M. K. Abdul Rahiman, V. DCIT, Ernakulam

ITA 301/COCH/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52270 (ITAT-COCHIN)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 09-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 25-05-2009
• Court: TRIBUNAL
• Department Lawyers: S VIJAYAPRABHA
• Assessee Lawyers: PETER MATHAI CAAR
• Keywords: Capital asset; Fair market value; Difference of opinion; Onus to prove; Change of opinion; Reassessment proceedings
• Section: 143(3); 2(14); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.VIJAYAKUMARAN,JM AND SANJAY ARO RA, AM I.T.A NO.301/COCH/2009 ASSESSMENT YEAR: 2005-06 M.K.ABDUL REHIMAN, MULACKAMPILLY HOUSE, VAZHAKKALA, THRIKKAKARA KOCHI-682021. [PAN:AHBPA 4652J] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2(1), KOCHI. (ASSESSEE-APPELLANT) (REVENUE-RESPONDENT) ASSESSEE BY SHRI PETER MATHAI, CA-AR REVENUE BY MS. S. VIJAYAPRABHA, JR.DR DATE OF HEARING 09/08/2011 DATE OF PRONOUNCEMENT 21/10/2011 O R D E R PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE ARISING OUT OF T HE ORDER BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOCHI (THE CIT(A) FOR SH ORT) DATED 30.3.2009, AND THE ASSESSMENT YEAR (A.Y.) UNDER REFERENCE IS 2005-06. 2. THE PRINCIPAL ISSUE ARISING IN THIS APPEAL IS TH E NATURE OF THE THREE PIECES OF LAND, AGGREGATING TO 110.97 ARES (LISTED AT TABLE B/PG. 2 OF THE ASSESSMENT ORDER) SOLD BY THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR, I.E., A S AN AGRICULTURAL LAND/S OR NON- AGRICULTURAL LAND/S AND, THUS, EXIGIBILITY TO TAX O N THE CAPITAL GAINS ARISING ON THEIR TRANSFER. SO, HOWEVER, BEFORE WE PROCEED TO ADJUDI CATE THIS ISSUE, WE SHALL TAKE UP THE ISSUE OF THE MAINTAINABILITY OF THE IMPUGNED ASSESS MENT, FRAMED U/S. 143(3) R.W.S. 147 OF I.T.A. NO.301 /COCH/2009 (ASSTT. YEAR: 2005-06) 2 THE INCOME-TAX ACT, 1961 ('THE ACT', HEREINAFTER), RAISED BY THE ASSESSEE PER ITS GROUND NO. 1 BEFORE US. THIS IS FOR THE SIMPLE REASON THA T THE SAME CONCERNS THE JURISDICTIONAL ASPECT OF THE ASSESSMENT, AN ABSENCE OF WHICH (JURI SDICTION TO ASSESS) WOULD RENDER THE SAME AS NULL AND VOID AB INITIO . 3. THE BRIEF FACTS IN RELATION TO THE SAID LEGAL IS SUE ARE THAT THE ASSESSEE FILED ITS RETURN FOR THE YEAR U/S. 139(4) OF THE ACT ON 12.5.2006 AT AN INCOME OF ` 8.97 LAKHS, WHICH STOOD PROCESSED U/S. 143(1) VIDE INTIMATION THERE-UNDER D ATED 13.5.2007 (COPY ON RECORD). SUBSEQUENTLY, A NOTICE U/S. 148 WAS ISSUED ON 29.6. 2007, RECORDING THE REASONS TO THE EFFECT THAT THE ASSESSING OFFICER (AO) HAD REASON T O BELIEVE THAT THE ASSESSEE WAS INDULGING IN PURCHASE AND SALE OF LAND, PROFIT AND GAINS FROM WHICH CONSTITUTED A BUSINESS OR AT LEAST AN ADVENTURE IN THE NATURE OF TRADE. T HE ASSESSEE, HOWEVER, HAD DISCLOSED THE SAME AS CAPITAL GAINS SUBJECT TO CONCESSIONAL TAX, SO THAT THERE HAD BEEN AN ESCAPEMENT OF INCOME CHARGEABLE TO TAX. THE ASSESSEE FURNISHED T HE DETAILS OF THE PROPERTY SOLD, WHEREFROM THE AO CAME TO THE CONCLUSION THAT THE PU RCHASE AND SALE OF LAND DID NOT REPRESENT A BUSINESS; BUT ONLY A SALE OR REALISATIO N OF HIS INVESTMENT IN LAND BY THE ASSESSEE; THERE BEING A WIDE TIME GAP BETWEEN THE P URCHASE AND SALE TRANSACTIONS. FURTHER, THE DETAILS ALSO REVEALED THE ASSESSEE TO HAVE NOT DISCLOSED CERTAIN SALE TRANSACTIONS FOR THE YEAR, WHICH STOOD TABULATED BY THE AO AS `TABLE B (IN THE ASSESSMENT ORDER), AS AGAINST `TABLE A TRANSACTION S, DISCLOSED PER THE RETURN OF INCOME. HE, ACCORDINGLY, SOUGHT TO ASSESS THE INCOME ARISIN G THEREON TO TAX. 4. THE ASSESSEES CONTENTION IS THAT HAVING CONCLUD ED THAT HE WAS NOT UNDERTAKING ANY BUSINESS BY WAY OF PURCHASE AND SALE OF LAND, T HE AO OUGHT TO HAVE DROPPED THE PROCEEDINGS, AND NOT MADE ANY FISHING ENQUIRIES. RE LIANCE WAS PLACE BY HIM ON THE DECISION IN THE CASE OF TRAVANCORE CEMENTS LTD. VS. CIT (ASST.) 219 CTR (KER.) 359. THE AO BEFORE WHOM, THE SAID OBJECTION WAS ALSO RAISED, REJECTED THE SAID CONTENTION ON THE GROUND THAT THE IMPUGNED TRANSACTIONS WERE ONLY CON NECTED TRANSACTIONS, AND WHICH FOUND FURTHER APPROVAL BY THE LD. CIT(A), SO THAT T HE ASSESSEE IS IN SECOND APPEAL. I.T.A. NO.301 /COCH/2009 (ASSTT. YEAR: 2005-06) 3 5. A PERUSAL OF THESE TRANSACTIONS, TO EXAMINE THE TAXABILITY FOR WHICH, I.E., UNDER THE PROVISIONS OF THE ACT, THE RE-ASSESSMENT NOTICE STO OD ISSUED, REVEALED THE ASSESSEE TO HAVE FAILED TO REPORT THREE SALE INSTANCES FOR AN AGGREG ATE VALUE OF ` 43.79 LAKHS, WITH THE DECLARED TRANSACTIONS AGGREGATING TO ` 18.06 LAKHS. THERE WAS NO MENTION OF THE SAME IN THE RETURN OF INCOME. THE QUESTION OF THE SAME (OM ISSION) BEING DELIBERATE, AS CONTENDED BY THE REVENUE, OR AS NOT MALA FIDE BUT ONLY BONA FIDE , AS THE ASSESSEE CONTENDS, ON THE BASIS OF THE LAND/S SOLD BEING AGRICULTURAL AND, TH US, NOT A CAPITAL ASSET LIABLE TO TAX UNDER THE ACT, IS IRRELEVANT AS A NOTICE U/S. 148 STANDS ISSUED WITHIN THE FOUR YEARS OF THE RELEVANT ASSESSMENT YEAR. THE LAW IN THE MATTER ST ANDS CLARIFIED BY THE APEX COURT IN THE CASE OF SUN ENGINEERING WORKS (1992) 198 ITR 297 (SC); IT HOLDING AS:- `HELD , REVERSING THE DECISION OF THE HIGH COURT, THAT, I N REASSESSMENT PROCEEDINGS, IT WAS NOT OPEN TO THE ASSESSEE TO SEEK A REVIEW OF CONCLUDED ITEMS UNCONNECTED WITH THE ESCAPEMENT OF INCOME FOR THE PURPOSE OF COMPUTATION OF THE INCOME ESCAP ING ASSESSMENT; AND, THEREFORE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE RESPONDENT WAS NOT ENTITLED TO REAGITATE THE QUESTION OF THE SET O FF OF LOSSES IN THE REASSESSMENT PROCEEDINGS. [EMPHAS IS, OURS] IT IS ONLY MATTERS THAT STAND CONCLUDED B Y/IN ORIGINAL ASSESSMENT PROCEEDINGS THAT WERE HELD BY THE HONBLE COURT AS BARRED FROM BEING REAGITATED AND SUBJECT TO REASSESEMENT PROCEEDINGS. THE SAME, IT WOULD BE RE ADILY SEEN, WOULD ALSO AMOUNT TO A CHANGE OF OPINION, THE CONCEPT OF WHICH, I.E., AS A DISQUALIFICATION, CONTINUES TO HOLD. OF COURSE, IT WOULD BE A DIFFERENT MATTER ALTOGETHER I F THERE IS SOME FRESH INFORMATION QUA SUCH A CONCLUDED MATTER, NOT CONSIDERED EARLIER AND WHICH HAS LEAD TO THE REOPENING OF THE ASSESSMENT. THE DECISION IN THE CASE OF TRAVANCORE CEMENT LTD . (SUPRA) IS SQUARELY INAPPLICABLE AND, RATHER, AGAINST THE ASSESSEE IN-A S-MUCH AS IT IS CLARIFIED THAT ONLY ITEMS UNCONNECTED WITH THE ESCAPEMENT OF INCOME FOR WHICH THE NOTICE IS GIVEN, WOULD BE EXCLUDED, SO THAT THE AO SHALL HAVE TO ISSUE A FRES H NOTICE U/S. 148. THAT IS, THE EXCLUSION, AS CLARIFIED, IS ONLY WHERE THE TWO ITEM S ARE UNCONNECTED AND NOT ALIGNED TO EACH OTHER, UNLIKE IN THE INSTANT CASE. THE SAME AR E CLEARLY CONNECTED, WITH THE AO FINDING THE UNDISCLOSED TRANSACTIONS ONLY FROM THE DETAILS OF THE LAND SALES ENTERED INTO BY THE ASSESSEE FOR THE YEAR. CONSEQUENTLY, THE ASSES SEE FAILS ON ITS GROUND NO. 1. I.T.A. NO.301 /COCH/2009 (ASSTT. YEAR: 2005-06) 4 6. THE PRINCIPAL ISSUE STANDS RAISED BY THE ASSESSE E BY WAY OF AN ADDITIONAL GROUND READING AS UNDER:- THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE SALE PROCEEDS OF LANDS CLAIMED TO BE AGRICULTURAL ATTRACTS CAPITAL GAIN ON THE GROUND T HAT THE SAME IS NON- AGRICULTURAL. 7. BEFORE US, THE MAIN THRUST OF THE ASSESSEES CAS E IS WITH REGARD TO THE LAND/S UNDER REFERENCE BEING NOT A CAPITAL ASSET U/S. 2(14)(III) OF THE ACT. SECTION 2(14) DEFINES THE TERM CAPITAL ASSET FOR THE PURPOSE OF THE ACT, GA INS ON THE TRANSFER OF LAND ARE LIABLE TO TAX UNDER CHAPTER IV-E OF THE ACT, I.E., UNDER THE HEAD CAPITAL GAINS. S. 2(14)(III)(A) EXCLUDES AGRICULTURAL LAND, OTHER THAN THAT COMPRIS ED WITHIN THE JURISDICTION OF A MUNICIPALITY (DEFINED THEREIN), WHICH HAS A POPULAT ION OF NOT LESS THAN 10,000 ACCORDING TO THE LAST CENSUS CARRIED OUT PRIOR TO THE COMMENC EMENT OF THE RELEVANT PREVIOUS YEAR. SECTION 2(14)(III)(B) FURTHER EXCLUDES AGRICULTURAL LAND SITUATE IN ANY AREA, NOT BEYOND 8 KMS. FROM THE LOCAL LIMITS OF A MUNICIPALITY AS SPE CIFIED IN CLAUSE (A) OF S. 2(14)(III), I.E., AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD TO THE EXTENT OF AND SCOPE FOR URBANISATION OF THAT AREA AND OTHER RELEVANT CONSIDERATIONS, SPE CIFY IN THIS BEHALF BY NOTIFICATION IN THE OFFICIAL GAZETTE. TAKING US THROUGH THE RELEVANT NO TIFICATION DATED 06.01.1994 (ANNEXURE IV) OF THE PAPER-BOOK (PB), THE LD. AR SOUGHT TO CL ARIFY THAT THE SAME IN RESPECT OF KOCHI (COCHIN) EXTENDS TO AREAS FORMING A PART OF ELOOR A ND MARADU PANCHAYATHS UP TO A DISTANCE OF 8 KMS. FROM THE MUNICIPAL LIMITS, WHILE THE LAND/S UNDER REFERENCE FALL UNDER THRIKAKKARA PANCHAYATH. THERE HAS BEEN NO FRESH NOT IFICATION BY THE CENTRAL GOVERNMENT SINCE. ON THE BENCH EXPRESSING SURPRISE AT THE SAID EXCLUSION, IN-AS-MUCH AS THE KAKKANAD AREA, WHERE THE LANDS UNDER REFERENCE ARE STATED TO BE SITUATE, IS A WELL DEVELOPED RESIDENTIAL AREA, A SITE OF COMMERCIAL AN D RESIDENTIAL PROJECTS, AS ALSO MENTIONED AT PARA 5.2 OF THE ASSESSMENT ORDER, IT W AS EXPLAINED BY THE LD. AR THAT THE SAID AREA, ALONG WITH THOSE FALLING UNDER THE TRIPUNITHU RA AND KALAMASSERY PANCHAYATHS, WERE SUBJECT TO NOTIFICATION PER THE EARLIER NOTIFICATIO N (NO. 77(E) DATED 6.2.1973) (ANNEXURE XI), SINCE SUPERSEDED BY THE NOTIFICATION DATED 6.1 .1994. THE LD. DR, ON THE OTHER HAND, RELIED ON THE AUTHORITIES BELOW, REITERATING THE RE VENUES STAND OF THE LAND/S UNDER REFERENCE AS BEING A NON-AGRICULTURAL LAND/S. I.T.A. NO.301 /COCH/2009 (ASSTT. YEAR: 2005-06) 5 8. WE HAVE HEARD THE PARTIES, AND PERUSED THE MAT ERIAL ON RECORD. 8.1 WE MAY PROCEED TO ADDRESS THE ASSESSEES CA SE AS MADE OUT BEFORE US. THE QUESTION OF THE THREE LANDS, AS REFERRED TO IN TABL E B (PG. 2) OF THE ASSESSMENT ORDER, AS BEING EITHER GOVERNED OR NOT SO BY THE NOTIFICATION ISSUED BY THE CENTRAL GOVERNMENT U/S. 2(14)(III)(B) OF THE ACT ARISES ONLY ONCE ITS STATU S AS AN AGRICULTURAL LAND/S IS CONFIRMED. IN FACT, THE REVENUE DISPUTING THE ASSESSEES CLAIM OF THE SAME BEING AGRICULTURAL LAND/S, A CLAIM QUA BEING NOT NOTIFIED U/S.2(14)(III)(B) WAS NEITHER M ADE BEFORE NOR CONSEQUENTLY EXAMINED BY THE AUTHORITIES BELOW. AS SUCH, THE ONL Y RELEVANCE OR IMPORT OF THE ARGUMENT ADVANCED BEFORE US BY THE ASSESSEE IN ITS RESPECT I S THAT IN CASE THE LAND/S UNDER REFERENCE IS HELD AS AGRICULTURAL LAND/S, THE MATTER WOULD RE QUIRE BEING RESTORED BACK TO THE FILE OF THE AO FOR AN ADJUDICATION ON MERITS QUA THE ASPECT OF ITS NOTIFICATION U/S. 2(14)(III)(B). 8.2 COMING TO THE CORE ISSUE, I.E., OF WHETHER THE LAND/S UNDER REFERENCE IS AGRICULTURAL LAND/S OR NOT, WE MAY AT THE VERY OUTSET, CLARIFY T HAT THE SAME HAS NOT BEEN DEFINED UNDER THE ACT, BEING ESSENTIALLY A MATTER OF FACT, EVEN A S CLARIFIED BY THE APEX COURT PER A HOST OF DECISIONS IN THE MATTER; IT HOLDING AS UNDER IN THE CASE OF SARIFABIBI MOHMED IBRAHIM AND OTHERS VS. CIT (1993) 204 ITR 631 (SC) RELIED UPON BY THE ASSESSE E ITSELF (ANNEXURE V): WHERE A LAND IS AN AGRICULTURAL LAND OR NOT IS ESSE NTIALLY A QUESTION OF FACT. SEVERAL TESTS HAVE BEEN EVOLVED IN THE DECISIONS OF THIS CO URT AND THE HIGH COURTS, BUT ALL OF THEM ARE MORE IN THE NATURE OF GUIDELINES. THE QUESTION HAS TO BE ANSWERED IN EACH CASE HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THA T CASE. THERE MAY BE FACTORS BOTH FOR AND AGAINST A PARTICULAR POINT OF VIEW. THE COURT HAS TO ANSWER THE QUESTION ON A CONSIDERATION OF ALL OF THEM A PROCESS OF EVALUAT ION. THE INFERENCE HAS TO BE DRAWN ON A CUMULATIVE CONSIDERATION OF ALL THE RELEVANT FACT S. [PG. 631, 637] FURTHER, THE BURDEN OF PROVING THE SAID FACT, I.E., OF THE LAND TRANSFERRED BEING AGRICULTURAL LAND, IS ON THE ASSESSEE, EVEN AS CLAR IFIED BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF KALPETTA ESTATES LTD. VS. CIT (1990) 185 ITR 318 (KER.), ALSO RELIED UPON BY THE ASSESSEE (ANNEXURE III). THIS IS EVEN OTHERWISE IN CONSONANCE WITH THE FUNDAMENTAL RULE THAT THE ONUS TO PROVE ITS CLAIMS OR OF ITS INCOME AS BEING EXEMPT UNDER THE ACT IS ONLY ON THE ASSESSEE. I.T.A. NO.301 /COCH/2009 (ASSTT. YEAR: 2005-06) 6 8.3 HOWEVER, BEFORE WE PROCEED TO EXAMINE THE ISSUE FACTUALLY, IT WOULD BE RELEVANT TO VISIT THE LAW, I.E., AS TO WHAT THE HIGHER COURTS O F LAW HAVE OPINED AS BEING OF RELEVANCE IN DETERMINING THE SAID FACT. THE LOCUS CLASSICUS ON THE SUBJECT IS THE DECISION RENDERED BY THE APEX COURT IN THE CASE OF CWT VS. OFFICER-IN-CHARGE (COURT OF WARDS), PAIGAH (1976) 105 ITR 133 (SC) (ALSO RELIED UPON BY THE ASSESSEE/ REFER ARGUMENT NOTES). THERE HAS BEEN FURTHER CLARIFICATION ON THE SUBJECT BY THE SA ID COURT IN THE CASE OF G.M.OMER KHAN VS. CIT (ADDL.) (1992) 196 ITR 269 (SC) AND SARIFABIBI MOHMED IBRAHIM AND OTHERS VS. CIT (SUPRA). THE HONBLE RAJASTHAN COURT IN THE CASE OF MAHAVIR ENTERPRISES V. UNION OF INDIA (2000) 244 ITR 789 (RAJ.), AFTER AN EXTENSIVE REVI EW OF CASE LAW IN THE MATTER, CONSIDERED THE FOLLOWING AS THE RELEVANT TESTS WHIC H COULD ACT AS GUIDELINES IN DETERMINING THE NATURE OR THE CHARACTER OF LAND AS AGRICULTURAL OR OTHERWISE: (1) THE PROXIMITY OF THE LAND TO BUILDING AND BUILDING SITES. (2) SALE OF LAND FOR NON-AGRICULTURAL PURPOSES. (3) SALE OF LAND BY A MEASURE WITH REFERENCE TO SQUARE YARDS AND NOT ACRES. (4) PRICE BEING SUCH AS TO BE NON-VIABLE, IF THE LAND I S PUT TO AGRICULTURAL USE BY THE PURCHASER, WHILE IT IS MORE CONSISTENT WITH THE PRI CE FETCHED FOR URBAN PLOTS THAN FOR AGRICULTURAL LAND. (5) CHARACTER OF THE LAND. (6) THE PURPOSE FOR WHICH THE LAND WAS HELD BY THE PRES ENT OWNER. A FIRM WHICH HOLDS IT MAY WELL BE PRESUMED TO HAVE HELD IT AS ST OCK-IN-TRADE AND NOT FOR CARRYING OUT AGRICULTURAL OPERATIONS. (7) AS REGARDS USE OF THE LAND FOR AGRICULTURAL PURPOSE S PRIOR TO SALE, MERE USE IN REMOTE PAST THOUGH LAND REVENUE IS PAID, WOULD NOT MAKE IT AGRICULTURAL. (8) MERE CAPABILITY OF BEING USED AS AGRICULTURAL LAND IS NOT ENOUGH. 8.4 WE SHALL, NEXT, EXAMINE THE FACTS OF THE CA SE IN THE LIGHT AND BACKGROUND OF THE FACTS, WHICH, AS WELL AS THE RESPECTIVE CASES OF BO TH THE PARTIES, ARE IN SUFFICIENT DETAIL BORNE OUT BY THE MATERIAL ON RECORD, INCLUDING THE ORDERS BY THE AUTHORITIES BELOW. THE LAND/S UNDER REFERENCE HAS NOT BEEN SHOWN AS USED F OR AGRICULTURAL PURPOSES. THERE IS NOTHING TO SHOW THAT THE LAND/S UNDER REFERENCE WAS BEING CULTIVATED PRIOR TO ITS SALE. THE ONLY EVIDENCE FURNISHED BY THE ASSESSEE IN THIS REG ARD, AS WE GATHER FROM THE ORDERS OF THE AUTHORITIES BELOW AND THE ASSESSEES PAPER-BOOK AND THE STATEMENT OF FACTS FURNISHED BEFORE THE FIRST APPELLATE AUTHORITY, IS THAT OF PA YMENT OF LAND REVENUE AND OF HAVING BEEN I.T.A. NO.301 /COCH/2009 (ASSTT. YEAR: 2005-06) 7 GRANTED ELECTRICITY CONNECTION FROM KSEB FOR AGRICU LTURAL PURPOSES. PAYMENT OF LAND REVENUE IS BY ITSELF NO PROOF OF THE LAND BEING SUB JECT TO AGRICULTURAL OPERATIONS, AND IS AT BEST ONLY A SUPPORTIVE EVIDENCE, WHICH (EVIDENCES) IN ANY CASE ARE TO BE CONSIDERED IN THEIR ENTIRETY. THE ELECTRICITY BILLS ARE FOR PALTR Y SUMS, EXHIBITING NO SIGNIFICANT CONSUMPTION OF POWER. IN FACT, THERE IS NOTHING TO EXHIBIT THAT ANY AGRICULTURAL ACTIVITY WAS CARRIED OUT BY THE ASSESSEE AT ANY TIME; THE LA ND/S UNDER REFERENCE HAVING BEEN OWNED SINCE LONG, NOT TO SPEAK OF DURING THE RELEVA NT PERIOD. AGRICULTURAL ACTIVITY STANDS EXPLAINED BY THE APEX COURT IN THE CASE OF CIT VS. RAJA BENOY KUMAR SAHAS ROY (1957) 32 ITR 466 (SC) (ANNEXURE IIIA/PB) TO BE - AT ITS B OTTOM THE CULTIVATION OF LAND IN THE SENSE OF PLOUGHING AND TILLING OF LAND, SOWING OF S EEDS, PLANTATION, ETC. THE EXPENDITURE OF HUMAN SKILL AND LABOUR IS A PRIMARY INGREDIENT, WHICH, THE ASSESSEE BEING A PERSON OF ADVANCED AGE, WOULD NECESSARILY REQUIRE TO PROCURE FROM OUTSIDE. IN FACT, THE ENTIRE GAMUT OF THE OPERATIONS WOULD YIELD A HOST AND VARIETY OF EVIDENCES, BOTH QUA ACQUISITION AND APPLICATION OF INPUTS (SEEDS, FERTILIZERS, HUMAN LA BOUR) AS WELL AS HARVEST AND DISPOSAL OF OUTPUT, WHILE WE FIND NONE. AGAIN, IT NEEDS TO BE B ORNE IN MIND THAT IT IS NOT THE ASSESSEES PROFESSION AS AN AGRICULTURIST, AS CLAIM ED, WHICH IS IN ISSUE, AND WHICH HE MAY WELL BE, BUT THE ACTUAL PHYSICAL CULTIVATION OF LAN D/S UNDER REFERENCE. RATHER, IN THAT CASE HE WOULD BE SUBJECT TO AGRICULTURAL INCOME-TAX AND AN ASSESSEE UNDER THE SAID ACT. IN FACT, THE AO NOTES THAT NEITHER THE RETURNS OF INCOME FOR THE CURRENT YEAR OR THE PRECEDING YEARS NOR THE CASH FLOW STATEMENT SUBMITTED BORE ANY AGRI CULTURAL INCOME, AND DISMISSED THE ASSESSEES REVISED CASH FLOW STATEMENT, BEARING THE SAME, AS ONLY AN AFTERTHOUGHT. THOUGH THE SAME, TO QUITE AN EXTENT DEBILITATES, IF NOT AC TUALLY DISPROVES THE ASSESSEES CLAIM, THE DISCLOSURE OF AGRICULTURAL INCOME, WE MAY ADD, IS, AGAIN, ONLY A SUPPORTIVE MATERIAL. THIS IS AS THE ASSESSEE IS OWNING VARIOUS LANDS, WHILE I T IS ONLY THE STATUS OF THE LAND/S UNDER REFERENCE AS AT THE TIME OF ITS SALE THAT IS RELEVA NT, SO THAT EVEN THE AGRICULTURAL ACTIVITY THEREON IN THE PAST WOULD BE OF NO AVAIL, WHERE THE SAME HAS SINCE BEEN DISCONTINUED AND THERE HAS BEEN AGRICULTURAL ACTIVITY IN THE RECENT PAST, AS SOUGHT TO BE EMPHASISED BY THE APEX COURT IN THE CASE OF SARIFABIBI MOHMED IBRAHIM AND OTHERS VS. CIT (SUPRA) (REFER PGS. 642, 643). I.T.A. NO.301 /COCH/2009 (ASSTT. YEAR: 2005-06) 8 8.5 IN FACT, BEFORE US, THE MAIN ARGUMENT OF THE LD . AR IN THIS REGARD WAS THAT THE ABSENCE OF AGRICULTURAL ACTIVITY WOULD NOT DISQUALI FYING THE LAND/S FROM BEING AGRICULTURAL LAND/S, QUOTING THE FOLLOWING FROM THE DECISION IN THE CASE OF CWT VS. OFFICER-IN-CHARGE (COURT OF WARDS), PAIGAH (SUPRA):-. THE LAND WHICH IS LEFT BARREN BUT WHICH IS CAPABLE OF BEING CULTIVATED CAN ALSO BE AGRICULTURAL LAND UNLESS THE SAID LAND IS ACTUAL LY PUT TO SOME OTHER NON- AGRICULTURAL PURPOSE LIKE CONSTRUCTION OF BUILDIN GS OR AN AERODROME, RUNWAY ETC. THEREON WHICH ALTERS THE PHYSICAL CHARACTER OF LAN D RENDERING IT UNFIT FOR IMMEDIATE CULTIVATION. IT APPEARS THAT THE LD. AR HAS NOT GONE THROUGH TH E ENTIRE JUDGMENT BY THE APEX COURT, WHICH HAS BEEN CAREFULLY PERUSED BY US. THE HONBLE COURT OPINED THAT IT WAS IMPERATIVE TO SET SOME REASONABLE LIMIT TO THE SCOP E OF THE AGRICULTURAL LAND, AND JUST BECAUSE IT WAS LEFT UNDEFINED BY LAW, IT WOULD NOT BE CORRECT TO GIVE IT AS WIDE A MEANING AS POSSIBLE, PARTICULARLY CONSIDERING THE OBJECTIVE OF THE PROVISION, WHICH IS EVEN MORE SO IN THE CASE OF THE ACT, AS EXCLUSION OF GAINS ON AG RICULTURAL LAND IS TO FACILITATE AGRICULTURE AND NOT ANY TRADE OR INDUSTRY (EVEN AS REFERRED TO BY THE AO AS WELL), AS ALSO FOR THE REASON THAT AGRICULTURE IS A STATE SUBJECT. A READ ING OF THE GIST OF THE DECISION IN THE CASE OF (AT PG. 134), CULLED MAINLY FROM ITS CONCLUSION AT PARAS 143-144, WOULD DISPEL ANY DOUBT IN THE MATTER: THE DETERMINATION OF THE CHARACTER OF THE LAND, AC CORDING TO THE PURPOSE FOR WHICH IT IS MEANT OR SET APART AND CAN BE USED, IS A MATTER WHI CH OUGHT TO BE DETERMINED ON THE FACTS OF EACH PARTICULAR CASE. WHAT IS REALLY REQUIRED T O BE SHOWN IS THE CONNECTION WITH AN AGRICULTURAL PURPOSE AND USER AND NOT THE MERE POSS IBILITY OF USER OF LAND, BY SOME POSSIBLE FUTURE OWNER OR POSSESSOR, FOR AN AGRICULT URAL PURPOSE. IT IS NOT THE MERE POTENTIALITY, WHICH WILL ONLY AFFECT ITS VALUATION AS PART OF ASSETS, BUT ITS ACTUAL CONDITION AND INTENDED USER WHICH HAS TO BE SEEN FO R PURPOSES OF EXEMPTION FROM WEALTH- TAX. ONE OF THE OBJECTS OF THE EXEMPTION IS TO ENCO URAGE CULTIVATION OR ACTUAL UTILIZATION OF LAND FOR AGRICULTURAL PURPOSES. IF THERE IS NEITHE R ANYTHING IN ITS CONDITION, NOR ANYTHING IN THE EVIDENCE TO INDICATE THE INTENTION OF ITS OW NERS OR POSSESSORS SO AS TO CONNECT IT WITH AN AGRICULTURAL PURPOSE, THE LAND COULD NOT BE AGRICULTURAL LAND FOR THE PURPOSES OF EARNING AN EXEMPTION UNDER THE ACT. ENTRIES IN REVENUE RECORDS ARE, HOWEVER, GOOD PRIMA FACIE EVIDENCE. I.T.A. NO.301 /COCH/2009 (ASSTT. YEAR: 2005-06) 9 THE OBSERVATION AS QUOTED BY THE ASSESSEE IS NOT B Y THE APEX COURT BUT BY THE HONBLE ANDHRA PRADESH HIGH COURT [REPORTED AT (196 9) 72 ITR 552 (AP) (FB)], WHOSE DECISION WAS SET ASIDE BY THE APEX COURT, AND THE A RGUMENT ADVANCED ON ITS BASIS (REFER PARA 3 OF THE ARGUMENT NOTES) IS CLEARLY MISLEADING . THE SUBSEQUENT DECISIONS BY THE APEX COURT, AS IN THE CASE OF G.M.OMERKHAN AND SARIFABIBI MOHMED IBRAHIM AND OTHERS VS. CIT (SUPRA), ALSO NOTED EARLIER, ARE AGAIN IN PERFECT HARMONY; THE HONBLE COURT IN THE LATTER CASE GOING ON TO ANALYSE AND RENDER A DECISI ON ON A CUMULATIVE CONSIDERATION OF ALL THE CONTENDING FACTS (REFER PGS. 642, 643). 8.6 THE OTHER RELEVANT INDICA ARE ALSO IN FACT ARRA IGNED COMPREHENSIVELY AGAINST THE ASSESSEE, AND NONE OF WHICH IS DISPUTED. THE LAND/S IS LOCATED IN A WELL-DEVELOPED AND A FURTHER FAST DEVELOPING AREA, WITH SEVERAL HOUSING AS WELL AS INFRASTRUCTURAL PROJECTS HAVING BEEN SET UP, AND MORE IN THE OFFING, I.E., A T THE RELEVANT TIME. THE LAND PRICE IS AT PAR WITH THE URBAN LAND PRICES AND SOLD TO NON-AGRI CULTURISTS, OSTENSIBLY ONLY FOR HOUSING PURPOSES, WITH ONE BEING ACTUALLY SOLD TO THE MANAG ING PARTNER OF A FIRM SETTING UP VILLAS. IN FACT, THE KAKKANAD AREA OF THE THRIKKAKARA PANC HAYATH, I.E. WHERE THE LAND/S IS SITUATE, AS IS WELL KNOWN, THE MOST SOUGHT AFTER PLACE IN TH E REAL ESTATE DEALS. IN FACT, THE ACTUAL AND ONGOING DEVELOPMENT TRANSLATES INTO CONSTANTLY INCREASING PRICES, SO THAT THE CONTINUED MENTION OF LAND/S UNDER REFERENCE IN THE REVENUE RECORD (I.E., ASSUMING SO; THERE BEING NO REFERENCE TO THE SURVEY NOS. IN THE ORDERS OF THE AUTHORITIES BELOW) AS NILAM (PADDY FIELDS), I.E., AS THE LAND OF THE AR EA IS BEING TRADITIONALLY SHOWN THEREIN AS, IS OF NO CONSEQUENCE. AS QUESTIONED BY THE LD. CIT(A), HOW COULD PADDY FIELDS BE USED FOR RESIDENTIAL PURPOSES; THE SAME BEING PROHI BITED BY THE LOCAL LAWS, SO THAT THE IMPUGNED SALE TRANSACTIONS ONLY IMPLY THAT THE SAME (LAND OF THAT AREA) WAS BEING USED FOR NON-AGRICULTURAL PURPOSES FOR A NUMBER OF YEARS . IN FACT, BOTH THE MANNER OF THE LAND SALE (AREA, MEASURE, PRICE, TRANSFEREE) DEPICTS THA T THE LAND WAS NOT SOLD AS AN AGRICULTURAL LAND; THE PRICE FETCHED ITSELF MAKING IT UNFEASIBLE FOR AGRICULTURAL PURPOSE. IN FACT, IT WOULD NOT BE SUFFICIENT IF THE LAND/S WAS ONCE AN A GRICULTURAL LAND, I.E., BEING ACTUALLY CULTIVATED [REFER P.S.M.O. MOHAMED OTHUMAN SAHIB VS. CIT , 31 ITR 480 (MAD.)]. THE LAND/S UNDER REFERENCE WAS, IN OUR OPINION, NOT AN AGRICULTURAL LAND, AT LEAST AT THE RELEVANT I.T.A. NO.301 /COCH/2009 (ASSTT. YEAR: 2005-06) 10 TIME, I.E., OF ITS SALE, AND STANDS RIGHTLY TREATED BY THE REVENUE AS NON-AGRICULTURAL LAND. WE DECIDE ACCORDINGLY. 9. THE ASSESSEES GROUND NO. 2 QUESTIONS THE COMPUT ATION OF CAPITAL GAINS BY CONTESTING THE FAIR MARKET VALUE (FMV) AS ON 1.4.19 81 ADOPTED BY THE AO, I.E., IN-AS- MUCH AND TO THE EXTENT THE LAND WAS PURCHASED PRIOR TO THAT DATE. THE SAID GROUND WAS NOT AGITATED BEFORE US. TWO, AS PER THE ADMITTED F ACTS, THE AO, ON THE BASIS OF THE PURCHASE ( QUA OTHER LANDS) IN DECEMBER, 1986 AT ` 403/- PER ARE, HAS ESTIMATED THE FMV AS ON 1.4.1981AT ` 350 PER ARE, I.E., AT A DISCOUNT OF 13% FOR NEARLY SIX YEARS. THE ADOPTED RATE IS, CLEARLY, VERY FAIR, AND WE DISMISS THE ASSESSEES GROUND AS WITHOUT MERIT. 10. THE THIRD AND THE FINAL GROUND OF APPEAL DISPUT ES THE COMPUTATION OF INTEREST LIABILITY UNDER SECTION 234A AND 234B BY RELYING ON THE DECISION IN THE CASE OF CIT VS. KALPAKA TRANSPORT CO. LTD ., 287 ITR 15 (KER.), EVEN AS THE LD. CIT(A) HAS DI RECTED THE AO TO CHARGE INTEREST UNDER THE SAID SECTIONS BY FO LLOWING THE DECISION CITED BY THE ASSESSEE; IT NOT FILING THE RELEVANT DETAILS BEFORE HIM. BEFORE US, THIS ISSUE WAS AGAIN NOT SPECIFICALLY ARGUED. HOWEVER, WE OBSERVE THAT THE RELIANCE BY THE ASSESSEE ON THE SAID DECISION IS NOT PROPER. IN THE FACTS OF THE SAID C ASE, NO RETURN WAS FILED BY THE ASSESSEE EITHER U/S. 139(1) OR U/S. 139(4) OR IN RESPONSE TO THE NOTICE U/S. 142(1), WHILE IN THE INSTANT CASE THE ASSESSEE HAS FILED THE RETURN U/S. 139(4). WITHOUT DOUBT, THE DATE OF FILING OF THE LETTER CONVEYING THAT THE RETURN FILED EARLI ER BE TREATED AS A RETURN IN RESPONSE TO THE NOTICE U/S. 148, HAS TO BE TREATED AS THE DATE OF C OMPLIANCE OF THE NOTICE U/S. 148, EVEN AS HELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN TH E CITED CASE. SECONDLY, THE DELAYED FILING OF THE RETURN WOULD NOT IMPACT THE LEVY OF I NTEREST U/S. 234B BUT ONLY U/S. 234A. WITH THESE COMMENTS, WE CLOSE THE ISSUE, DIRECTING THE AO TO CHARGE INTEREST IN ACCORDANCE WITH LAW. WE DECIDE ACCORDINGLY. I.T.A. NO.301 /COCH/2009 (ASSTT. YEAR: 2005-06) 11 11. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. SD/- SD/- (N.VIJAYAKUMARAN) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: ERNAKULAM DATED: 21 ST OCTOBER, 2011 GJ COPY TO: 1. M.K.ABDUL REHIMAN, MULACKAMPILLY HOUSE, VAZHAKKA LA, THRIKKAKARA KOCHI - 682021 2. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2 (1), KOCHI. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, KOC HI. 4. THE COMMISSIONER OF INCOME-TAX, KOCHI 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE .