Sri. C. Radha Krishna Kumar, Hyderabad V. ACIT, Circle - 6 (1)), Hyderabad

ITA 295/HYD/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6411 (ITAT-HYDERABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 21-06-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 22-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: S RAMA RAO
• Keywords: Capital asset; Search and seizure; Benefit of exemption; Revised return
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NO.295/HYD/2012 : ASSESSMENT YEARS 2008-0 9 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD (PAN ABBPC 5019 K ) V/S ASSTT. COMMISSIONER OF INCOME-TAX 16(1), HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.RAMA RAO RESPONDENT BY : SHRI K.J.RAO DATE OF HEARING 21.6.2016 DATE OF PRONOUNCEMENT 29.6.2016 O R D E R PER PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER : THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) IV, HYDERABAD F OR THE ASSESSMENT YEAR 2008-09. IT IS PERTINENT TO MENTIO N AT THE OUTSET THAT THIS APPEAL WAS ORIGINALLY DISPOSED OF BY THE ORDER OF THIS TRIBUNAL DATED 7.3.2013 AND HAS BEEN RECALLED BY THE SUBSEQU ENT ORDER DATED 10.12.2014 PASSED UNDER S.254(2) OF THE INCOME TAX ACT,1961 PASSED IN MA NO.103/HYD/2014. 2. BRIEFLY STATED, THE ASSESSEE IS AN INDIVIDUAL A ND ADVOCATE BY PROFESSION. SEARCH AND SEIZURE OPERATIONS WERE CONDUCTED IN THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 25.10.2007. THE DETAILS OF ASSETS FOUND AND SEIZED DURING THE COURSE OF SEARCH INTER ALIA INCLUDED CASH OF RS.69 LAKHS. CONSEQUENT UPON THE NOTICE UND ER S.153A OF THE ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 2 ACT ISSUED INTER ALIA FOR THE ASSESSMENT YEAR 2008- 09, ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.3,98, 593, BESIDES AGRICULTURAL INCOME OF RS.1,10,000. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE DID NOT FILE ITS RETURN F OR THE ASSESSMENT YEAR 2008-09 EARLIER. THE RETURN WAS FILED ONLY IN RESPO NSE TO THE NOTICE UNDER S.153A OF THE ACT AS NOTED ABOVE. IN THE COU RSE OF ASSESSMENT IN PURSUANCE OF THE NOTICE UNDER S.153A OF THE ACT, ASSESSEE STATED THAT THE CASH FOUND AND SEIZED OF RS.69 LAKHS AT TH E TIME OF SEARCH IS PART OF THE SALE CONSIDERATION RECEIVED IN CASH FRO M SHRI E.V.RAJA REDDY IN RESPECT OF SALE OF LAND SITUATED AT AMEENP UR VILLAGE. ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THA T HE HAD ACQUIRED A PROPERTY ADMEASURING 32.5 GUNTAS LOCATED AT SURVE Y NO.464 OF AMEENPUR VILLAGE PATANCHERU MANDAL, MEDAK DISTRICT ON 15.5.2002 VIDE REGISTERED SALE DEED DATED 3047/2002 FOR A CON SIDERATION OF RS.41,000 AND INCURRED STAMP DUTY EXPENSES OF RS.4, 510. JUST A DAY PRIOR TO THE DATE OF SEARCH ON 25.10.2007, I.E. ON 24.10.2007, THIS PROPERTY WAS SOLD TO ONE SHRI E.V.RAJA REDDY FOR A TOTAL CONSIDERATION OF RS.1 CRORE, OUT OF WHICH THE RECORDED CONSIDERAT ION AS PER THE SALE DEED WAS ONLY RS.24,37,500. THUS, THE ASSESSEE RECE IVED A SUM OF RS.75,62,500 IN CASH AND THE BALANCE AMOUNT OF RS.2 4,37,500 ONLY THROUGH BANKING CHANNEL. THE ASSESSING OFFICER OB SERVED THAT AS AGREED IN THE COURSE OF SEARCH, THE ASSESSEE FILED HIS RETURN FOR THE ASSESSMENT YEAR 2008-09 AND DECLARED THE TOTAL SALE CONSIDERATION RECEIVED OF RS.1 CRORE THEREIN. HOWEVER, THE ASSES SEE CLAIMED THE ENTIRE AFORESAID AMOUNT AS LONG TERM CAPITAL GAIN E XEMPT UNDER S.54 OF THE ACT. THE ASSESSING OFFICER DID NOT FIND MER IT IN THE CLAIM OF THE ASSESSEE. THE ASSESSING OFFICER OBSERVED THAT AN AM OUNT OF RS.29 LAKHS STATED TO BE SPENT TOWARDS CONSTRUCTION OF HO USE ON PLOT NO.539, JUBILEE HILLS WAS PURCHASED BY ASSESSEES WIFE, SMT .K.RAJANIKUAMRI ON ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 3 2.9.2002, VIDE DOCUMENT NO.3056/2002 FOR A TOTAL CO NSIDERATION OF RS.29,48,150. THE ASSESSING OFFICER NOTED THAT DUR ING THE COURSE OF SEARCH, IT WAS NOTICED THAT CONSTRUCTION OF RESIDEN TIAL HOUSE WAS IN PROGRESS ON THIS PLOT BELONGING TO WIFE OF ASSESSE E. IT IS THE CASE OF ASSESSING OFFICER THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER S.54 FOR CONSTRUCTION ON PLOT BELONGING TO WIFE AND NOT TO ASSESSEE HIMSELF. IN NUTSHELL, THE ASSESSING OFFICER DENIE D THE BENEFIT OF EXEMPTION UNDER S.54 TO THE ASSESSEE ON THE GROUND THAT THE PROPERTY WAS PURCHASED BY THE ASSESSEES WIFE AND THE SAME I S NOT A JOINT PROPERTY. SECONDLY, BOTH THE ASSESSEE AND HIS WIFE ARE SEPARATE INDIVIDUALS AND THE PLOT BELONGS TO WIFE OF ASSESSE E AND NOT ASSESSEE PER SE. INVESTMENT IN CONSTRUCTION ON THE LAND IN NAME OF HIS WIFE IS UNACCEPTABLE TO DETERMINE THE ASSESSEES ELIGIBILIT Y TO DEDUCTION UNDER S.54F OF THE ACT. HE ALSO MADE OBSERVATIONS TO THE EFFECT OF LACK OF EVIDENCE TOWARDS INVESTMENT IN THE AFORESAID CONSTR UCTION. HE ACCORDINGLY, BROUGHT TO TAX THE AMOUNT OF RS.29 LAK HS CLAIMED AS EXEMPT ON ACCOUNT OF INVESTMENT IN THE CONSTRUCTION OF HOUSE PROPERTY AND ALSO CASH FOUND OF RS.69 LAKHS. 3. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPE AL BEFORE THE CIT(A). HE REITERATED HIS SUBMISSIONS MADE BEF ORE THE ASSESSING OFFICER AND CONTENDED THAT THE AMOUNT OF RS.29 LAKH S HAVE BEEN UTILISED FOR EXTENDED CONSTRUCTION OF RESIDENTIAL H OUSE IN THE JOINT NAMES OF ASSESSEE AND HIS WIFE. WHILE THE WIFE HAS PURCHASED THE LAND AND CONSTRUCTED ON A PART OF LAND EARLIER, EXT ENDED CONSTRUCTION WAS CONTRIBUTED BY THE ASSESSEE, AND THEREFORE, HE IS ENTITLED TO CLAIM EXEMPTION UNDER S.54F OF THE ACT. ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 4 3.1. THE ASSESSEE FURTHER RAISED AN ADDITIONAL GR OUND BEFORE THE CIT(A) CONTENDING THAT THE LAND SITUATED AT AME ENPUR VILLAGE IS AN AGRICULTURAL LAND AND WAS SITUATED BEYOND EIGHT KIL OMETERS FROM THE LIMITS OF ANY MUNICIPAL CORPORATION AT THE RELEVANT TIME OF SALE AND THEREFORE IS NOT A CAPITAL ASSET WITHIN THE MEANING OF S.2(14) OF THE ACT. THUS, CAPITAL GAINS IS NOT CHARGEABLE AT ALL ON THE SURPLUS REALISED ON THE SALE OF THE SAID AGRICULTURAL LAND. 3.2. THE CIT(A), HOWEVER, DID NOT FIND MERIT IN E ITHER OF THE CONTENTIONS OF THE ASSESSEE. WITH REGARD TO THE PLE A OF THE ASSESSEE THAT LAND IN QUESTION IS AN AGRICULTURAL LAND SITUA TED OUTSIDE THE LIMITS OF MUNICIPAL CORPORATION IN TERMS OF S.2(14) OF THE ACT, THE CIT(A) OBSERVED THAT IT IS NOT EVIDENT FROM THE RECORD THA T THE LAND WAS SUBJECT TO ANY AGRICULTURAL OPERATIONS IN THE PAST AS CLAIMED. HE NOTED THAT FROM THE PHOTOGRAPH TAKEN AT THE TIME OF REGIS TRATION OF THE SALE OF PROPERTY THAT ONLY CERTAIN WILD GROUND IS DISCER NIBLE ON THE LAND IN QUESTION. THE CIT(A) ALSO OBSERVED THAT THE MUNICI PAL CORPORATION, I.E. GHMC CAME INTO EXISTENCE ON 16.4.2007, VIDE GO MS NO. 261 OF EVEN DATE, WHEREAS THE LAND IN QUESTION HAS BEEN SO LD SUBSEQUENT TO THE AFORESAID NOTIFICATION ON 24.10.2007 AND THEREF ORE, THE IMPUGNED LAND SOLD BY THE ASSESSEE IS REQUIRED TO BE TREATE D AS CAPITAL ASSET. THE CIT(A) FURTHER NOTED THAT THE ASSESSEE COULD NO T SUBSTANTIATE THAT ANY AGRICULTURAL OPERATIONS WERE ACTUALLY BEING CAR RIED OUT ON THE IMPUGNED LAND PRIOR TO ITS SALE. THE CERTIFICATE F ROM LOCAL REVENUE AUTHORITY CONCERNED, I.E., MRO, RELIED UPON BY THE ASSESSEE ONLY SHOWS THAT THE LAND WAS CULTIVABLE AND HAD A SOURCE OF WA TER IN ITS VICINITY. IT NOWHERE INDICATES THE FACT OF ACTUAL CULTIVATION TH EREON. IN THE ABSENCE OF ANY EVIDENCE TO CORROBORATE THE ASSERTIO NS MADE BY THE ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 5 ASSESSEE, THE CIT(A) WAS OF THE VIEW THAT IMPUGNED SALE OF LAND CANNOT BE CONSIDERED AS SALE OF AGRICULTURAL LAND. 3.3. THE CIT(A) NEXT OBSERVED THAT THE ASSESSEE D ID NOT FILE THE RETURN OF INCOME PRIOR TO THE DATE OF SEARCH AT AL L. IN THE RETURN FILED PURSUANT TO STATUTORY NOTICE UNDER S.153A, THE ASS ESSEE HIMSELF HAS DECLARED THE LAND AS CAPITAL ASSET AND HAS SHOWN SA LE CONSIDERATION OF RS.1-CRORE RECEIVED THEREON AS LIABLE TO TAX AS LON G TERM CAPITAL GAINS. THE CIT(A) ALSO NOTED THAT THE ASSESSEE EVEN CLAIME D EXEMPTION UNDER S.54 AGAINST THE IMPUGNED CAPITAL GAINS. ADMI TTED POSITION REGARDING THE NATURE OF THE LAND SOLD OR INCOME ARI SING FROM SUCH TRANSFER WAS NOT SOUGHT TO BE AMENDED BY FILING REV ISED RETURN AT ANY STAGE OR DURING THE COURSE OF THE ASSESSMENT PROCEE DINGS. THIS PLEA WAS RAISED FOR THE FIRST TIME BEFORE THE FIRST APPE LLATE AUTHORITY BY WAY OF ADDITIONAL GROUND. IN THE LIGHT OF THE AFORESAID FACTS, THE CIT(A) OBSERVED THAT THE ASSESSING OFFICER HAS NO POWER TO ENTERTAIN A CLAIM WHICH IS MADE OTHERWISE THAN BY WAY OF A REVISED R ETURN IN VIEW OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE C ASE OF GOETZE(INDIA)LIMITED (284 ITR 323)(SC). THE CIT(A) JUSTIFIED THE ACTION OF THE ASSESSING OFFICER AND OBSERVED THAT AS A COROLLARY TO THE DECISION OF THE SUPREME COURT, THE ASSESSEE CANNOT BE ALLOWED EXCLUSION OF ANY INCOME WITHOUT FILING A REVISED RE TURN. THE CIT(A) HELD THAT ANY NEW CLAIM FOR DEDUCTION OR EXCLUSION OF INCOME CANNOT BE MADE WITHOUT FILING A REVISED RETURN OF INCOME, WHI CH THE ASSESSEE HAS FAILED TO DO IN THE INSTANT CASE. ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 6 3.4. THE CIT(A) ALSO REJECTED THE CONTENTION OF T HE ASSESSEE THAT CASH OF RS.69 LAKHS FOUND AND SEIZED AT THE T IME OF SEARCH IS REQUIRED TO BE TREATED AS DEPOSIT IN THE CAPITAL GA INS ACCOUNT, ELIGIBLE FOR CLAIMING EXEMPTION UNDER S.54F, AS REQUESTED I N THE LETTER DATED 19.8.2009 BEFORE THE ASSESSING OFFICER. THE CIT(A) NOTED THAT THE ASSESSEE RECORDED SALE CONSIDERATION OF RS.24,37,50 0 ONLY IN ITS BOOKS OF ACCOUNT AS AGAINST THE ACTUAL CONSIDERATION OF R S.1 CRORE. THEREFORE, THERE WAS NO BONA FIDE INTENTION TO CLAIM EXEMPTION UNDER S.54. THE CIT(A) ALSO INTER ALIA NOTED ON FACTS THAT THE ASSE SSEE HAD TAKEN SUBSTANTIAL UNSECURED LOANS TO THE TUNE OF RS.75,70 ,000 FROM HIS WIFE, WHICH IS OUTSTANDING AS ON 31.3.2008. THEREFORE, EX PLANATION OF THE ASSESSEE THAT TRANSFER OF MONEY TO HIS WIFES ACCOU NT IS TOWARDS CONSTRUCTION OF PROPERTY, FOR THE PURPOSE OF ELIGIB ILITY TO CLAIM EXEMPTION UNDER S.54F IS AGAINST HUMAN PROBABILIT IES, PARTICULARLY, WHEN THE ASSESSEE HAD NO LEGAL RIGHT OR TITLE OVER THE LAND ON WHICH THE CONSTRUCTION IS SOUGHT TO BE MADE. HE ACCORDIN GLY CONFIRMED THE ORDER OF THE ASSESSING OFFICER, REJECTING THE CLAIM OF ASSESSEE FOR EXEMPTION. 4. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL, WITH THE FOLLOWING GROUNDS OF APPEAL- .. 1. THE LEARNED CIT APPEALS ERRED IN NOT CONSIDERING TH E ADDITIONAL GROUNDS OF APPEAL RAISED BY THE APPELLANT, ON THE E XEMPTION OF PROFIT ON SALE OF AGRICULTURAL LAND, WHICH IS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(III)(B) OF INCO ME TAX ACT, WHEN THE APPELLANT HAS ALREADY SHOWN PROFIT ON SALE OF LAND IN HIS RETURN OF INCOME WHICH IS THE SUBJECT MATTER OF ADD ITIONAL GROUND OF APPEAL KEPT ON THE RECORDS OF THE AO AT THE TIME OF ASSESSMENT. ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 7 2. THE LEARNED CIT(APPEALS) ERRED IN MISCONCEIVING THE PROVISIONS U/S. 139, AND U/S.54F OF THE INCOME TAX ACT,1961, AND ALSO THE FACTS RELEVANT TO THE CLAIM OF THE ASSESSEE FOR EXE MPTION OF LONG TERM CAPITAL GAINS U/S. 54F OF INCOME TAX ACT, FOR AMOUNT SPENT IN CONSTRUCTION OF RESIDENTIAL HOUSE BY THE APPELLANT. 3. .. 5. THE LEARNED AUTHORISED REPRESENTATIVE FOR THE ASSESSEE, SHRI S.RAMA RAO, REITERATED THE SUBMISSIONS MADE BE FORE THE LOWER AUTHORITIES AND ASSERTED THAT THE ASSESSEE IS NOT L IABLE TO PAY CAPITAL GAINS TAX ON AGRICULTURAL LAND SITUATED AT AMEENPUR VILLAGE. HE SUBMITTED THAT THE IMPUGNED LAND DOES NOT FALL WITH IN THE DEFINITION OF THE TERM CAPITAL ASSET UNDER S.2(14) OF THE ACT I N THE FIRST PLACE BECAUSE THE LAND WAS SITUATED BEYOND EIGHT KILOMETE RS FROM THE LOCAL MUNICIPALITY AT THE RELEVANT TIME OF SALE. LEARNED AUTHORISED REPRESENTATIVE FURTHER ASSERTED THAT THE LAND WAS S UBJECTED TO AGRICULTURAL OPERATIONS PRIOR TO ITS SALE AND ALSO IT WAS PURCHASED FROM AGRICULTURISTS. IT WAS ALWAYS USED FOR CULTIVATION OF AGRICULTURAL PRODUCE AND THE LAND WAS NEVER CONVERTED INTO NON-A GRICULTURAL LAND AT ANY POINT OF TIME NOR WAS IT SUB-DIVIDED IN ANY MAN NER FOR COMMERCIAL EXPLOITATION. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT THE CIT(A) HAS NOT APPRECIATED THE FACTS IN PROPER PERS PECTIVE AND HAS COME TO AN INCORRECT CONCLUSION WITHOUT DUE REGARD TO THE FACTS AND WITHOUT GIVING PROPER OPPORTUNITY TO THE ASSESSEE T O CANVASS ITS CASE. THE LEARNED AUTHORISED REPRESENTATIVE NEXT CONTEND ED THAT THE CIT(A) WRONGLY APPLIED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF GOETZ INDIA LTD (SUPRA) TO ARRIVE AT A CONCLUSION THAT UNLESS THE RETURN IS REVISED, THE RELIEFS AVAILABLE TO THE ASSESSEE IN TERMS OF THE PROVISIONS OF THE ACT BY WAY OF DEDUCT ION OR EXEMPTION CANNOT BE GRANTED. HE SUBMITTED THAT NOTWITHSTANDI NG THE FACT THAT ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 8 THE CAPITAL GAIN WAS OFFERED ON SALE OF AGRICULTURA L LAND FOR THE PURPOSE OF TAX IN THE RETURN FILED IN RESPONSE TO NOTICE UN DER S.153A, THE ASSESSING OFFICER IS UNDER STATUTORY OBLIGATION TO ASSESS THE INCOME AS PER LAW. A MISTAKE COMMITTED BY THE ASSESSEE IN LA W BY WRONGLY OFFERING AN INCOME WHICH IS NOT TAXABLE, WILL NOT O PERATE AS AN ESTOPPEL AGAINST THE ASSESSEE. HE SUBMITTED THAT THE ASSESS ING OFFICER IS REQUIRED TO DETERMINE THE TAXABLE INCOME IN ACCORDA NCE WITH LAW AND IS NOT ENTITLED TO THE ADVANTAGE OF THE MISTAKE CO MMITTED BY THE ASSESSEE. HE THEREFORE VEHEMENTLY EXHORTED THAT THE CONSIDERATION RECEIVED ON SALE OF AGRICULTURAL LAND IS NOT A CAPI TAL ASSET AND THEREFORE NOT LIABLE FOR CAPITAL GAINS TAX AT ALL. 6. IN THE ALTERNATIVE AND WITHOUT PREJUDICE TO TH E FIRST CONTENTION, THE LEARNED AUTHORISED REPRESENTATIVE F OR THE ASSESSEE SUBMITTED THAT THE CAPITAL GAINS WAS DERIVED ON SAL E OF LAND HAS BEEN UTILISED OR PROPOSED TO BE UTILISED TOWARDS CONSTRU CTION OF PROPERTY AND HENCE IT IS EXEMPT IN TERMS OF S.54 & S.54F(4) OF T HE ACT. OWNERSHIP OF THE LANDS IN THE NAME OF THE WIFE, DOES NOT PREV ENT THE ASSESSEE FROM MAKING INVESTMENT IN CONSTRUCTION THEREON IN T HE CAPACITY OF A JOINT OWNER. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT ON THE VERY NEXT DAY OF RECEIPT OF CASH, SEARCH AND SE IZURE OPERATIONS TOOK PLACE AND CASH WAS SEIZED. THIS PREVENTED THE ASSESSEE FROM AVAILING THE BENEFIT CONTEMPLATED UNDER S.54F(4) OF THE ACT BY MAKING DEPOSITS AS THE SCHEME CONTEMPLATED, AND THEREFORE, A FORMAL REQUEST WAS MADE TO THE ASSESSING OFFICER TO APPROPRIATE TH E AFORESAID AMOUNT BY DEEMING IT AS DEPOSIT UNDER S.54F OF THE ACT. IN THE AFORESAID FACTS AND CIRCUMSTANCES , THE ACTION OF T HE ASSESSEE IN CLAIMING EXEMPTION UNDER S.54 AND S.54F CANNOT BE F AULTED. HE ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 9 THEREFORE, PLEADED THAT APPROPRIATE RELIEF AS PER G ROUNDS OF APPEAL MAY BE GRANTED. 7. LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OT HER HAND RELIED UPON THE ORDER OF THE CIT(A) AND SUBMITTED T HAT THE CIT(A) HAS DEALT WITH THE ENTIRE GAMUT OF FACTS OBJECTIVEL Y AND CAME TO A RIGHTFUL CONCLUSION AND THEREFORE, NO INTERFERENCE IS CALLED FOR. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISS IONS AND ORDERS OF THE AUTHORITIES BELOW AS WELL AS MATERIAL REFERRED IN THE COURSED OF HEARING. THE SUBSTANTIVE ISSUE THAT ARI SES FOR ADJUDICATION IN THIS APPEAL IS WHETHER THE SURPLUS OF CONSIDERA TION REALISED BY THE ASSESSEE PARTLY BY WAY OF CASH AND PARTLY THROUGH B ANKING CHANNEL ON THE SALE OF LAND AT AMEENPUR VILLAGE IS CHARGEABLE TO CAPITAL GAINS TAX OR NOT. ASSESSEE HAS ACQUIRED THE LAND ADMEASURING 32.25 GUNTAS AT AMEENPUR VILLAGE ON 25.5.2002 FOR A TOTAL CONSIDER ATION OF RS.41,000. THE AFORESAID PROPERTY WAS SOLD BY REGISTERED SALE DEED DATED 24.10.2007 FOR ACTUAL CONSIDERATION OF RS.1 CRORE, OUT OF WHICH THE RECORDED CONSIDERATION WAS FOUND TO BE RS.24,37,50 0 ONLY. ASSESSEE CLAIMS TO HAVE RECEIVED THE BALANCE AMOUNT IN CASH, OUT OF WHICH RS.69 LAKHS WAS FOUND AND SEIZED FROM THE PREMISE S OF THE ASSESSEE IN THE COURSE OF SEARCH OPERATIONS UNDER S.132 OF T HE ACT ON 25.10.2007. THE ASSESSEE HAS INCLUDED THE SALE CONS IDERATION OF RS.1 CRORE FOR THE PURPOSES OF COMPUTATION OF CAPITAL GA INS TAX IN ITS RETURN OF INCOME FILED IN RESPONSE TO NOTICE UNDER S.153A OF THE ACT, BUT CLAIMED THE SAME AS EXEMPT FROM TAX ON ACCOUNT OF I NVESTMENT IN THE CONSTRUCTION OF HOUSE PROPERTY. ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 10 9. THE ASSESSEE IN THE COURSE OF FIRST APPELLATE PROCEEDINGS, BEFORE THE CIT(A) ALSO INTER ALIA CONTENDED THAT TH E IMPUGNED LAND IS AN AGRICULTURAL LAND. COUPLED WITH THIS, IT IS NOT A CAPITAL ASSET UNDER S.2(14) OF THE ACT, IN VIEW OF ITS SITUS . HOWEVER, THE CIT(A) REJECTED THE AFORESAID CONTENTION OF THE ASSESSEE INTER AL IA FOR THE FOLLOWING REASONS (A) THE ASSESSEE HAS NOT REVISED THE RETU RN OF INCOME INTER ALIA EXCLUDING THE CAPITAL GAINS OFFERED FOR TAXATI ON; (B) THE ASSESSEE FAILED TO ADDUCE EVIDENCE IN SUPPORT OF THE AGRICUL TURAL OPERATIONS. THE ASSESSEE HAS FAILED TO RETURN THE AGRICULTURAL INCO ME GENERATED FROM THE ALLEGED CULTIVATION OF THE LAND IN THE PAST, P RIOR TO THE DATE OF SEARCH; (C) IN THE OPINION OF THE CIT(A), THE LAND WAS SITUATED WITHIN THE LOCAL LIMITS OF MUNICIPALITY AT THE TIME OF SAL E IN VIEW OF THE NOTIFICATION GOMS NO.261 DATED 16.4.2007. 10. SINCE THE AFORESAID PLEA THAT THE LAND SOLD I S NOT A CAPITAL ASSET TAKEN BEFORE THE CIT(A), BEING LEGAL AS WELL AS FACTUAL AND GOES TO THE ROOT OF THE MATTER, WE SHALL FIRST EXAMINE T HIS ISSUE. WE FIND CONSIDERABLE MERIT IN THE ARGUMENTS OF THE ASSESSEE THAT WRONGFUL INCLUSION OF AN AMOUNT IN THE INCOME TAX RETURN FOR THE PURPOSE OF TAXABILITY, BY ITSELF WILL NOT MAKE THE ASSESSEE LI ABLE FOR TAX. ARTICLE 265 OF THE CONSTITUTION PROVIDES THAT NO TAXES CAN BE COLLECTED OR LEVIED WITHOUT THE AUTHORITY OF LAW. THE ASSESSING OFFICER IS REQUIRED TO COMPUTE THE ASSESSED INCOME IN ACCORDANCE WITH LAW IN TERMS OF THE PROVISIONS OF THE INCOME TAX ACT, 1961. ANY WRONGFU L OFFERING OF ANY AMOUNT TOWARDS INCOME BY THE ASSESSEE WILL NOT OPER ATE AS ESTOPPEL AGAINST THE PROPER APPLICATION OF LAW. THIS ASPEC T OF THE MATTER IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF CIT V/S. PRITHVI BROKERS & SHA REHOLDERS PVT. LTD. (349 ITR 336) AND THE DECISIONS OF THE TRIBUNAL IN THE CASES OF PRADEEP ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 11 KUMAR HARLALKA VS ACIT (ITA NO.4501/MUM/2010 DATED 10.8.2011) AND RAMI K.PALI V/S. DCIT (ITA NO.7314/MUM/2011 DAT ED 17.10.2012). 11. AS FOR THE SECOND REASON THAT WEIGHED WITH TH E CIT(A), THAT THE ASSESSEE HAS FAILED TO ADDUCE SUFFICIENT E VIDENCE TO SUBSTANTIATE THE CLAIM THAT THE LAND WAS PUT TO BAS IC OPERATIONS FOR CULTIVATION BEFORE ITS SALE, WE NOTICE FROM THE ORD ER OF THE CIT(A) THAT CERTAIN REVENUE RECORDS AND PHOTOGRAPHS HAVE BEEN RELIED UPON TO COME TO THE CONCLUSION THAT NO AGRICULTURAL PRODUCE WAS GENERATED FROM THE LAND. WE NOTE THAT WHETHER THE ASSESSEE IN DULGED IN SUCH BASIC OPERATIONS TO GENERATE AGRICULTURAL PRODUCE F ROM THE LAND IS ESSENTIALLY A QUESTION OF FACT AND GOES TO THE ROOT OF THE MATER. THIS ISSUE WAS RAISED FOR THE FIRST TIME BEFORE THE CIT( A) DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS. FROM THE IMPUGNED ORDER OF THE CIT(A), WE FIND THAT SUFFICIENT OPPORTUNITY APPEARS TO HAV E NOT BEEN GIVEN TO THE ASSESSEE TO SUBSTANTIATE ITS PLEA OF AGRICULTUR AL OPERATIONS BEING CARRIED ON THE AFORESAID LAND. WE ARE, THEREFORE, O F THE CONSIDERED OPINION THAT IN ORDER TO ENSURE CORRECT VERIFICATIO N ON THIS FACTUAL ASPECT OF THE MATTER, A FAIR OPPORTUNITY SHOULD BE GRANTED TO THE ASSESSEE TO ADDUCE EVIDENCE IN THIS REGARD BEFORE T HE ASSESSING OFFICER AND THE MATTER SHOULD BE RESTORED TO THE FILE OF TH E ASSESSING OFFICER FOR THAT PURPOSE. 12. AS FOR THE THIRD REASON THAT WEIGHED WITH THE CIT(A), WE FIND THAT THE CIT(A) HAS RELIED UPON THE NOTIFICATI ON, GOMS NO.361 TO HOLD THAT THE MUNICIPAL CORPORATION THAT ENVELOPES THE ASSESSEES LAND IN QUESTION WITHIN ITS LIMITS, CAME INTO EXISTENCE ON 16.4.2007. ON THE CONTRARY, LEARNED AUTHORISED REPRESENTATIVE VEH EMENTLY SUBMITTED ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 12 THAT THE HYDERABAD MUNICIPAL CORPORATION (AMENDMENT ) ACT, 2008 HAS COME INTO FORCE WITH EFFECT FROM 10.7.2008, I.E . AFTER THE SALE OF THE IMPUGNED LAND BY THE ASSESSEE. WE FEEL THAT PRO PER OPPORTUNITY SHOULD BE GIVEN TO THE ASSESSEE TO ADDRESS THE CORR ECT POSITION BEFORE THE ASSESSING OFFICER ON THIS SCORE ALSO. 13. IN THE AFORESAID FACTS AND CIRCUMSTANCES OF T HE CASE, THE CLAIM OF THE ASSESSEE WITH REGARD TO EXEMPTION OF S URPLUS REALISED ON THE SALE OF IMPUGNED LAND, ON THE LEGAL-CUM-FACTUAL ASPECTS, NEEDS FRESH ADJUDICATION. WE ACCORDINGLY SET ASIDE THIS I SSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDA NCE WITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO T HE ASSESSEE TO ADDUCE NECESSARY EVIDENCE TO SUBSTANTIATE ITS CLAIM THAT LAND SOLD IS NOT A CAPITAL ASSET UNDER S.2(14) OF THE ACT. 14. NOW TURNING TO THE OTHER PLEA OF THE ASSESSEE THAT THE SURPLUS ARISING OUT ON ACCOUNT OF SALE OF LAND INCL UDING CASH COMPONENT IS ELIGIBLE FOR RELIEF UNDER S.54 AND S.54F OF THE ACT, NOTWITHSTANDING THE FACT THAT THE CONSTRUCTION HAS BEEN CARRIED OUT ON THE LAND HELD IN THE NAME OF THE HIS WIFE, ALBEIT JOINTLY, WE RESTOR E THIS ASPECT OF THE MATTER ALSO TO THE FILE OF THE ASSESSING OFFICER FO R FRESH EXAMINATION. IN CASE THE PLEA OF THE ASSESSEE BASED ON APPLICABI LITY OF S.2(14) IS FOUND ACCEPTABLE BY THE ASSESSING OFFICER, THE OTH ER PLEA FOR DEDUCTION UNDER S.54 AND S.54F IS RENDERED ACADEMI C AND INFRUCTUOUS. 15. IN THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE AND FOR THE REASONS DISCUSSED ABOVE, WE SET ASIDE THE I MPUGNED ORDER OF THE CIT(A) AND REMIT THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR ITA NO.295/HYD/2012 SHRI C.RADHAKRISHNA KUMAR, HYDERABAD 13 RE-EXAMINATION OF THE FACTS DE NOVO IN ACCORDANCE W ITH LAW AND AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASS ESSEE. 16 IN THE RESULT, ASSESSEES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 21 ST JUNE, 2016. SD/- SD/- ( D.MANMOHAN ) ( PRADIP KUMAR KEIDA ) VICE PRESIDENT ACCOUNTANT MEM BER DT/- 29 JUNE, 2016 COPY FORWARDED TO: 1. SHRI C.RADHAKRISHNA KUMAR, C/O. SHRI S.RAMA RAO, FLAT NO.102, SHIRYA'S ELEGANCE, NO.3-6-643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500029 2. ASSTT. COMMISSIONER OF INCOME - TAX CIRCLE 6(1), HYDERABAD 3. 4 COMMISSIONER OF INCOME-TAX(APPEALS) IV, HYDERABAD COMMISSIONER OF INCOME-TAX III, HYDERABAD 5 . DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.