Prakash Shripat Mandale, Nashik V. Deputy Commissioner of Income tax, Nashik

ITA 316/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3681 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 08-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MILIND R CHAHURE
• Assessee Lawyers: LALIT S SANGLE
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 54B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO.316/PUN/2017 / ASSESSMENT YEAR : 2012-13 SHRI PRAKASH SHRIPAT MANDALE, PLOT NO.22, SHRIKRISHNA NIWAS, BEHIND GANESH MARBLE, GANGAPUR ROAD, NASHIK-422 013 PAN : AFFPM1165C .... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, NASHIK. / RESPONDENT ASSESSEE BY : SHRI LALIT S. SANGLE REVENUE BY : SHRI MILIND R. CHAHURE / DATE OF HEARING : 21.02.2019 / DATE OF PRONOUNCEMENT : 22.02.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM: THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF LD. CIT(APPEAL)-1, NASHIK DATED 11.11.2016 FOR THE ASSESSMENT YEAR 2012-13 AS PER FOLLOWING GROUNDS OF APPEAL ON RECORD: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT (A)-I, NASHIK ERRED IN UPHOLDING THE AC TION OF THE ASSESSING OFFICER DISALLOWING DEDUCTION CLAIMED U/S. 54B ON THE GROUND THAT NO AGRICULTURAL ACTIVITIES WERE CARRIED OUT ON THE LAN D SOLD, DISREGARDING THE FACT THAT THE INCOME FROM AGRICULTURAL ACTIVITIES W ERE OFFERED FOR TAXATION BY THE ASSESSES IN THE RETURNS FOR TWO IMMEDIATELY P RECEDING ASSESSMENT 2 ITA NO. 316/PUN/2017 A.Y.2012-13 YEARS I.E. A.Y. 2010-11 AND A.Y. 2011-12 WHICH WERE ON THE RECORD OF THE ASSESSING OFFICER AND WERE ACCEPTED BY HIM. 2. ON THE FACTS AND IN THE CIRCUMSTANCE OF THE CASE AND IN LAW, THE LEARNED CIT(A) -I, NASHIK ERRED IN UPHOLDING THE AC TION OF THE ASSESSING OFFICER DENYING CLAIM OF THE ASSESSEE FOR EXEMPTION U/S. 54B DISREGARDING THE FACT THAT SALE OF THE SAID AGRICULTURAL LAND WA S REFLECTED IN THE COMPUTATION OF TOTAL INCOME FILED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LEARNED CIT(A)-I, NASHIK ERRED IN UPHOLDING THE ACT ION OF THE ASSESSING OFFICER DISALLOWING DEDUCTION CLAIMED U/S. 54B OF THE ACT AS NO OPPORTUNITY WAS GIVEN BY THE ASSESSING OFFICER TO PLACE FURTHER MATERIAL AND EXPLANATION IN SUPPORT OF THE CLAIM UNDER SECTION 5 4B BEFORE DENYING THE SAID CLAIM. 4.THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER OR AM END THE GROUNDS OF APPEAL HERE-IN-ABOVE MENTIONED, EITHER BEFORE OR DU RING THE COURSE OF APPELLATE PROCEEDINGS. 2. AT THE OUTSET, THE APPEAL IS TIME-BARRED BY 3 DAYS AND IN RESPECT THEREOF, THE ASSESSEE HAS FILED CONDONATION PETITION AND AFFIDAVIT STA TING REASONS FOR THE SAID DELAY IN FILING THE APPEAL. WE HAVE PERUSED THE C ONDONATION PETITION AS WELL AS AFFIDAVIT OF THE ASSESSEE AND ARE CONVINCED WITH THE GENUINENESS OF THE GROUNDS STATED BY THE ASSESSEE THEREIN THAT THE DELAY WAS CAUSED DUE TO REASONS BEYOND CONTROL OF THE ASSESSEE. HENCE, THE DELA Y IS CONDONED AND WE PROCEED TO HEAR THE APPEAL ON MERITS. 3. THAT IN THE GROUNDS OF APPEAL FILED, THE ASSESSEE HAS T WO BASIC CONTENTIONS. GROUND NOS. 1 AND 2 REFERS TO DISALLOWANCE OF DEDUCTION CLAIMED U/S.54B OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AND GROUND NO. 3 IS A LEGAL GROUND WHICH IS ANOTHER PART OF C ONTENTION OF THE ASSESSEE THAT SUFFICIENT OPPORTUNITY WAS NOT PROVIDED BY THE ASSESSING OFFICER BEFORE DISALLOWING DEDUCTION CLAIMED U/S.54B OF THE ACT. GROU ND NO.4 IS GENERAL IN NATURE AND HENCE, REQUIRES NO ADJUDICATION. 4. THE FACTS ON RECORD ARE THAT THE ASSESSEE SOLD AGR ICULTURAL LAND SITUATED AT GAT NO. 131, PIMPLEGAON BAHULA ON 28.04.2011 FOR TOTAL C ONSIDERATION OF RS.89,50,000/- ON WHICH THE ASSESSEE HAD DECLARED LONG TE RM CAPITAL GAIN OF 3 ITA NO. 316/PUN/2017 A.Y.2012-13 RS.82,44,512 ON THE SALE OF THIS LAND. THE ASSESSEE HAS CLA IMED DEDUCTION U/S.54B OF THE ACT AS THE ASSESSEE HAS REINVESTED AN A MOUNT OF RS.80,71,480/- FOR PURCHASE OF AGRICULTURAL LAND. THE ASSESSE E WAS ASKED TO PRODUCE EVIDENCE REGARDING THE AGRICULTURAL ACTIVITIES CARR IED OUT ON THE LAND SOLD BY THE ASSESSEE AND ALSO THE NEWLY PURCHASED LAND . THE ASSESSEE PRODUCED THE COPIES OF 7/12 EXTRACTS OF THE LAND SOLD. HO WEVER, ON VERIFICATION OF 7/12 EXTRACTS OF THE LAND SOLD, IT WAS FOUND THAT THERE WAS NO AGRICULTURAL ACTIVITY ON THE SAID LAND AND THE LAND WAS KEPT FALLOW. THE ASSESSING OFFICER OBSERVED THAT FOR THE PURPOSE OF CLAIMING DEDUCTION U/S .54B OF THE ACT, THE ASSESSEE SHOULD INVEST CAPITAL GAIN IN AGRICULTURAL LAND. THE ASSESSING OFFICER DISALLOWED THE DEDUCTION CLAIMED U/S.54B OF THE ACT AND ADD ED RS.80,71,840/- TO THE INCOME OF THE ASSESSEE PRIMA-FACIE ON THE GROUND THAT IT WAS NOT ESTABLISHED BY THE ASSESSEE THAT THE LAND SO LD WAS USED FOR AGRICULTURAL PURPOSE FOR TWO YEARS PRIOR TO THE DATE OF T RANSFER OF SAID LAND AND THAT THE ASSESSEE HAS ALSO PURCHASED THE LAND WITH THE SALE CONSIDERATION WHICH IS ALSO USED FOR AGRICULTURAL PURPOSE. THIS REQUIREMEN T OF SECTION 54B OF THE ACT WAS NOT ESTABLISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND THAT RESULTED IN THE SAID DISALLOWANCE. 5. THAT WHEN THE MATTER TRAVELLED UPTO THE LD. CIT(APPE AL), THE ORDER OF ASSESSING OFFICER WAS UPHELD BY THE LD. CIT(APPEAL) ON THE SAME GROUND THAT EVIDENCES IN CONFORMITY WITH THE LEGAL REQUIREMENTS OF SECT ION 54B OF THE ACT WERE NOT PRODUCED BY THE ASSESSEE. 6. THAT BEING FURTHER AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE US. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE VEHEMENTL Y ARGUED THAT PRINCIPLE OF NATURAL JUSTICE WAS NOT COMPLIED WITH BY THE LD . ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS SINCE SUFFICIENT OPPORTUNITY WERE NOT PROVIDED TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCES REGARD ING LEGAL REQUIREMENTS OF 4 ITA NO. 316/PUN/2017 A.Y.2012-13 SECTION 54B OF THE ACT. IN THIS RESPECT, THE LD. AR INVITES OUR ATTENTION TO PAGE 11 OF THE PAPER BOOK WHEREIN THE COPY OF LETTER IS ATTA CHED WHICH THE ASSESSEE HAS WRITTEN TO THE LD. CIT(APPEAL) AT THE TIME OF HEARING S TATING THAT THE ASSESSING OFFICER PASSED ASSESSMENT ORDER DENYING DEDUCT ION U/S.54B OF THE ACT WITHOUT CALLING FOR ANY EXPLANATION FROM THE ASSESSEE A ND ALSO THAT SUFFICIENT OPPORTUNITY OF BEING HEARD WAS NOT PROVIDED TO T HE ASSESSEE. THE LD. AR FURTHER SUBMITTED THAT THIS ISSUE WAS NOT RESPONDED TO EVEN IN THE ORDER OF LD. CIT(APPEAL). THE LD. AR, THEREFORE, PRAYED THAT THEY HA VE SUFFICIENT EVIDENCE IN SUPPORT OF CLAIM WITH REGARD TO SECTION 54B OF THE ACT AND THEY WOULD LIKE TO DEMONSTRATE THE CASE ON MERITS BEFORE ASSE SSING OFFICER AND PRAYED THAT THE MATTER MAY BE RESTORED TO THE FILE OF ASSESSING OFFICER. THIS PRAYER WAS ALSO IN ACCORDANCE WITH THE GROUND NO.3 IN TH E GROUNDS OF APPEAL BEFORE US. 7. PER CONTRA, THE LD. DR CONTENDED THAT IF THE DEDUC TION IS BEING CLAIMED WITHIN THE ACT, IT IS THE BURDEN ENTRUSTED ON THE ASSESS EE TO PROVE THAT HE IS ELIGIBLE FOR CLAIMING THE DEDUCTION AND THAT REVENUE AUTHORIT Y WHETHER OR NOT ASKED FOR ANY EXPLANATION, IT IS THE DUTY OF THE ASSESSEE TO JUSTIFY HIS CLAIM WITH ALL EVIDENCES AND IN THIS CASE, THE ASSESSEE HAS NOT DONE. BUT FO R THE FACT THAT PRAYER OF THE LD. AR WAS FOR ONLY RESTORING THE MA TTER TO THE FILE OF ASSESSING OFFICER TO WHICH THERE WILL NOT BE ANY IMPACT ON THE REVENUE, THE LD. DR CONCEDED TO THE SUBMISSIONS OF THE LD. AR. 8. WE HAVE PERUSED THE CASE RECORDS AND HEARD THE R IVAL CONTENTIONS. THAT ON THE FACTS AND CIRCUMSTANCES, PRAYER HAS BEEN MADE BY THE LD. AR THAT SUFFICIENT OPPORTUNITY WAS NOT PROVIDED TO THE ASSESSEE T O REPRESENT HIS CASE ON MERITS BEFORE THE ASSESSING OFFICER AND THEREFORE, THE M ATTER MAY BE SET ASIDE BACK TO THE FILE OF ASSESSING OFFICER FOR PROPER ADJUD ICATION. HERE, WE OBSERVE THAT IF ANOTHER OPPORTUNITY IS GIVEN TO THE ASSE SSEE, PRINCIPLE OF 5 ITA NO. 316/PUN/2017 A.Y.2012-13 NATURAL JUSTICE SHALL BE COMPLIED WITH AND AT THE SAME TIME , THERE WILL NOT BE ANY IMPACT ON THE REVENUE SINCE THE MATTER IS TO BE RE -ADJUDICATED. THAT FURTHER ON THE ISSUE THAT PROPER OPPORTUNITY WAS NOT P ROVIDED TO THE ASSESSEE AT THE ASSESSMENT STAGE BY THE LD. ASSESSING OFFICER, THE LD. CIT(APPEAL) HAS NOT DEALT WITH THE GRIEVANCE OF THE ASSESSEE THOUGH IT W AS BROUGHT TO HIS KNOWLEDGE AS PER LETTER DATED 10.11.2016 AS RECEIVED IN T HE OFFICE OF THE LD. CIT(APPEAL) AND ENCLOSED AT PAGE 11 IN THE PAPER BOOK FILED BEFORE US. EVEN IN GROUND NO.3 IN THE GROUNDS OF APPEAL BEFORE US THIS GRIEVA NCE IS STATED BY THE ASSESSEE. IN VIEW OF THE MATTER, WE SET ASIDE THE ORDER OF LD. CIT(APPEAL) AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FO R PROPER ADJUDICATION AFTER PROVIDING SUFFICIENT OPPORTUNITY OF HEARING TO THE ASSESSEE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURP OSES. ORDER PRONOUNCED ON 22 ND DAY OF FEBRUARY, 2019. SD/- SD/- ANIL CHATURVEDI PA RTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 22 ND FEBRUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEAL)-1, NASHIK. 4. THE PR. CIT-1, NASHIK. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 6 ITA NO. 316/PUN/2017 A.Y.2012-13 DATE 1 DRAFT DICTATED ON 21 .0 2 .2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 21 .0 2 .201 9 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER