Income Tax Officer (Ward) 1(2), Panaji V. Shri Shaukat Karim Prasla., Goa

ITA 284/PAN/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6700 (ITAT-PANAJI)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 25-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONAL L SONKAVDE LD
• Keywords: Capital asset; Business income; Principle of natural justice; Corroborative evidences
• Section: 2(14); 260A; 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P. K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 284 /PNJ/2013 (ASSESSMENT YEAR - 2009 - 10 ) THE INCOME - TAX OFFICER, WARD - 1 (2) PANAJI. (APPELLANT) VS. SHRI SHAUKAT KARIM PRASLA. 310, MIRAMAR KERANT CARANZALEM, TISWADI, GOA PAN:AYNPP5560F (RESPONDENT) APPELLANT BY : SMT. SONAL L. SONKAVDE , LD. DR. RESPONDENT BY : SHRI SANDIP BHANDARE, CA. DATE OF HEARING : 07/04 /2014 DATE OF PRONOUNCEMENT : 09 /05 /2014 O R D E R PER: D.T. GARASIA THIS APPEAL HAS BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER OF CIT(A) - PANAJI DATED 17.07.2013 F OR THE ASSESSMENT YEAR 2009 - 10 BY RAISING THE FOLLOWING GROUNDS READ AS UNDER: 1. ON TH E FACTS AND CIRCUMSTANCES, THE LD. CIT(A) GROSSLY ERRED IN NOT CONSIDERING THE FACT THAT IN THE RECITAL OF SALE DEED THE PROPERTY SOLD IS NOT MENTIONED AS AGRICULTURAL LAND. 2. ON TH E FACTS AND CIRCUMSTANCES, THE L D. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT AS SE EN FROM THE EXTRACT OF FORM NO. 1 & XIV FURNISHED BY THE SUB - REGISTRAR THAT THE DETAILS OF CROPPED AREA IS MENTIONED AS NIL. 3. ON THE FACTS AND CIRCUMSTANCES , THE L D. CIT(A) ERRED IN NOT APPRECIATI NG THE FACT THAT ASSESSEE HAS NOT SHOWN ANY AGRICULTURAL RECEIPTS IN THE RETURNS OF INCOME FILED FOR PREVIOUS THREE YEARS THEREBY EVIDENCING THAT THE LAND IN QUESTION IS NOT AGRICULTURAL LAND. 4. ON THE FACTS AND CIR CUMSTANCES, THE LD. CIT(A) GROSSLY ERRED IN NOT CONSIDERING THE FACT THAT ASSESSEE HAS SOLD THE PROPERTY TO A NON - AGRICULTURIST FOR NON - AGRICULTURAL PURPOSE. 5. ON TH E FACTS AND CIRCUMSTANCES, THE LD. CIT(A) ERRED IN DELETING ADDITION OF 10,00,000/ - BY NOT APPRECIATING THAT THE SOURCE OF CIB IS AUTHENTIC. THE ASSESSEE WAS NOT ABLE TO DISPROVE THAT HE HAD NOT RECEIVED THE SAID AMOUNT. HENCE THE TRANSACTION REFLECTED IN CIB SHOULD BE TREATED AS GENUINE AND TO BE TAXED IN THE HANDS OF THE ASSESSEE. 6. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING THE ORDER OF THE LEARNED CIT(A) MAY BE SET ASIDE AND ORDER OF ASSESSING OFFICER RESTORED. 2 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA 2. IN THIS CASE ISSUE NO S. 1 ,2,3 AND 4 ALL ARE INTERCONNECTED, THEREFORE, DISPOSED BY THE COMMON ORDER. 2.1 . THE SHORT FACT S OF THE CASE ARE THAT THE DDIT(INV), PANAJI WAS CARRIED OUT CERTAIN INVESTIGATION. AS PER THE REPORT ASSESSEE HAS SOLD CERTAIN LANDED PROPERTY A ND CLAIMED EXEMPTION U/S. 2(14) OF THE INCOME TAX ACT WHICH THE ASSESSEE IS NOT ENTITLED FOR AS PER THE FINDING OF THE DDIT (INV) . THE ASSESSEE HAS FILED THE RETURN AN D CLAIMED THE EXEMPTION IN RESPECT OF SALE PROCEEDS OF RS. 1,81,50,000 FROM CAPITAL GAINS WITHIN THE MEANING OF SECTION 2(14), BEING THE LAND SOLD IS AN AGRICULTURAL PROPERTY. THE PROPERTY WAS SITUATED AT USGAON - GANJE, TALUKA PONDA, GOA. THE ASSESSEE WAS GIVEN SHOW CAUSE NOTICE. THE ASSESSEE HAS FILED THE COPY OF AGREEMENT OF SALE ON 13.12.1988 AND SALE DEED DATED 21.06.2007 FOR THE PURCHASE OF AGRICULTURAL PROPERTY. THE COPY OF SALE DEED DATED 24.07.2008 IN RESPECT OF TRANSFER OF ABOVE PROPERTY TO M/S. MAHALAKSHIMI REAL ESTATE & INVESTMENT PVT. LTD. THE ASSESSEE H AS ALSO SUBMITTED FORM NO. I & IV ISSUED BY THE MAMLATDAR OF PONDA, GOA, IN SUPPORT OF HIS CLAIM FOR THE SAID PROPERTY AS AGRICULTURAL LAND. THE ASSESSEE ALSO CONTENDED THAT THE AGREEMENT OF SALE WAS ON 13.12.1988, DUE TO SOME LEGAL COMPLICATIONS, THE SALE DEED WAS EXECUTED ON 21.06.2007. IN ORDER TO VERIFY THE CLAIM OF THE ASSESSEE THE ASSESSING OFFICER WAS OF THE VIEW THAT THE SALE DEED DATED 24.07.2008 , NOWHERE IT IS MENTIONED THAT SAID PROPERTY IS AN AGRICULTURAL PROPERTY . THE ASSESSEE WAS UNABLE TO PRODUCE ANY CREDIBLE SUPPORTING EVIDENCE THAT THE SAID PROPERTY WAS AGRICULTURAL PROPERTY IN THE FORM OF HAVING AGRICULTURAL INCOME, RECEIPTS/BILLS IN SUPPORT OF AGRICULTURAL EXPENSES INCURRED AND AGRICULTURAL INCOME EARNED IN ASSESSMENT YEAR 2009 - 10 AND PRECEDING YEARS. THE ASSESSING OFFICER HAS VERIFIED FORM NO. I & XIV OBTAINED FROM THE MAMALATDAR OF PONDA TALUKA, AND HE WAS OF THE VIEW THAT LAND IS NOT AGRICULTURAL LAND AND NOWHERE MENTIONED THAT THE LAND IS USED FOR AGRICULTURAL PURPOSE. THE ASSESSIN G OFFICER HAS ALSO TRIED TO VERIFY WHETHER THE ASSESSEE HAS USED THIS LAND FOR AGR ICULTURAL PURPOSES OR NOT. IN THIS REGARD , ASSESSEE HAS NO EVIDENCE TO SHOW THAT HE HAD CARRIED OUT THE 3 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA AGRICULTURAL OPERATION ON THE LAND . IN QUESTION, T HE ASSESSEE HAS ALS O TAKEN SECOND CONTENTION THAT ASSESSE E HAS EXECUTED TO SALE DEED AGREEMENT IN 1988 B UT THE SALE DEED ON 21.06.2007 MENTIONS THAT THE ASSESSEE HAS PAID AN AMOUNT OF RS. 6,36,500/ - IN THE YEAR 1988 TO THE SELLER AND THE POSSESSION WAS HANDED OVER TO THE ASSE SSEE. THE ASSESSEE DID NOT PRODUCE THE EVIDENCE TO SHOW THAT ASSESSEE HAD MADE ANY PAYMENT IN THE YEAR 1988. THE ASSESSING OFFICER HAS ALSO VERIFIED WHETHER THE ASSESSEES NAME IS OCCUPANT IN THE DISPUTED LAND IN YEAR 1988 BUT THE ASSESSEES NAME IN MUTAT ION REGISTER ONLY IN 14.08.2008 AND BEFORE 14.08.2008 SOME ANOTHER PERSON WAS THE OWNER OF THE PROPERTY. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PROPERTY WAS TRANSFERRED ON 24.07.2008 AS PER THE SALE DEED ENTERED BY THE ASSESSEE WITH THE PURCHASER F OR THE CONSIDERATION OF RS. 1,81,50,000/ - THEREFORE, DATE OF ACQUISITION OF THE PROPERTY AS ON 21.06.2007, THE PERIOD OF HOLDING OF THE SAID ASSET BY THE ASSESSEE IN THE PREVIOUS YEAR UNDER CONSIDERATION IS ONLY ONE YEAR. THEREFORE, IT IS SHORT TERM CAPITAL GAIN U/S. 2(42A) AND IT IS LIABLE TO BE SHORT TERM CAPITAL GAINS U/S. 2(42B). THE ASSESSING O FFICER HAS ALSO VERIFIED THAT THE ASSESSEE HAS NOT SUBMITTED ANY EVIDENCE THAT ASSESSEE HAS CARRIED OUT ANY AGRICULTURAL ACTIVITIES ON IT AND ASSESSEE WAS NOT HAV ING ANY AGRICULTURAL INCOME FOR LAST YEARS, THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE NEVER UTILIZED THE LAND FOR ANY CULTIVATION. THE ASSESSEE ACQUIRED LAND ON 21.06.2007 AND AS IT IS TRANSFERRED TO M/S. MAHALAKSHMI REAL ESTATE & INVE STMENT PVT. LTD., MARGAO, ON 24.07.2008 WITHOUT CARRYING OUT ANY AGRICULTURAL OPERATION FOR NON - AGRICULTURAL PURPOSE. THE COMPANY HAS PURCHASED THE LAND FOR NON - AGRICULTURAL PURPOSE I.E. FOR COMMERCIAL USE, THUS IT IS A BUSINESS INCOME OF THE ASSESSEE AND ASSESSING OFFICE R HAS TREATED THE AMOUNT OF RS. 1,81,50,000/ - IS BROUGHT TO TAX UNDER THE HEAD PROFIT & GAINS FROM BUSINESS/ PROFESSION . 2.2 . THE MATTER CARRIED TO CIT(A) AND CIT(A) HAS ALLOWED THE CLAIM BY OBSERVING AS UNDER: 6.4 IN CONNECTION WITH T HE ABOVE FINDINGS OF ITO IN SUPPORT OF HIS TAXING OF PROFIT OF RS. 1,75,13,500/ - AND ALSO VARIOUS DETAILED SUBMISSIONS MADE BY THE APPELLANT AGAINST THE SAID FINDINGS, I HAVE TO MAKE THE FOLLOWING OBSERVATIONS: 4 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA (I ) FROM THE ASSESSMENT ORDER PASSED BY THE ITO I HAVE NOTED THAT THE ITO HAS MADE SEVERAL CONTRADICTORY STATEMENTS IN SUPPORT OF HIS TAXING OF PROFITS OF RS. 1,75,13,500/ - . IT CAN BE SEEN FROM THE INITIAL PARAGRAPHS OF HIS ASSESSMENT ORDER THAT HE WANTED TO TAX THE GAINS FROM SALE OF LAND AS INCOME FROM SHORT TERM CAPITAL GAINS. HOWEVER IN THE SUBSEQUENT PARAGRAPHS OF HIS ORDER HE CHANGED HIS INITIAL STAND AND DECIDED TO TREAT THE GAINS AS BUSINESS PROFITS. THIS CLEARLY SHOWS THAT THE ITO HIMSELF WAS NOT SURE WHETHER THE GAINS MADE BY THE APPELLANT ON SALE OF LAND ARE SHORT TERM CAPITAL GAINS BUSINESS PROFITS. IN VIEW OF THE ABOVE INCONSISTENCY IN THE STAND OF THE ITO, THE ORDER PASSED BY HIM S UFFERS FROM VARIOUS DEFICIENCIES . (II) THE ITO IN ORDER TO TAX THE GAINS ON SALE OF LAND AS BUSINESS PROFITS CONSIDERED THE DATE ON WHICH THE SALE DEED WAS EXECUTED BY THE APPELLANT WITH THE ORIGINAL SELLER OF THE LAND I.E. ON 21/06/2007 AS THE DATE ON WHICH THE OWNERSHIP OF THE LAND WAS ACQUIRED BY HIM. WHILE ADOPTING TH E ABOVE DATE AS DATE OF ACQUISITION, THE ITO TREATED THE AGREEMENT OF SALE DATED 13/12/ 1988 EXECUTED BY THE APPELLANT WITH THE ORIGINAL SELLER AS FAKE AGREEMENT. HOWEVER THE COPY OF THE AGREEMENT PRODUCED BEFORE ME BY THE APPELLANT ESTABLISHED THAT THE SAI D AGREEMENT WAS THE MOST GENUINE ONE, IT CAN BE CLEARLY SEEN FROM THE AGREEMENT THAT THE APPELLANT PAID AN AMOUNT OF RS. 8,25,000/ - TO THE ORIGINAL SELLER BY ISSUING A DEMAND DRAFT NO. 554336 DATED 02/12/1988 ON UNION BANK OF INDIA, PANAJI - GOA (III) FURTHER CONSIDERING THE GENUINENESS OF THE ABOVE AGREEMENT OF SALE EXECUTED IN THE YEAR 1988 THE APPELLANT CANNOT BE CHARGED THAT HE PURCHASED THE LAND WITH THE INTENTION OF TRADING IN LAND. THE SAID LAND WHICH WAS PURCHASED BY HIM IN THE YEAR 1988 WAS SOLD BY HI M AFTER ALMOST 20 YEARS. I HAVE ALSO FURTHER OBSERVED THAT THE APPELLANT WHO IS AGED MORE THAN 60 YEARS WAS NOT ENGAGED IN ANY BUSINESS ACTIVITY DURING THE YEAR UNDER APPEAL AS WELL AS DURING THE EARLIER YEARS. HENCE IN MY OPINION THE TRANSACTION OF SALE O F LAND DURING THE YEAR CANNOT BE CONSIDERED AS COMMERCIAL TRANSACTION. THEREFORE THE ACTION OF THE ITO IN CONSIDERING THE PROFITS OF RS. 1,75,13,500/ - COMPUTED BY HIM AND TAXING IT AS INCOME FROM BUSINESS IS TOTALLY ERRONEOUS. (IV) FURTHER ACCORDING TO ME THE GAINS MADE ON THE SALE OF THE AGRICULTURAL LAND SOLD DURING THE YEAR BY THE APPELLANT CANNOT BE ALSO CONSIDERED AS LONG TERM/SHORT TERM CAPITAL GAINS SINCE THE ITO FAILED TO ESTABLISH IN THE ASSESSMENT ORDER THAT THE AGRICULTUR AL LAND SOLD BY THE APPELLANT IS NOT AN AGRICULTURAL LAND. HOWEVER ON THE OTHER SIDE THE APPELLANT HAS BROUGHT ON MY RECORD SUFFICIENT EVIDENCE TO ESTABLISH THAT THE AGRICULTURAL LAND SOLD BY HIM DOES NOT COME WITHIN THE AMBIT OF SECTION 2(14) OF THE INCOM E TAX ACT SO AS TO CONSIDER IT AS A CAPITAL ASSET, THE SALE OF WHICH IS LIABLE TO CAPITAL GAINS TAX. 6.5 AT THE TIME OF HEARING OF APPEAL, THE APPELLANT PRODUCED BEFORE ME THE CERTIFICATE ISSUED BY THE GRAM PANCHAYAT STATING THAT VARIOUS FRUIT BEARING TREE S EXISTED IN THE AGRICULTURAL LAND SOLD BY THE APPELLANT. I HAVE HOWEVER OBSERVED THAT THE ASSESSMENT ORDER PASSED BY THE ITO IS TOTALLY SILENT AS REGARDS THE ABOVE CERTIFICATE WHICH WAS 5 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA ACCORDING TO THE APPELLANT BROUGHT ON THE RECORDS OF THE ITO AT THE I TEM OF HEARING OF ASSESSMENT. 6. 6 FURTHER THE ITO HAS STATED IN HIS ASSESSMENT ORDER THAT THE APPELLANT HAD NOT SHOWN ANY AGRICULTURAL INCOME IN HIS RETURN OF INCOME OF THE EARLIER YEARS. THE ITO HAS ALSO STATED THAT THE APPELLANT HAD NOT PRODUCED ANY RECO RDS BEFORE HIM AS REGARDS INCURRING OF EXPENSES ON MAINTENANCE OF AGRICULTURAL LAND. IN MY VIEW BOTH THE ABOVE STATEMENTS CANNOT BE CONSIDERED AS AUTHENTIC FOR THE PURPOSE OF CONSIDERING THE LAND AS NON AGRICULTURAL LAND. NONE OF THE PROVISIONS OF THE INCO ME TAX ACT STATE THAT THE AGRICULTURIST SHOULD KEEP RECORDS IN RESPECT OF INCURRING OF EXPENSES ON THE MAINTENANCE OF LAND SO AS TO ESTABLISH THAT THE LAND OWNED BY HIM IS AN AGRICULTURAL LAND. IN THESE CIRCUMSTANCES THE ITO CANNOT CONSIDER THE LAND AS NON AGRICULTURAL LAND JUST BECAUSE NO RECORDS OF ABOVE NATURE ARE MAINTAINED BY THE APPELLANT. 6.7 AS REGARDS THE OTHER CONTENTION OF THE ITO RELATING TO NOT SHOWING OF ANY AGRICULTURAL INCOME IN THE INCOME TAX RETURNS THE APPELLANT HAS ALREADY EXPLAINED THAT AS THE AGRICULTURAL PRODUCE WAS USED FOR SELF CONSUMPTION, THE QUESTION OF GENERATION OF ANY INCOME FROM SALE OF THIS PRODUCE DOES NOT ARISE AT ALL. MOREOVER IN MY OPINION NON DISCLOSURE OF AGRICULTURAL INCOME IN THE RETURNS OF EARLIER YEARS CANNOT BE A G ROUND FOR TREATING ANY LAND AS NON AGRICULTURAL LAND. 6.8 THE ITO HAS FURTHER STATED IN HIS ASSESSMENT ORDER THAT THE LAND WAS PURCHASED FROM THE APPELLANT BY AN INFRASTRUCTURE COMPANY FOR DOING REAL ESTATE BUSINESS, IN MY VIEW THIS STATEMENT OF THE ITO DOES NOT CARRY ANY WEIGHT SINCE THE AGRICULTURAL LAND DOES NOT GET CONVERTED INTO NON AGRICULTURAL LAND JUST BECAUSE THE LAND IS SOLD TO ANY PARTY WHO WOULD NOT USE IT FOR AGRICULTURAL PURPOSES. THE DECISION OF THE MADRAS HIGH COURT IN THE MATTER OF M. S. SRINIVASA NAICKER V. ITO 292 ITR 481 FULLY SUPPORTS MY ABOV E VIEW. WHILE EXPRESSING MY ABOVE VIEWS I HAVE FULLY RELIED ON THE JUDGMENT OF JURISDICTIONAL BOMBAY HIGH COURT IN THE MATTER OF CIT V. DEBBIE ALEMAO & JOAQUIM ALEMAO REPORTED IN 331 ITR 59 MORE PARTICULARLY THE FOLLOWING OBSERVATIONS MADE BY HIGH COURT WH ILE RENDERING THE ABOVE JUDGMENT HAVE BECOME GUIDING FACTORS FOR MY DECIDING THE CASE OF THE APPELLANT UNDER SECTION 260A OF THE INCOME TAX ACT, IT IS NOT OPEN TO THE HIGH COURT TO INTERFERE IN THE FINDING OF THE FACT. THE FINDING OF FACT THAT COULD BE INT ERFERED ONLY IF IT WAS ARRIVED AT BY APPLICATION OF WRONG PRINCIPLES OF LAW OR WAS PERVERSE I.E ., TO SAY THAT NO PRUDENT MAN VERSED IN LAW WOULD COME TO THE SAID FINDING. IN OUR VIEW, THE FINDING IS NEITHER PERVERSE NOR IS IT ARRIVED AT BY WRONG APPLICATIO N OF ANY PRINCIPLE OF LAW AND IT IS NOT OPEN FOR US TO INTERFERE IN THE POSSIBLE FINDING OF FACT IN AN APPEAL UNDER SECTION 260A OF THE INCOME TAX ACT. THE ASSESSING OFFICER HAS NOTED THAT THE SAID LAND WAS ENTERED IN THE REVENUE RECORD AS AN AGRICULTURAL LAND I.E. GARDEN OR ORCHARD. THE ITAT ALSO HELD THAT THE LAND WAS RECORDED IN THE REVENUE RECORDS AS AN AGRICULTURAL LAND. THIS IS NOT DISPUTED BY THE REVENUE. IT IS HOWEVER CONTENDED THAT THE LAND WAS NOT ACTUALLY USED FOR AGRICULTURAL IN AS MUCH AS NO AG RICULTURAL INCOME WAS DERIVED FROM THIS LAND AND WAS 6 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA NOT SHOWN BY THE RESPONDENTS IN THEIR INCOME TAX RETURN. THIS WAS EXPLAINED BY THE RESPONDENTS BY SAYING THAT THERE WERE COCONUT TREES IN THE LAND BUT THE AGRICULTURAL INCOME DERIVED BY SALE OF THE COCON UTS WAS JUST ENOUGH TO MAINTAIN THE LAND AND THERE WAS NO ACTUAL SURPLUS. HENCE, NO AGRICULTURAL INCOME WAS SHOWN FROM THIS LAND. IN OUR OPINION, IF AN AGRICULTURAL OPERATION DOES NOT RESULT IN GENERATION OF SURPLUS THAT CANNOT BE A GROUND TO SAY THAT THE LAND WAS NOT USED FOR THE AGRICULTURAL PURPOSE. IT IS NOT DISPUTED THAT THE LAND WAS SHOWN IN THE REVENUE RECORD TO BE USED FOR AGRICULTURAL PURPOSE AND NO PERMISSION WAS EVER OBTAINED FOR NON - AGRICULTURAL USE BY THE RESPONDENTS. SECTION 30 OF THE GOA, DAM AN AND DIU LAND REVENUE CODE, 1968 PROVIDES THAT NO LAND USED FOR AGRICULTURE SHALL BE USED FOR ANY NON - AGRICULTURAL PURPOSE A ND NO LAND ASSESSED FOR ONE NON - AGRICULTURAL PURPOSE S HALL BE USED FOR ANY OTHER NON - AGRICULTURAL PURPOSE EXCEPT WITH THE PERMISSI ON OF THE COLLECTOR. SECTION 32 OF THE GOA, DAMAN AND DIU LAND REVENUE CODE PRESCRIBES THE PROCEDURE FOR CONVERSION OF USE OF LAND FROM ONE PURPOSE TO ANOTHER INCLUDING CONVERSION FROM AGRICULTURAL PURPOSE TO NON - AGRICULTURAL PURPOSE. THE PERMISSION FOR N ON AGRICULTURAL USE WAS OBTAINED FOR THE FIRST TIME BY THE VARCA HOLIDAY BEACH RESORT PRIVATE LIMITED THE PURCHASER AFTER IT PURCHASED THE LAND. THUS, THE FINDING RECORDED TWO AUTHORITIES BELOW THAT THE LAND WAS USED FOR THE PURPOSE OF AGRICULTURAL IS BASE D ON APPRECIATION OF EVIDENCE AND BY APPLICATION OF CORRECT PRINCIPLES OF LAW. THE TRIBUNAL HAS RELIED UPON TWO UNREPORTED DECISIONS OF THIS COURT IN CIT V/S MINGUEL CHANDRA PAIS (TAX APPEAL NO. 1/2002) AND CIT V/S SMT. MARIA LEILA TOVAR FURTADOE PAIS (TAX APPEAL NO. 2/2002) WHICH INVOLVED IDENTICAL ISSUE. IN THOSE APPEALS, THIS COURT HAS UPHELD THE ORDER OF THE TRIBUNAL HOLDING THAT THE LAND WAS AGRICULTURAL LAND AND ITS SALE DID NOT INVITE THE PAYMENT OF CAPITAL GAIN. IT IS NOT DISPUTED BEFORE US THAT THE FACTS OF THE SAID CASES WERE SIMILAR TO THE FACTS OF THE PRESENT CASES. WE ARE BOUND BY THE DECISION IN THOSE CASES. THE DECISION OF THE KARNATAKA HIGH COURT IN THE MATTER OF CIT V. SMT. K. LEELAVATHY REPORTED IN 341 ITR 287 (KAR.) ALSO FORTIFY MY VIEW TH AT THE AGRICULTURAL LAND SOLD BY THE APPELLANT CANNOT BE CONSIDERED AS CAPITAL ASSET AS PER SECTION 2(14) OF THE INCOME TAX ACT. AS PER THE ABOVE DECISION THE LAND SOLD BY ANY ASSESSEE RETAINS THE AGRICULTURAL CHARACTER TILL THE DATE OF THE ORDER PERMITTIN G NON AGRICULTURAL USE AND COULD BE TREATED AS CAPITAL ASSET ONLY THEREAFTER. ACCORDING TO THE COURT THERE IS NO NEED TO BRING TO TAX THE CAPITAL GAINS ON SALE OF AGRICULTURAL LAND WHICH WAS NOT CONVERTED INTO NON - AGRICULTURAL LAND TILL THE DATE OF SALE OF SAID LAND. CONSIDERING THE ABOVE FACTUAL AND LEGAL POSITION I HOLD THAT THE LAND SOLD DURING THE YEAR IS AN AGRICULTURAL LAND AND HENCE THE SAID LAND CANNOT BE CONSIDERED AS CAPITAL ASSET BY APPLYING PROVISIONS OF SECTION 2(14) OF THE INCOME TAX ACT. CONS EQUENTLY THE ITO WAS IN ERROR IN TAXING THE GAINS MADE BY THE APPELLANT ON SALE OF SAID AGRICULTURAL LAND. I THEREFORE DIRECT THE IT O TO DELETE THE ADDITION OF RS. 1,75,13,500/ - MADE TO THE RETURNED INCOME OF THE APPELLANT. 2.2 . THE LEARNED DR SUBMITTED BEFORE US THAT THE ASSESSEE HAS PURCHASED AN AGRICULTURAL LAND ON 13.12.1988 BY AGREEMENT OF SAL E BUT THE SALE DEED WAS EXECUTE 7 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA ON 21.06.2007. THE ASSESSING OFFICER HAS VERIFIED FORM NO. I & XIV OBTAINED FROM THE MAMLATDAR OF PONDA TALUKA, AND IT WAS FOUND THAT THE LAND WAS CATEGORISED AN AGRICULTURAL LAND BUT IT DOES NOT MENTION THAT THE LAND IS UTILIZED FOR AGRICULTURAL PURPOSES MOREOVER, THE ASSESSING OFFICER HAS ALSO VERIFIED THE MUTATION REGISTRATION AND IT FOUND THAT IN THE YEAR 1988 THE ASSESSEE WAS NOT SHOWN THE OCCUPIER OF THE PROPERTY. THE ASSESSEE BECAME OWNER ON 14.08.2008 AND PROPERTY WAS TRANSFERRED ON 24.07.2008 AS PER SALE DEED ENTERED INTO BY THE ASSESSEE. THEREFORE, ASSESSEE WAS NOT OW NER OF THE PROPERTY AND HE HAS NOT CARRIED OUT ANY AGRICULTURAL ACTIVITIES, THEREFORE, ASSESSEE CANNOT CLAIM THE EXEMPTION U/S. 2(14) OF THE IT ACT IT CANNOT BE ALLOWED . THE ASSESSEE HAS PURCHASED THE LAND IN YEAR 2007 AND SOLD THIS LAND IN 2008, THEREFORE, THIS TRANSACTION IS ADVENTURE IN THE NATURE AND ASSESSEE ENGAGED IN REAL ESTATE B USINESS , THEREFORE, IT IS THE INCOME FROM BUSINESS. THE COMMISSIONER OF INCOME TAX HAS OVERLOOKED THIS MATERIAL EVIDENCE I.E. FORM NO. I & XIV OBTAINED FROM THE M AMALATDAR OF PONDA, THEREFORE, DEPARTMENT APPEAL MAY BE ALLOWED. 2.3 . THE LEARNED AR HAS FILED THE WRIT TEN SUBMISSION WHICH READ AS UNDER: EXEMPTION U/ S 2(14) IN RESPECT OF AGRICULTURE PROPERTY TRANSFERRED: 3.1 THE FIRST ADDITION OF RS. 1,75,13,500/ - MADE TO THE RETURNED INCOME OF THE APPELLANT BY THE ITO REPRESENTS THE PROFIT ON SALE OF AGRICULTURAL LAND LOCATED AT USGAO GANJEM VILLAGE. IN THIS CONNECTION IT HAS TO BE NOTED THAT THE APPELLANT IN HIS RETURN FILED FOR THE YEAR DID NOT DISCLOSE ANY CAPIT AL GAINS ON THE ABOVE SALE OF AGRICULTURAL LAND SINCE ACCORDING TO THE APPELLANT THE SAID LAND WAS NOT A CAPITAL ASSET AS PER SECTION 2 (14) OF INCOME TAX ACT. 3.2 IT CAN BE NOTICED FROM THE CONTENTS OF ASSESSMENT ORDER PASSED FOR THE YEAR THAT THE ITO WAS DETERMINED TO BRING TO TAX THE PURPORTED PROFIT MADE ON THE SALE OF AGRICULTURAL LAND WHICH WAS OTHERWISE NOT COMING UNDER THE CATEGORY OF CAPITAL ASSET DEFINED U/S 2(14) OF INCOME TAX ACT. THE ITO DID NOT PAY ANY ATTENTION TO THE VALID EXPLANATIONS GIVEN BY THE APPELLANT IN SUPPORT OF HIS CLAIMING THAT THE LAND SOLD BY HIM WAS AN AGRICULTURAL LAND AND THAT ITS SALE DID NOT GIVE RISE TO ANY CAPITAL GAINS/PROFIT. IN THIS CONTEXT THE APPELLANT WOULD LIKE TO CITE THE FOLLOWING CONVINCING FACTORS WHICH POINT OU T THAT THE SALE OF AGRICULTURAL LAND OF THE APPELLANT CANNOT ATTRACT CAPITAL GAIN TAX. I . THE AGRICULTURAL LAND OF THE APPELLANT WAS SITUATED IN VILLAGE PANCHAYAT AND THE SAME WAS NOT COMING WITHIN 8 KMS FROM ANY NOTIFIED MUNICIPALITY. II. THE FORM I & XIV BROUGHT ON RECORDS OF THE ITO CLEARLY SHOWED THAT THE LAND IN QUESTION WAS AGRICULTURAL LAND. III. THE AGRICULTURAL OPERATIONS WERE CARRIED OUT IN THE PROPERTY TILL THE DATE IT WAS SOLD. 8 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA IV. THE SEVERAL FRUIT BEARING TREES EXISTED IN THE SAID AGRICULTURAL LAND FOR A NUMBER OF YEARS. THE FRUITS GROWN IN THE LAND INCLUDED CASHEWS, MAN GOES, JACK FRUITS AND COCONUTS. V. THE CERTIFICATE ISSUED BY THE SARPANCH OF USGAO VILLAGE PANCHAYAT WHICH WAS BROUGHT ON THE RECORDS OF THE ITO CLEARLY REVEALED THAT THE LAND SOLD BY THE APPELLANT WAS AGRICULTURAL LAND AND THAT SEVERAL FRUIT BEARING TREES EXISTED IN THE PROPERTY. 3.3 THE SOLE PICTURE WHICH EMERGE S FROM THE ABOVE CLARIFICATIONS/ INFORMATION/DETAILS/ DOCUMENTS AVAILABLE ON THE RECORDS OF THE ITO IS THAT THE LAND S OLD BY THE APPELLANT WAS AN AGRICULTURAL LAND WHICH CANNOT BE TREATED AS A CAPITAL ASSET LIABLE TO CAPITAL GAINS ON ITS SALE. IN THIS BACKDROP IT WAS REQUISITE ON THE PART OF THE ITO NOT TO TAX THE GAIN MADE BY THE APPELLANT BY SELLING THE ABOVE LAND. INST EAD HE PASSED AN ASSESSMENT ORDER TREATING THE ABOVE LAND AS NON AGRICULTURAL LAND. FURTHER HE ERRONEOUSLY CONSIDERED THE GAIN ARISING FROM SALE OF LAND AS PROFITS FROM BUSINESS AND ADDED THE SAME TO THE RETURNED INCOME OF THE APPELLANT. WHILE TAXING THE A BOVE PROFIT HE HAS MADE SEVERAL C ONTENTIONS IN SUPPORT OF HIS ACT ION. IN THIS CONTEXT THE APPELLANT WOULD LIKE TO FIRMLY SAY THAT THE VARIOUS STATEMENTS MADE BY THE ITO ARE A BUNDLE OF CONTRADICTIONS. 3.4 ACCORDING TO THE OBSERVATIONS MADE BY THE ITO IN PA RA 5.6 OF HIS ORDER THE AGRICULTURAL LAND SOLD BY THE APPELLANT FALLS UNDER SHORT TERM CAPITAL ASSET IN TERM OF SECTION 2 (42A) AND HENCE LIABLE TO TAX AS SHORT TERM CAPITAL GAIN AS PROVIDED IN SECTION 2 (42B) .THEREAFTER IN PARA NO.5.9 THE ITO HAS REM ARKED THAT THE TRANSACTION OF PURCHASE OF LAND AND SUBSEQUENT SALE OF SAME FOR COMMERCIAL USE WITHIN A SHORT PERIOD OF ONE YEAR AMOUNTS TO ADVENTURE IN THE NATURE OF TRADE. IN VIEW OF THIS POSITION HE IS OF THE OPINION THAT THE PROFIT ARISING FROM THE ABOV E COMMERCIAL TRANSACTION IS CHARGEABLE TO TAX AS BUSINESS PROFIT. 3.5 IT IS CLEAR FROM THE ABOVE CONTRADICTORY OBSERVATIONS MADE IN TWO DIFFERENT PA RAS OF THE SAME ORDER THAT THE I TO WAS HIMSELF NOT SURE WHETHER HE SHOULD TAX THE GAIN UNDER THE HEAD INCOM E FROM CAPITAL GAINS (SHORT TERM) OR UNDER THE HEAD INCOME FROM BUSINESS FINALLY IN CONFUSED STATE OF MIND HE ERRONEOUSLY BROUGHT TO TAX THE GAIN AS PROFIT FROM BUSINESS AND ADDED THE SAME TO THE RETURNED INCOME IN HIS ASSESSMENT ORDER PASSED FOR THE YE AR. 3.6 BESIDES THE ABOVE CONTRADICTIONS IN THE ORDER THE ACTION TAKEN BY THE ITO FOR TAXING THE PROFIT AS BUSINESS INCOME IS WITHOUT BASIS AND THE SAME IS DIVERGENT TO THE FACTUAL AND LEGAL POSITION INVOLVED IN THE MATTER. THE ITO HAS BASED HIS FINDINGS O N ASSUMPTIONS / PRESUMPTIONS AND THEREFORE LACKS THE AUTHORITY OF LAW. IN SUPPORT OF THIS CONTENTION THE APPELLANT WOULD LIKE TO MAKE THE FOLLOWING SUBMISSIONS. 3.7 THE ITO HAS STATED IN PARA 5.4 OF HIS ORDER THAT IT IS NOWHERE MENTIONED IN THE SALE DEED D ATED 24/07/2008 THAT THE PROPERTY SOLD BY THE APPELLANT IS AGRICULTURAL PROPERTY. NEITHER THE PROVISIONS OF INCOME TAX ACT NOR THE PROVISIONS OF THE TRANSFER OF PROPERTY ACT SPECIFY THAT THE NATURE OF THE LAND HAS TO BE MENTIONED IN THE SALE DEED. FURTHER HIS STATEMENT GIVES THE IMPRESSION THAT THE AGRICULTURAL LAND SOLD BY THE APPELLANT HAS BEEN CONSIDERED BY HIM AS A CAPITAL ASSET, THE SALE OF WHICH IS LIABLE TO CAPITAL GAINS TAX JUST BECAUSE THE SAID LAND HAS NOT BEEN MENTIONED AS AGRICULTURAL LAND IN TH E SALE DEED. 3.8 AS REGARDS THE NEXT STATEMENT MADE BY THE ITO IN PARA 5.4 OF HIS ORDER IN RESPECT OF NOT BRINGING OF CERTAIN EVIDENCES ON HIS RECORD BY THE APPELLANT, THE APPELLANT WOULD LIKE TO EMPHASIZE THAT CARRYING ON OF AGRICULTURAL OPERATIONS IS NOT SYNONYMOUS WITH THE 9 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA CARRYING ON OF BUSINESS ACTIVITY. THE ITO WHILE REQUIRING THE RECEIPTS/BILLS IN SUPPORT OF AGRICULTURAL EXPENSES SHOULD HAVE KEPT IN MIND THAT HE IS NOT ASSESSING THE BUSINESS INCOME OF THE ASSESSEE. NO AGRICULTURIST WOULD BE IN A POSI TION TO SUBMIT THE DETAILS OF ABOVE NATURE TO THE TAX AUTHORITIES AS THE INCOME TAX ACT DOES NOT REQUIRE HIM TO KEEP RECORDS FOR THE PURPOSE OF GENERATING THE SAID DETAILS. FURTHER IT WOULD BE NEXT TO IMPOSSIBLE FOR ANY AGRICULTURIST TO MAKE AVAILABLE THE SAID DETAILS AFTER THE EXPIRY OF ALMOST THREE YEARS FROM THE DATE OF SALE OF THE LAND. NOTWITHSTANDING THE ABOVE POSITION, THE ITO CANNOT TREAT THE AGRICULTURAL LAND AS NON AGRICULTURAL LAND JUST BECAUSE THE DETAILS MENTIONED ABOVE HAVE NOT BEEN PRODUCED F OR HIS VERIFICATION. 3.9 IN CONNECTION WITH THE CONTENTION OF THE ITO MADE IN PARA 5.6 OF THE ORDER THAT THE APPELLANT HAS NOT FURNISHED DETAILS OF ANY AGRICULTURAL INCOME DERIVED BY HIM FOR ASSESSMENT YEARS 1989 - 90 TO 2009 - 10, THE APPELLANT HAD MADE IT AB UNDANTLY CLEAR TO THE ITO AT THE TIME OF HEARING OF ASSESSMENT THAT ALL THE PRODUCE OF THE AGRICULTURAL LAND WAS USED FOR SELF CONSUMPTION AND CONSUMPTION OF THE CARE TAKER. IT WAS ALSO INFORMED BY THE APPELLANT TO HIM THAT HE NEVER SOLD ANY PRODUCE OF THE LAND WHICH GENERATED INCOME. IN THESE CIRCUMSTANCES THE QUESTION OF SUBMITTING ANY DETAILS WITH SUPPORTING EVIDENCE TO SHOW THAT HE HAD CARRIED OUT THE AGRICULTURAL OPERATIONS ON THE LAND DOES NOT ARISE AT ALL. HERE THE APPELLANT WOULD LIKE TO RELY ON THE DECISION OF BOMBAY HIGH COURT IN THE MATTER OF CIT V. DEBBIE ALEMAO (2010) 331 ITR . 59. IN THIS CASE THE LAND WHICH WAS SOLD BY THE ASSESSEE WAS SHOWN AS AGRICULTURAL LAND IN GOVERNMENT RECORDS AND WAS NEVER SOUGHT TO BE USED FOR NON AGRICULTURAL PURPOSES BY THE ASSESSEE TILL IT WAS SOLD. AFTER CONSIDERING THIS POSITION THE HIGH COURT HELD T HAT SUCH LAND HAS TO BE TREATED AS AGRICULTURAL LAND EVEN THOUGH NO AGRICULTURAL INCOME IS SHOWN BY THE ASSESSEE AS THE ASSESSEE STATED THAT THE AGRICULTURAL INCOME RECEIVED ON SALE OF COCONUTS GROWN ON THE LAND WAS JUST ENOUGH TO MAINTAIN THE LAND AND THE RE WAS NO SURPLUS. 3.10 ANOTHER STATEMENT MADE BY THE ITO IS REGARDING THE SELLING OF PROPERTY TO M/S. MAHALAXMI REAL ESTATES INVESTMENT PVT. LTD. FOR NON AGRICULTURAL PURPOSES. IN THIS RESPECT THE ITO HAS STATED IN PARA 5.9 THAT THE APPELLANT HAS SOLD THE PROPERTY TO A COMPANY WHICH IS ENGAGED IN THE REAL ESTATE BUSINESS FOR DEVELOPING INTO BUILDING SITE.. THE ITO SHOULD HAVE KEPT IN MIND THAT HE IS CONDUCTING THE ASSESSMENT OF THE SELLER OF THE LAND AND NOT THAT OF THE PURCHASER OF THE LAND. ONCE THE SELL ER SELLS THE PROPERTY HE LOSES ALL HIS OWNERSHIP RIGHTS AND HE CANNOT GIVE ANY DIRECTIONS TO THE PURCHASER AS REGARDS THE MANNER IN WHICH HE HAS TO USE THE PROPERTY. HERE THE APPELLANT WOULD LIKE TO CITE THE CASE DECIDED BY MADRAS HIGH COURT IN THE MATTER OF M. S. SRINIVASA NAICKER V. ITO (2007) 292 ITR 481 (MAD). IN THIS CASE DECIDED BY THE HIGH COURT, LAND WHICH WAS SOLD BY THE ASSESSEE WAS REGISTERED AS AGRICULTURAL LAND IN GOVERNMENT RECORDS AND AGRICULTURAL OPERATIONS WERE CARRIED OUT TILL THE DATE OF SALE. IN VIEW OF THIS REGISTRATION AND CARRYING OUT OF THE AGRICULTURAL OPERATIONS, THE COURT HELD THAT THE PURCHASER WILL USE THE LAND FOR NON - AGRICULTURAL PURPOSES IS NOT MATERIAL AND THE SALE OF LAND WILL NOT ATTRACT CAPITAL GAINS TAX. 3.11 FURTHER THE ITO IN HIS ASSESSMENT ORDER PASSED FOR THE YEAR HAS MADE REMARKS OVER THE OF SALE DEED DATED 2 1/06/2007 EXECUTED BY THE APPELLANT WITH THE VENDOR OF THE LAND. IN PARA 5.5 OF HIS ORDER THE ITO HAS CHARGED THE APPELLANT FOR FABRICATING THE SALE DEED BY MENT IONING THEREIN THAT HE PURCHASED THE PROPERTY COVERED BY THE ABOVE SALE DEED IN 1988. ACCORDING TO THE ITO THIS HAS BEEN DONE BY THE APPELLANT TO CLAIM EXEMPTION AND AVOID TAX ON CAPITAL GAINS WHICH MAY ARISE ON SALE OF THE PROPERTY AS THERE IN NO VALID 10 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA RE ASON TO SUBSTANTIATE THE FACTS WHY THE FORMAL SALE DEED WAS EXECUTED ONLY IN THE YEAR 2007 AND NOT IN THE YEAR 1988. THE ITO HAS FURTHER STATED THAT THERE IS NO REASON WHY THE ASSESSEE WAS TO PAY MONEY FOR THE DISPUTED PROPERTY WITHOUT ANY FORMAL SALE DEED IN THE YEAR 1988. 3.12 IN ABOVE CONNECTION THE APPELLANT WOULD LIKE TO POINT OUT THAT THE ITO HAS MADE THE ABOVE ALLEGATIONS WITHOUT ACQUAINTING HIMSELF WITH THE LAWS RELATING TO THE EXECUTION OF AGREEMENTS OF SALE AND SALE DEEDS. IT IS PERFECTLY LEGAL ON THE PART OF THE SELLER/PURCHASER OF PROPERTIES TO FIRST EXECUTE THE AGREEMENT OF SALE AND THEN TO GO FOR SALE DEED SINCE NUMBER OF LEGAL FORMALITIES ARE REQUIRED TO BE COMPLIED WITH BEFORE EXECUTING THE SALE DEED. IN THIS CONTEXT IT IS TO BE NOTED THAT TH E EXECUTION OF AGREEMENT COUPLED WITH TAKING OF POSSESSION OF PROPERTY GIVE FULL OWNERSHIP RIGHTS TO THE PURCHASER AS PER PROVISIONS OF THE TRANSFER OF PROPERTY ACT. IN THESE CIRCUMSTANCES THE APPELLANT HAS LEGALLY ACQUIRED THE OWNERSHIP RIGHTS BY EXECUTIN G THE AGREEMENT OF SALE WITH THE VENDOR OF THE AGRICULTURAL LAND ON 13/12/988. 3.13 IN ABOVE CONNECTION IT IS IMPORTANT TO NOTE THAT THE APPELLANT HAD MADE THE FULL PAYMENTS OF THE SALE PRICE OF THE LAND BY ISSUING DEMAND DRAFT TO THE SELLER. IT WAS HOWEVE R NOT POSSIBLE FOR THE APPELLANT TO EXECUTE THE SALE DEED IMMEDIATELY AFTER THE EXECUTION OF THE AGREEMENT OF SALE WITH THE VENDOR ON ACCOUNT OF ERUPTING OF CERTAIN LEGAL DISPUTES SUBSEQUENT TO THE EXECUTION OF AGREEMENT OF SALE. THE APPELLANT HOWEVER SUCC EEDED IN GETTING THE SALE DEED EXECUTED IN THE YEAR 2007. IN THE BACKDROP OF ABOVE FACTUAL POSITION IT WAS NOT CORRECT ON THE PART OF THE ITO TO RAISE DOUBTS OVER THE EXECUTION OF SALE DEED/AGREEMENT OF SALE WHICH WERE PERFECTLY VALID DOCUMENTS. 3.14 FURTH ER THE APPELLANT WOULD LIKE TO PLEAD THAT THE ITO WAS VERY WELL AWARE THAT THE APPELLANT HAD VALIDITY ENTERED INTO AGREEMENT OF SALE DATED 13/12/1988 WITH THE VENDOR AS THE COPY OF THE SAID AGREEMENT WAS BROUGHT ON HIS RECORDS BY THE APPELLANT. HOWEVER THE ITO DID NOT ISSUE ANY INSTRUCTIONS TO THE APPELLANT TO PRODUCE ORIGINAL AGREEMENT FOR HIS VERIFICATION. IN THESE CIRCUMSTANCES AFTER THE COMPLETION OF ASSESSMENT PROCEEDINGS IT WAS NOT REQUISITE ON HIS PART TO STATE IN PARA 5.5 THAT THE AUTHENTICITY OF TH E ABOVE AGREEMENT OF SALE COULD NOT BE VERIFIED BY HIM. HERE THE APPELLANT WOULD LIKE TO SUBMIT THAT IT WILL BE HIS ENDEAVOUR TO PRODUCE THE ORIGINAL AGREEMENT FOR THE PERUSAL OF ANY TAX AUTHORITY AT ANY TIME. IT IS ALSO THE CONTENTION OF THE APPELLANT THA T IF THE ITO HAD ANY DOUBTS OVER THE EXECUTION OF THE AGREEMENT AND THE PAYMENT OF THE SALE PRICE HE COULD HAVE VERY WELL MADE NECESSARY ENQUIRIES WITH THE VENDORS OF THE PROPERTY BY ISSUING NECESSARY LETTERS/NOTICES TO THEM. THE APPELLANT HAS ALREADY PROD UCED THE ORIGINAL AGREEMENT BEFORE THE CIT(APPEALS). 3.15 AS REGARDS ANOTHER STATEMENT OF THE ITO IN THE ABOVE PARA IN RESPECT OF THE CONTINUATION OF THE NAME OF THE VENDOR TILL 14/08/2008 IN THE MUTATION REGISTER, THE APPELLANT WOULD LIKE TO CLARIFY THAT THE CHANGES IN MUTATION RECORDS ARE CARRIED OUT ONLY AFTER THE EXECUTION OF THE SALE DEED. IN THIS REGARD THE APPELLANT WOULD LIKE TO FURTHER SUBMIT THAT THE OWNERSHIP RIGHT CAN BE ACQUIRED BY THE PURCHASER OF THE PROPERTY BY EXECUTING AGREEMENT OF SALE AN D BY TAKING OVER THE POSSESSION OF THE PROPERTY. THE CHANGES REQUIRED TO BE MADE IN MUTATION RECORDS IS SIMPLE FORMALITY TO BE CARRIED OUT AT ANY TIME FOR SAFEGUARDING THE INTEREST OF THE PURCHASER AGAINST THE WRONGFUL ACTS OF ANY OUTSIDE THIRD PARTY CLAIM ING RIGHTS IN THE CONCERNED PROPERTY. 3.16 THE APPELLANT WOULD ALSO LIKE TO BRING ON RECORD THAT WHILE MAKING THE ABOVE STATEMENT REGARDING THE ACQUISITION OF OWNERSHIP RIGHTS BY THE APPELLANT BY EXECUTING THE 11 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA AGREEMENT, THE ITO COMPLETELY OVERLOOKED THE P ROVISIONS OF SECTION 2(47) OF INCOME TAX ACT WHICH STATES THAT THE TRANSFER IN RELATION TO CAPITAL ASSET INCLUDES ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT O F THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882). IN VIEW OF THIS PROVISION IN THE INCOME TAX ACT IT CAN BE ESTABLISHED BEYOND DOUBT THAT THE APPELLANT ACQUIRED THE OWNERSHIP RIGHTS IN THE AGRICULTURAL LAND IN THE Y EAR 1988 BY EXECUTING THE AGREEMENT OF SALE DATED 13/1 2/1 988. THESE RIGHTS WERE ENJOYED BY HIM TILL THE DATE OF SELLING THE PROPERTY I.E. UPTO 24/07/2008. CONSIDERING THIS LEGAL POSITION THE ACTION OF THE ITO TO TREAT THE ABOVE AGRICULTURAL LAND ACQUIRED BY THE APPELLANT IN THE YEAR 1988 AS SHORT TERM CAPITAL ASSET IS TOTALLY ERRONEOUS. 3.17 NOT WITHSTANDING THE ABOVE LEGAL POSITION REGARDING THE ACQUISITION OF OWNERSHIP RIGHTS BY THE APPELLANT IN THE YEAR 1988 THE APPELLANT WOULD LIKE TO STATE THAT HE HAS NOWHERE CLAIMED IN THE RETURN THAT THE GAINS MADE ON THE SALE OF THE AGRICULTURAL PROPERTY ARE LONG TERM CAPITAL GAINS. ACCORDING TO THE APPELLANT SINCE THE AGRICULTURAL PROPERTY SOLD BY HIM DOES NOT COME WITHIN THE PURVIEW OF SECTION 2(14) OF THE INCO ME TAX ACT THE QUESTION OF TREATING THE SAID LAND AS CAPITAL ASSET AND TAXING OF THE GAINS ON ITS SALE DOES NOT ARISE AT ALL. 3.18 IN VIEW OF FOREGOING DISCUSSIONS IT IS EVIDENT THAT THE ITO HAS ERRONEOUSLY TREATED THE AGRICULTURAL LAND SOLD BY THE APPELLA NT AS SHORT TERM CAPITAL ASSET DESPITE BRINGING VARIOUS DOCUMENTS ON HIS RECORDS BY THE APPELLANT TO PROVE THAT AGRICULTURAL LAND SOLD BY HIM CANNOT BE TREATED AS CAPITAL ASSET AS PER PROVISIONS OF SECTION 2(14) OF THE INCOME TAX ACT. 3.19 FURTHER IT WAS C OMPLETELY CONTRADICTORY ON THE PART OF THE ITO WHO ARGUED IN PARAS 5.1 TO 5.7 OF HIS ASSESSMENT ORDER FOR TREATING THE AGRICULTURAL LAND SOLD BY THE APPELLANT AS SHORT TERM CAPITAL ASSET LIABLE TO SHORT TERM CAPITAL GAINS TO TAKE AN ALTOGETHER DIFFERENT ST AND IN PARAS 5.8 AND 5.9. AS PER THIS CONTRADICTORY STAND HE CONSIDERED THE SALE OF AGRICULTURAL LAND AS COMMERCIAL TRANSACTION AND TAXED THE GAINS MADE BY THE APPELLANT ON SALE OF THE LAND UNDER THE HEAD PROFITS & GAINS FROM BUSINESS. THE ABOVE SUDDEN C HANGE IN THE STAND TAKEN BY THE ITO FOR TREATING THE GAINS ON SALE OF LAND CLEARLY VIOLATES ALL CANONS OF NATURAL JUSTICE. 3.20 WHILE TAKING THE ABOVE DECISION OF TAXING THE GAINS AS PROFITS FROM BUSINESS THE ITO HAS IGNORED NOT ONLY ALL CANONS OF JUSTICE BUT ALSO THE RATIOS LAID DOWN BY THE JURISDICTIONAL BOMBAY HIGH COURT IN THE CASE OF CIT V. SMT DEBBIE ALEMAO & JOAQUIM ALEMAO REPORTED IN 331 ITR 59 CITED BY THE APPELLANT IN THE EARLIER PARA. THE ITO HAS OVERLOOKED THE FACT THAT THE APPELLANT HAS NEVER C ARRIED OUT IN THE PAST ANY BUSINESS ACTIVITY OF BUYING AND SELLING OF LAND. LEAVE ASIDE THIS ACTIVITY OF TRADING IN LANDS THE APPELLANT DID NOT CARRY OUT ANY OTHER BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATION OR IN THE PAST MANY YEARS. IT IS THERE FORE NOT CORRECT ON THE PART OF THE ITO TO CONSIDER SINGLE TRANSACTION OF SALE OF LAND THAT TOO AGRICULTURAL LAND AS ADVENTURE IN THE NATURE OF TRADE WITH THE OBJECT OF EARNING PROFIT. 3.21 THE ONLY REASON GIVEN BY THE ITO TO TAX THE GAINS AS BUSINESS PROF ITS IS THAT THE LAND WAS HELD BY THE APPELLANT ONLY FOR A YEAR AND THE SAME HAS BEEN SOLD TO A COMPANY CARRYING ON REAL ESTATE BUSINESS. THE ABOVE LAND HOLDING PERIOD OF ONE YEAR HAS BEEN WRONGLY COMPUTED BY HIM FROM THE DATE OF EXECUTION OF SALE DEED IN T HE YEAR 2007 AND NOT AS PER THE AGREEMENT OF SALE EXECUTED IN THE YEAR 1988. IN THIS CONNECTION THE 12 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA APPELLANT HAD ALREADY CLARIFIED IN THE EARLIER PARAS THAT FULL OWNERSHIP RIGHTS WERE ACQUIRED BY HIM IN THE YEAR 1988 BY EXECUTING VALID AGREEMENT OF SALE. CONSIDERING THIS YEAR OF ACQUISITION THE PROPERTY WAS HELD BY THE APPELLANT FOR ALMOST 20 YEARS AND NOT FOR 1 YEAR AS STATED IN PARA 5.9 OF THE ORDER BY THE ITO. 3.22 FURTHER THE ABOVE AGRICULTURAL LAND WAS NOT PURCHASED BY THE APPELLANT FOR TRADING BUT FO R CARRYING OUT THE AGRICULTURAL ACTIVITIES AND THEREFORE HE HELD THIS ASSET FOR 18 YEARS. THE APPELLANT WOULD LIKE TO STATE HERE THAT THE BOMBAY HIGH COURT IN THE CASE OF CIT V. SMT DEBBIE ALEMAO & JOAQUIM ALEMAO REPORTED IN 331 ITR 59 CITED SUPRA HAD RULE D THAT THE SALE OF AGRICULTURAL LAND WHICH WAS HELD BY THE ASSESSEE ONLY FOR 2 YEARS WAS NOT LIABLE FOR CAPITAL GAINS TAX. IGNORING THIS JUDGMENT TOTALLY THE ITO HAS TRIED TO TAX THE GAINS MADE BY THE APPELLANT ON SALE OF AGRICULTURAL LAND HELD FOR A LONG PERIOD OF 20 YEARS AS PROFITS OF THE BUSINESS. 3.23 FINALLY THE APPELLANT WOULD LIKE TO STATE THAT THE ITO HAS WRONGFULLY RELIED UPON THE JUDGMENTS OF VARIOUS COURTS IN PARA NO. 5.9 OF HIS ASSESSMENT ORDER FOR SUPPORTING HIS ACTION OF TAXING THE GAINS MADE ON THE SALE OF HIS AGRICULTURAL LAND. IN THIS REGARD IT COULD BE NOTED FROM THE DETAILED SUBMISSIONS MADE BY THE APPELLANT IN EARLIER PARAS THAT THE CASE LAWS CITED BY THE ITO IN HIS ORDER ARE NOT AT ALL APPLICABLE TO THE INSTANT CASE OF THE APPELLANT. TH E APPELLANT RIGHT FROM THE DATE OF FILING OF RETURN OF INCOME FOR THE YEAR HAS CONSISTENTLY HELD THE VIEW THAT THE AGRICULTURAL LAND SOLD BY HIM DOES NOT COME WITHIN THE TERM CAPITAL ASSET DEFINED IN SECTION 2(14) OF THE INCOME TAX ACT. HENCE THE SALE PROC EEDS OF THE LAND CANNOT BE TAXED UNDER ANY OF THE SECTIONS OF THE INCOME TAX ACT. MOREOVER THE CHARACTER OF THE LAND SOLD BY THE APPELLANT SATISFIES ALL THE TESTS LAID DOWN BY THE VARIOUS COURTS FOR CONSIDERING THE LAND SOLD BY ANY ASSESSEE AS AGRICULTURAL LAND AND HENCE THE ITO CANNOT TAX THE GAINS COMPUTED BY HIM UNILATERALLY BY RELYING UPON CERTAIN COURT JUDGMENTS WHICH ARE NOT RELEVANT IN THE PRESENT MATTER. IN FACT THE ITO BEFORE PASSING THE INSTANT ORDER SHOULD HAVE REFERRED TO THE JUDGMENTS OF BOMBAY HIGH COURT IN THE MATTER OF CIT V. MINGUEL CHANDRA PALS REPORTED IN 282 ITR 618 AND ANOTHER RECENT JUDGMENT IN THE MATTER OF CIT V. SMT DEBBIE ALEMAO & JOAQUIM ALEMAO REPORTED IN 331 ITR 59. 3.24 THE REFERENCES TO THE ABOVE JUDGMENTS WERE VERY MUCH CRUCIAL FOR THE ITO SINCE THE INCOME TAX DEPARTMENT IN GOA COMES UNDER THE JURISDICTION OF BOMBAY HIGH COURT AND ANY DECISION OF THIS COURT HAS TO BE MANDATORILY FOLLOWED BY THE INCOME TAX AUTHORITIES IN GOA. ADDITIONALLY THE ABOVE TWO CASES DECIDED BY THE HIGH COURT PERTAIN TO THE SALE OF AGRICULTURAL LANDS IN GOA. IN THESE JUDGMENTS THE COURT HELD THAT THE LANDS SOLD BY THE CONCERNED ASSESSEES WERE AGRICULTURAL LANDS ON ACCOUNT OF THEIR COMPLYING WITH THE TESTS AND FACTORS LAID DOWN BY THE SUPREME COURT F OR CONSIDERING ANY LAND AS AGRICULTURAL LAND. THE BOMBAY HIGH COURT IN THE ABOVE MATTERS ALSO RULED THAT THE SALES OF AGRICULTURAL LANDS MADE BY THE CONCERNED ASSESSEES WERE NOT LIABLE FOR PAYMENT OF CAPITAL GAINS TAX. 3.25 FURTHER THE APPELLANT WOULD ALSO LIKE TO STRESS THAT THE RATIOS LAID DOWN BY THE BOMBAY HIGH COURT IN THE ABOVE TWO CASES SQUARELY APPLY TO THE PRESENT CASE OF THE APPELLANT. CONSIDERING THE APPLICABILITY OF THESE JUDGMENTS OF THE BOMBAY HIGH COURT TO THE CASE OF THE APPELLANT AS ALSO IN VIEW OF THE DETAILED EXPLANATIONS GIVEN IN THE MATTER BY THE APPELLANT IN EARLIER PARAS, THE ACTION OF THE ITO IN WORKING OUT THE PROFITS OF RS. 1,75,13,500/ - ON SALE OF AGRICULTURAL LAND AND ADDING THE SAME TO THE RETURNED INCOME IS TOTALLY INCORRECT. 13 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA 3.2 6 IN CIT AND ANOTHER V. SMT. K LEELAVATHY REPORTED IN 341 ITR 287 (KAR) THE KARNATAKA HIGH COURT TOOK THE VIEW THAT THE LAND SOLD BY THE ASSESSEE RETAINED ITS AGRICULTURAL CHARACTER TILL THE DATE OF THE ORDER PERMITTING NON AGRICULTURAL USE AND COULD BE T REATED AS CAPITAL ASSET ONLY THEREAFTER. BY TAKING THIS VIEW THE COURT HELD THAT THERE IS NO NEED TO BRING TO TAX THE CAPITAL GAINS ON SALE OF AGRICULTURAL LAND WHICH WAS NOT CONVERTED INTO NON AGRICULTURAL LAND TILL THE DATE OF SALE OF LAND. CONSIDERING T HE RATIO OF THE KARNATAKA HIGH COURT DECISION. THE ACTION OF THE INCOME TAX OFFICER IN TREATING THE AGRICULTURAL LAND SOLD BY THE APPELLANTS AS SALE OF A BUSINES S ASSET IS TOTALLY UNJUSTIFIED. 2.4 . WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THIS LAND WAS PURCHASED BY THE ASSESSEE BY EXECUTING THE AGREEME NT FOR SALE DATED 13.12.1988. THE COPY OF AG REEMENT FOR SALE IS ON PAGE 72 TO 80 OF THE PAPER BOOK. WE HAVE GONE THROUGH THE A GREEMENT FOR SALE AND WE FIND FROM AGREEMENT FOR SALE THAT THE OWNER OF THE PROPERTY DR. MA NUEL FRANCISCO DIAS AND OTHERS HAVE EXECUTED THE AGREEMENT FOR SALE IN FAVOUR OF THE ASSESSEE. IN THE AGREEMENT FOR SALE IT IS MENTIONED THAT T HE ORIGINAL OWNER HAS RECEIVED A SUM OF RS.8,25,000/ - BY DEMAND DRAFT NO. 5543 3 6 DATED 2.12.1988 DRAWN ON UNION BANK OF INDIA, PANAJI, GOA. THE SALE DEED WAS EXECUTED ON 21.06.2007 WHICH IS ON PAPER BOOK PAGE NOS. 45 TO 71. THE ASSESSING O FFICER HAS VERIFIED THE REASON FOR EXECUTING THE SALE DEED AFTER SO MANY YEARS. DURING THE COURSE OF HEARING BEFORE AO THE ASSESSEE SUBMITTED THAT THE SAID PROPER TY WAS PURCHASED BY ME ON 13 TH DECEMBER, 1988 , AND AGREEM ENT FOR SALE WAS EXECUTED BY HIM . AT THE TIME OF ENTERING INTO SALE DEED THE SAID PROPERTY WENT UNDER LITIGATION AND ON 24 TH JULY, 1989 THE COURT ORDERED TEMPORARY INJUNCTION E X - PARTE. AS THE INJUNCTION OF THE COURT WAS THERE, THE PROPERTY COULD NOT BE TRANS FERRED IN HIS NAME IN THE LAND RECORDS. HOWEVER, THE SALE CONSIDERATIO N OF RS. 8,25,000/ - WAS PAID ON 2 ND DECEMBER, 1988 IT SELF AND ONLY TRANSFER OF THE PROPERTY IN ASSESSEES NAME AS PER THE LAND RECORDS WAS PENDING. THE MATTER WAS IN THE COURT AND AFTER VACATING STAY ORDER THE SALE DEED WAS EXECUTED. WE HAVE ALSO VERIFI ED FROM THE SALE DEED WHICH IS ON PAGE 45 TO 71 IN PAPER BOOK WHEREIN IT HAS MENTIONED ON PAGE ON PAGE 56 OF THE PAPER BOOK THAT LATE DR. MANUEL FRANCISCO D IAS, AND HIS WIFE MRS. ELVIRA DIAS HAS ENTERED INTO AN AGRE EMENT WITH THE PURCHASER T HEREIN TO SELL THE 14 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA SAID PROPERTY DESCRIBED IN THE SCHEDULED NO.1 FOR CONSIDERATION OF RS.6,36,500/ - AND HE HAS ALREADY PAID FULL AMOUNT IN THE YEAR 1988 AND POSSESSION WAS HANDED OVER TO THE ASSESSEE AND NOW ONLY A FORMAL DEED OF SALE WAS EXECUTED. THE ASSESSEE ALSO SUBMITTED THAT THE PROPERTY WAS PURCHASED BY AGREEMEN T TO SALE IN 1988 THEREAFTER SAID PROPERTY WENT UNDER LITIGATION . THE MATTER WAS IN COURT AND AFTER VACATION OF STAY ORDER WAS ISSUED, SALE DEED WAS EXECUTED . THE A SSESSING O FFICER WAS OF THE VIEW THAT THE AGREEMENT OF SALE WAS NOT EXECUTED BY THE ASSESSEE BUT IT IS A FAKE AGREEMENT TO SALE. WE FIND FROM THE ABOVE DOCUMENTARY EVIDENCE THAT ASSESSEE HAS FIRST EXECUTED THE AGREEMENT OF SALE AND WHEN ASSESSEE HAS MADE PAYMENT BY DEMAND DRAFT AND HE HAS GIVEN THE NUMBER OF DEMAND DRAFT AND IT IS MENTIONED IN THE SALE DEED ALSO , T HEREFORE, WE ARE OF THE VIEW THAT ASSESSEE HAS ACQUIRED THE OWNERSHIP RIGHT BY EXECUTING AGREEMENT OF SALE WITH THE VENDER OF AGRICULTURAL LAND ON 13 .12.1988. THE SECOND CONTENTION OF THE ASSESSING OFFICER THAT IN THE SALE DEED DATED 24.07.2008 NOWHERE IT IS MENTIONED THAT THE SAID PROPERTY IS AN AGRICULTURAL PROPERTY. THE ASSESSEE WAS UNABLE TO PRODUCE ANY CREDIBLE SUPPORTING EVIDENCE THAT THE SAID PROPERTY WAS AGRICULTURAL PROPERTY IN THE FORM OF HAVING AGRICULTURAL INCOME, RECEIPTS/ BILL S IN SUPPORT OF AGRICULTURAL EXPENSES INCURRED AND AGRICULTURAL INCOME EARNED IN ASSESSMENT YEAR 2009 - 10. THE ASSESSEE HAS CONTENDED THAT THE PROPERTY HAD FRUIT BEARING TREE S LIKE COCONUTS, JACKFRUITS, CASHEWS AND MANGOES, AND THE PRODUCE FROM TR EES WAS MOSTLY FOR CONSUMPTION OF SELF AND THE CARETAKER. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAS PURCHASED THE PROPERTY FOR A.Y. 1989 - 90 TO 2009 - 10. THE ASSESSEE HAS NOT CARRIED OU T ANY AGRICULTURAL OPERATION LAND IN QUESTION. WE FIND THAT ASSESSEE HAS PRODUCE FORM I & XIV OBTAINED FROM THE MAMLATDAR OF PONDA AND NOWHERE IT IS MENTIONED THAT IT WAS USED FOR AGRICULTURE PURPOSE. THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE HAS EXECUTED THE AGREEMENT OF SALE ON 13.12.1988 AND THEREAFTER, THE SALE DEED WAS EXECUTED ON 21.06.2007. THE ASSESSING OFFICER HAS VERIFIED FORM NO. I & XIV OF 15 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA THE DISPUTED PROPERTY. THE ASSESSEES NAME WAS ENTERED AS THE OWNER ON 24.7.2008 THE REAFT ER, ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT ASSESSEE HAS NOT CARRIED OUT ANY AGRICULTURAL ACTIVITIES. WE FIND FROM THE RECORD THAT AS WE HAVE HELD THAT THE ASSESSEE WAS IN POSSESSION OF THE PROPERTY BY AGREEMENT TO SALE DE ED IN YEAR 1988. TH E MATTER WAS PENDING, THEREFORE, THE SALE DEED WAS EXECUTED ON 21.06.2007. THEREAFTER, THE MUTATION ENTERED IN THE RECORDS OF RIGHT HAS TAKEN PLACE AND IT HAS TAKEN SOME TIME AND ULTIMATELY ON 14.08.2008 , T HE ASSESSEES NAME WAS SHOWN AS OWNER . T HEREFORE, LOOKING TO THIS EVIDENCE WE ARE OF THE VIEW THAT ASSESSEE WAS OWNER OF THE PROPERTY SINCE 13.12.1988 AND HE WAS IN POSSESSION. WE HAVE ALSO GONE THROUGH THE RECORD OF RIGHTS WHICH IS PRODUCED BEFORE US, WHEREIN IT IS CLEARLY MENTIONED THAT THIS P ROPERTY IS THE GARDEN LAND AND CULTIVABLE AREA AND WHEN IT IS CULTIVABLE AREA IT IS AN AGRICULTURAL LAND THEREFORE, WE ARE OF THE VIEW THAT CIT(A) IS JUSTIFIED IN HOLDING THAT THE DISPUTED PROPERTY IS AGRICULTURAL LAND AND IT I S LIABLE TO BE EXEMPTION UNDE R SECTION 2( 14) OF THE INCOME TAX ACT ON CAPITAL GAIN . WE FIND THAT THE ASSESSEE HAS SOL D AGRICULTURAL LAND AND THIS AGRICULTURAL LAND IS SITUATED IN VILLAGE PANCHAYAT AND THE SAME WAS NOT COMING WITHIN 8 KMS FROM NOTIFIED MUNICIPALITY. THE FORM NO. I & X IV SHOWS THAT THE LAND IN QUESTION IS AGRICULTURAL LAND. THE AGRICULTURAL OPERATION WERE CARRIED IN THE PROPERTY TILL THE DATE IT WAS SOLD AND THE SEVERAL FRUITS BEARING TREES WERE EXISTED IN THE SAID AGRICULTURAL LAND FOR A NUMBER OF YEARS, T HUS, IT IS A G ARDEN LAND. THEREFORE, WE ARE OF THE VIEW THAT IT IS NOT LIABLE TO BE A CAPITAL GAIN. WE FIND THAT THE CIT HAS RELIED UPON THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF CIT VS. DEBBIE ALEMAO (2010) 331 ITR 59 WHEREIN THE HONBLE JURISDICTIONAL HIGH COU RT HAS HELD THAT WHEN LAND IS SHOWN BY THE GOVT. AS AGRICULTURAL LAND AND THAT LAND IS NEVER USED AS NON AGRICULTURAL LAND TILL IT WAS SOLD. THE ASSESSEE IS NOT LIABLE FOR CAPITAL GAIN. THE HONBLE HIGH COURT HAS FURTHER HELD THAT THE LAND HAS TO BE TREATE D AS AGRICULTURAL LAND EVEN THOUGH NO SUCH AGRICULTURAL INCOME IS SHOWN BY THE ASSESSEE AS THE ASSESSEE STATED THAT THE AGRICULTURAL INCOME RECEIVED ON SALE OF COCONUTS GROWN ON THE LAND WAS JUST ENOUGH TO MAINTAIN THE LAND AND THERE WAS NO SURPLUS. WE 16 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA RES PECTFULLY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT WE ARE OF THE VIEW THAT CIT(A) IS JUSTIFIED IN HIS ACTION AND OUR INTERFERENCE IS NOT REQUIRED. WE ALSO FIND FROM THE DECISION OF KARNATAKA HIGH COURT IN THE CASE OF CIT & ANR. VS. SMT. K . LEELA VATHY REPORTED IN 341 ITR 287(KAR) WHEREIN HIGH COURT HAS HELD THAT THE LAND SOLD BY THE ASSESSEE RETAINED ITS AGRICULTURAL CHARACTER TILL THE DATE OF THE ORDER PERMITTING NON AGRICULTURAL USE AND COULD BE TREATED AS CAPITAL ASSET ONLY THEREAFTER. IN THE I NSTANT CASE THERE IS NO EVIDENCE ON THE RECORD THAT THIS PROPERTY IN USE IS CONVERTED FROM AGRICULTURAL LAND TO NON AGRICULTURAL LAND MOREOVER THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANY EVIDENCE BEFORE US. WE FIND THAT THE ASSESSEE WAS HOLDING THIS LAND ALMOST 20 YEARS AND THE ASSESSEE WAS HOLDING AS OWNE R OF THE PROPERTY AS AGRICULTURAL LAND. THEREFORE, IN OUR OPINION, THE CIT IS JUSTIFIED AND OUR INTERFERENCE IS NOT REQUIRED. THEREFORE, WE ARE IN COMPLETE AG REEMENT WITH THE FINDING OF THE CIT(A). IN THE RESULT, DEPARTMENT S APPEAL IS DISMISSED ON THIS GROUND. 3 . TH E SECOND GROUND OF APPEAL RELATES TO DELETING THE ADDITION OF RS.10,00,000/ - BY NOT APPRECIAT E THAT THE SOURCE OF CIB IS AUTH ENTIC. THERE WAS INFORMATION BY CIB THAT ASSESSEE HAS RECEIVED RS. 10,00,000 / - FROM M/S. TOTAL REC ALL TECHNOLOGIES INDIA PVT. LTD . THE ASSESSEE HAS NOT OFFERED TO TAX, THEREFORE, AO H AS MADE THE ADDITION OF RS. 10,00,000/ - . 3.1 . T HE MATTER CARRIED TO CIT(A) AND CIT(A) HAS DISMISSED THIS ADD ITION BY OBSERVING AS UNDER: IT CAN BE SEEN FROM THE VARIOUS STATEMENTS MADE BY THE ITO IN HIS ORDER THAT HE HAS NOT SUCCEEDED IN ESTABLISHING THAT THE APPELLANT HAD RECEIVED AMOUNTS OF RS. 10,00,000/ - FROM M/S. TOTAL RECALL TECHNOLOGIES INDIA PVT. LTD. (TRTIPL). HE HAS NOT BROUGHT ANY DOCUMENT LIKE ENTRIES IN THE PASS BOOK, CONFIRMATION FROM TRTIPL REGARDING THE RECEIPT OF RS. 10,00,000/ - . IN MY CONSIDERED OPINION, THE FOLLOWING CASUAL REMARKS MADE BY THE ITO IN SUPPORT OF ADDITIONS CANNOT BE GROUNDS FOR MAKING THE ABOVE ADDITION OF RS. 10,00,000/ - . (I) THE ASSESSEES CONTENTION THAT HE HAS NOT RECEIVED THE PAYMENT OF RS.10,00,000/ - FROM THE SAID COMPANY FOR THE REASON STATED ABOVE IS NOT ACCEPTABLE FOR THE REASONS THAT THE SOURCE OF CIB INFORMATION IS A UTHENTIC. 17 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA (II) THAT IT IS LEARNT FROM LOCAL ENQUIRIES THAT THE ASSESSEES WIFE IS ONE OF THE DIRECTORS OF TRTIPL AND SHE WAS IN RECEIPT OF RENTAL INCOME FROM THE SAID COMPANY. (III) THAT THE ASSESSEE IS SOMEHOW CONNECTED TO TRITPL WHICH MUST HAVE ENTERED SOME TRANSACTION IN THE NAME OF TRITPL AND THE COMPANY MUST HAVE ENTERED SOME TRANSACTION IN THE NAME OF THE ASSESSEE. HENCE THE TRANSACTION REFLECTED IN CIB DAT A IS TREATED AS GENUINE AND RS. 10,00,000/ - IS REQUIRED TO BE CONSIDERED AS INCOME OF THE ASSESSEE. IN MY VIEW THE ABOVE REMARKS ARE MADE BY ITO ON SUSPICION/SURMISES AND HERE SAY IN ORDER TO BRING TO TAX AN AMOUNT OF RS.10,00,000/ - IN THE HANDS OF THE APPELLANT. IN FACT THE ITO SHOULD HAVE BROUGHT ON RECORD SOME CONCRETE MATERIAL TO PROVE THAT THE APPELLANT RECEIVED RS. 10,00,000/ - FROM TRITPL. IN THE ABSE NCE OF THIS THE ADDITION OF RS. 10,00,000/ - IS TOTALLY UNJUSTIFIED. I THEREFORE DIRECT THE ITO TO D ELETE THE ABOVE ADDITION OF RS. 10,00 ,000/ - MADE TO THE RETURNED INCOME OF THE APPELLANT. 3.2 . WE HAVE HEARD THE RIVAL CONTENTION OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSING OFFIC ER HAS MADE THE ADDITION OF RS. 10,00,000/ - ON THE BASIS OF INFORMATION RECEIVED BY CIB. THE INFORMATION WAS THAT THE A SSESSEE HAS RECEIVED SUM OF RS. 10,00,000/ - FROM ONE M/S. TOTAL RECALL TECHNOLOGIES INDIA PVT. LTD., ON 2 4.02.2009. WE FIND THAT THE ASSESSING OFFICER HAS NOT MADE ANY ENQUIRY F ROM M/S. TOT AL RECALL TECHNOLOG IES INDIA PVT. LTD. WHETHER THEY HAVE PAID SUM OF RS. 10,00,000/ - TO THE ASSESSEE OR NOT. THERE IS NO EVIDENCE ON RECORD TO SHOW THAT THE ASSESSEE HAS RECEIVED SUCH AMOUNT . M OREOVER , THE ASSESSING OFFICER HAS NOT VERIFIED WHETHER SUCH C OMPANY IS IN EXISTENCE OR NOT. THEREFORE, CIT(A) HAS DELETED THIS ADDITION AND OUR INTERFERENCE IS NOT REQUIRED. 4 . IN THE RESULT, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED . ORDER PRONOUNCED IN THE OP EN COURT ON 9 .5 .2014. SD/ - SD/ - ( P.K. BANSAL) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 9 . 5 .2014 P.S. - *PK* 18 . ITA NO. 284/PNJ/2013(A.Y. 2009 - 10) ITO VS. SHRI SHAUKAT KARIM PRASLA COPY TO : ( 1 ) APPELLANT ( 2 ) RESPONDENT ( 3 ) CIT CONCERNED ( 4 ) CIT(A) CONCERNED ( 5 ) D.R ( 6 ) GUARD FILE TRUE COPY, BY ORDER