The ACIT, 1(1), Bhopal V. Smt. Renu Devi Malpani, Pipariya

ITA 335/IND/2012

• Counselvise Citation: 33522714 RSA 2012
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 05-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K KARAN
• Assessee Lawyers: S S DESH
• Keywords: Capital asset; Competent authority
• Section: 2(14)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO.335/IND/2012 A.Y. 2008-09 ASSTT. COMMISSIONER OF INCOME TAX 1(1), BHOPAL :: APPELLANT VS SMT. RENUDEVI MALPANI PIPRIA PAN ACFPM-8244D :: RESPONDENT CO NO. 72/IND/2012 (ARISING OUT OF ITA NO. 335/IND/2012) SMT. RENUDEVI MALPANI PIPRIA :: OBJECTOR VS ASSTT. COMMISSIONER OF INCOME TAX 1(1), BHOPAL :: RESPONDENT 2 REVENUE BY SHRI V.K. KARAN ASSESSEE BY SHRI S.S. DESHPANDE DATE OF HEARING 25.10.2012 DATE OF PRONOUNCEMENT 25.10.2012 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 31.3.2012 PASSED BY THE LEARNED FIRST APPELLATE AUT HORITY ON THE GROUND THAT ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F RS.67,51,050/- MADE ON ACCOUNT OF CAPITAL GAIN WHER EAS THE ASSESSEE HAS ALSO PREFERRED CROSS OBJECTION CHALLEN GING THE DISMISSAL OF INITIATION OF PROCEEDINGS U/S 147/148 OF THE ACT. 2. DURING HEARING, WE HAVE HEARD SHRI VINAY KARAN, LEARNED SENIOR DR AND SHRI S.S. DESHPANDE, LEARNED COUNSEL FOR THE ASSESSEE. THE CRUX OF ARGUMENTS ON BEHALF OF THE R EVENUE IS THAT THE IMPUGNED LAND IS URBAN LAND ON WHICH NO AGRICUL TURAL ACTIVITY WAS CARRIED OUT BY THE ASSESSEE, THEREFORE , IT CANNOT BE TERMED AS AGRICULTURAL LAND, CONSEQUENTLY, THE LE ARNED CIT(A) IS QUITE UNJUSTIFIED IN DELETING THE ADDITION. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE ASSESSEE STRONGLY DEFENDED THE IMPUGNED 3 ORDER BY SUBMITTING THAT THE IMPUGNED LAND IS AN AG RICULTURAL LAND FOR WHICH OUR ATTENTION WAS INVITED TO THE REV ENUE RECORD BY FURTHER ASSERTING THAT EVEN OTHERWISE THE LAND IS S ITUATED ABOUT 20 KMS FROM THE MUNICIPAL LIMIT AND IS PURELY AN AG RICULTURAL LAND. OUR ATTENTION WAS INVITED TO VARIOUS PAGES O F THE PAPER BOOK. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE ADVERTING FURT HER, WE ARE REPRODUCING HEREUNDER THE RELEVANT PORTION AS AVAIL ABLE IN PARA 4.3 OF THE IMPUGNED ORDER :- 4.3 I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DER AND SUBMISSIONS OF THE APPELLANT. THE ONLY ISSUE T O BE DECIDED IN THE PRESENT CASE IS WHETHER OR NOT THE UNDERLYING PROPERTY SOLD BY THE APPELLANT DURING TH E YEAR UNDER CONSIDERATION WAS A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE ACT. SECTION 2(14) CONTAINS CERTAIN EXCLUSIONS AND CLAUSE (III) THEREO F, PUT IN SIMPLE TERMS, PROVIDES THAT THE RURAL AGRICULTUR AL LAND IN INDIA IS NOT A CAPITAL ASSET. THUS, THE TWO VAR IABLES TO BE SEEN IN THE PRESENT CASE ARE, FIRSTLY, WHETHE R OR NOT THE LAND WAS AGRICULTURAL AND SECONDLY WHETHER OR 4 NOT THE LAND WAS LOCATED AT A DISTANCE OF MORE THAN 8 KMS FROM THE MUNICIPAL LIMITS. PERUSAL OF SALE DEED REVEALS THAT THE LAND SOLD BY THE APPELLANT IS AN AGRICULTURAL LAND AS THE WORDS SUCH AS KRISHI BHUM I HAVE BEEN USED IN THE SALE DEED. MOREOVER, THE P-I I KHASRA PAANCHSHALA ISSUED BY THE RELEVANT AUTHORITI ES HAVE CERTIFIED THE AGRICULTURAL OPERATIONS ON THE S AID LAND. I AM OF THE CONSIDERED OPINION THAT SO FAR AS CONTRADICTION REFERRED IN THE ASSESSMENT ORDER REGARDING DISCLOSURE OF AGRICULTURAL INCOME IN THE RETURN OF INCOME IS CONCERNED, THE SAME MAY LEAD TO ADDITI ON OF AGRICULTURAL INCOME IN THE RESPECTIVE YEARS. HO WEVER, THE NON-DISCLOSURE OF AGRICULTURAL INCOME IN THE RE TURN OF INCOME CANNOT BE THE BASIS FOR DETERMINING THE NATU RE OF LAND. IN OTHER WORDS, THE DISCLOSURE OF AGRICULTUR AL INCOME CANNOT A SOLE ACID TEST TO DETERMINE THE AGRICULTURAL NATURE OF THE LAND. IF THE AGRICULTUR AL OPERATIONS HAD TAKEN PLACE ON THE LAND THEN MERE NO N DISCLOSURE OF AGRICULTURAL INCOME WILL NOT VITIATE THE AGRICULTURAL NATURE OF THE LAND. FOR NON DISCLOSURE OF AGRICULTURAL INCOME, THE APPELLANT MAY HAVE TO FACE 5 CONSEQUENCES AS PER LAW. I AM OF THE CONSIDERED OPINION THAT AN INDEPENDENT AND COMPETENT AUTHORITY HAS CERTIFIED THE AGRICULTURAL OPERATIONS ON THE LA ND SOLD BY THE APPELLANT. IT WAS INCUMBENT UPON THE A.O. T O BRING ON RECORD SUBSTANTIVE EVIDENCES TO PROVE THAT THE LAND SOLD WAS NOT SUBJECTED TO AGRICULTURAL OPERATI ONS OR THAT THE LAND WAS OTHERWISE UNFIT FOR ANY AGRICU LTURAL OPERATION. THE CONCLUSION DRAWN BVY THE A.O. IS NO T BASED ON ANY INDEPENDENT ENQUIRY. IT IS MERELY BAS ED ON SUSPICION. KEEPING IN VIEW THE DOCUMENTARY EVIDENCES PLACED BEFORE ME, I AM OF THE CONSIDERED OPINION THAT THE LAND SOLD BY THE APPELLANT WAS AGRICULTURAL LAND. THE SECOND LIMB THAT IS TO BE SE EN IS THE DISTANCE OF THE LAND FROM MUNICIPAL LIMITS. IT IS NOT THE CASE OF THE A.O. THAT THE LAND IS LOCATED WITHI N THE DISTANCE OF 8 KMS FROM NEAREST MUNICIPAL LIMITS. TH E APPELLANT HAS PLACED BEFORE ME THE COPY OF LETTER O F CHIEF MUNICIPAL OFFICER, PIPARIYA, HOSHANGABAD WHEREIN IT HAS BEEN STATED THAT THE LAND SOLD IS NO T WITHIN THE MUNICIPAL LIMITS AND THE SAME IS UNDER T HE JURISDICTION OF GRAM PANCHAYAT HATHWAS. IT IS SETTL ED 6 PRINCIPLE OF LAW THAT THE RURAL LOCAL SELF GOVERNME NT IS NOT COVERED UNDER THE TERMS MUNICIPALITY, TOWN COMMITTEE, ETC. THEREFORE, I AM CONVINCED THAT THE LAND IS NOT AN URBAN LAND AND THUS THE LAND SOLD IS NOT A CAPITAL ASSET U/S 2(14). HENCE, NO CAPITAL GAIN CHARGEABLE TO TAX CAN BE LEVIED ON THE LAND SOLD BY THE APPELLANT. 4.4 LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE ADDITION MADE BY THE A.O. ON ACCOUNT OF CAPITAL GAIN IS DELETED. 3.1 IF THE CONCLUSION DRAWN IN THE IMPUGNED ORDER, OBSERVATIONS MADE IN THE ASSESSMENT ORDER, EVIDENCE AVAILABLE ON RECORD AND THE ASSERTION MADE BY THE LEARNED RESPECTIVE COUNSE L ARE KEPT IN JUXTAPOSITION AND ANALYSED, FIRSTLY THE LAND IN QUE STION IS SITUATED BEYOND THE PRESCRIBED LIMIT FROM THE MUNIC IPALITY AND EVEN AS PER THE SALE DEED, THE LAND, IN QUESTION, H AS BEEN MENTIONED AS AGRICULTURAL LAND (KRISHI BHUMI). AS PER THE KHASRA PAANCHSALA ISSUED BY THE REVENUE AUTHORITY, AGRICULTURAL OPERATION WAS DONE AND THE AGRICULTURAL PRODUCE LIK E SOYABEAN, WHEAT, ETC. WAS GROWN ON THE LAND. NON-DISCLOSURE O F AGRICULTURAL INCOME, IF ANY, ITSELF IS NOT A PROOF DETERMINING T HE NATURE OF LAND 7 BECAUSE IN SMALL VILLAGES HARDLY ANY SMALL FARMER F ILES ANY INCOME TAX RETURN AND NORMALLY THEY DO NOT HAVE ANY OTHER SOURCE OF INCOME EXCEPT AGRICULTURAL INCOME, DOES N OT MEAN THAT THEIR LAND IS NON-AGRICULTURAL. HOWEVER, IF THE FAC TS ARE OTHERWISE AND ANYTHING IS HIDDEN, THAT IS DEALT WITH AS PER T HE PREVAILING LAW DEPENDING UPON THE FACTS OF EACH CASE. EVEN OTH ERWISE, THE CONCLUSION DRAWN IN THE ASSESSMENT ORDER IS WITHOUT ANY BASIS AND IS PURELY BASED ON SUSPICION. THE DOCUMENTARY EVIDENCE PLACED ON RECORD CLEARLY INDICATES THAT FIRSTLY IT IS AN AGRICULTURAL LAND, SITUATED BEYOND MUNICIPAL LIMIT AND SECONDLY AGRICULTURAL OPERATION WAS CARRIED OUT ON THE IMPUGNED LAND. IN THE ABSENCE OF AGRICULTURAL OPERATION, THERE WAS NO POSSIBILITY OF AGRICULTURAL PRODUCE. HOWEVER, FROM RECORD IT IS ESTABLISHED THA T THE LAND SOLD IS WITHIN THE REVENUE JURISDICTION OF VILLAGE HATHW AS, CONSEQUENTLY, IT IS NOT A CAPITAL ASSET AS DEFINED IN SECTION 2(14) OF THE ACT, THEREFORE, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN IN THE IMPUGNED ORDER AND CONFIRM THE SAME. 3.2 SO FAR AS CROSS OBJECTION OF THE ASSESSEE REGAR DING INITIATION OF PROCEEDINGS U/S 147/148 OF THE ACT IS CONCERNED, KEEPING IN VIEW THE TOTALITY OF FACTS AVAILABLE ON RECORD, WE FIND NO SUBSTANCE IN THE SAME, THEREFORE, SUCH CROSS OBJECTION IS ALS O DISMISSED. 8 FINALLY, THE APPEAL OF THE REVENUE AND CROSS OBJEC TION OF THE ASSESSEE ARE DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 25 TH OCTOBER, 2012. SD SD (R.C.SHARMA) (JOGINDER SINGH ) ACCOUNTANT MEMBER JUDICIAL ME MBER DATED: 25 TH OCTOBER, 2012 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-2525