ASHOK C. THAKKAR, MUMBAI V. ITO - WARD -29(1)(1), MUMBAI

ITA 2625/MUM/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1984 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 26-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAYA B JAKKE
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Additional evidence; Set aside
• Section: 50C; 2(14); 208; 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL , ACCOUNTANT MEMBER ITA NO . 2625 / MUM . /2019 ( ASSESSMENT YEAR : 20 13 14 ) SHRI ASHOK C. THAKKAR 1403/04, MARATHON GALAXY LBS ROAD, NEAR VASANT OSC MULUND (WEST) MUMBAI 400 080 PAN AAAPT7754L . APPELLANT V/S INCOME TAX OFFICER WARD 29(1)(1), MUMBAI . RESPONDENT ASSESSEE BY : SHRI DHARMESH SHAH REVENUE BY : SHRI UDAYA B. JAKKE DATE OF HEARING 05 .0 9 .2019 DATE OF ORDER 28.11.2019 O R D E R PER SAKTIJIT DEY, J.M . THE CAPTIONED APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 29 TH MARCH 2019, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 39, MUMBAI, FOR THE ASSESSMENT YEAR 2013 14. 2. BASICALLY, TWO ISSUES ARISE OUT OF THE GROUNDS RAISED BY THE ASSESSEE. THE FIRST ISSUE RELATES TO ASSESSEES CLAIM THAT CAPITAL ASSETS 2 SHRI ASHOK C. THAKKAR SOLD BEING IN THE NATURE AGRICULTURAL LAND IS NOT SUBJECT TO CAPITAL GAIN TAX. THE SECOND ISSUE IS WITH REGARD TO APPLICA BILITY OF PROVISIONS OF SECTION 50C OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) , IN CASE THE INCOME RECEIVED FROM SALE OF LAND IS ASSESSED UNDER THE HEAD CAPITAL GAIN . OF COURSE, THE ASSESSEE HAS RAISED THE ISSUE OF LEVY OF INTEREST UNDER SECTION S 234A, 234B, 234C AND 234D OF THE ACT. 3. BRIEF FACTS ARE, THE ASSESSEE IS AN INDIVIDUAL. FOR THE ASSESSMENT YEAR UNDER DISPUTE, THE ASSESSEE FILED HIS RETURN OF INCOME ON 22 ND APRIL 2014, DECLARING INCOME OF ` 6,91,540. WHILE EXAMINING THE RETURN OF INCOME A S WELL AS OTHER MATERIA L ON RECORD IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT IN THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAD SOLD CAPITAL ASSET IN THE NATURE OF LAND AND RECEIVED CERTAIN CONSIDERATION IN RELATION TO SUCH SA LE. FURTHER, THE ASSESSEE HAD ALSO RECEIVED COMPENSATION FROM NATIONAL HIGHWAY AUTHORITY OF INDIA TOWARDS ACQUISITION OF LAND. HOWEVER, THE ASSESSEE HAD NOT OFFERED THE GAIN DERIVED FROM SALE /ACQUISITION OF SUCH LAND TO TAX UNDER THE HEAD CAPITAL GAIN . WHEN CALLED UPON TO EXPLAIN WHY THE INCOME FROM SALE OF LAND HAS NOT BEEN OFFERED TO TAX AS CAPITAL GAIN, IT WAS SUBMITTED BY THE ASSESSEE THAT THE LAND SOLD BEING A RURAL AGRICULTURAL LAND , CANNOT BE TREATED AS CAPITAL ASSET AS PER SECTION 2(14)(III) OF T HE ACT. IN THIS CONTEXT, THE 3 SHRI ASHOK C. THAKKAR ASSESSEE ALSO REFERRED TO CIRCULAR NO.F.M. 24011/2009 LRD. D ATED 13 TH APRIL 2011, ISSUE D BY THE GOVERNMENT OF INDIA, MINISTRY OF RURAL DEPARTMENT, NEW DELHI. FURTHER, IN SUPPORT OF HIS CLAIM THAT THE LAND BEING IN THE NATURE OF AGRICULTURAL LAND IS NOT SUBJECT TO CAPITAL GAIN TAX IRRESPECTIVE OF THE FACT WHETHER AGRICULTURAL ACTIVITY WAS CARRIED ON AT THE TIME OF SALE, THE ASSESSEE RELIED UPON CERTAIN JUDICIAL PRECEDENTS. THE ASSESSING OFFICER, HOWEVER, WAS NOT CONVINCED WITH TH E SUBMISSIONS OF THE ASSESSEE. HE OBSERVED , THE LAND SOLD BY THE ASSESSEE WAS HELD BY HIM FOR A PERIOD OF LESS THAN TWO YEARS. THUS, ACCORDING TO HIM, THE PERIOD OF LAND HOLDING CLEARLY INDICATE S THAT THE INTENTION OF THE ASSESSEE WAS NOT TO CARRY OUT ANY AGRICULTURAL ACTIVITY. REFERRING TO 7/12 EXTRACTS, HE OBSERVED , NO AGRICULTURAL ACTIVITY WAS CARRIED ON BY THE ASSESSEE AT THE TIME OF SALE OF LAND. THUS, HE ULTIMATELY CONCLUDED THAT THE ASSESSEE FAILED TO PROVE THAT THE LAND SOLD IS IN THE NATURE OF AGRI CULTURAL LAND. ACCORDINGLY, HE HELD THAT THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE IS ASSESSABLE UNDER THE HEAD CAPITAL GAIN . HAVING HELD SO, HE FOUND THAT AS PER REGISTERED SALE DEED, THE STAMP VALUATION AUTHORITY HAS DETERMINED THE VALUE OF LAND AT A RATE HIGHER THAN THE SALE CONSIDERATION MENTIONED IN THE DEED. THUS, INVOKING THE PROVISIONS OF SECTION 50C OF THE ACT, THE ASSESSING OFFICER ADOPTED THE VALUE DETERMINED BY THE STAMP DUTY VALUATION AUTHORITY AS DEEMED SALE CONSIDERATION AND COMPUTED CAPITAL 4 SHRI ASHOK C. THAKKAR GAIN. THIS RESULTED IN ADDITION OF ` 4,96,00,149, AS SHORT TERM CAPITAL GAIN AND ` 15,59,029, AS LONG TERM CAPITAL GAIN. THE ASSESSEE CHALLENGED THE AFORESAID ADDITION S BEFOR E THE FIRST APPELLATE AUTHORITY WITHOUT ANY SUCCESS. 4. SHRI DHARMESH SHAH, THE LEARNED AUTHORISED REPRESENTATIVE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED , DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SOLD AGRICULTURAL LAND S LOCATED AT VILL AGES AASE AND ARDHE IN THE DISTRICT OF RAIGARH. HE SUBMITTED , THE LAND S SOLD BEING IN THE NATURE OF RURAL AGRICULTURAL LAND S DO NOT COME WITHIN THE PURVIEW OF CAPITAL ASSET AS PER SECTION 2(14)(III) OF THE ACT. THEREFORE, THE GAIN DERIVED FROM SALE OF SUCH ASSET IS NOT SUBJECT TO TAX. THE LEARNED AUTHORISED REPRESENTATIVE S UBMITTED , NON - CARRYING OUT OF AGRICULTURAL ACTIVITY DOES NOT CHANGE THE CHARACTER OF LAND AS A AGRICULTURAL LAND. HE SUBMITTED , LEARNED COMMISSIONER (APPEALS) HAS ACCEPTED THIS FACT AGAINST WHICH THE REVENUE IS NOT IN APPEAL. HE SUBMITTED , THE ONLY ISSUE W HICH REMAINS TO BE DECIDED IS, WHETHER THE LAND SOLD BY THE ASSESSEE WERE IN THE NATURE OF AGRICULTURAL LAND OR NOT. HE SUBMITTED , TO JUSTIFY HIS CLAIM, THE ASSESSEE APART FROM SUBMITTING THE SALE DEED S WHEREIN THE DESCRIPTION OF PROPERTY HAS BEEN MENTIONE D AS AGRICULTURAL LAND AS WELL AS THE 7/12 EXTRACTS , THE ASSESSEE HAS ALSO FURNISHED CERTIFICATES FROM THE LOCAL TALATI CERTIFYING 5 SHRI ASHOK C. THAKKAR THAT THE LAND SOLD BY THE ASSESSEE WAS AGRICULTURAL LAND. HE SUBMITTED , LETTERS FROM GRAMS EWAK OF THE LOCAL GRAM PANCHAYAT WE RE ALSO FURNISHED CERTIFYING THE LAND SOLD AS AGRICULTURAL LAND. HE SUBMITTED , THE CLAUSES IN THE SALE DEED ALSO CLEARLY MENTION THAT THE ASSESSEE IS AN AGRICULTURIST. HE SUBMITTED , 7/12 EXTRACTS ENCLOSED WITH THE DEED OF CONVEYANCE ALSO REVEAL THAT IN SOM E OF THE PLOTS CROPS WERE CULTIVATED DURING THE YEAR. THUS, HE SUBMITTED , ALL THESE EVIDENCES CLEARLY DEMONSTRATE THAT THE LAND S SOLD WERE IN THE NATURE OF AGRICULTURAL LAND, HENCE, CANNOT BE CONSIDERED AS CAPITAL ASSET, AS DEFINED U/S 2(14) OF THE ACT , SO AS TO ATTRACT CAPITAL GAIN TAX. IN SUPPORT OF HIS CONTENTION, THE LEARNED AUTHORISED REPRESENTATIVE RELIED UPON THE FOLLOWING DECISIONS: - I) SERCON PVT. LTD. V/S CIT, 136 ITR 881 (GUJ.); II) MR.S SHAKUNTALA VE DACHALAM & ORS., V/S ACIT, 369 ITR 558 (MAD.); III) CIT V/S DEBBIE ALEMAO & CO., 331 ITR 59 (BOM.); IV) CHALSAMI NAGARATNA KUMARI V/S ITO, 79 TAXMANN.COM 104 (VIZAG.); V) CWT V/S H.V. MUNGALE, 145 ITR 208 (BOM.). 5. SHRI UDAYA B. JAKKE, T HE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , THE VERY FACT THAT THE ASSESSEE WAS NOT CARRYING OUT ANY AGRICULTURAL ACTIVITY ON THE LAND S SOLD AND HELD THEM FOR A PERIOD OF 6 SHRI ASHOK C. THAKKAR LESS THAN TWO YEARS INDICATE S THAT THE ASSESSEE WAS HOLDING THE LAND S AS INVESTMENT . THEREFORE, THE ACTIVITIES CARRIED ON BY THE ASSESSEE ARE AKIN TO ADVENTURE IN THE NATURE OF TRADE. THUS, HE SUBMITTED , TO QUALIFY AS AGRICULTURAL LAND SOME AGRICULTURAL ACTIVITY MUST BE CARRIED ON SUCH LAND WHICH IS ABSENT IN THE CASE OF LAND SOLD BY THE ASSESSEE. THEREFORE, IT CANNOT BE TREATED AS AGRICULTURAL LAND. IN SUPPORT OF HIS CONTENTION, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FOLLOWING DECISIONS: I) P. CHELLAIAH PILLAI V/S CIT, 16 ITR 350 (MAD.); AND II) CIT V/S R. VENKATASWAMY NAIDU, 29 ITR 529 (SC); 6. WE HAVE CONSIDERED RIVAL S UBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS EVIDENT, THE ASSESSING OFFICER HAS BROUGHT THE INCOME DERIVED FROM SALE OF LAND S TO TAX UNDER THE HEAD CAPITAL GAIN AFTER REJECTING ASSESSEES CLAIM THAT THEY ARE IN THE NATURE O F AGRICULTURAL LAND, HENCE, DO NOT COME WITHIN THE DEFINITION OF CAPITAL ASSET AS PER SECTION 2(14) OF THE ACT. WHILE REJECTING ASSESSEES CLAIM, THE ASSESSING OFFICER HAS OBSERVED THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE TO DEMONSTRATE THAT AGRICULTURAL A CTIVITY WAS CARRIED OU T ON THE LAND DURING THE PERIOD THE ASSESSEE WAS HOLDING SUCH LAND. WHEREAS, LEARNED COMMISSIONER (APPEALS), THOUGH, HAS ACCEPTED ASSESSEES CONTENTION THAT ACTUAL CARRYING ON OF AGRICULTURAL 7 SHRI ASHOK C. THAKKAR OPERATION IS NOT A NECESSARY CONDITION FOR DECIDING THE NATURE OF A PARTI CULAR LAND AS AGRICULTURAL LAND, H OWEVER, HE HAS REJECTED ASSESSEES CLAIM ON THE SOLITARY GROUND THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE TO SHOW THAT THE LAND S SOLD BY THE ASSESSEE HAVE BEEN REFER RED TO AS AGRIC ULTURAL LAND IN GOVERNMENT RECORD . QUA THE AFORESAID OBSERVATION OF LEARNED COMMISSIONER (APPEALS), IT MUST BE OBSERVED THAT IN THE COURSE OF PROCEEDINGS BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE HAS FURNISHED CERTAIN DOCUMENT BY WAY OF ADDIT ION AL EVIDENCES WHICH ARE AS UNDER: - (A) CONFIRMATION LETTER FROM TALATI DATED 06.05.2016 STATING THAT ALL THE PLOTS AT VILLAGE AASE SOLD BY THE APPELLANT WERE AGRICULTURAL LAND; (B) CONFIRMATION LETTER FROM TALATI DATED 06.05.2016 STATING THAT ALL THE PLOTS AT VILLAGE ARDHE SOLD BY THE APPELLANT WERE AGRICULTURAL LAND; (C) LETTER FROM GRAMSEWAK, GROUP GRAMPANCHAYAT OF THE CENSUS OF THE VILLAGES . 7. IN FACT, LEARNED COMMISSIONER (APPEALS) HAS NOT ONLY ACKNOWLEDGED FILING OF DOCUMENTARY EVIDENCE S BEFORE HIM, BUT HAS ALSO CALLED FOR A REPORT FROM THE ASSESSING OFFICER ON THE ADDITIONAL EVIDENCE S FILED BY THE ASSESSEE. AS OBSERVED BY THE LEARNED COMMISSIONER (APPEALS), THE ASSESSING OFFICER CHOSE NOT TO OFFER ANY COMMENT ON THE ADDITIONAL EVIDENCE S FILED BY THE ASSESSEE . BE THAT AS IT MAY, THE FACTS ON RECORD CLEARLY REVEAL THAT THE ASSESSEE PRODUCED 8 SHRI ASHOK C. THAKKAR CERTAIN DOCUMENTARY EVIDENCE S FROM THE VILLAGE LEVEL OFFICERS TO DEMONSTRATE THAT THE LAND S SOLD WERE IN THE NATURE OF AGRICULTURAL LAND. FURTH ER, THE S ALE DEED ALSO DESCRIBES THE LAND S SOLD AS AGRICULTURAL LAND. UNFORTUNATELY, LEARNED COMMISSIONER (APPEALS) HAS NOT WHISPERED EVEN A SINGLE WORD ON THE VERACITY OF ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE. IF THE ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE MENTIONING THE LAND S SOLD AS AGRICULTURAL LAND DID NOT INSPIRE CONFIDENCE OR REQUIRED FURTHER VERIFICATION, LEARNED COMMISSIONER (APPEALS) SHOULD HAVE CONDUCTED PROPER ENQUIRY TO ASCERTAIN THE AUTHENTICITY OF THE CERTIFICATE S ISSUED BY TALATI AND GRAMS EWAK. WITHOUT DISPROVING THE CORRECTNESS OF THE CONFIRMATION/ CERTIFICATES I SSUED BY THE TALATIES AND GRAMS EWAK, LEARNED COMMISSIONER (APPEALS) WAS NOT JUSTIFIED IN REJECTING ASSESSEES CLAIM OF AGRICULTURAL LAND , THAT TOO , ON THE PREMISE THAT THE ASSE SSEE FAILED TO FURNISH ANY EVIDENCE TO SHOW THAT THE LAND S ARE RECORDED AS AGRICULTURAL LAND IN THE GOVERNMENT RECORD. MOREOVER, THE DETAILS OF LAND SOLD ARE VERY MUCH AVAILABLE WITH THE DEPARTMENTAL AUTHORITIES. THEREFORE, IT WOULD NOT HAVE BEEN DIFFI CULT ON THEIR PART TO ASCERTAIN/ VERIFY THE EXACT NATURE OF LAND SOLD AS MENTIONED IN GOVERNMENT RECORD S BY CONDUCTING NECESSARY ENQUIRY WITH THE CONCERNED GOVERNMENT AUTHORITIES. WITHOUT DOING SO, THE REVENUE AUTHORITIES CANNOT PRESUM E THAT THE LAND S SOLD ARE NOT IN THE NATURE OF AGRICULTURAL LAND. WHEN THE 9 SHRI ASHOK C. THAKKAR ASSESSEE HAS BROUGHT SOME EVIDENCE ON RECORD TO ESTABLISH ITS CLAIM THAT THE LAND SOLD IS IN THE NATURE OF AGRICULTURAL LAND, THE REVENUE AUTHORITIES ARE DUTY BOUND TO VERIFY THE AUTHENTICITY O F SUCH EVIDENC E AND IF THEY WANT TO REJECT ASSESSEES CLAIM, THEY MUST BRING CONTRARY MATERIAL ON RECORD TO DISPROVE A SSESSEES CLAIM . IT IS EVIDENT , THE REVENUE AUTHORITIES HAVE NOT CONDUCTED ANY ENQUIRY TO VERIFY THE NATURE OF LAND SOLD BY THE ASSESSEE, WHETHER AGRICULTURAL OR OTHERWISE. IN FACT, THE EVIDENCES FURNISHED BY THE ASSESSEE HAVE NOT AT ALL BEEN EXAMINED IN PROPER PERSPECTIVE. IN VIEW OF THE AFORESAID, WE ARE INCLINED TO SET ASIDE THE IMPUGNED ORDER OF LEARNED COMMISSIONER (APPEALS) AND RESTOR E THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DE NOVO ADJUDICATION AFTER EXAMINING THE EVIDENCES FILED BY THE ASSESSEE AND CONDUCT ING ENQUIRY, IF NECESSARY, WITH THE CONCERNED AUTHORITIES OF THE GOVERNMENT TO FIND OUT THE TRUE NATURE AND CHARACTER O F THE LAND SOLD. ONLY AFTER THE ASSESSING OFFICER COMES TO A CONCLUSION ON THE BASIS OF MATERIAL BROUGHT ON RECORD THAT THE LAND S SOLD BY THE ASSESSEE ARE NOT IN THE NATURE OF AGRICULTURAL LAND, HENCE, COME WITHIN THE PURVIEW OF CAPITAL ASSET AS DEFINED U/S 2(14 ) OF THE ACT, THEN THE QUESTION OF APPLICABILITY OF SECTION 50C OF THE ACT WOULD ARISE. IN SUCH EVENT, THE ASSESSING OFFICER HAS TO COMPUTE THE CAPITAL GAIN BY APPLYING PROVISIONS OF SECTION 50C OF THE ACT AFTER FOLLOWING THE PROCEDURE LAID DOWN IN SUB - SECTION S (2) AND (3) OF THE SAID 10 SHRI ASHOK C. THAKKAR PROVISION. NEEDLESS TO MENTION, THE ASSESSING OFFICER MUST ALLOW REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. ACCORDINGLY, GROUNDS NO.1 TO 5, ARE ALLOWED FOR STATISTICAL PURPOSES. 8. I N GROUND NO.6, THE ASSESSEE HAS CHALLENGED LEVY OF INTEREST UNDER VARIOUS PROVISIONS. 9. THIS GROUND BEING CONSEQUENTIAL IN NATURE DOES NOT REQUIRE ADJUDICATION. 10. IN THE RESULT, APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT O N 28.11.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, D ATED: 28.11.2019 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI