The Income Tax Officer, Ward-2(2), Panaji., Panaji V. Shri Sameer Raghunath Lad., Ponda

ITA 30/PAN/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2097 (ITAT-PANAJI)
• Duration Of Justice: 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 01-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMESH S MUTAGAR
• Assessee Lawyers: SHRINIVAS NAYAK
• Keywords: Capital asset; Business income; Source of fund
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 30 /P A N/201 6 (ASST. YEAR : 20 1 0 - 1 1 ) ITO, WARD - 2(2), PANAJI GOA. VS. SHRI SAMEER RAGHUNATH LAD, AF - 02, 4 TH FLOOR, DR. ALMEDIDA COMPLEX, PONDA GOA. PAN NO. ABEPL 0959 Q (APPELLANT) (RESPONDENT) C.O.NO. 17/PAN/2016 ( ITA NO. 30 /P A N/201 6 ) (ASST. YEAR : 20 1 0 - 1 1 ) SHRI SAMEER RAGHUNATH LAD, AF - 02, 4 TH FLOOR, DR. ALMEDIDA COMPLEX, PONDA GOA. VS. ITO, WARD - 2( 1 ), PANAJI GOA. PAN NO. ABEPL 0959 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHRINIVAS NAYAK C A. DEPARTMENT BY : SHRI RAMESH S. MUTAGAR - DR DATE OF HEARING : 0 4 / 0 5 /201 6 . DATE OF PRONOUNCEMENT : 04 / 0 5 /201 6 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER ITA NO. 30/PAN/2016 IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), PANAJI - 1 IN APPEAL NO. 89/PNJ/14 - 15 , DATED 08/1 2/2015 FOR THE ASSESSMENT YEAR 2010 - 11 . C . O . NO. 17/PAN/2016 IS A C ROSS O BJECTION FILED BY THE ASSESSEE IN THE REVENUES APPEAL. 2. SHRI RAMESH S. MUTAGAR , DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI SHRINIVAS NAYAK, CA REPRESENTED ON BEHALF OF THE ASSESSEE. 2 ITA NO. 30 /P A N/201 6 & C.O.NO.17/PAN/2016 3 . IT WAS SUBMITTED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT IN THE CROSS OBJECTION, THERE IS A DELAY OF 32 DAYS, FOR WHICH ASSESSEE HAS FILED THE AFFIDAVIT FOR CONDONATION OF DELAY, WHEREIN IT WAS MENTIONED THAT DELAY WAS OCCURRED ON ACCOUNT OF OBTAINING ALL THE RELEVANT DOCUMENTS FROM THE CHARTERED ACCOUNTANT OF THE ASSESSEE, WHO HAD REPRESENTED THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS AND PROVIDING THE SAME TO THE AUTHORIZED REPRESENTATI VE OF THE ASSESSEE, WHO WAS TO REPRESENT THE ASSESSEE BEFORE THE TRIBUNAL. IT WAS THE SUBMISSION TH A T IN THE CROSS OBJECTION, THE ASSESSEE HAS CHALLENGED 144 ASSESSMENT BEING EXPARTE ASSESSMENT AS ALSO THE REOPENING. IT WAS, H OWEVER, SUBMISSION THAT HE D OES NOT WISH TO PRESS THE CROSS OBJECTION. CONSEQUENTLY, CROSS OBJECTION FILED BY THE ASSESSEE STANDS DISMISSED AS NOT PRESSED. 4 . IN THE REV E NUES APPEAL , THE REVENUE HAS CHALLENGED THE ACTION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION ON ACCOUNT OF THE TREATMENT OF THE SALE CONSIDERATION OF THE AGRICULTURAL PROPERTY CLAIMED AS EXEMPT BY THE ASSESSING AND THE ASSESSING OFFICER, WH O HAS CONSIDERED THE SAME AS BUSINESS INCOME. 5. IT WAS FURTHER SUBMITTED IN G ROUND NO.3 THAT THE REVENUE HAS CHALLENGED THE ACTION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE UNEXPLAINED ASSETS BROUGHT TO TAX BY RELYING ON THE REVISED BALANCE SHEET FILED BY THE ASSESSEE , WHEN THE ASSESSEE HAD NOT EXPLAINED THE SOURCE OF FUNDS BEFORE THE ASSESSING OFFICER . 6. IT WAS THE SUBMISSION THAT THE ASSESSEE HAD PURCHASED CERTAIN AGRICULTURAL LAND BETWEEN 2004 AND MARCH 2009 AND ON 09/07/2009, THE ASSESSEE HAD SOLD THE SAID AGRICULTURAL LAND TO M/S. A NE ESH INVESTMENTS (P) LTD. IT WAS THE SUBMISSION THAT THE PURCHASE WAS MADE BY INCURRING AN EXPENDITURE OF 1,76,57,000 / - AND THE SALE CONSIDER ATION WAS 8,15,00,000/ - . IT WAS THE SUBMISSION THAT THE ASSESSEE HAD CLAIMED THE PROFIT ON THE SAID PURCHASE & SALE OF 3 ITA NO. 30 /P A N/201 6 & C.O.NO.17/PAN/2016 AGRICULTURAL PROPERTY AS EXEMPT ON THE GROUND THAT THE PROPERTY WAS AGRICULTURAL PROPERTY AND ON THE GROUND THAT THE PROPERTY WAS BEYOND THE 08KM. LIMIT OF THE MUNICIPALITY. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD TREATED THE PURCHASES OF THE AGRICULTURAL LAND AS A CAPITAL ASSET, INSOFAR AS THE ASSESSEE HAS SHOWN THE SAID PURCHASES AS INVESTMENT. IT WAS THE SUBMISSION THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAD DELETED THE SAME BY HOLDING THAT THE PROPERTY SOLD BEING AN AGRICULTURAL LAND, THE SAME WAS NOT LIABLE TO BE BROUGHT TO TAX AS BUSINESS INCOME. IT WAS THE FURTHER SUB MISSION THAT IN THE COUR SE OF ASSESSMENT, THE ASSESSEE HAD FILED A BALANCE SHEET ORIGINALLY AND SUBSEQUENTLY A REVISED BALANCE SHEET . IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAD BROUGHT TO TAX THE DIFFERENCE BETWEEN ASSETS SIDE OF THE TWO BALANCE SHEETS AS THE UNEXPLAIN ED ASSETS. IT WAS THE SUBMISSION THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAD DELETED THE ADDITION BY HOLDING THAT EVEN THE LIABILITIES SIDE OF THE BALANCE SHEETS WERE TO BE CONSIDERED AND IF THE LIABILITIES ARE CONSIDERED, THEN THERE IS ADEQUATE SOU RCE FOR INCREASE IN THE ASSETS. IT WAS THE SUBMISSION THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS ERRONEOUS AND LIABLE TO THE REVERSED. 7 . IN REPLY, AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT IN RESPECT OF G ROUND NO.2 OF THE REVENUES APPEAL REGARDING THE ADDITION ON ACCOUNT OF PROFIT ON SALE OF THE AGRICULTURAL LAND, THE AGRICULTURAL LAND WAS THE ANCESTRAL PROPERTY OF THE ASSESSEE . IT WAS THE SUBMISSION THAT THE PROPERTY NO. 174/9 WAS ANCESTRAL PROPERTY AND WAS NEVER PART OF THE BUSINESS OF THE ASSESSEE. THE VARIOUS RELATIVES HAD RIGHTS IN THE SAID ANCESTRAL LAND , AND AS THE ASSESSEE WAS IN THE BUSINESS OF DEVELOPING REAL ESTATE & CONSTRUCTION, THE RELATIVES REQUESTED THE ASSESSEE TO ASSI S T THEM IN SELLING THE SAID AGRICULTURAL LAND . IT WAS THE SUBMISSION THAT ON THE SAID AGRICULTURAL PROPERTY, THE ASSESSEES GRAND - FATHER USED TO CULTIVATE PULSES AND ALSO HAD DEVELOPED COCONUT TREE FARM. HE DREW OUR ATTENTION TO PAGE NO.73 OF THE PAPER 4 ITA NO. 30 /P A N/201 6 & C.O.NO.17/PAN/2016 BOOK, WHICH IS A COPY OF FORM I & XIV TO SHOW THAT THE SAID PROPERTY WAS THE ANCESTRAL PROPERTY. HE ALSO DREW OUR ATTENTION TO PAGE NOS. 74 TO 86 WHICH IS A COPY OF THE AFFIDAVIT FILED BY THE ASSESSEE EXPLAINING THE HISTORY OF THE SAID LAND. IT WAS THE SUBMISSION THAT THE DETAILS OF THE SO - CALLED PURCHASE OF THE SAID LAND FROM VARIOUS RELATIVES HAD BEEN EXTRACTED BY THE ASSESSING OFFICER IN PAGE NO.16 OF ITS ORDER. IT WAS THE SUBMISSION THAT THE ENTRIES CLEARLY SHOW ED THAT NO CASH CONSIDERATION WAS PAID TO MOST OF THE RELATIVES. AF TER CONSOLIDATING ALL THE RELATIVES WHO HAD RIGHTS IN THE SAID LAND HE HAD RECORDED THE SAME IN HIS BOOKS AS THE BUYERS WERE WILLING TO DEAL ONLY WITH THE ASSESSEE AS IT WAS PRACTICALLY IMPOSSIBLE TO NEGOTIATE AND REACH A CONSENSUS WITH ALL THE RELATIVES. T HE ASSESSEE HAD SOLD THE SAID LAND TO M/S. ANEESH INVESTMENTS (P) LTD. IN JULY 2009 FOR A CONSIDERATION OF 8,09,10,000/ - IT WAS THE SUBMISSION THAT EVEN TODAY, THE PROPERTY REMAINS AGRICULTURAL PROPERTY. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICE R HAD , ON THE BASIS OF A STATEMENT RECORDED FROM THE ASSESSEE BY THE DDIT (INVESTIGATION), PANAJI , TREATED THE SALE OF THE AGRICULTURAL LAND AS THE BUSINESS INCOME OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THE FACT REMAINS THAT THE PROPERTY WAS AN ANCESTRAL PROPERTY OF THE ASSESSEE , WHICH WAS OWNED BY MULTIPLE OWNERS. THE ASSESSEE HAD CONSOLIDATED THE OWNERSHIP AND HAD SOLD THE AGRICULTURAL LAND AT THE BEHEST OF THE RELATIVES , WHO WERE THE CO - OWNERS AND THE SAME REMAINS AGRICULTURAL LAND EVEN TODAY. IT WAS THE SUBMISSION THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS FOLLOWED THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. DEBBIE ALEMAO , RE P O RTED IN (2011) 196 TAXMANN.COM 230 (BOM.) AS ALSO THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ITO VS. M/S. PISCES PROPERTIES DEVELOPERS IN ITA NO. 106/PNJ/2015, DATED 08/09/2015 , WHEREIN IT HAS BEEN HELD THAT ONCE A PROPERTY IS HELD TO BE AN AGRICULTURAL PROPERTY BEYOND 8 KM. FROM THE NEAREST MUNICIPAL LIMITS, THE AGRICULTURAL PROPERTY CANNOT BE TERMED AS A CAPITAL ASSET AND PROFIT ON SALE OF THE SAME CANNOT BE TAXED. IT WAS THE FURTHER SUBMISSION 5 ITA NO. 30 /P A N/201 6 & C.O.NO.17/PAN/2016 THAT AS A DEVELOPER THE ASSESSEE WOULD OBVIOUSLY HAVE PREFERRED TO DEVELOP THE SAID LAND AND SELL IT IN BITS AND PIECES WITH CONSTRUCTION AND IT WOULD HAVE HELPED HIS BUSINESS BUT THE FACT THAT THE FAMILY MEMBERS WANTE D TO S ELL THE AGRICULTURAL LAND AS IT IS , AND IT WAS ONLY ON THIS GROUND AND THE GREATER INTEREST OF THE FAMILY MEMBERS, THE ASSESSEE HAD AGREED AND STARTED THE PROCESS OF FI N DING THE BUYERS FOR THE PROPERTY, WHO HAD DEMANDED THAT THE PROPERTY FIRST MUST BE CONSOLIDATED FROM ALL THE SELLERS , WHICH WAS DONE BY THE ASSESSEE. 8 . REVENUE HAS NOT BEEN ABLE TO DISLODGE THESE FINDINGS OF FACT AS HAS BEEN RECORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS). IN FACT, A PER USAL OF THE ASSESSMENT ORDER SHOWS TH A T THE ASSESSEE HAS CHALLENGED THE REOPENING OF THE ASSESSMENT UNDER SEC. 148 AND THOUGH, THE OBJECTIONS RAISED BY THE ASSESSEE HAVE BEEN DISPOSED OF BY THE ASSESSING OFFICER BY PASSING A SPEAKING ORDER ON 19/03/2014 AS EARLY ON 13/03/2014 , T HE ASSESSING OFFICER PROP O SE S TO COMPLETE THE ASSESSMENT EXPARTE UNDER SEC. 144 READ WITH SEC. 147 , T HIS CLEARLY SHOWS THAT THE ASSESSING OFFICER HAD ALREADY PRE - DETERMIN ED THE INTENTION TO TREAT THE SAID TRANSACTION AS A BUSINESS INCOME AND ONCE IT IS PRE - CONCEIVED , NO AMOUNT OF EVIDENCE PRODUCED BY THE ASSESSEE TO SUPPORT HIS CLAIM THAT THE SAID TRANSACTION INVOLVING THE SALE OF AGRICULTURAL LAND WAS NOT LIABLE TO TAX , WAS CONSIDERED BY THE ASSESSING OFFICER. IN ANY CASE, AS THE REVENUE HAS NOT BEEN ABLE TO DISLODGE THE FINDINGS ARRIVED AT BY THE COMMISSIONER OF INCOME TAX (APPEALS) ON THE BASIS OF THE EVIDENCES PRODUCED BY THE ASSESSEE AND AS IT IS NOTICED THAT THE CO MMISSIONER OF INCOME TAX (APPEALS) FOLLOWED THE PRINCIPLES LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF DEBBIE ALEMAO (SUPRA) AND THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF M/S. PISCES PROPERTIES DEVELOPERS (SUPRA) TO HOLD THAT THE PROFITS ON THE SALE OF AGRICULTURAL LAND CANNOT BE TREATED AS BUSINESS INCOME OF THE ASSESSEE, IS FOUND TO BE ON A RIGHT FOOTING AND 6 ITA NO. 30 /P A N/201 6 & C.O.NO.17/PAN/2016 DOES NOT CALL FOR ANY INTERFERENCE. IN THE RESULT, GROUND NO.2 OF THE REVENUE STANDS DISMISSED. 9 . IN REGARD TO GROUND NO.3 REGARDING THE UNEXPLAINED ASSETS BROUGHT TO TAX, IT WAS SUBMITTED BY THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE THAT AT THE OUTSET IN THE SHOW - CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER , WHICH HAS BEEN EXTRACTED BY THE ASSESSING OFFICER AT PAGE NO.5 OF THE ASSESSMENT ORDER, DOES NOT CONTAIN THIS ISSUE AND CONSEQUENTLY, AS THE ADDITION ITSELF IS BEYOND THE ISSUE RAISED IN THE SHOW - CA U SE NOTICE , THE ADDITION WAS LIABLE TO BE DELETED. IT WAS FURTHER SUBMITTED THAT IN ANY CASE, WHEN CONSIDERING TWO DIFFERENT BALANCE SHEETS, THE LIABILITIES SIDE OF THE BALANCE SHEETS WERE ALSO TO BE CONSIDERED WHEREAS THE ASSESSING OFFICER HAS ONLY CONSIDERED ASSETS SIDE . THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE DREW OUR ATTENTION TO PAGE NO. 105 OF THE PAPER BOOK WHICH WAS COMPARISON OF THE SAID TWO BALANCE SHEETS. IT WAS THE SUBMISSION THAT IT IS THE SAME COMPARISON WHICH WAS PRODUCED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). IT WAS THE SUBMISSION THAT THE REVISED BALANCE SHEET CONTAINED CORRECT FIGURES INSOFAR AS ALL THE ASSETS HAD NOT BEEN CORRECTLY ENTERED IN THE ORIGINAL BALANCE SHEET, SO ALSO IN RESPECT OF THE LIABILITIES. IT WAS THE SUBMISSION THAT EVEN THE OPENING BALANCE OF THE CAPITAL ACCOUNT H AD WRONGLY BEEN TAKEN WHICH ITSELF RESULTED IN A DIFFERENCE OF NEARLY 6.87 CRORES. IT WAS THE SUBMISSION THAT THE INCREASE IN THE ASSETS IN THE REVISED BALANCE SHEET IS ALSO SUPPORTED BY THE CORRESPONDING INCREASE IN THE LIABILITIES IN THE REVISED BALANCE SHEET AND THE SAID LIABILITIES HAVE NOT BEEN DISPUTED BY THE REVENUE . IT WAS THE SUBMISSION THAT AFTER CONSIDERING THE ANALYSIS OF THE ASSETS AND LIABILITIES AS PER THE ORIGINAL BALANCE SHEET AND THE REVISED BALANCE SHEET, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED THE ADDITION. IT WAS THE SUBMISSION THAT THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS LIABLE TO BE UPHELD. 7 ITA NO. 30 /P A N/201 6 & C.O.NO.17/PAN/2016 10 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PERUSAL OF THE ANALYSIS OF ORIGINAL AND REVISED BALANCE SHEET CLEARLY SHOWS THAT THE ASSETS HAVE INCREASED IN THE REVISED BALANCE SHEE T . THESE INCREASE IN ASSETS IS CLEARLY SUPPORTED BY THE CORRESPONDING LIABILITIES IN THE REVISED BALANCE SHEET. A PERUSAL OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE GENUINENESS OF THE LIABILITIES IN THE REVISED BALANCE SHEET. WHEN CONSIDERING TWO DIFFERENT BALANCE SHEETS, ONE CANNOT CONSIDER ONLY ONE SIDE OF THE BALANCE SHEET BEING EITHER THE ASSETS SIDE OR THE LIABILITIES SIDE INDEPENDENTLY. THEY ARE TWO SIDES OF THE SAME COIN. THE ASSETS SIDE AND THE LIABILITIES SIDE GO TOGETHER . FURTHER, THE REVENUE HAS NOT BEEN ABLE TO DISLODGE THE FINDINGS OF FACT AS HAS BEEN EXTRACTED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN PARA 6.2, PAGE 22 OF HIS ORDER ON THIS ISSUE. THIS BEING SO, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS). IN THE RESULT, GROUND NO.3 STANDS DISMISSE D. 1 1 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED AS NOT PRESS ED . ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 0 4 TH DAY OF MAY , 201 6 AT GOA . S D / - S D / - (N.S.SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 0 4 TH MAY , 201 6 . VR/ - 8 ITA NO. 30 /P A N/201 6 & C.O.NO.17/PAN/2016 COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. A) ITO, WARD - 2(2), PANAJI GOA. B) ITO, WARD - 2(1), PANAJI GOA. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI