY THE ASSESSEE. TO DECIDE THE QUESTIO N OF DEDUCTION U/S.54B OF THE ACT, THE QUESTION WHETHER THE LANDS IN QUEST ION WERE AGRICULTURAL LANDS USED FOR THE PURPOSE OF AGRICULTURAL OPERATIO NS WAS RELEVANT. THE REVENUE AUTHORITIES HELD THAT THE CONDITIONS FOR AL LOWING DEDUCTION U/S.54B OF THE ACT WERE NOT SATISFIED ON THE LANDS IN QUEST ION BEING REGARDED AS AGRICULTURAL LANDS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS ON GROUNDS N O.4 TO 8. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESS EE BROUGHT TO OUR NOTICE THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN ASSESSEES OWN CASE IN AY 2003-04 IN ITA NO.437 OF 2009 DATED 9.3.2015 WHEREIN THE HONBLE ITA NO. 245/BANG/2014 PAGE 3 OF 5 COURT REMANDED THE ISSUE FOR FRESH CONSIDERATION WI TH THE FOLLOWING OBSERVATIONS:- 4. THE LEARNED COUNSEL FOR BOTH THE PARTIES AGREE THAT THE ENTIRE DISPUTE IN THE PRESENT APPEAL HINGES UPON TH E FACT AS TO WHETHER THE PROPERTIES WHICH WERE SOLD AND ALSO THE PROPERTIES WHICH WERE PURCHASED ARE THE AGRICULTURAL LANDS AS PER SECTION 2(14) OF THE ACT AND ALSO AS TO WHETHER THE SAME WE RE BEING USED FOR AGRICULTURAL PURPOSE SO AS TO ATTRACT THE PROVI SIONS OF SECTION 54B OF THE ACT. THE LEARNED COUNSEL FOR BOTH THE PA RTIES HAVE ALSO STATED THAT THOUGH THE EVIDENCE FROM BOTH SIDES WER E ADDUCED BEFORE THE ASSESSING AUTHORITY, WHICH FORMED PART O F PAPER BOOK OF THE TRIBUNAL, BUT THERE IS NO DISCUSSION WITH RE GARD TO SUCH EVIDENCE ON THE BASIS OF WHICH THE TRIBUNAL HAS COM E TO A FINDING THAT THE PROPERTIES IN QUESTION WHICH WERE SOLD AND PURCHASED BY THE ASSESSEE WERE AGRICULTURAL PROPERTIES AND WERE USED FOR AGRICULTURAL PURPOSES. THE LEARNED COUNSEL FOR BOTH THE PARTIES THUS JOINTLY STATED THAT THE MATTER BE REMANDED BACK TO THE ASSESSING AUTHORITY FOR CONSIDERING SUCH QUESTION OF FACT AFR ESH AFTER TAKING INTO ACCOUNT THE EVIDENCE WHICH WAS LEAD BY THE PAR TIES. 5. IN SUCH VIEW OF THE MATTER, THE APPEAL IS ALLOWE D. THE ORDER DATED 17.04.2009 PASSED BY THE TRIBUNAL IN IT A NO.384/BANG/2008 AS WELL AS THE ORDER OF THE AUTHOR ITIES BELOW ARE HEREBY QUASHED. THE MATTER IS REMITTED BACK TO THE ASSESSING AUTHORITY WITH A DIRECTION TO CONSIDER THE MATTER A FRESH IN THE LIGHT OF THE OBSERVATIONS MADE HEREIN ABOVE. IN VIEW OF THE FACT THAT THE QUESTIONS, WHICH HAV E BEEN REFERRED FOR DECISION OF THIS COURT, HAVE TO BE DECIDED AFRE SH IN THE LIGHT OF THE EVIDENCE ADDUCED BY THE PARTIES BY THE ASSESSIN G AUTHORITY, WE ARE NOT ANSWERING THE QUESTIONS FRAMED AT THE TI ME OF ADMISSION OF THIS APPEAL AND THE SAME SHALL BE LOOK ED INTO BY THE ASSESSING AUTHORITY. 6. IT IS UNDISPUTED THAT THE AFORESAID OBSERVATIONS WILL APPLY TO THE PRESENT ASSESSMENT YEAR ALSO, AS SOME OF THE PROPER TIES ON WHICH DEDUCTION WAS CLAIMED IN AY 2003-04 WERE SOLD IN TH IS YEAR AND THE NATURE OF THOSE PROPERTIES, WHETHER THEY WERE AGRICULTURAL LANDS OR NOT DEPENDS ON ITA NO. 245/BANG/2014 PAGE 4 OF 5 THE FINDINGS IN AY 2003-04. THEREFORE, IT WOULD BE JUST AND PROPER TO SET ASIDE THE ORDER OF THE CIT(APPEALS) ON THE GROUNDS RAISED IN GR.NO.4 TO 8 TO THE AO FOR CONSIDERATION AFRESH ON THE SAME DIRE CTIONS AS GIVEN BY THE HONBLE HIGH COURT. THE LEARNED COUNSEL FOR ASSESS EE PLEADED FOR LIBERTY TO FILE ADDITIONAL EVIDENCE BEFORE THE AO IN THE SE T ASIDE PROCEEDINGS TO SHOW THE CHARACTER OF THE LANDS THAT WERE SOLD ON T HE BASIS OF REVENUE RECORDS. THE PRAYER IS ACCEPTED. THUS, GROUNDS 4 T O 8 ARE DECIDED ACCORDINGLY. 7. IN GROUNDS NO. 9 TO 12, THE ASSESSEE HAS CHALLEN GED THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENTS IN CONST RUCTION OF A KALYANI MANDAPAM. IN AY 2003-04 SIMILAR ADDITION WAS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT AND THE TRIBUNAL VIDE PARAGR APH 16 OF ITS ORDER IN ITA NO.384/BANG/2008 ORDER DATED 16.4.2009 HELD THA T THE VALUATION OF PLINTH AREA SHOULD BE MADE BY ADOPTING THE STATE PW D RATES AS AGAINST THE CPWD RATES ADOPTED BY THE DISTRICT VALUATION OFFICE R (DVO). THE LEARNED COUNSEL FOR THE ASSESSEE PRAYED FOR SIMILAR DIRECTI ON IN THE PRESENT ASSESSMENT YEAR ALSO, WHICH PRAYER, IN OUR OPINION, DESERVES TO BE ACCEPTED. THUS, GROUNDS NO.9 TO 12 ARE DECIDED ACC ORDINGLY. 8. IN THE RESULT, APPEAL BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 15 TH DAY OF FEBRUARY, 2019. SD/- SD/- ( B.R. BASKARAN ) ( N.V . VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 15 TH FEBRUARY, 2019. / D ESAI S MURTHY / ITA NO. 245/BANG/2014 PAGE 5 OF 5 COPY TO: 1. APP ELL ANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.