Hiral Somabhai Prajapati, Ahmedabad V. The Income Tax Officer, Ward-7(4), Ahmedabad

ITA 494/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6003 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 28-04-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 14-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA SURESH HARDASANI
• Keywords: Capital asset; Tangible material
• Section: 143(3); 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENCH AHMEDABAD BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ITA NOS. 494 & 495/AHD/2014 (ASSESSMENT YEARS: 200 6-07 & 2008-2009) HIRAL SOMABHAI PRAJAPATI A/2, NANDBAUGH SHOPPING CENTRE, BHIMJIPURA, NAVA VADAJ, AHMEDABAD-380013 APPELLANT VS. I.T.O., WARD 7(4), AHMEDABAD RESPONDENT PAN: ABVPP8912C /BY ASSESSEE : NONE /BY REVENUE : SMT. ANITA SURESH HARDASANI, SR. D.R. /DATE OF HEARING : 28.04.2017 /DATE OF PRONOUNCEMENT : 05.05.2017 ORDER PER S. S. GODARA, JUDICIAL MEMBER THESE TWO ASSESSEES APPEALS FOR ASSESSMENT YEARS 2 006-07 & 2008-09 ARISE AGAINST THE CIT(A)-XXI, AHMEDABADS SEPARATE ORDERS; BOTH DATED 24.01.2014, IN CASES NOS. CIT(A)-XXI/331/12-13 & CI T(A)-XXI/332/12-13; ITA NOS. 494 & 495/AHD/2014 (HIRAL S. PRAJAPATI VS . ITO) A.YS. 2006-07 & 2008-09 - 2 - RESPECTIVELY, IN PROCEEDINGS U/S. 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. CASES CALLED TWICE. NONE APPEARS AT ASSESSEES BEH EST DESPITE SERVICE OF RPAD NOTICES. HER AUTHORIZED REPRESENTATIVE HAS MOVED AN ADJOURNMENT PETITION DATED 24.04.2017. THERE IS NOBODY TO PURS UE THE SAME IN THE COURSE OF HEARING. WE THUS DECLINE THIS ADJOURNMENT PETIT ION. THESE TWO ASSESSEES APPEALS ARE TAKEN UP FOR ADJUDICATION ON MERITS. 2. THE ASSESSEE APPEARS TO BE RAISING TWO IDENTICAL SUBSTANTIVE GROUNDS IN HER INSTANT AS MANY APPEALS. THE FIRST ONE PLEADS THAT THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN REJECTING HER CHALLENGE TO VALI DITY OF REOPENING. HER SECOND SUBSTANTIVE GROUND CHALLENGES CORRECTNESS OF BOTH THE LOWER AUTHORITIES ACTION MAKING LONG TERM CAPITAL GAIN A DDITIONS OF RS.35,99,885/- & RS.19,31,573/-; RESPECTIVELY ARISING FROM TRANSFE R OF HER CO-OWNED LAND IN BLOCK NO.504, BHADAJ IN ABOVE FORMER ASSESSMENT YEA R AND BLOCK NO.512 OF THE VERY REVENUE ESTATE IN LATTER ASSESSMENT YEAR. 3. WE STRAIGHTWAY COME TO MERITS OF THE CASE FIRST . THE DEPARTMENT CARRIED OUT A SEARCH IN CASE OF ONE SHRI SOMABHAI A MBALAL PRAJAPATI ON 08.12.2009. IT CAME ACROSS VARIOUS DOCUMENTS / LOO SE PAPERS INDICATING TRUE PRICE OF ASSESSEES CO-OWNED LANDS HEREINABOVE TO B E OF RS.2,55,64,500/- AND RS.1,17,99,000/- INSTEAD OF THE ONE SHOWN IN THE SA LE DOCUMENT CONCERNED TO THE TUNE OF RS.11,10,900/- AND RS.5,14,000/-. ALL THIS CULMINATED IN ISSUANCE OF SECTION 147 NOTICES. THE ASSESSING OFFICER THER EAFTER FRAMED THE RE- ASSESSMENTS IN QUESTION MAKING THE ABOVE IDENTICAL ADDITION OF LONG TERM CAPITAL GAINS. ITA NOS. 494 & 495/AHD/2014 (HIRAL S. PRAJAPATI VS . ITO) A.YS. 2006-07 & 2008-09 - 3 - 4. THE ASSESSEE PREFERRED SEPARATE APPEALS. IT EME RGES THAT SHE CHALLENGED VALIDITY OF REOPENING AND THE ABOVE IMPU GNED ADDITION OF CAPITAL GAINS. LEARNED CIT(A) DECLINES BOTH THE PLEAS. HI S IDENTICAL DISCUSSION ON THE ABOVE LATTER ISSUE READS AS UNDER: 6.1 I AM NOT INCLINED WITH THE RATIO OF AAKAS H DEEP FARMS PVT. LTD. ORDER FOR AY 09-10 AS DECIDED BY THE CIT(A) VI AHME DABAD VIDE ORDER DATED 28.8.12 IN APPEAL NO. 205. THE RATIO IS NOT B INDING ON OTHER APPEAL AUTHORITIES AND THE SAID DECISION WAS NOT ACCEPTED BY DEPARTMENT. NO OTHER SUCH CASE LAWS OF HIGHER APPELLANT AUTHORITIES I.E. ITAT, HIGH COURT OR SUPREME COURT WAS SUBMITTED OR RELIED ON BY APPELLA NT. THE FACTS OF THE AAKASH DEEP FARMS PVT. LTD. FOR AY 2009-10 WERE ENT IRELY DIFFERENT THEN THE FACTS OF APPELLANT. THE BASIC DIFFERENCE IS, IN THAT CASE APPELLANT RIGHT FROM THE FILLING OF RETURN ON INCOME DISPUTED THAT THE TRANSACTION OF SALE OF LAND THOUGH DISCLOSED IS RELATED TO AGRICULTURAL LA ND. FURTHER THE AO IN REMAND REPORT SUBMITTED VARIOUS' DETAILS RELATED TO POPULATION OF BOTH THE VILLAGE I.E. KANITI AND TELAV OF SANAND. NO SUCH DE TAIL OF POPULATION IS SUBMITTED BY APPELLANT. IN SECTION 2(14) OF THE ACT , THERE ARE TWO MUTUALLY EXCLUSIVE CONDITIONS I.E. 2(14)(III)(A) AND 2(14)(I II)(B). AS PER 2 (14) (III) (A) IF THE POPULATION OF ANY AREA COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY IS MORE THAN 10,000 THEN THE SAME IS N OT AGRICULTURAL LAND. IN 2(14)(III)(B), THE OTHER CONDITION, IF THE AREA IS WITHIN 8 KMS. OF THE MUNICIPAL LIMIT FOR WHICH A NOTIFICATION IS PUBLISH ED, THEN THE SAME IS NOT AGRICULTURAL LAND. IT IS THEREFORE, THE POPULATION OF THE VILLAGE BHADAJ BEFORE THE TRANSFER OF LAND HAS TO BE CONSIDERED AND IF TH E SAME IS MORE THAN 10000, THEN 2(14)(III)(A) IS APPLICABLE. THE APPELLANT HAS NOT FILED ANY DETAIL OF SUCH CENSUS. THE APPELLANT ONLY RELIED ON SECTION 2(14)(III)(B) WITH THE NOTIFICATION. THE CONDITION OF NOTIFICATION IN OFFI CIAL GAZETTE IN RESPECT OF MUNICIPALITY IS NOT THERE IN SECTION 2(14)(III)(A). IT IS ONLY 'JURISDICTION' OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNI CIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS POP ULATION OF NOT LESS THAN TEN THOUSAND ACCORDING TO LAST PRECEDING CENSU S OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR.' NOWHERE, THE MUNICIPALITY OR CANTONMENT WAS SPECIFI CALLY DEFINED AS NOTIFIED IN GAZETTE. IN THE CASE OF SECTION 2(14)(I II)(B), THE LEGISLATURE SPECIFICALLY CONDITIONED / DEFINED THE MUNICIPALITY LINKED WITH DISTANCE. AS PER THE SETTLED LEGAL PROPOSITION, WHEN THE LEGISLA TURE SPECIFICALLY PROVIDE SUCH CONDITIONS/ DEFINITIONS THEN THE SAME IS LIMIT ED TO THAT SECTION AND IT CANNOT BE EXTENDED BEYOND THAT PROVISIONS. 6.2 FURTHER, IN SECTION 2(14)(III)(B) THE LEGISLATU RE USED THE WORD 'MAY' FOR THE PUBLICATION OF NOTIFICATION BY CENTRAL GOVERNME NT. THIS DOES NOT EXCLUDE ANY OTHER NOTIFICATION ISSUED BY STATE GOVT. AND PU BLISHED IN RESPECTIVE STATE GOVT. GAZETTE. THERE IS DELEGATION OF POWER IN RESP ECT OF URBAN DEVELOPMENT ITA NOS. 494 & 495/AHD/2014 (HIRAL S. PRAJAPATI VS . ITO) A.YS. 2006-07 & 2008-09 - 4 - AS PER THE CONSTITUTION OF INDIA. IT IS THIS REGARD , THE NOTIFICATION DATED 20.077.2006 PUBLISHED IN THE GUJARAT GOVT. GAZETTE, EXTRAORDINARY VOLUME XLVII DATED 20.07.2006 HAS SAME LEGAL SANCTITY AS P UBLISHED BY CENTRAL GOVT. IN THIS NOTIFICATION AT PARA 1 THE POWERS SO DELEGATED ARE MENTIONED WHILE AT PARA 3 THE REASONS WERE ALSO MENTIONED TO INCLUDE 'BHADAJ' INTO THE MUNICIPAL LIMIT OF AHMEDABD. THE REASONS ARE AS FOL LOWS: 'AND WHEREAS HAVING REGARD TO THE POPULATION OF THE AREA, THE DENSITY OF THE POPULATION, THE REVENUE GENERATED FOR LOCAL ADMINISTRATION, THE PERCENTAGE OF EMPLOYMENT IN NON-AGRICULTURAL ACTIVI TIES..... CITY OF AHMEDABAD.' 6.3 THE ABOVE REASONING IS WELL SUPPORTED BY R ATIO OF VARIOUS CASE LAWS AS FOLLOWS: '(A) HON'BL MADRAS HIGH COURT IN THE CASE OF S. HIDHAYAT HULLAH SAHIB V. CIT(1986) 158 ITR 20 HELD THAT POPULATION LIMIT APP LIES TO MUNICIPALITY AS A WHOLE AND NOT TO AREA WITHIN THE MUNICIPALITY. (B) HON'BLE DELHI HIGH COURT IN REFERENCE TO RURAL AREAS OF DELHI/NCR (AFTER THE NOTIFICATION NO. 9447 DATED 06.01.94] IN VARIOUS CASES HELD AS FOLLOWS: [I] PROVISIONS OF SECTION 2(14)(III)(A) ARE APPLICA BLE TO RURAL AREA OF UNION TERRITORY OF DELHI AND CAPITAL GAIN ARISING O N TRANSFER OF AGRICULTURAL LAND IN A IN A VILLAGE IN SUCH TERRITO RY IS CHARGEABLE TO TAX. CIT(A) V/S. LAXMAN (2002) 124 TAXMAN 596 CIT V/S. RANJITSINGH (2004) 136 TAXMAN 440 [II] CAPITAL GAIN ARISING ON TRANSFER OF AGRICULTUR AL LANDS IN VILLAGE NANGAL DEWAT, DELHI IS CHARGEABLE TO TAX. [III] FARIDABAD ADMINISTRATION COMPLEX IS A 'MU NICIPALITY' WITHIN THE MEANING OF SECTION 2(14)(III)(A) AND HENCE, AGRICUL TURAL LAND WITHIN SUCH AREA IS A CAPITAL ASSET. [IV] DEOKINANDAN & SONS V. CIT [2001] 115 TAXMA N 513 IT IS THEREFORE, BOTH THESE GROUND OF APPEAL NOS. 3 AND 4 ARE WITHOUT SUBSTANCE AND MERIT AND REQUIRED TO BE REJECTED. 5. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIV E. CASE FILE PERUSED. THE SOLE ISSUE ON MERITS IS AS TO WHETHER THE ASSESSEES LANDS IN ITA NOS. 494 & 495/AHD/2014 (HIRAL S. PRAJAPATI VS . ITO) A.YS. 2006-07 & 2008-09 - 5 - QUESTION ARE CAPITAL ASSET OR NOT U/S.2(14) OF THE ACT. IT HAS COME ON RECORD THAT ASSESSEES VILLAGE BHADAJ MERGED WITH THE AHME DABAD MUNICIPALITY IN GUJARAT GOVERNMENTS NOTIFICATION DATED 20.07.2006. THIS MAKES BOTH THE LOWER AUTHORITIES TO TREAT THE ABOVE LANDS AS CAPIT AL ASSET. WE PROCEED IN THIS BACKDROP TO OBSERVE THAT THE MINISTRY OF FINANCE, D EPARTMENT OF REVENUE HAD ISSUED A GAZETTE NOTIFICATION DATED 06.01.1994 U/S. 2(14)(III)(B) OF THE ACT SPECIFYING DISTANCE LIMITS FROM AHMEDABAD AND GANDH INAGAR MUNICIPALITIES TO BE 8 & 4 KMS.; RESPECTIVELY. THIS IS NOT THE REVENU ES CASE THAT THE LANDS IN QUESTION DO COME WITHIN EITHER OF THE SAID SPECIFIE D DISTANCES. ITS ONLY CASE IS THAT THE SAME WERE WELL WITHIN THE MUNICIPAL LIM ITS AFTER THE ISSUANCE OF ABOVESTATED 2006 NOTIFICATION. IT IS EVIDENT IN TH IS BACKDROP THAT THIS TRIBUNAL IN ITO VS. AKASH DEEP FARMS ITA NO.2564 & 2138/AHD/ 2012 DECIDED ON 11.08.2015 HAS ALREADY UPHELD CIT(A)S CONCLUSION T HEREIN THAT THIS 2006 NOTIFICATION DOES NOT IPSO FACTO TURN THE CONCERNED REVENUE ESTATES LAND AS CAPITAL ASSET IN ABSENCE OF IDENTICAL NOTIFICATIONS ALIKE THE ONE DATED 06.01.1994 (SUPRA). ANOTHER CO-ORDINATE BENCH ENDO RSES THE VERY VIEW IN GANDABHAI A. MAKWANA VS. DCIT IT(SS)A NOS. 8, 9, 20 & 21/AHD/2012. IT IS THUS CLEAR THAT ASSESSEES LANDS SOLD WERE NOT C APITAL ASSETS U/S.2(14) OF THE ACT BEING AGRICULTURAL AND NOT COVERED UNDER THE AB OVESTATED NOTIFICATION ISSUED WAYBACK IN THE YEAR 1994. LEARNED DEPARTMEN TAL REPRESENTATIVE FAILS TO REBUT ALL THESE FACTUAL AND LEGAL DEVELOPMENTS. WE THEREFORE CONCLUDE THAT NO CAPITAL GAINS HAD ACCRUED TO THE ASSESSEE SO AS TO BE ASSESSED AS LONG TERM CAPITAL GAINS IN THE TWO ASSESSMENT YEARS BEFORE US RESULTING IN THE IMPUGNED ADDITIONS UNDER CHALLENGE. THE SAME ARE ACCORDINGL Y DIRECTED TO BE DELETED. THE ASSESSEES SECOND SUBSTANTIVE GROUND ON MERITS IS ACCEPTED. 6. THIS LEAVES US WITH THE ASSESSEES LEGAL GROUND CHALLENGING THE VALIDITY OF REOPENING. THE ABOVE NARRATED CIRCUMSTANCES MAK E IT CLEAR THAT THE DEPARTMENT HAD INDEED COME ACROSS TANGIBLE MATERIAL INDICATING THE ABOVE ITA NOS. 494 & 495/AHD/2014 (HIRAL S. PRAJAPATI VS . ITO) A.YS. 2006-07 & 2008-09 - 6 - DIFFERENCE IN DOCUMENTED SALE PRICE AND THE ACTUAL MARKET PRICE OF THE LANDS IN QUESTION. WE THUS CONCLUDE THAT THE ASSESSING O FFICER DID HAVE SUFFICIENT MATERIAL RIGHTLY INITIATED THE IMPUGNED REOPENING. THIS LEGAL GROUND IS ACCORDINGLY DECLINED. 7. THESE TWO ASSESSEES APPEALS ARE ALLOWED ON MERI TS. [PRONOUNCED IN THE OPEN COURT ON THIS THE 5 TH DAY OF MAY, 2017.] SD/- SD/- ( PRADIP KUMAR KEDIA ) (S. S. GODARA) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD: DATED 05/05/2017 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )*+ ,--. . /0 / DR, ITAT, AHMEDABAD 1 +23 / GUARD FILE. BY ORDER / . // . /0