ACIT, Coimbatore V. G.Shanmuganathan, Coimbatore

ITA 569/CHNY/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3819 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 19-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-03-2016
• Court: TRIBUNAL
• Assessee Lawyers: S RAMACHANDRANC A
• Keywords: Capital asset; Business income; Onus to prove
• Section: 68; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI , . !' BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.569/MDS./2016 / ASSESSMENT YEAR : 2009-10 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, AAYAKAR BHAVAN, 63, RACE COURSE ROAD, COIMBATORE 641 018. VS. MR.G.SHANMUGANATHAN, 7/8,LAKSHMI HOUSE, PALAKKAD MAIN ROAD KUNIAMUTHUR, COIMBATORE 641 008. [PAN AQEPS 4036 J ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : MR.CLEMENT RAMESH KUMAR, JCIT D.R /RESPONDENT BY : MR.S.RAMACHANDRAN,C.A. / DATE OF HEARING : 19 - 10 - 201 6 !' / DATE OF PRONOUNCEMENT : 04 - 11 - 2016 ' / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-18, CHENN AI DATED 2.11.2015 PERTAINING TO ASSESSMENT YEAR 2009-10. ITA NO. /MDS./201 :- 2 -: 2. THE FIRST GRIEVANCE OF THE REVENUE IN THIS APPE AL IS WITH REGARD TO DELETION OF ADDITION MADE TOWARDS SALE OF LANDED PROPERTY TREATING IT BY THE LD.CIT(A) AS IT IS A SALE OF AGR ICULTURAL LAND. 2.1 APPEALS OF THE REVENUE ARE DELAYED BY 5 DAYS F OR WHICH A CONDONATION PETITION HAS BEEN FILED. DELAY IS CONDO NED AND APPEALS ADMITTED. 3. THE FACTS OF THE ISSUE ARE THAT THE LD. ASSESSI NG OFFICER MADE ADDITION ON ACCOUNT OF SALE OF AGRICULTURAL LANDS. DURING THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAD SOLD HIS LAND SITUA TED AT SENTRAMPALAYAM VILLAGE (BOUGHT DURING THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2007-08) FOR A SUM OF ` 3,77,76,250/- AND THE SAME WAS DULY RECORDED IN THE BOOKS OF ACCOUNT AND CLAIM ED THE SAME TO BE EXEMPT FROM TAX SINCE THE AGRICULTURAL LANDS WERE L OCATED OUTSIDE THE 8 KM LIMIT FROM THE MUNICIPAL CORPORATION. THIS IS T HE CASE OF ASSESSMENT PASSED CONSEQUENT TO SURVEY CONDUCTED I N THE PREMISES OF THE ASSESSEE ON 31.07.2008. LOOSE SHEET NO.9 IMPOUNDED IN ANNEXURE ANN/LS/IMP REPRESENTS PURCHAS E DETAILS OF A LAND AND IN ANN/NSK/IMP REPRESENTS SALE DETAILS OF THE SAME LAND WHICH TOOK PLACE IN JULY,2008. THE RELEVANT LAND IN A VILLAGE CALLED SENDRAMPALAYAM, IN THE OUT SKIRTS OF COIMBATORE OWN ED BY THE VILLAGERS OF WHICH NO PROPER DOCUMENTS WERE AVAILAB LE. OUT OF 50 ACRES THE ASSESSEE PURCHASED 16 ACRES AND BALANCE LANDS W ERE PURCHASED BY ITA NO. /MDS./201 :- 3 -: FOUR OTHERS IN INDEPENDENT DOCUMENTS. DURING THE ASSESSMENT YEAR 2009-10, THE ASSESSEE SOLD THE LAND TO M/S.ALMCO PV T LTD., AT ` 3,77,76,250/-.ACCORDING TO ASSESSEE, THE LAND BEING AGRICULTURAL LAND SITUATED OUTSIDE 8 KMS OF THE MUNICIPALITY, IS NOT LIABLE FOR CAPITAL GAINS TAX. IN THE REVENUE RECORDS THIS IS CLASSIFIED AS A GRICULTURAL LAND. HOWEVER, AO QUOTED THE INTENTION OF THE ASSESSEE FO R PURCHASE THE LAND AS RESALE AND STATED THAT THE ASSESSEE TREATED THIS SALE OF LAND AS ADVENTURE IN THE NATURE OF TRADE. HENCE, THE AO PRO CEEDED TO MAKE THIS ADDITION BASED ON INTENTION OF THE ASSESSEE TO MAKE A PROFIT BY RE- SELLING IT. AGAINST THE ORDER OF LD. ASSESSING OF FICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A). 4. ON APPEAL, LD.CIT(A) OBSERVED THAT IN THE ABSEN CE OF ANY MATERIAL BROUGHT ON RECORD BY THE AO IN SUPPORT OF ASSESSEE NOT CARRYING ON AGRICULTURAL LAND OR ASSESSEES INTENTI ON TO MAKE A PROFIT BY RE-SELLING IT EXCEPT THE ALLEGATION THAT SOME OF TH E FRIENDS OF THE ASSESSEE HAD ALSO ENTERED SIMILAR DEALS IN THEIR IN DIVIDUAL CAPACITY, THE LAND IN QUESTION WAS SOLD BY THE ASSESSEE WITHIN ON E AND HALF YEARS FROM THE DATE OF PURCHASE. THEREFORE, LD.CIT(A) OBS ERVED THAT THERE WAS NO FINDING BY THE AO IN REGARD TO THE CARRYING OF THE BUSINESS BY THE ASSESSEE OF SALE AND PURCHASE OF THE LAND AND T HE LAND BEING STOCK IN TRADE, THE CONTENTION OF THE AO THAT INCOME FROM THE SALE OF LAND AMOUNTED TO PROFIT AND GAINS OF BUSINESS COULD NOT BE SUSTAINED. ITA NO. /MDS./201 :- 4 -: FURTHER, LD.CIT(A) OBSERVED THAT THERE WAS NO EVIDE NCE OF ANY TRADING ACTIVITY IN THE TRANSACTION OF PURCHASE AND SALE BY THE ASSESSEE, THE TRANSACTION COULD NOT BE TREATED AS VENTURE IN THE NATURE OF TRADE. THE ONUS OF PROVING THAT THE LAND FORMED PART OF THE BU SINESS ASSET OF THE ASSESSEE WAS ON AO AND IN THE ABSENCE OF ANY EVIDEN CE TO THAT EFFECT THE PRESUMPTION WOULD BE THAT THE LAND WAS HELD AS A CAPITAL ASSET BY THE ASSESSEE AND THE INCOME FROM THE TRANSFER WAS N OT INCOME FROM BUSINESS. HENCE, LD.CIT(A) DELETED THE ADDITION MAD E BY THE AO ON THIS ISSUE. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. IN HIS CASE THE IMPUGNED VACANT LAND SITUA TED AT SETRAMPALAYAM VILLAGE ( MENTIONED AS NALLATTIPALAYA M VILLAGE IN THE SALE DEED 3RD JULY 2008), TIRUPPUR DISTRICT AND TH E SAID LAND WAS ACQUIRED BY THE ASSESSEE ALONG WITH FOUR OTHERS IN THE A.Y 2007-2008 FOR A COST OF 1,15,29,000/- AND THE SAID PROPERTY SOLD FOR CONSIDERATION OF 3,77,76,250/- TO M/S.ALMCO PROPER TIES PVT. LTD. ACCORDING TO THE ASSESSEE, THE PROPERTY IS AN AGRIC ULTURAL LAND, NOT LIABLE FOR TAX IN VIEW OF THE FOLLOWING DECISIONS: I) CIT VS. DHABLE, BOBDO PAROSE, KALE, LUTE AND CHO UDHARI REPORTED IN [1993] 202 ITR 98(BOM.) II) ACIT VS. BHOPINDERSINGH R.ARNEJA IN [2013] 31 TAXMANN.COM 307(NAGPUR-TRIB) ITA NO. /MDS./201 :- 5 -: III) GOUTHAM CONSTRUCTIONS CO. VS. ITO IN [2013] 3 9 TAXMANN.COM(HYDERABD-TRIB) IV) SMT.SUPRIYA KANWAR VS. ITO IN [2014] 46 TAXMAN N.COM 452(JODHPUR-TRIB)(TM) V) HARNIKS PARK (P.) LTD., VGS. ITO IN [2014] 41 TA XMANN.COM 109 (HYD.-TRIB) VI) ITO VS. CHANDAR HUF IN [2011] 12 TAXMANN.COM 305(CHENNAI-TRIB) VII) CIT VS. SAIRAM IN [2002] 123 TAXMAN 348(MAD.) THE LD. AR ALSO RELIED ON THE JUDGMENT OF SUPREME COURT IN THE CASE OF CIT VS. S.KHADER KHAN SON IN [2012] 25 TAXMANN.C OM 413(SC) AND MAHESH OHRI VS. ACIT IN [2013] 35 TAXMANN.COM 301(D ELHI-TRIB) FOR THE PROPOSITION THAT SEC.133A DOES NOT EMPOWER ANY ASSESSING OFFICER TO EXAMINE ANY PERSON ON OATH AND RELYING ON THE SA ME FOR THE PURPOSE OF ASSESSMENT. 5.1 ON THE OTHER HAND, THE LD.D.R RELIED ON THE O RDER OF THE CO-ORDINATE BENCH IN THE CASE OF ITO VS. SHRI ABOOB UCKER IN ITA NO.1793/MDS./2013 FOR ASSESSMENT YEAR 2006-07VIDE O RDER DATED 31.12.2015 WHEREIN CONSIDERED THE PROPERTY AT NAVAL UR VILLAGE AND DECIDE THE CASE AGAINST THE ASSESSEE. HOWEVER, THE AR SUBMITTED THAT THE SALE TRANSACTION EFFECTED BY THE ASSESSEE IN RE SPECT OF THE ABOVE LAND CONSTITUTED ONLY SALE OF AGRICULTURE LAND, AND BY NO STRETCH OF ITA NO. /MDS./201 :- 6 -: IMAGINATION IT CAN BE TREATED AS TRANSFER OF CAPIT AL ASSET AND SO AS TO TREAT THE SAME AS CAPITAL GAIN FOR THE FOLLOWING REASONS: (I) PURCHASE AND HOLDING OF LAND FOR A LONG PERIOD AND SUBSEQUENT SALE THEREOF ITSELF CANNOT BE AN INDICATOR TO HOLD IT AS NON- AGRICULTURAL LAND, THE ASSESSEE WAS TO CARRY ON BUS INESS WITH THOSE ASSETS. (II) THE ASSESSEE HELD LAND FOR CONSIDERABLE TIME. THE A SSET ACQUIRED WAS AGRICULTURE LAND AS PER THE EVIDENCE B ROUGHT ON RECORD. THUS, THE ASSESSEE HELD THE AGRICULTURE LAN D FOR MORE THAN ONE YEAR. DURING THAT PERIOD THE ASSESSEE CARR IED ON REGULAR AGRICULTURAL OPERATIONS. IN THE LIGHT OF FA VOURABLE MARKET CONDITIONS THE ASSESSEE THOUGHT IT GOOD TO S ELL THE ASSET TO REALIZE A GOOD AMOUNT. REALIZATION OF BETT ER PRICE IN A BOOMING MARKET CANNOT BE CONSIDERED AS AN ADVENTURE IN TRADE (III) REALIZATION OF INVESTMENTS CONSISTING OF PURCHASE O F AGRICULTURAL LAND AND RESALE, THOUGH PROFITABLE ARE CLEARLY OUTSIDE THE DOMAIN OF CAPITAL GAIN. (IV) THE ASSESSEE TREATED THE ASSETS AS INVESTMENT IN AG RICULTURAL LAND. THEREFORE DISPOSAL OF THE SAME WOULD NOT CONV ERT, WHAT WAS A CAPITAL ACCRETION. TO MAKE IT MORE CLEAR, SAL E OF AGRICULTURAL LAND BY THE ASSESSEE AND REALISATION O F GOOD PRICE WOULD NOT ALTER THE BASIC NATURE AND CHARACTERISTIC OF THE TRANSACTION. IN THE CASE OF THE ASSESSEE, LAND WAS ACQUIRED BY THE ASSESSEE AND TREATED AS FIXED-ASSETS. (V) WHETHER A TRANSACTION IN RESPECT OF AN ASSET IS CAP ITAL OR NOT DEPENDS ON THE FACTS AND CIRCUMSTANCES OF THE CASE. THE MERE FACT THAT THE PERSON HAS PURCHASED A LAND AND SUBSE QUENTLY SOLD IT, GIVING RISE TO A SUBSTANTIAL PROFIT CANNOT CHANGE THE CHARACTER OF THE TRANSACTION. IT IS THE GENERAL HUM AN TENDENCY TO EARN PROFIT OUT OF CAPITAL ASSET. NO ONE INVESTS TO INCUR A ITA NO. /MDS./201 :- 7 -: LOSS. IF THE MARKET CONDITION SUDDENLY GOES UP OR D OWN, IT IS ALWAYS THE TENDENCY OF A PERSON TO TAKE A QUICK DEC ISION SO THAT THE REALIZATION ON THE INVESTMENT IS MAXIMUM O R THE LOSS IS MINIMUM. HE SUBMITTED THAT IN THE PRESENT CASE THERE IS NO D ISPUTE THAT THE ASSESSEES ACQUIRED AGRICULTURAL LAND. 5.2 THE DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE AMOUNT RECEIVED ON SALE OF THIS PROPERTY IS NOTHING BUT ON ACCOUNT OF SALE OF CAPITAL ASSET AND THE SAME WAS BROUGHT INTO INCOME FROM CAPITAL GAIN. IN THIS CASE, THE AUTHORISED REPRESENTATIVE SUBMITT ED THAT THE LAND ALWAYS TREATED AS INVESTMENT AND NOT AT ALL CONVERT ED INTO STOCK-IN- TRADE. THE CHARACTER OF THE LAND IN THE HANDS OF TH E ASSESSEES HAS NOT CHANGED. 5.3 NOW THE QUESTION AS TO WHETHER A LAND I S AGRICULTURAL LAND OR NOT IS ESSENTIALLY A QUESTION OF FACT. THE QUESTION HAS TO BE ANSWERED IN EACH CASE HAVING REGARD TO THE FACTS AND CIRCUMS TANCES OF THAT CASE. THERE MAY BE FACTORS BOTH FOR AND AGAINST A PARTICU LAR POINT OF VIEW. WE HAVE TO ANSWER THE QUESTION ON A CONSIDERATION O F ALL OF THEM, A PROCESS OF EVALUATION AND THE INFERENCE HAS TO BE D RAWN ON A CUMULATIVE CONSIDERATION OF ALL THE RELEVANT FACTS. IT MAY BE STATED ITA NO. /MDS./201 :- 8 -: HERE THAT NOT ALL THE FACTORS OR TESTS WOULD BE PRE SENT OR ABSENT IN ANY CASE AND THAT IN EACH CASE ONE OR MORE OF THE FACTO RS MAY MAKE APPEARANCE AND THAT ULTIMATE DECISION WILL HAVE TO BE REACHED ON A BALANCED CONSIDERATION OF THE TOTALITY OF THE CIRCU MSTANCES. 5.4 THE EXPRESSION 'AGRICULTURAL LAND' IS NOT DEFINED IN THE ACT, AND NOW, WHETHER IT IS AGRICULTURAL LAND OR NOT HAS TO BE DETERMINED BY USING THE TESTS OR METHODS LAID DOWN BY THE COURTS FROM TIME TO TIME. 5.5 THE SUPREME COURT IN THE CASE OF SMT. SARIF ABIBI MOHMED IBRAHIM V. CIT [1993] 204 ITR 631/70 TAXMAN 301 HAS APPROVED THE DECISION OF A DIVISION BENCH OF THE GUJARAT HIGH C OURT IN THE CASE OF SIDDHARTH J. DESAI 139 ITR 628 AND HAS LAID DOWN 1 3 TESTS OR FACTORS WHICH ARE REQUIRED TO BE CONSIDERED AND UPON CONSID ERATION OF WHICH, THE QUESTION WHETHER THE LAND IS AN AGRICULTURAL LA ND OR NOT HAS TO BE DECIDED OR ANSWERED. WE REPRODUCE THE SAID 13 TESTS AS FOLLOWS: '1. WHETHER THE LAND WAS CLASSIFIED IN THE REVENUE RECO RDS AS AGRICULTURAL AND WHETHER IT WAS SUBJECT TO THE PAYM ENT OF LAND REVENUE? 2. WHETHER THE LAND WAS ACTUALLY OR ORDINARILY USED FO R AGRICULTURAL PURPOSES AT OR ABOUT THE RELEVANT TIME ? ITA NO. /MDS./201 :- 9 -: 3. WHETHER SUCH USER OF THE LAND WAS FOR A LONG PERIOD OR WHETHER IT WAS OF A TEMPORARY CHARACTER OR BY ANY O F A STOPGAP ARRANGEMENT? 4. WHETHER THE INCOME DERIVED FROM THE AGRICULTURAL OP ERATIONS CARRIED ON IN THE LAND BORE ANY RATIONAL PROPORTION TO THE INVESTMENT MADE IN PURCHASING THE LAND? 5. WHETHER, THE PERMISSION UNDER S. 65 OF THE BOMBAY L AND REVENUE CODE WAS OBTAINED FOR THE NON-AGRICULTURAL USE OF THE LAND? IF SO, WHEN AND BY WHOM (THE VENDOR OR THE VE NDEE)? WHETHER SUCH PERMISSION WAS IN RESPECT OF THE WHOLE OR A PORTION OF THE LAND? IF THE PERMISSION WAS IN RESPE CT OF A PORTION OF THE LAND AND IF IT WAS OBTAINED IN THE P AST, WHAT WAS THE NATURE OF THE USER OF THE SAID PORTION OF THE L AND ON THE MATERIAL DATE? 6. WHETHER THE LAND, ON THE RELEVANT DATE, HAD CEASED TO BE PUT TO AGRICULTURAL USE? IF SO, WHETHER IT WAS PUT TO A N ALTERNATIVE USE? WHETHER SUCH LESSER AND/OR ALTERNATIVE USER WA S OF A PERMANENT OR TEMPORARY NATURE? 7. WHETHER THE LAND, THOUGH ENTERED IN REVENUE RECORDS , HAD NEVER BEEN ACTUALLY USED FOR AGRICULTURE, THAT IS, IT HAD NEVER BEEN PLOUGHED OR TILLED? WHETHER THE OWNER MEANT OR INTENDED TO USE IT FOR AGRICULTURAL PURPOSES? 8. WHETHER THE LAND WAS SITUATED IN A DEVELOPED AREA? WHETHER ITS PHYSICAL CHARACTERISTICS, SURROUNDING SITUATION AND USE OF THE LAND IN THE ADJOINING AREA WERE SUCH AS WOULD I NDICATE THAT THE LAND WAS AGRICULTURAL? 9. WHETHER THE LAND ITSELF WAS DEVELOPED BY PLOTTING A ND ITA NO. /MDS./201 :- 10 - : PROVIDING ROADS AND OTHER FACILITIES? 10. WHETHER THERE WERE ANY PREVIOUS SALES OF PORTIONS O F THE LAND FOR NON-AGRICULTURAL USE? 11. WHETHER PERMISSION UNDER S. 63 OF THE BOMBAY TENANC Y AND AGRICULTURAL LAND ACT, 1948, WAS OBTAINED BECAUSE T HE SALE OR INTENDED SALE WAS IN FAVOUR OF A NON-AGRICULTURIST? IF SO, WHETHER THE SALE OR INTENDED SALE TO SUCH NON-AGRIC ULTURISTS WAS FOR NON-AGRICULTURAL OR AGRICULTURAL USER? 12. WHETHER THE LAND WAS SOLD ON YARDAGE OR ON ACREAGE BASIS? 13. WHETHER AN AGRICULTURIST WOULD PURCHASE THE LAND FO R AGRICULTURAL PURPOSES AT THE PRICE AT WHICH THE LAN D WAS SOLD AND WHETHER THE OWNER WOULD HAVE EVER SOLD THE LAND VALUING IT AS A PROPERTY YIELDING AGRICULTURAL PRODUCE ON T HE BASIS OF ITS YIELD?' 5.6 WE WILL THEREFORE PROCEED TO EXAMINE THE QUESTI ON AS TO WHETHER THE PROPERTY CAN BE SAID TO BE AGRICULTURAL LAND OR NOT. IN THE CASE OF CWT VS. OFFICER-IN- CHARGE (COURT OF WARDS ), PAIGAH 105 ITR 133 (SC) IN WHICH QUESTION TO BE DECIDED WAS WHETHE R ACRES OF VACANT LAND ENCLOSED IN COMPOUND WALLS OF A PALACE SITUATED BY THE SIDE OF A LAKE AND CLASSIFIED AND ASSESSED TO LAND REVENUE, WHICH WERE NEITHER CULTIVATE NOR HAD BEEN PUT TO NON-AGRICULTU RAL USE' IN THE PAST COULD BE REGARDED AS 'AGRICULTURAL LAND' WITHIN THE MEANING OF THAT EXPRESSION WHICH OCCURRED IN THE DEFINITION OF 'ASS ET' IN SECTION 2(E) OF ITA NO. /MDS./201 :- 11 - : THE WT ACT, 1957. THE HON'BLE SUPREME COURT HELD TH AT MUCH WEIGHT CANNOT BE GIVEN TO MERE 'POTENTIALITY' OF THE LAND FOR USE FOR AGRICULTURAL PURPOSES AND WHAT IS REALLY REQUIRED T O BE SHOWN IS THE CONNECTION WITH AN AGRICULTURAL PURPOSE AND USER AN D NOT THE MERE POSSIBILITY OF USER OF THE LAND, BY SOME POSSIBLE F UTURE OWNER OR POSSESSOR, FOR AN AGRICULTURAL PURPOSE. IT IS NOT M ERE POTENTIALITY, BUT ITS ACTUAL CONDITION AND INTENDED USER WHICH HAS TO BE SEEN. ONE OF THE OBJECTS FOR EXEMPTION IS TO ENCOURAGE CULTIVATI ON OR ACTUAL UTILISATION OF LAND FOR AGRICULTURAL PURPOSES AND H ENCE IF THERE IS NEITHER ANYTHING IN ITS CONDITION, NOR ANYTHING IN THE EVIDENCE TO INDICATE THE INTENTION OF ITS OWNERS OR POSSESSORS SO AS TO CONNECT IT WITH AN AGRICULTURAL PURPOSE, THE LAND COULD NOT B E AGRICULTURAL LAND. 5.7 IN THE CASE BEFORE THE SUPREME COURT THE FOLLOW ING CIRCUMSTANCES WERE EMPHASISED VIZ. (I) AREA WAS VE RY LARGE (108 ACRES) AND WAS ABUTTING A LAKE, (II) THERE WERE TW O WELLS ON IT (III) IT WAS CAPABLE OF BEING USED (THOUGH NOT ACTUALLY USED ) FOR AGRICULTURAL PURPOSES, (IV) IT HAD NOT BEEN PUT TO ANY USE WHICH COULD CHANGE ITS CHARACTER BY MAKING IT UNFIT FOR IMMEDIATE CULTIVAT ION; AND (V) IT WAS CLASSIFIED AND ASSESSED TO LAND REVENUE AS 'AGRICUL TURAL LAND' UNDER THE RELEVANT REVENUE ENACTMENT. THE SUPREME COURT H ELD THAT FIRST ITA NO. /MDS./201 :- 12 - : FOUR CIRCUMSTANCES RELATING TO ABSENCE OF NON-AGRIC ULTURAL USER WERE NEUTRAL CIRCUMSTANCES AND ONLY FIFTH CIRCUMSTANCE . WAS GOOD PRIMA FACIE EVIDENCE OF LAND BEING AGRICULTURAL LAND BUT PRESUMPTION ARISING THERE FROM COULD BE REBUTTED BY OTHER CIRCUMSTANCE S. IN THAT CASE THE ASSESSEE HAD NOT LED ANY EVIDENCE ABOUT INTENDED US ER BECAUSE ASSESSEE WAS UNDER MISTAKEN IMPRESSION THAT IT WAS NOT NECESSARY TO DO SO IN VIEW OF EXISTENCE OF PRIMA FACIE EVIDENCE IN THE FORM OF ENTRIES IN THE REVENUE RECORD AND THEREFORE THE SUP REME COURT RESTORED THE MATTER TO TRIBUNAL TO RECORD A FINDING ON THE QUESTION OF INTENDED USER AND THEN DECIDE THE POINT WHETHER THE LAND IN QUESTION WAS AGRICULTURAL LAND. THE SUPREME COURT DISAPPROVE D THE VIEW THAT THAT LAND WHICH IS LEFT BARREN BUT WHICH IS CAPABLE OF BEING CULTIVATED CAN ALSO BE AGRICULTURAL LAND UNLESS THE. SAID LAND IS ACTUALLY PUT TO SOME OTHER NON- AGRICULTURAL PURPOSE LIKE CONSTRUCT ION OF BUILDINGS, OR AN AERODROME RUNWAY, ETC. THEREON WHICH ALTERS THE PHYSICAL CHARACTER OF THE LAND RENDERING IT UNFIT FOR IMMEDIATE CULTIV ATION AND OBSERVED THAT MINIMAL TEST OF AGRICULTURAL LAND WAS CREDIBLE EVIDENCE OF AT LEAST APPROPRIATION OR SETTING A PART OF THE LAND FOR A P URPOSE WHICH COULD BE REGARDED AS AGRICULTURAL AND FOR WHICH LAND WAS USED WITHOUT AN ALTERATION OF ITS CHARACTER. 5.8 THE DECISION OF SUPREME COURT IN THE CASE OF OFFICER-IN-CHARGE ITA NO. /MDS./201 :- 13 - : (COURT OF WARDS ) WAS ANALYSED BY THE GUJARAT HIGH COURT IN CIT VS. SARIFABIBI MOHAMMED IBRAHIM 136 ITR 621(GUJ) AND TH E LEGAL POSITION WAS SUMMED UP AS FOLLOWS:- (I) THE FACT THAT LAND IS ENTERED AS AGRICULTURAL LAND IN REVENUE RECORDS AND IS ASSESSED AS SUCH UNDER THE L AND REVENUE CODE WOULD BE A CIRCUMSTANCE IN FAVOUR OF CONCLUSIO N THAT IT IS AN AGRICULTURAL LAND. HOWEVER, THIS WOULD RAISE ONLY A PRIMA FACIE PRESUMPTION AND SAID PRESUMPTION CAN BE DESTROYED B Y OTHER CIRCUMSTANCES POINTING TO THE CONTRARY CONCLUSION (II) THE FACT THAT AGRICULTURAL OPERATIONS WERE CARRIED ON IN THE PAST OR ARC CARRIED ON CURRENTLY IS A CIRCUMSTA NCE IN FAVOUR OF CONCLUSION THAT LAND WAS AGRICULTURAL LAND. HOWE VER, THIS IS NOT A DECISIVE FACTOR INASMUCH AS AGRICULTURAL CROP CAN BE RAISED EVEN ON BUILDING SITE LAND (EVEN ON DESERT LAND AS OBSERVED BY THE SUPREM E COURT IN SAID CASE) AND SOMETIMES, A CROP IS GROWN IN ORDER NOT TO ALLOW THE LAND TO REMAIN IDLE AWAITING SALE FOR NON-AGRIC ULTURAL PURPOSES TO A NON- AGRICULTURIST BY WAY OF A STOP-G AP ARRANGEMENT OR IN ORDER TO AVOID PAYMENT OF REVENUE AT A HIGHER RATE OR IN ORDER TO AVOID PAYMENT OF CAPITAL GAINS TAX. (III) THE FACT THAT LAND IS NOT CONVERTED TO NON-AGRICULT URAL USER WOULD BE A CIRCUMSTANCE INDICATING THAT I T IS AN AGRICULTURAL LAND. HOWEVER THIS IS SUBJECT TO SAME RIDER AS IS MENTIONED IN (II) ABOVE. (IV) THE FOLLOWING FACTS WOULD INDICATE THAT LAND WAS NOT AGRICULTURAL LAND: (A) THE LAND IS SITUATED (EVEN IN THE YEAR PRIOR TO ASS T. YEAR 1970-71 WHEN AMENDMENT CAME IN FORCE) IN AN UR BAN AREA IN THE PROXIMITY OF BUILDING SITES. (FROM ASST. YEAR 1970-71, AGRICULTURAL LANDS SITUATE WITHIN MUNICIPA L LIMITS ARE NOT OUTSIDE THE AMBIT OF 'CAPITAL ASSETS'). (B) THE LAND IS SOLD TO A NON-AGRICULTURIST FOR NON - AGRICULTURAL PURPOSES. C) THE LAND IS SOLD ON A PER SQUARE YARD BASIS AT A PRICE COMPARABLE TO THE PRICE FETCHED BY BUILDING SITES. ITA NO. /MDS./201 :- 14 - : (D) THE PRICE IS SUCH THAT NO BONA FIDE AGRICULTU RIST WOULD PURCHASE THE SAME FOR GENUINE AGRICULTURAL OPERA TIONS (E) WHEN THE PRICE IS SUCH THAT NO PRUDENT OWNER WOULD SELL IT AT A PRICE WORKED OUT ON THE CAPITALISATION METHOD TAKING INTO ACCOUNT ITS OPTIMUM YIELD IN THE MOST FAVOURABLE CIRCUMSTANCES. 5.9 THE ABOVE DECISION OF GUJARAT HIGH COURT HAS BEEN AFFIRMED IN APPEAL BY THE SUPREME COURT IN SARIFABIBI MOHMED IB RAHIM VS. CIT 204 ITR 631 (SC) IN WHICH THE SUPREME COURT EMPHASISED THAT ALL THE CIRCUMSTANCES WERE REQUIRED TO BE WEIGHTED AND THAT HIGH COURT HAS REACHED A CORRECT CONCLUSION. 5.10 THE CLAIM OF THE ASSESSEE THAT AGRICULTU RAL OPERATIONS WERE CARRIED OUT OVER THE PROPERTY AND THE PROPERTY WAS ACTUALLY USED FOR AGRICULTURAL PURPOSE WAS SOUGHT TO BE ESTABLISHED B Y RELYING ON THE CLASSIFICATION OF THE PROPERTY AS AGRICULTURAL LAND IN THE REVENUE RECORD. THE REVENUE CONTENDS THAT THERE IS NO EVIDENCE OF T HE ASSESSEE HAVING CARRIED OUT ACTUAL AGRICULTURAL ACTIVITIES O VER THE PROPERTY. THE ASSESSEE HAS NOT CLAIMED ANY EXPENSES INCURRED IN C ARRYING OUT AGRICULTURAL OPERATIONS OR DECLARED ANY AGRICULTURA L INCOME FROM THIS LANDED PROPERTY. THERE IS NO EVIDENCE OF THE AGRICU LTURAL PRODUCE HAVING BEEN SOLD. THE HON'BLE KERALA HIGH COURT IN THE CASE OF KALPETTA ESTATES LTD. 185 ITR 318 (KER) IT HAS BEEN HELD BY THE HON'BLE KERALA ITA NO. /MDS./201 :- 15 - : HIGH COURT THAT THE BURDEN OF PROOF THAT THE LAND I N QUESTION WAS AGRICULTURAL LAND AT THE TIME OF TRANSFER TO CLAIM EXEMPTION WAS ON THE ASSESSEE. AS ALREADY OBSERVED THE QUESTION WHETHER THE LAND WAS AGRICULTURAL LAND HAS TO BE DECIDED ON FACTS OF EAC H CASE AND DECIDED CASES ARE ONLY GUIDELINES TO BE KEPT IN MIND. FACTS AND ALL THE CIRCUMSTANCES ARE TO BE CONSIDERED AS A WHOLE AND A N OVERALL VIEW IS TO BE TAKEN IN DECIDING WHETHER THE LAND WAS AN AGRICU LTURAL LAND. IN A GIVEN CASE LARGE NUMBER OF CIRCUMSTANCES MAY BE IND ICATIVE OF AGRICULTURAL CHARACTER BUT ONE CIRCUMSTANCE MAY OUT WEIGH ALL OF THEM AND ON ITS BASIS THE LAND WOULD BE HELD TO BE A NON -AGRICULTURAL LAND. THE CASE LAWS CITED BY THE ASSESSEE AS WELL AS THE REVENUE DEAL WITH SITUATIONS WHERE ONE OR TWO FACTORS WAS CONSIDERED AS THE BASIS ON WHICH THE CONCLUSION THAT PROPERTY WAS AGRICULTURAL LAND OR WAS NOT AGRICULTURAL LAND HAD BEEN ARRIVED AT. 5.11 THE ASSESSEE IN THE PRESENT CASE HAS BROUGH T NO EVIDENCE OF HAVING SPENT HUMAN LABOUR IN THE SENSE OF PREPARIN G THE LAND, FILLING, SOWING SEEDS, PLANTING ON A REGULAR BASIS HAS BEEN PRODUCED BY THE ASSESSEE. THE PROPERTY IS SITUATED IN FAST DEVELOP ING AREA OF TIRUPPUR. THE PROPERTY IS LOCATED IN DEVELOPED/ DEVELOPING AR EA AND HAS ACCESS TO ALL MODERN AMENITIES/LIVING. THERE WAS REAL ESTA TE ACTIVITY IN THE AREA WHERE THE PROPERTY IS SITUATED. THE SALE OF TH E PROPERTY BY THE ITA NO. /MDS./201 :- 16 - : ASSESSEE IS TO A COMMERCIAL ORGANISATION. THE SALE CONSIDERATION PAID WOULD SHOW THAT NO BONA-FIDE AGRICULTURIST WOULD PA Y SUCH A HUGE PRICE FOR ACQUIRING AGRICULTURAL LAND. 5.12 WE WILL NOW APPLY THE TESTS LAID DOWN BY THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF SARIFABIBI MOHAMMED IBRAH IM (SUPRA) WHICH WAS APPROVED BY THE HON'BLE SUPREME COURT, TO THE F ACTS AND CIRCUMSTANCES OF THE CASE:- (I) THE FACT THAT LAND IS ENTERED AS AGRICULTURAL LAND IN REVENUE RECORDS AND IS ASSESSED AS SUCH UNDER THE LAND REVENUE CODE WOULD BE A . CIRCUMSTANCE IN FAVOUR OF CONCLUSION THAT IT IS AN AGRICULTURAL LAND. HOWEVER, THIS WOULD RAISE ONLY A PRIMA FACIE PRESUMPTION AND SAID PRESUMPTION CAN BE DESTROYED BY OTHER CIRCUMSTANCES POINTING TO THE CONTRARY CONCLUSION. (II) THE FACT THAT AGRICULTURAL OPERATIONS WERE CARRIED ON IN THE PAST OR ARE CARRIED ON CURRENTLY IS A CIRCUMSTANCE IN FAVOUR OF CONCLUSION THAT LAND WAS AGRICULTURAL LAND. HOWEVER, THIS IS NOT A DECISIVE FACTOR INASMUCH AS AGRICULTURAL CROP CAN BE RAISED EVEN ON BUILDING SITE LAND (EVEN ON DESERT LAND AS OBSERVED BY THE SUPREME COURT IN SAID CASE) AND SOMETIMES, A CROP IS GROWN IN ORDER NOT TO ALLOW THE LAND TO REMAIN IDLE AWAITING SALE FOR NON-AGRICULTURAL PURPOSES TO A NON-AGRICULTURIST BY WAY OF A STOP-GAP ARRANGEMENT OR IN ORDER TO AVOID PAYMENT OF REVENUE AT A HIGHER RATE OR IN ORDER TO AVOID PAYMENT OF CAPITAL GAINS TAX. (III) THE FACT THAT LAND IS NOT CONVERTED TO NO ITA NO. /MDS./201 :- 17 - : AGRICULTURAL USER WOULD BE A CIRCUMSTANCE INDICATING THAT IT IS AN AGRICULTURAL LAND. HOWEVER THIS IS SUBJECT TO SAME RIDER AS IS MENTIONED IN(II) ABOVE. (IV) THE FOLLOWING FACTS WOULD INDICATE THAT LAND WAS NOT AGRICULTURAL LAND: (A) THE LAND IS SITUATED IN AN AREA IN THE PROXIMITY OF BUILDING SITES. (B) THE LAND IS SOLD TO A NON- AGRICULTURIST FOR NON-AGRICULTURAL PURPOSES. (C)THE LAND IS SOLD AT A PRICE COMPARABLE TO THE PRICE FETCHED BY BUILDING SITES. (D) THE PRICE IS SUCH THAT NO BONA FIDE AGRICULTURIST WOULD PURCHASE THE SAME FOR GENUINE AGRICULTURAL OPERATIONS. 5.13 IN THE PRESENT CASE, THE PURCHASER OF THE PROP ERTY WAS A COMPANY BY NAME M/S. ALMCO PROPERTIES PVT LTD WHICH IS A REGISTERED COMPANY UNDER THE COMPANIES ACT, 1956. THE PROPERTY SOLD IS SITUATED IN VILLAGE WHICH IS A SU BURB IN TIRUPPUR DISTRICT, TAMIL NADU. THE PLACE IS AN UPCOMING RESI DENTIAL AREA. AS DETAILED ABOVE, THE PROPERTY SOLD BY THE ASSESSE E IS IN THE MIDST OF DEVELOPMENT ACTIVITIES BEING CARRIED OUT B Y BUILDERS IN PROMOTING HOUSING PROJECTS AND NO AGRICULTURAL ACTI VITIES WERE ITA NO. /MDS./201 :- 18 - : BEING CARRIED OUT EITHER BY THE ASSESSE NOR BY OTHE RS IN THAT PROPERTY. IN VIEW OF THE SAME, THE SALE PRICE RECEI VED FOR THE PROPERTY HAS INCREASED MANIFOLD WHICH A NORMAL AGRI CULTURAL LAND WILL NOT FETCH. THE PRICE IS IN ACCORDANCE WITH THE DEVELOPMENT ACTIVITIES AND CHANGES HAPPENING IN THE NATURE OF T HE LAND FROM AGRICULTURAL TO THAT OF HOUSING. 5.14 IF WE CONSIDER THE ABOVE FACTS AND CIRCUMSTANC ES OF THE PRESENT CASE AS A WHOLE AND AN OVERALL VIEW IS TO B E TAKEN IN DECIDING WHETHER THE LAND WAS AN AGRICULTURAL LAND, WE WOULD COME TO A CONCLUSION THAT THE PROPERTY CANNOT BE CO NSIDERED AS AGRICULTURAL LAND, THOUGH THE CIRCUMSTANCE THAT THE LAND IS CLASSIFIED AS AGRICULTURAL IN THE REVENUE RECORDS. IN OUR VIEW THE OTHER CIRCUMSTANCES POINTED OUT ABOVE OUTWEIGHS ALL OF THE CIRCUMSTANCES IN FAVOUR OF THE REVENUE AND ON THE B ASIS OF THOSE CIRCUMSTANCES, WE ARE INCLINED TO CONCLUDE THAT THE PROPERTY WAS NOT AN AGRICULTURAL LAND AS THERE IS NO PROOF CARR YING ON AGRICULTURAL ACTIVITIES IN THE SAID LAND. 6.1 FURTHER, JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. HI TECH ARAI LTD. REPORTED IN [2010] 321 ITR 477 (MAD.) WHE REIN HELD THAT:- 3. WE ARE NOT IN A POSITION TO APPRECIATE EITHER O F THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE PETITION ER. AS FAR AS THE FIRST CONTENTION IS CONCERNED, WHEN THE TRIBUNA L BY THE IMPUGNED ORDER HAS APPLIED SECTION 32(1)(IIA) OF TH E ACT, TO THE ITA NO. /MDS./201 :- 19 - : FACTS INVOLVED IN THE CASE OF THE ASSESSEE AND HAS FOUND THAT THE ASSESSEE IS ENTITLED FOR THE ADDITIONAL DEPRECIATIO N CLAIMED UNDER THE SAID PROVISION, IT CANNOT BE HELD THAT SIMPLY B ECAUSE A CO- ORDINATE BENCH OF THE TRIBUNAL HAD EARLIER TAKEN A DIFFERENT VIEW, THE TRIBUNAL ON THIS OCCASION ALSO OUGHT TO HAVE FO LLOWED THE SAME. WHEN WE FIND THAT THE TRIBUNAL HAS APPLIED TH E LAW CORRECTLY IN THE IMPUGNED ORDER, THERE IS NO GAINSA YING THAT THERE WAS AN EARLIER ORDER BY THE CO-ORDINATE BENCH AND THEREFORE, FOR THAT REASON, THIS TIME ALSO THE TRIB UNAL SHOULD HAVE BLINDLY FOLLOWED ITS OWN EARLIER DECISION EVEN IF SUCH EARLIER DECISION DID NOT REFLECT THE CORRECT POSITION OF TH E LAW. AS SUCH, WE ARE NOT IN A POSITION TO FOLLOW THE DEC ISIONS CITED BY THE LD,AR AND RATHER WE ARE INCLINED TO FOLLOW THE DEC ISION OF CO-ORDINATE BENCH IN THE CASE OF ITO VS. SHRI ABOOBUCKER CITED SUPRA, AS IN THE PRESENT CASE THERE IS NO IOTA OF EVIDENCE TO SHOW T HAT ASSESSEE HAS CARRIED ON ANY AGRICULTURAL OPERATIONS IN THE IMPUG NED LAND AS PROVED BY IN THOSE CITED CASES. FURTHER LD. AR RELIED ON T HE JUDGEMENT OF SUPREME COURT IN THE CASE OF S.KHADER KHAN SON CITE D SUPRA AND IN THE ORDER OF THE TRIBUNAL IN THE CASE OF MAHESH OHR I CITED SUPRA IS TOTALLY MISPLACED. IN THE PRESENT CASE, THE DECISI ON OF THE AO NOT ONLY BASED ON THE STATEMENT RECORDED U/S.131(1A) OF THE ACT BUT ALSO IT SUPPORTED BY THE IMPOUNDED MATERIALS FROM THE PREMI SES OF SHRI SHANMUGANATHAN, IT IS ALSO BROUGHT ON RECORD BY THE ASSESSING OFFICER THAT THE LAND LAYOUT WAS FORMED IN THE NAME OF VIP NAGAR. ALL THESE FACTS CLEARLY SUGGEST THAT THE INTENTION OF THE ASE ESSEE IS TO DEAL IN LAND AND TO MAKE PROFIT THUS IT IS AN ADVENTURE IN THE NATURE OF A TRADE ITA NO. /MDS./201 :- 20 - : AND IT IS TO BE CONSIDERED AS BUSINESS INCOME OF TH E ASSESSEE AND THE ASSESSING OFFICER CORRECTLY TREATED THE INCOME EARN ED FROM THESE SALE OF LANDED PROPERTIES AS INCOME FROM BUSINESS ONLY. ACCORDINGLY, THE ORDER OF THE ASSESSING OFFICER ON THIS ISSUE IS CON FIRMED IN TOTO AND THE FINDINGS OF THE LD. CIT(APPEALS) IS VACATED. ACCOR DINGLY, THIS GROUND RAISED BY THE REVENUE IS ALLOWED. 7. THE NEXT GROUND IS WITH REGARD TO DELETION OF A DDITION OF ` 78,00,000/- MADE BY THE AO, ARISING FROM ADDITIONAL RECEIPTS BY THE ASSESSEE TREATING AS BENEFIT ARISING FROM BUSINESS U/S.28(V) OF THE ACT. 8. THE FACTS OF THE ISSUES ARE THAT ONE AMONG THE FOUR PERSONS WHO WERE OWNERS OF THE ADJACENT LANDS OF THE ASSESS EE WAS ONE MR.NATARAJ GANESH, WHO SOLD HIS OWNERSHIP LAND TO M /S.ALMCO P LTD FOR ` 3,58,14,000/-. OUT OF THIS SALE PROCEEDS, AMOUNT RE CEIVED BY THE ASSESSEE BY CHEQUE/DD FROM SHRI NATARAJ GANESH IS ` 70 LAKHS. SHRI NATARAJ GANESH HAS REQUESTED THE ASSESSEE TO FIND A NOTHER SUITABLE PROPERTY FOR HIS INVESTMENT. HE ALSO GAVE A SUM OF ` 60 LAKHS BY DD TO ONE MR.V.DHANAPAL WHO IS IN NO WAY CONNECTED WITH T HE PURCHASE OR SALE OF THE LANDS BUT WAS THE BROTHER IN LAW OF THE ASSESSEE. HE, HOWEVER CLAIMS THAT HE HAS ALSO GIVEN A SUM OF ` 18 LAKHS BY CASH WHICH IS NOT AGREED TO BY THE ASSESSEE. SUBSEQUENT LY, MR.NATARAJ ITA NO. /MDS./201 :- 21 - : GANESH CAME TO KNOW THAT INVESTMENT IN AGRICULTURAL LANDS IS AGAINST FEMA AND HE WILL BE BEHIND BARS FOR VIOLATION AND H ENCE ASKED THE ASSESSEE NOT TO INVEST BUT TO HOLD THE AMOUNT. LATE R, HE HAS TAKEN THE STAND THAT HE HAS GIVEN THE ABOVE AMOUNT TO THE ASS ESSEE AS COST OF VENTURE. LATER, SHRI NATARAJ GANESH FILED AN AFFIDA VIT BEFORE THE AO AND CLAIMED THAT HE PAID ` 1,48,00,000/- TOWARDS PURCHASE AND SALE. ACCORDINGLY, THE AO PROCEEDED TO ADD THE AMOUNT OF ` 70 LAKHS RECEIVED BY THE ASSESSEE AS UNPROVED CREDITS U/S.6 8 OF THE ACT AND THE BALANCE AMOUNT OF ` 78 LAKHS IS TREATED AS PROFIT OF BUSINESS U/S.29(IV) OF THE ACT. AGGRIEVED WITH THE ORDER OF LD. ASSESSING OFFICER, THE ASSESSEE CARRIED THE APPEAL BEFORE THE LD.CIT(A ). 8.1 ON APPEAL, LD.CIT(A) OBSERVED THAT ASSESSEE ST ATED BEFORE HIM THAT THE AFFIDAVIT BY SHRI NATARAJ GANESH IS CONTRA DICTORY BECAUSE THIS AMOUNT IS PAID MUCH LATER TO THE ABOVE SAID TRANSAC TION. SHRI NATARAJ GANESH RECEIVED THE SALE CONSIDERATION ON 03.07.200 8 AND THE DDS FOR ` 70 LAKHS AND ` 60 LAKHS ARE TAKEN ON 08.07.2007. SINCE THE ASSESSE E DID NOT HAVE ENOUGH SOURCES, HE MOBILIZED HIS FRIEN DS FOR PURCHASE OF LAND. SHRI NATARAJ GANESH HAD PURCHASED 15.24 ACRES OF LAND FOR THE PRICE OF ` 5,40,000/- PER ACRE. WHEN THE PRICE IS ` 82 LAKHS WHY HE SHOULD PAY ` 1,48,00,000/-. EVEN IF THE DIFFERENCE MONEY IS TREA TED AS A COMMISSION, THE COMMISSION WORKS OUT TO 41.34% OF THE SALE PROCEEDS WHICH ITSELF IS A PROOF THAT AFFIDAVIT IS NOT CORRECT. THIS CANNOT ITA NO. /MDS./201 :- 22 - : BE ACCEPTED BECAUSE THE PREVAILING BROKERAGE IS ONL Y 2 TO 3%. ON THIS COUNT THE AFFIDAVIT FILED BY SHRI NATARAJ GANESH IS NOT RELIABLE. THE ASSESSEE ACKNOWLEDGES THAT SHRL NATARAJ GANESH HAD PAID ONLY RS.70 LAKHS TO THE APPELLANT AND ` 60 LAKHS TO SHRI DHANAPAL. HE DENIES RECEIPT OF ` 18 LAKHS AT ALL AND ALSO THE ASSESSEE REITERATES T HE STAND THAT WHEN THE AMOUNT RECEIVED BY SHRI DHANAPAL IS I N DD HOW CAN IT BE ASSESSED IN THE HANDS OF THE ASSESSEE. THERE IS NO BASIS. SO HE SAYS THAT ASSESSING OFFICER SHOULD NOT HAVE PLACED RELIANCE ON AFFIDAVIT. THE LD.CIT(A) CONSIDERED OPINION THAT TAKING INTO ACCOUNT THE ABOVE STATEMENTS THE ACTION OF THE ASSESSING OFFICER IN M AKING ADDITION U/S 68 AID THE SUM OF ` 70,00,000 + ` 78,00,000/- = ` 1,,48,00,000/- PAID TOWARDS PURCHASE AND SALE IS MISPLACED AND NOT SUPP ORTED WITH ANY EVIDENCE. DURING THE COURSE OF HEARING, THE AR SUBM ITTED THAT THE STAND TAKEN BY SHILL NATAREJ GANESH WAS COUNTERD BY THIS ASSESSEE THROUGH LEGAL NOTICE. IN RESPONSE TO LEGAL NOTICE S HILL NATAREJ GANESH HAS GIVEN IN WRITING THAT HE HAS FOREGONE THE AMOUN T GIVEN AS AN ADVANCE FOR INVESTMENT IN IAND. SO THE YEAR IN WHIC H SUCH A COMMUNICATION WAS RECEIVED FROM SHILL NATARAJ GANES H THE RELEVANT AMOUNT HAS BEEN OFFERED AS INCOME IN TE HANDS OF TH E APPELLANT. ON THIS COUNT ALSO THE ADDITION MADE REQUIRES TO BE DE LETED. LD.CIT(A) OBSERVED AFTER CONSIDERING THE ABOVE SUBMISSION, VE RIFYING THE LEGAL NOTICE AND REPLY BY SHRI NTARAJ GANESH THAT THAT T HE AMOUNT RECEIVED ITA NO. /MDS./201 :- 23 - : BY THE ASSESSEE FROM SM NATARAJ GANESH REMAINED AS LIABILITY IN THE HANDS OF ASSESSEE AS SHRI NATARAJ GANESH UNTIL FORE GOES THE CLAIM. THIS CANNOT BE TREATED AS UNPROVED CASH CREDITS. TH E PERSON WHO PAID THE AMOUNT HAS CONFIRMED THAT HE HAS GIVEN THIS AMO UNT AND ALSO PAID THROUGH BANKING CHANNEL. THIS FACT HAS NOT BEEN DIS PROVED BY THE ASSESSING OFFICER. ` 78 LAKHS RECEIVED BY SHRI DHANAPAL BY NO STRETCH OF IMAGINATION CAN BE ASSESSED IN THE HANDS OF THE ASS ESSEE SIMPLY BASED ON AFFIDAVIT. ACCORDINGLY, LD.CIT(A) DELETED THE ADDITION OF `70 LAKHS AND ` 78 LAKHS TOTALLING TO ` 1,48,00,000/- LAKHS. AGAINST THIS THE REVENUE IS IN APPEAL BEFORE US. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MAIN GRIEVANCE OF REVENUE IN THIS APPEA L IS THAT THE CIT(A) DELETED THE ABOVE ADDITION BY ADMITTING CERT AIN FRESH EVIDENCE WITHOUT GIVING AN OPPORTUNITY TO THE AO TO VERIFY T HE SAME BY VIOLATING RULE 46A(3) INCOME TAX RULES, 1962. IN OUR OPINIO N, BEFORE THE AO THERE IS NO CONFIRMATION LETTER FROM THE ELIGIBLE C REDITORS AS DISCUSSED BY THE AO IN PARA-6.III AT PAGE-11 OF THE ASSESSMEN T ORDER. CONTRARY TO THIS, THE CIT(A) OBSERVED THAT THERE IS A CONFIRMAT ION LETTER FROM THE PARTIES CONCERNED. IN OUR OPINION, WHATEVER THE EVI DENCE FILED BY THE ASSESSEE BEFORE THE CIT(A) TO BE CONFRONTED TO THE AO FOR HIS COMMENTS. HENCE, WE REMIT THIS ISSUE RELATING TO TH E ADDITION OF ` 1.48 CRORES TO THE FILE OF LD. ASSESSING OFFICER FOR FRE SH CONSIDERATION. WE ITA NO. /MDS./201 :- 24 - : NEED NOT TO SAY THAT THE ASSESSEE SHALL BE GIVEN AN OPPORTUNITY OF HEARING BEFORE DECIDING THE ISSUE. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS A LLOWED. ORDER PRONOUNCED ON 04 TH NOVEMBER, 2016, AT CHENNAI. SD/ - SD/ - ( . ) ( G.PAVAN KUMAR ) / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 04 TH NOVEMBER, 2016 K S SUNDARAM &'(()*( +* / COPY TO: ( 1 . / APPELLANT 3. ( ,(- . / CIT(A) 5. */0 (1 / DR 2. / RESPONDENT 4. ( , / CIT 6. 02(3 / GF