Shri Ajit Subhash Gaikwad, Pune V. Dy. CIT, Central Circle 2(1), Pune

ITA 700/PUN/2013

• Counselvise Citation: 70024514 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 18-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Keywords: Capital asset; Principle of natural justice; Earning of tax free income; Cost of acquisition; Benefit of exemption
• Section: 143(3); 2(14); 153A; 54; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE M S . SUSHMA CHOWLA , JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 699 /PN/201 3 ITA NO. 699 /PN/201 3 ASSESSMENT YEAR: 200 9 - 1 0 MR. ABHIJIT SUBHASH GAIKWAD, S.NO.127/A, A.G. TECHNOLOGY PARK, 2 ND FLO OR, AUNDH, PUNE 411007 . APPELLANT PAN: AIOPG4167C VS. THE DY. COMMISSIONER OF INCOME TAX, THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), PUNE . RESPONDENT ITA NO. 7 0 0 /PN/2013 ASSESSMENT YEAR: 2009 - 10 MR. AJIT SUBHASH GAIKWAD, S.NO.127/A, A.G. TECHNOLOGY PARK, 2 N D FLOOR, AUNDH, PUNE 411007 . APPELLANT PAN: AIP P G 6313B VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), PUNE . RESPONDENT ITA NO. 701 /PN/2013 ASSESSMENT YEAR: 2009 - 10 MR. SUBHASH SHANKARRAO GAIKWAD, S.NO.127/A, A.G. TECHNOLO GY PARK, 2 ND FLOOR, AUNDH, PUNE 411007 . APPELLANT PUNE 411007 . APPELLANT PAN: AI P PG 6313B VS. THE DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), PUNE . RESPONDENT A PPELLANT BY : SHRI ABHAY AVCHAT RESPONDENT BY : SHRI A.K. MODI DATE OF HEARIN G : 1 6 - 0 4 - 201 5 DATE OF PRONOUNCEMENT : 27 - 0 5 - 201 5 ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 2 ORDER PER SUSHMA CHOWLA, J.M : ALL THESE APPEALS FILED BY THE DIFFERENT ASSESSEES ARE AGAINST THE DIFFERENT ORDER S OF CIT(A) - CENTRAL , PUNE ALL DATED 3 1. 12 .201 2 REL ATING TO SAME ASSESSMENT YEAR 2009 - 10 PASSED UNDER SECTION 143(3) R.W.S. 153A OF THE INCOME TAX ACT , 1961 . 2. ALL THE APPEALS RELATING TO RELATED PERSONS ON SIMILAR ISSUE S WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENI ENCE. THE FACTS IN ALL THE APPEALS ARE IDENTICAL. HOWEVER, WE MAKE A REFERENCE TO THE FACTS IN ITA NO. 699 /PN/2013 TO ADJUDICATE THE ISSUE. 3. THE ASSESSEE IN ITA NO.699/PN/2013 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. WITHOUT CONSIDERING FACTS AND C IRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING OFFICER, PUNE, HAS ERRED IN ASSESSING TOTAL INCOME RETURNED OF RS.12,46,968/ - AT A HIGHER AMOUNT OF RS.108,74,396 - AND THE RS.12,46,968/ - AT A HIGHER AMOUNT OF RS.108,74,396 - AND THE COMMISSIONER OF INCOME TAX HAS ERRED IN CONFIRMING THE SAME. 2. IN THE FACTS AND CIRCUM STANCES OF T HE CASE AND THE ATTENDANT LAW, THE LEARNED ASSESSING OFFICER, PUNE HAS ERRED IN MAKING THE ADDITION OF RS.96,27,428 / - IN THE ASSESSMENT ORDER PASSED FOR A.Y. 2009 - 10 ON ACCOUNT OF CAPITA L GAINS AND T HE COMMISSIONER OF I NCO M E TAX HAS ERRED IN CO NFIRMING THE SAME. 3. THE LEARNED ASSESSING OFFICER, PUNE HAS ERRED IS NOT CONSIDERING THE AFFORDING BENEFIT OF EXEMPTION FROM TAX AVAILABLE UNDER THE INCOME TAX LAW TO INCOME EARNED BY THE ASSESSEE FROM SALE OF AGRICULTURAL LAND AND T HE COMMISSIONER OF INCO ME TAX HAS E RRED IN CONFIRMING THE SAME. 4. THE ASSESSMENT ORDER UNDER SECTION 143(3 ) R.W . S . 153A OF THE INCOME TAX ACT 1961, DATED 30 . 12.2011 IS PASSED WITHOUT FOLLOWING PRINCIPLES OF NATURAL JUSTICE AND THEREFORE, THE SAME NEEDS TO BE CANCELLED . 5. THE ORDER UNDER SECTION 143(3) R.W.S. 153A OF THE INCOME TAX ACT 1961, DATED 30.12 2011 OF THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRA L CIRCLE - 2(1), PUNE, IN CASE OF THE ASSESSEE IS BAD IN LAW. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT SEARCH ACTION UNDER SECTION 132 OF THE ACT WAS CONDUCTED AT THE PREMISES OF ASSESSEE AT AUNDH, PUNE . THE ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 3 ASSESSEE HAD ORIGINALLY FILED RETURN OF INCOME ON 31.10.2009 AND IN RESPONSE TO NOTICE UNDER S ECTION 153A OF THE ACT , THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 12,46,968/ - . THE ASSESSING OFFICER NOTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD SOLD LAND FOR TOTAL CONSIDERATION OF RS. 1,01,00,000/ - . AS PER THE RETURN OF INCOME, THE ASSESSEE HAD COMPUTED THE INCOME FROM CAPITAL GAINS AT NIL BY CLAIMING DEDUCTION UNDER SECTION 54/54B/54D/54EC/54F/54G/54GA OF THE ACT. SINCE THE ASSESSEE HAD CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT, THE ASSESSEE WAS ASKED TO F URNISH DOCUMENTS IN SUPPORT OF ITS CLAIM. IN REPLY, THE ASSESSEE CONTENDED THAT THE LAND UNDER CONSIDER ATION WAS AN AGRICULTURAL LAND OUTSIDE THE CITY LIMITS. IT WAS CLAIMED TO BE OVER 45 KILOMETERS AWAY FROM MUNICIPAL LIMITS AND THE POPULATION OF THE VI LLAGE WAS MUCH LESSER THAN 10,000. IN SUPPORT OF ITS CLAIM REGARDING POPULATION, A CERTIFICATE FROM TALATHI WAS PRODUCED. THE ASSESSEE THEREAFTER, WAS ASKED TO PRODUCE DOCUMENTARY EVIDENCE IN SUPPORT OF THE LAND BEING AN AGRICULTURAL LAND. IN RESPONSE T HERETO, THE ASSESSEE PRODUCED 7/12 EXTRACT, ACCORDING TO WHICH, THE LAND WAS A JIRAYAT FALLOW LAND (PAD LAND). THE ASSESSING OFFICER DEPUTED THE INSPECTOR TO REPORT ABOUT THE STATUS OF THE LAND, WHO IN TURN REPORTED THAT THE LAND OF THE ASSESSEE WAS ON A HILLOCK AND WAS A BARREN LAND. HE REPORTED THAT THE LAND IN QUESTI ON WAS NOT AN AGRICULTURAL LAND. HE ALSO REPORTED THAT IT WAS GRASS LAND AND HENCE CULTIVATION MAY NOT BE POSSIBLE ON THIS LAND. IN VIEW THEREOF, THE ASSESSEE WAS ASKED TO CLARIFY AS TO W HY PROFIT ON ACCOUNT OF TRANSFER OF LAND SHOULD NOT BE TAXED IN HIS HANDS. IN RESPONSE, THE ASSESSEE CONTENDED THAT IT USED TO GROW WHEAT / JAWAR ON THIS LAND AND HENCE, THE LAND WAS AGRICULTURAL LAND. THE ASSESSING OFFICER NOTED AS PER THE LAND RECORDS I.E. 7/12 EXTRACTS, THE LAND WAS PAD LAND, THE SCANNED COPY OF 7/12 EXTRACT IS PLACED AT PAGES 4 AND 5 OF THE ASSESSMENT ORDER. FROM THE PERUSAL OF THE SAME, THE ASSESSING OFFICER NOTED THAT THE LAND WAS JIRAYAT FALLOW LAND AND CROP GROWN WAS GRASS AND IT WAS HELD THAT THE LAND WAS NOT AN AGRICULTURAL LAND. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS FAR AS TAXABILITY OF LAND WAS ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 4 CONCERNED, WHAT WAS RELEVANT WAS THE USER OF LAND AT THE TIME OF SALE. THE ASSESSING OFFICER ALSO NOTED THAT THE LAND OF AR OUND ONE ACRE HAD BEEN SOLD FOR A CRORE AND NO AGRICULTURIST WOULD PURCHASE SUCH LAND FOR AGRICULTURAL PURPOSES AT THIS RATE. THE ASSESSING OFFICER THUS, HELD THAT THE LAND IN QUESTION WAS NOT AN AGRICULTURAL LAND AND THEREFORE, PROFIT FROM TRANSFER OF SU CH LAND WAS NOT EXEMPT AS AN AGRICULTURAL INCOME. RELIANCE IN THIS REGARD WAS PLACED UPON BY THE ASSESSING OFFICER ON THE FOLLOWING DECISIONS: - 1. SMT. SARIFABIBI MOHMED IBRAHIM & OTHERS VS. CIT, 204 ITR 631 (SC) 2. CIT VS. V.A. TRIVEDI, 172 ITR 95 (BOM) 3. GOP AL C. SHARMA VS. CIT, 209 ITR 946 (BOM) 5. ANOTHER ASPECT NOTED BY THE ASSESSING OFFICER WAS THAT THE ASSESSEE IN THE RETURN OF INCOME HAD HIMSELF COMPUTED CAPITAL GAINS OF RS.96,27, 428/ - , AGAINST WHICH HE HAD CLAIMED THE DEDUCTION UNDER SECTION 54 OF TH E ACT. SINCE THE CLAIM OF DEDUCTION COULD NOT BE SUPPORTED BY ANY DOCUMENTARY EVIDENCE, THE CLAIM OF THE SAID DEDUCTION WAS DENIED TO THE ASSESSEE AND INCOME FROM CAPITAL GAINS AT RS. 96,27,428/ - WAS TAXED IN THE HANDS OF ASSESSEE. 6. BEFORE THE CIT(A), T HE ASSESSEE MADE WRITTEN SUBMISSIONS TO ITS CLAIM THAT THE SAID LAND WAS AGRICULTURAL LAND AT THE TIME OF PURCHASE, IN SUPPORT OF WHICH, COPY OF AGREEMENT WAS FURNISHED. IT WAS FURTHER CLAIMED THAT THE SAID LAND WAS AGRICULTURAL LAND AT THE TIME OF SALE A S MENTIONED IN THE SALE DEED. FURTHER, THE LAND WAS REGISTERED AS AN AGRICULTURAL LAND IN REVE NUE RECORDS AND WAS ALSO SURROUNDED BY THE AGRICULTURAL LAND AND ALSO LAND WAS NOT SITUATE D WITHIN THE MUNICIPAL LIMITS OF 8 KILOMETERS OR THE VILLAGE HAD POPULA TION OF 10,000 OR MORE. AS PER THE ASSESSEE, IN VIEW OF THE SAID FACTUAL ASPECTS, THE LAND WAS AGRICULTURAL LAND AND THEREFORE, NOT A CAPITAL ASSET UNDER SECTION 2(14) OF THE ACT. THE CONTENTION OF THE ASSESSEE BEFORE THE CIT(A) WAS THAT THE APPROPRIATE AUTHORITY TO DECLARE ANY LAND A S AGRICULTURAL LAND WAS THE REVENUE DEPARTMENT OF GOVT. OF MAHARASHTRA AND 7/12 EXTR ACT REVEALED THE NATURE OF LAND. ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 5 7. THE CIT(A) MAKING A REFERENCE TO THE PROVISIONS OF SECTION 2(14) OF THE ACT NOTED THAT FROM THE PLAIN REA DING OF THE SAID PROVISIONS, IT WAS CLEAR THAT IN ORDER TO BE EXCLUDED FROM THE DEFINITION OF CAPITAL ASSET , THE LAND MUST FIRST AND FOREMOST, BE AGRICULTURAL LAND AND THEREAFTER, IT SHOULD ALSO SATISFY THE REQUIRE MENTS OF SUB - CLAUSE S (A) AND (B). IN THE PRESENT CASE, SINCE THE LOCATION OF LAND OUTSIDE THE PRESCRIBED DISTANCE FROM THE NEAREST MUNICIPALITY HAD NOT BEEN DOUBTED BY THE ASSESSING OFFICER, THE CIT(A) HELD THAT THE CONDITIONS OF CLAUSES (A) AND (B) WERE CONSIDERED TO HAVE BEEN MADE. THE ONL Y QUESTION TO BE ADJUDICATED WAS THE FUNDAMENTAL FACT WHETHER OR NOT THE LAND IN QUESTION WAS AGRICULTURAL LAND AT THE RELEVANT TIME. THE CIT(A) REFERRED TO THE RATIO LAID DOWN IN CIT VS. SIDDHARTH J. DESAI (1983) 139 ITR 628 (GUJ) AND REFERRED TO 13 TEST S LISTED BY THE HONBLE GUJARAT HIGH COURT , WHICH IN TURN WERE APPROVED BY THE HONBLE SUPREME COURT IN SARIFABIBI MOHMED IBRAHIM VS. CIT (1993) 204 ITR 631 (SC) . THE CIT(A) FURTHER NOTED THAT ONE OF THE SIGNIFICANT TESTS LISTED WERE WHETHER THE LAND WAS ACTUALLY AND ORDINARILY USED FOR AGRICULTURAL PURPOSE AT OR ABOUT THE RELEVANT TIME AND WHERE THE LAND HAD NOT BEEN CULTIVATED FOR A PERIOD OF FOUR YEARS PRIOR TO ITS SALE, IT WAS HELD THAT THE ASSESSEE HAD NO INTENTION TO BRING THE SAID LAND UNDER CULTIVA TION. THE MER E FACT THAT THE LAND REVENUE WAS ASSESSED AND PAID IN RESPECT OF LAND DOES NOT MAKE IT AGRICULTURAL FOR THE PURPOSES OF THE ACT AS HELD IN CWT VS. OFFICER - IN - CHARGE (COURT OF WARDS) PAIGAH (1976) 105 ITR 133 (SC). FURTHER, RELIANCE WAS PLACE D ON THE RATIO LAID BY HONBLE GUJARAT HIGH COURT IN CIT VS. SIDDHARTH J. DESAI (SUPRA) AND RANCHHODBHAI BHAIJIBHAI PATEL VS. CIT (1971) 81 ITR 446 (GUJ) , WHEREIN IT WAS HELD THAT TRUE TEST TO BE APPLIED FOR THE PURPOSE OF DETERMINING WHETHER A PARTICULAR LAND WAS AGRICULTURAL LAND OR NOT IS FIRST TO ASCERTAIN THE USE TO W HICH THE LAND IS ACTUALLY BEING PUT. THE CIT(A) VIDE PARA 6.7 HELD AS UNDER: - 6.7 IN THE PRESENT CASE, NOT A SHRED OF EVIDENCE HAS BEEN PRESENTED BY THE APPELLANT EITHER BEFORE THE AO O R BEFORE ME DURING APPELLATE PROCEEDINGS TO ESTABLISH THAT THE LAND IN QUESTION WAS ACTUALLY BEING USED FOR CULTIVATION AT ANY TIME OR ANY 'BASIC OPERATIONS' OR 'SUBSEQUENT OPERATIONS' AS EXPLAINED BY THE HON. SUPREME COURT IN RAJA BENOY KUMAR SAHAS RO Y (SUPRA) WERE CARRIED OUT ON THE LAND. IN FACT, THE AO, BASED ON THE REPORT SUBMITTED BY THE INSPECTOR AFTER INQUIRY, HAS ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 6 MENTIONED THAT THE LAND WAS NOT FIT FOR CULTIVATION. THIS HAS NOT BEEN CHALLENGED BY THE ASSESSEE. UNDER THE CIRCUMSTANCES, THE CO RE ATTRIBUTE OF AGRICULTURAL LAND, NAMELY, USE THEREOF FOR THE PURPOSES OF AGRICULTURE, WAS MISSING IN THE PRESENT CASE. IN THE ABSENCE OF THIS FUNDAMENTAL FACT, THE SURROUNDING FACTS RELIED UPON BY THE APPELLANT SUCH AS THE MENTION OF THE LAND AS 'AGRI CULTURAL' IN THE SALE DEED, THE REGISTRATION THEREOF AS 'AGRICULTURAL LAND' IN REVENUE RECORDS, THE FACT OF BEING SURROUNDED BY AGRICULTURAL LANDS AND NOT BEING LOCATED IN OR AROUND AN URBAN AREA, CANNOT BESTOW 'AGRICULTURAL' STATUS UPON THE LAND. IN VIEW OF THE FACTUAL POSITION PREVAILING IN THE CASE AND THE LEGAL POSITION EMERGING FROM AUTHORITATIVE JUDICIAL PRONOUNCEMENTS DISCUSSED ABOVE, THEREFORE, GROUNDS NO.2 AND 3 ARE HEREBY DISMISSED. 8 . ANOTHER ASPECT NOTED BY THE CIT(A) WAS THE COMMUNICATION RE CEIVED FROM THE JCIT DURING THE TIME WHEN ORDER WAS UNDER DRAFTING AND THE REPORT OF TALATHI TO THE EXTENT THAT THE LAND WAS NEVER USED FOR AGRICULTURAL ACTIVITY. T HE CIT(A) HAS INCORPORATED THOSE COMMUNICATIONS I N ITS ORDER FOR THE SAKE OF RECORD AND HEL D THAT THE SAME ARE BEING INCORPORATED IN THE ORDER ONLY FOR THE SAKE OF RECORD SINCE HE HAD ALREADY REACHED THE CONCLUSION THAT THE LAND IN QUESTION WAS NOT AN AGRICULTURAL LAND . 9 . THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 1 0 . THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STRESSED THAT THE SAID LAND SOLD BY THE ASSESSEE IS MENTIONED AS AGRICULTURAL LAND IN THE LAND RECORDS AND ALSO MENTIONED IN THE PURCHASE DEED WHEN THE ASSESSEE HAD ORIGINALLY PURCHASED IT AND ALSO IN THE SALE DEE D , WHEN THE SAME WAS SOLD. THE CLAIM OF ASSESSEE BEFORE US WAS THAT THE ASSESSEES LAND IS CAPABLE OF DOING CULTIVATION AND CARR Y OUT AGRICULTURAL ACTIVITY. FURTHER, THE CONTENTION OF THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE WAS THAT THE SA ME WAS NOT SITUATE D IN ANY INDUSTRIAL ZONE NOR WAS SOLD FOR NON - AGRICULTURAL PURPOSES AND THOUGH, IT WAS SITUATED ON HILLOCK AREA, IT WAS CAPABLE OF BEING USED FOR AGRICULTURAL OPERATIONS AND CULTIVATION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSE SSEE STRESSED THAT AS ON DATE OF PURCHASE AND SALE, THE STATUS OF LAND UNDER CONSIDERATION WAS AN AGRICULTURAL LAND AND WAS SURROUNDED BY AGRICULTURAL LAND, ADDITION MADE IN THE HANDS OF ASSESSEE WAS NOT WARRANTED. THE LEARNED AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN HIND USTAN INDUSTRIAL RESOURCES LTD. VS. ACIT (2011) 335 ITR 77 (DEL) . THE LEARNED AUTHORIZED REPRESENTATIVE ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 7 FOR THE ASSESSEE HAS FURNISHED SYNOPSIS OF ARGUMENTS WHICH ARE PLACED ON RECORD. 1 1 . IN REPLY, THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE SUBMITTED WRITTEN S UBMISSIONS AND POINTED OUT AS UNDER: - 4. I N THIS CONTEXT IT IS SUBMITTED THAT THE ASSESSEE HAS NOT REBUTTED THE FINDINGS OF FACT GIVEN BY A O BASED ON THE INSPECTOR'S REPORT, 7/12 EXTRACTS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND TALATI'S REPORT THAT THE LAND WAS NEVER USED FOR AGRICULTURAL PURPOSE IN PAST. NO EVIDENCES WERE PRODUCED TO PROVE FACTUM OF LAND CULTIVATION IN RECE NT PAST. THE HON'BLE SUPREME COURT IN THE CASE OF SARIFABIBI MOHMED IBRAHIM (SUPRA) HAS LAID DOWN THE PRINCIPAL THAT IT IS A QUESTION OF FACT AND WHETHER THE PARTICULAR LAND IS TO BE TREATED AS AGRICULTURAL LAND IS TO BE TESTED ON 13 PARAMETERS MENTIONED I N THE ORDER. THE ACTUAL CULTIVATION IN RECENT PAST OR INTENTION OF USING THE LAND FOR AGRICULTURAL PURPOSE IN NEAR FUTURE WAS MOST IMPORTANT. NATURE SHOWN AS AGRICULTURAL LAND IN REVENUE RECORDS IS NOT CONCLUSIVE TEST. IN THIS CASE ALSO LAND WAS NOT PUT T O USE FOR AGRICULTURAL PURPOSES IN RECENT PAST PRIOR TO DATE OF SALE AND THERE WAS NO EVIDENCE OF INTENTION TO CARRY OUT AGRICULTURAL PURPOSE IN FUTURE. THUS LAND WAS NOT AGRICULTURAL LAND AT THE TIME OF SALE. THE HON'BLE MUMBAI JURISDICTIONAL HIGH COURT IN THE CASE OF SHRI GOPAL C.SHARMA (SUPRA) FOLLOWED DECISION OF THE HON'BLE SUPREME COURT (SUPRA) AND HELD AS UNDER: T HE EXPRESSION AGRICULTURAL LAND' IS NOT DEFINED IN THE INCOME TAX ACT, 1961. THE UNDERLYING OBJECT OF THE ACT TO EXEMPT AGRICULTURAL I NCOME FROM INCOME TAX IS TO ENCOURAGE ACTUAL CULTIVATION OR DE FACTO AGRICULTURAL OPERATIONS. ACTUAL USE OF THE LAND FOR AGRICULTURAL PURPOSE OR ABSENCE THEREOF AT THE RELEVANT TIME IS UNDOUBTEDLY ONE OF THE CRUCIAL TESTS FOR THE THEREOF AT THE RELEVANT TIME IS UNDOUBTEDLY ONE OF THE CRUCIAL TESTS FOR THE DETERMINATION OF THE ISSUE . IT IS WELL SETTLED THAT THE NATURE AND CHARACTER OF LAND MAY UNDERGO A CHANGE DEPENDING UPON ITS SITUATION, GROWTH OF THE LOCALITY OR ZONE IN WHICH IT IS SITUATE AND ITS POTENTIALITY. THE FACT THAT THE LAND IS SOLD OR TRANSFERRED TO A NON AGRICULTURIST F OR A NON AGRICULTURAL PURPOSE OR THAT IT IS LIKELY TO BE USED FOR NON AGRICULTURAL PURPOSES SOON AFTER ITS TRANSFER IS ALSO A RELEVANT FACTOR GERMANE TO THE DETERMINATION OF THE ISSUE. MERELY BECAUSE THE LAND WAS USED FOR AGRICULTURAL PURPOSES IN THE REMOT E PAST OR ITS CONTINUES TO BE ASSESSED TO LAND REVENUE A AGRICULTURAL LAND IS NOT DECISIVE. IN ORDER TO ASCERTAIN THE TRUE CHARACTER AND NATURE OF THE LAND IT MUST BE SEEN WHETHER THE LAND HAD BEEN PUT TO USE FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME PRIOR TO THE RELEVANT DATE AND FURTHER AS TO WHETHER ON THE DATE OF THE TRANSFER THE LAND IN QUESTION WAS INTENDED TO BE PUT TO USE BY THE PURCHASER FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME IN FUTURE' ON THE OTHER HAND HON'BLE DELH I HIGH COURT DECIDED THE ISSUE WITHOUT CONSIDERING DECISION OF HON'BLE SUPREME COURT HENCE SAME WOULD NOT CONSTITUTE BINDING PRECEDENT. DECISION OF JURISDICTIONAL HIGH COURT WHICH HAS FOLLOWED SUPREME COURT DECISION WOULD CONSTITUTE BINDING PRECEDENT. IT IS THEREFORE PRAYED THAT APPEAL FILED BY THE ASSESSEE BE DISMISSED. 1 2 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING BEFORE US IS IN RELATION TO THE ASSESSABILITY OF CAPITAL GAINS IN THE HANDS OF ASSESSEE ON SALE OF LAN D. THE ASSESSEE CLAIMS TO HAVE SOLD AGRICULTURAL LAN D FOR TOTAL CONSIDERATION OF RS.1,01,00,000/ - DURING THE YEAR UNDER CONSIDERATION. ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 8 THOUGH IN THE RETURN OF INCOME THE ASSESSEE HAD COMPUTE D THE INCOME FROM CAPITAL GAINS AND CLAIMED DEDUCTION UNDER SECT ION 54 OF THE ACT, HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE PLEA OF THE ASSESSEE WAS THAT THE SAID LAND SOLD BY THE ASSESSEE WAS AN AGRICULTURAL LAND AND HENCE OUTSIDE THE PURVIEW OF BEING TAXED UNDER THE HEAD INCOME FROM CAPITAL GAINS A S IT FELL OUTSIDE THE DEFINITION OF CAPITAL ASSET UNDER SECTION 2(14) OF THE ACT. 1 3 . SECOND 2(14) OF THE ACT DEFINES AGRICULTURAL LAND AS UNDER: - 2. IN THIS ACT, UNLESS THE CONTEXT OTHERWISE REQUIRES, - (14) CAPITAL ASSET MEANS PROPERTY OF ANY KIND HELD BY AN ASSESSEE, WHETHER OR NOT CONNECTED WITH HIS BUSINESS OR PROFESSION, BUT DOES NOT INCLUDE (I) .. (II) . (III) AGRICULTURAL LAND IN INDIA, NOT BEING LAND SITUATE - (A) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY (WHETH ER KNOWN AS A MUNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND ACCORDING TO THE LAST PRECEDING CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFORE THE FIRST DAY OF THE PREVIOUS YEAR; OR (B) IN ANY AREA WITHIN SUCH DISTANCE, NOT BEING MORE THAN EIGHT KILOMETERS, FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM (A), AS T HE CENTRAL GOVERNMENT MAY, HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR, URBANIZATION OF THAT AREA AND OTHER RELEVANT CONSIDERATIONS, SPECIFY IN THIS BEHALF BY NOTIFICATION IN THE OFFICIAL GAZETTE; 1 4 . UNDER THE DEFINITION , LAND, WHICH IS AGRICULTUR AL LAND FALLS OUTSIDE THE PURVIEW OF BEING CAPITAL ASSET SUBJECT TO FULFILMENT OF SUB - CLAUSES (A) AND (B) , WHICH INTER - ALIA PROVIDED T HAT THE LAND IN QUESTION SHOULD NOT BE WITHIN THE JURISDICTION OF A MUNICIPALITY OR CANTONMENT BOARD , ITS POPULATION OF NO T LESS THAN 10,000 PERSONS AND FURTHER IT SHOULD NOT BE IN AN AREA NOT BEING MORE THAN 8 KILOMETERS FROM THE MUNICIPAL LIMITS OR CAN TONMENT BOARD . IN THE PRESENT CASE, THE FULFILLMENT OF CONDITIONS IN CLAUSES (A) AND (B) ARE CONSIDERED TO HAVE BEEN MET I. E. THE LAND IN QUESTION IS SITUATED BEYOND 8 KILOMETERS FROM THE LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD AND ALSO THE AREA IN WHICH THE SAID LAND ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 9 IS SITUATED DOES NOT HAVE POPULATION OF MORE THAN 10,000 . THE ONLY Q UESTION WHICH REMAINS TO BE ADJUDICATED IN THE PRESENT CASE IS WHETHER THE LAND SOLD BY THE ASSESSEE WAS AN AGRICULTURAL LAND AND WHETHER IT FALLS OUTSIDE THE DEFINITION OF CAPITAL ASSET. 15. THE HONBLE SUPREME COURT IN CIT VS. RAJA BENOY KUMAR SAHAS ROY (1957) 32 ITR 466 (SC) HA D HELD THAT AGRICULTURE IN ITS ROOT SENSE MEAN AGAR, A FIELD AND CULTURE, I.E. CULTIVATION OF A FIELD. AGRICULTURE IMPLIES EXPENDITURE OF HUMAN SKILLS AND LABOUR UPON LAND. AFTER EXHAUSTIVELY DISCUSSING THE VARIOUS CASES DEALING WITH THE SUBJECT, THE APEX COURT HELD THAT AGRICULTURE INVOLVED 'BASIC OPERATIONS', SUCH AS TILLING OF LAND, SOWING OF SEEDS, PLANTING ETC. AND 'SUBSEQUENT OPERATIONS', SUCH AS WEEDING, TENDING, PRUNING, CUTTING, HARVESTING AND RENDERING THE PRODUCE FIT FOR MARKET. 16. FURTHER, THE HONBLE GUJARAT HIGH COURT IN CIT VS. SIDDHARTH J. DESAI (SUPRA) HAD LAID DOWN 13 TESTS TO DETERMINE WHETHER A PARTICULAR LAND IS AGRICULTURAL LAND OR NOR WHICH ARE AS UNDER: - (1) WHETHER THE LAND WAS CLASSIFIED IN THE REVENUE RECORDS AS AGRI CULTURAL LAND WHETHER IT WAS SUBJECT TO THE PAYMENT OF LAND REVENUE? (2) WHETHER THE LAND WAS ACTUALLY OR ORDINARILY USED FOR AGRICULTURAL PURPOSES AT OR ABOUT THE RELEVANT TIME? (3) WHETHER SUCH USER OF THE LAND WAS FOR A LONG PERIOD OR WHETHER IT WAS O F A TEMPORARY CHARACTER OR BY WAY OF A STOP - GAP ARRANGEMENT (4) WHETHER THE INCOME DERIVED FROM THE AGRICULTURAL OPERATIONS CARRIED ON IN THE LAND BORE ANY RATIONAL PROPORTION TO THE INVESTMENT MADE IN PURCHASING THE LAND? (5) WHETHER, THE PERMISSION UN DER S.65 OF THE BOMBAY LAND REVENUE CODE WAS OBTAINED FOR THE NON - AGRICULTURAL USE OF THE LAND? IF SO, WHEN AND BY WHOM (THE VENDOR OR THE VENDEE)? WHETHER SUCH PERMISSION WAS IN RESPECT OF A PORTION OF THE LAND AND IF IT WAS OBTAINED IN THE PAST, WHAT WA S THE NATURE OF THE USER OF THE SAID PORTION OF THE LAND 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 AN ALTERNATIVE USE? WHETHER SUCH CESSER AND/OR ALTERNATIVE US ER WAS OF A PERMANENT OR TEMPORARY NATURE? ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 10 (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 SITUATE IN A DEVELOPED AREA? WHETHER ITS PHYSICAL CHARACTERISTICS, SURROUNDING SITUATION AND USE OF THE LANDS IN THE ADJOINING AREA WERE SUCH AS WOULD INDICATE THAT THE LAND WAS AGRICULTURAL? (9) WHETHER THE LAND ITSEL F WAS DEVELOPED BY PLOTTING AND PROVIDING ROADS AND OTHER FACILITIES? (10) WHETHER THERE WERE ANY PREVIOUS SALES OF PORTIONS OF THE LAND FOR NON - AGRICULTURAL USE? (11) WHETHER PERMISSION UNDER S.63 OF THE BOMBAY TENANCY AND AGRICULTURAL LANDS ACT, 1948, WAS OBTAINED BECAUSE THE SALE OR INTENDED SALE WAS IN FAVOUR OF A NON - AGRICULTU RIST? IF SO, WHETHER THE SALE OR INTENDED SALE TO SUCH NON - AGRICULTURIST 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 FOR AGRICULTURAL PURPOSES AT THE PRICE AT WHICH THE LAND WAS SOLD AND WHETHER THE OWNER WOULD HAVE EVER SOLD THE LAND VALUING IT AS A PROPERTY YIELDING AGRICULTURAL PRODUCE ON THE BASIS OF ITS Y IELD? 17. THE HONBLE GUJARAT HIGH COURT FURTHER HELD THAT AT THE RISK OF REPETITION, WE MAY MENTION THAT NOT ALL OF THESE FACTORS WOULD BE PRESENT OR ABSENT IN ANY CASE AND THAT IN EACH CASE ONE OR MORE OF THOSE FACTORS MAY MAKE APPEARANCE AND THAT THE ULTIMATE DECISION WILL HAVE TO BE REACHED ON A BALANCED CONSIDERATION OF THE TOTALITY OF CIRCUMSTANCES. 1 8 . T HE HONBLE SUPREME COURT IN SMT. SARIFABIBI MOHMED IBRAHIM & OTHERS VS. CIT (SUPRA) HAD LAID DOWN AS UNDER: - WHETHER A PIECE OF LAND IS AGRICULT URAL LAND OR NOT IS ESSENTIALLY A QUESTION OF FACT. SEVERAL TESTS HAVE BEEN EVOLVED IN DECISIONS OF THE SUPREME COURT AND THE HIGH COURTS, BUT ALL OF THEM ARE MORE IN THE NATURE OF GUIDELIN E S. THE QUESTION HAS TO BE ANSWERED IN EACH CASE, HAVING REGARD T O THE FACTS AND CIRCUMSTANCES OF THAT CASE. THERE MAY BE FACTORS BOTH FOR OR AGAINST A PARTICULAR POINT OF VIEW. THE COURT HAS TO ANSWER THE QUESTION ON A CONSIDERATION OF ALL OF THEM A PROCESS OF EVALUATION. THE INFERENCE HAS TO BE DRAWN ON A CUMULAT IVE CONSIDERATION OF ALL THE RELEVANT FACTS. ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 11 19. THE HONBLE BOMBAY HIGH COURT IN CIT VS. V.A. TRIVEDI (1988) 172 ITR 95 (BOM) I.E. THE DECISION RELIED UPON BY THE ASSESSING OFFICER , AFTER CONSIDERING THE FACTS OF THE CASE, IT WAS HELD THAT TO ASCERTAIN THE TRUE CHARACTER AND NATURE OF THE LAND, IT MUST BE SEEN WHETHER IT HAS BEEN PUT TO USE FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME, PRIOR TO THE RELEVANT DATE AND FURTHER WHETHER ON THE RELEVANT DATE THE LAND WAS INTENDED TO BE PUT TO USE FO R AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME IN THE FUTURE. 20 . FOLLOWING THE JUDICIAL PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT AND VARIOUS HIGH COURTS IN ORDER TO DETERMINE THE NATURE OF THE AGRICULTURAL LAND, THE FIRST AND FOREMOST TE ST WAS WHETHER THE LAND WAS ACTUALLY AND ORDINARILY USED FOR THE PURPOSE OF AGRICULTURE . WHERE THE SAID LAND HAD NOT BEEN ACTUALLY CULTIVATED IN THE RECENT PAST AND / OR THERE WAS NO INTENTION OF USING THE LAND FOR AGRICULTURAL PURPOSES IN NEAR FUTURE, WA S HELD BY THE COURTS TO BE THE MOST CON CLUSIVE FEATURE TO DETERMINE THE NATURE OF LAND IN QUESTION. MERELY BECAUSE THE LAND WAS SHOWN AS AGRICULTURAL IN REVENUE RECORDS WAS HELD TO BE NOT THE THE LAND WAS SHOWN AS AGRICULTURAL IN REVENUE RECORDS WAS HELD TO BE NOT THE CONCLUSIVE TEST TO DETERMINE THAT THE LAND WAS AGRICULTURAL LAN D. 21. THE HONBLE BOMBAY HIGH COURT IN GOPAL C. SHARMA VS. CIT (SUPRA) HAD HELD AS UNDER: - T HE EXPRESSION AGRICULTURAL LAND' IS NOT DEFINED IN THE INCOME TAX ACT, 1961. THE UNDERLYING OBJECT OF THE ACT TO EXEMPT AGRICULTURAL INCOME FROM INCOME TAX IS TO ENCOURAGE ACTUAL CULTIVATION OR DE FACTO AGRICULTURAL OPERATIONS. ACTUAL USE OF THE LAND FOR AGRICULTURAL PURPOSE OR ABSENCE THEREOF AT THE RELEVANT TIME IS UNDOUBTEDLY ONE OF THE CRUCIAL TESTS FOR THE DETERMINATION OF THE ISSUE. IT IS WELL SETTLED THA T THE NATURE AND CHARACTER OF LAND MAY UNDERGO A CHANGE DEPENDING UPON ITS SITUATION, GROWTH OF THE LOCALITY OR ZONE IN WHICH IT IS SITUATE AND ITS POTENTIALITY. THE FACT THAT THE LAND IS SOLD OR TRANSFERRED TO A NON AGRICULTURIST FOR A NON AGRICULTURAL PU RPOSE OR THAT IT IS LIKELY TO BE USED FOR NON AGRICULTURAL PURPOSES SOON AFTER ITS TRANSFER IS ALSO A RELEVANT FACTOR GERMANE TO THE DETERMINATION OF THE ISSUE. MERELY BECAUSE THE LAND WAS USED FOR AGRICULTURAL PURPOSES IN THE REMOTE PAST OR ITS CONTINUES TO BE ASSESSED TO LAND REVENUE A AGRICULTURAL LAND IS NOT DECISIVE. IN ORDER TO ASCERTAIN THE TRUE CHARACTER AND NATURE OF THE LAND IT MUST BE SEEN WHETHER THE LAND HAD BEEN PUT TO USE FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME PRIOR TO THE RE LEVANT DATE AND FURTHER AS TO WHETHER ON THE DATE OF THE TRANSFER THE LAND IN QUESTION WAS INTENDED TO BE PUT TO USE BY THE PURCHASER FOR AGRICULTURAL PURPOSES FOR A REASONABLE SPAN OF TIME IN FUTURE' ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 12 22 . THE JUDICIAL PRE CEDENTS HAVE LAID DOWN THAT THE EX PRESSION AGRICULTURAL LAND THOUGH NO T D EFINED UNDER THE INCOME - TAX ACT, BUT WOULD BE APPLICABLE TO SUCH LAND WHERE THE ACTUAL USER OF THE LAND WAS FOR AGRICULTURAL PURPOSES IN RECENT TIMES. JUST BECAUSE THE LAND WAS USED FOR AGRICULTURAL PURPOSES IN TH E RE MOTE PAST OR IT CONTINUES TO BE ASSESSED IN THE LAND REVENUE RECORDS AS AGRICULTURAL LAND IS NOT DECISIVE TO DETERMINE THE NAT URE OF LAND BEING AGRICULTURAL LAND. WHERE THE LAND HAS NOT BEEN PUT TO USE FOR AGRICULTURAL PURPOSES FOR REA SONABLE SPAN OF TIME PRIOR TO THE DATE OF ITS TRANSFER, THE LAND IN QUESTION CANNOT BE HELD TO BE AGRICULTURAL LAND. THE ONUS WAS UPON THE ASSESSEE TO ESTABLISH ITS CASE OF HAVING CULTIVATED THE LAND IN RECENT PAST AND IN THE ABSENCE OF ASSESSEE HAVING DISCHARGED ITS ONU S AND MERELY BECAUSE THE LAND IS RECORDED AS AGRICULTURAL LAND IN THE REVENUE RECORDS, DOES NOT ESTABLISH THE CASE OF ASSESSEE. 2 3 . NOW, COMING TO THE FACTS OF THE PRESENT CASE , THE ASSESSEE BEFORE THE ASSESSING OFFICER HAD FUR NISHED THE COPY OF 7/12 EX TRACT, ACCORDING TO WHICH THE ASSESSING OFFICER HAD FUR NISHED THE COPY OF 7/12 EX TRACT, ACCORDING TO WHICH THE LAND WAS A JIRAYAT FALLOW LAND I.E. LAND BEING NOT CAPABLE OF CULTIVATION. THE 7/12 EXTRACT FURNISHED BY THE ASSESSEE HAS BEEN SCANNED BY THE ASSESSING OFFICER, COPY OF WHICH IS PLACED AT PAGES 4 AND 5 OF THE ASSESSMENT ORDER , WHICH REFLECTS NO AGRICULTURAL ACTIVITY HAVING BEEN CARRIED ON BY THE ASSESSEE. THE ASSESSEE HAS NOT DECLARED ANY AGRICULTURAL INCOME IN ITS HANDS NOR ANY EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE IN ANY OF THE PROCEEDINGS OR EVEN BEFORE US TO ESTABLIS H THAT THE LAND IN QUESTION WAS ACTUALLY BEING USED FOR CULTIVATION AT ANY TIME OR ANY BASIC OPERATION OR SUBSEQUENT OPERATIONS WERE CARRIED OUT IN THE LAND. THE REPORT OF THE INSPECTOR WAS OBTAINED BY THE ASSESSING OFFICER, WHICH CLEARLY MENTIONED THAT T HE LAND WAS NOT FIT FOR CULTIVATION W HICH HAS NOT BEEN CHALLENGED BY THE ASSESSEE. IN THE ABSENCE OF FULFILMENT OF FUNDAMENTAL FACT THAT TH E LAND WAS USED FOR AGRICULTURE, MERELY MENTION ING OF THE LAND AS AGRICULTURAL LAND IN THE PURCHASE DEED AND OR IN T HE SALE DEED OR EVEN IN THE REVENUE RECORDS CANNOT ESTABLISH THE CASE OF THE ASSESSEE THAT THE LAND SOLD BY ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 13 IT WAS AN AGRICULTURAL LAND. EVEN OTHERWISE, THE ASSESSEE IN THE RETURN OF INCOME HAD COMPUTED THE INCOME FROM CAPITAL GAINS AS UNDER: - FULL VALU E OF CONSIDERATION 1,01,00,000 COST OF ACQUISITION AFTER INDEXATION 4,72,572 BALANCE 96,27,428 DEDUCTION U/S 54/ 54B/ 54D/ 54EC/ 54F/ 54G 54GA 96,27,428 TAXABLE CAPITAL GAINS NIL 2 4 . THE ASSESSEE IN THE RETURN OF INCOME HAD NOT CLAIMED THAT IT SOLD AGRICULTURAL LAND, BUT ON THE OTHER HAND HAD CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT, IN SUPPORT OF WHICH, ASSESSEE FAILED TO FURNISH ANY DOCUMENTS AND HENCE THAT CLAIM OF SECTION 54 OF THE ACT WAS HELD TO BE NOT ALLOWABLE TO THE ASSESSEE. ONLY DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE CLAIMED THAT THE SAID LAND WAS AGRICULTURAL LAND BEING OUTSIDE THE CITY LIMITS AND IN SUPPORT THEREOF, THE NECESSARY EVIDENCE WAS FILED. HOWEVER, THE ASSESSEE FAILED TO FURNISH ON RECORD ANY EVIDENCE TO ESTABLISH ITS CASE OF HAVING CULTIVATED THE SAID LAND OR HAVING ANY EVIDENCE TO ESTABLISH ITS CASE OF HAVING CULTIVATED THE SAID LAND OR HAVING CARRIED OUT ANY AGRICULTURAL OPERATIONS. NO AGRICULTURAL INCOME HAS BEEN DECLARED IN ANY OF THE YEAR OF HOLDING OF SUCH LAND. IN THE ABSENCE OF TH E SAME AND IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE THAT THE SAID LAND SOLD BY THE ASSESSEE IS AN AGRICULTURAL LAND AND SALE PROCEEDS OF WHICH ARE EXEMPT FROM TAX. 25. THE LEARNED AUTHORIZED REPRESENTA TIVE FOR THE ASSESSEE ON THE OTHER HAND PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN HINDUSTAN INDUSTRIAL RESOURCES LTD. VS. ACIT (SUPRA), WHEREIN IT WAS HELD THAT THE FACT THAT THE ASSESSEE DID NOT CARRY OUT ANY AGRICULTURAL OPERATIONS D ID NOT RESULT IN ANY CONVERSION OF THE SAID LAND INTO INDUSTRIAL LAND AND THE FINDING THAT THE LAND WAS NOT AGRICULTURAL LAND WAS REVERSED BY THE HONBLE DELHI HIGH COURT (SUPRA). HOWEVER, THE FINDING OF THE HONBLE DELHI HIGH COURT (SUPRA) IS CONTRARY TO THE FINDING OF JURISDICTIONAL HIGH COURT IN GOPAL C. SHARMA VS. CIT (SUPRA), WHICH ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 14 HAS BEEN REFERRED TO BY US IN THE PARAS HEREINABOVE, WHICH IN TURN HAS BEEN RELIED UPON BY THE ASSESSING OFFICER / CIT(A) AND ALSO BY THE LEARNED DEPARTMENTAL REPRESENTATIV E FOR THE REVENUE. THOUGH THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAD FILED COMPILATION OF CASE LAWS, BUT DURING THE COURSE OF HEARING HAD ONLY RELIED ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN HINDUSTAN INDUSTRIAL RESOURCES LTD. VS. ACIT (SUPRA). THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF HONBLE HIGH COURT OF BOMBAY AT GOA IN CIT VS. SMT. DEBBIE ALEMAO (2011) 331 ITR 59 AND PUNE BENCH OF TRIBUNAL IN HARESH V. MILANI VS. JCIT IN ITA NO.192/PN/2003 RELATING TO ASSESSMENT YEAR 1995 - 96 REPORTED IN (2007) 111 TTJ (PUNE) 310. THE PERUSAL OF FACTS OF BOTH THE CASES REFLECT THAT IN BOTH THE ABOVE SAID DECISIONS, THE LAND WAS CULTIVATED BY THE ASSESSEE AND EVEN THE NATURE OF THE CROP IS MENTIONED. HOWEVER, IN THE FACTS OF THE PRESENT CASE BEFORE US AS POINTED OUT BY US IN THE PARAS HEREINABOVE, THE ASSESSEE HAS FAILED TO ESTABLISH WHETHER THE LAND WAS USED FOR CARRYING ON ANY AGRICULTURAL ACTIVITY. ON THE OTHER HAND, FINDINGS OF THE AU THORITIES BELOW IS THAT THE LAND WAS IN FACT BARREN LAND, AS REPORTED IN 7/12 EXTRACT FURNISHED PRIOR TO THE THE LAND WAS IN FACT BARREN LAND, AS REPORTED IN 7/12 EXTRACT FURNISHED PRIOR TO THE COMPLETION OF ASSESSMENT AND THE LAND WAS NOT AT ALL USED FOR AGRICULTURAL ACTIVITIES AS BEING CLAIMED BY THE ASSESSEE. IN REPLY, THE CASE OF THE ASSESSEE IS THAT THE LAND IS CAPABLE OF DOING CULTIVATION AND AGRICULTURAL ACTIVITY. HOWEVER, THE ASSESSEE HAS NOT FILED ON RECORD ANY EVIDENCE OF HAVING CULTIVATED THE LAND OR ANY AGRICULTURAL ACTIVITY WAS BEING CARRIED ON EXCEPT FOR HIS CLAIM THAT THE S TATUS OF THE LAND BOTH IN THE PURCHASE AND SALE DEED AND ALSO IN THE REVENUE RECORDS WAS AN AGRICULTURAL LAND. 26. IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT IN CIT VS. V.A. TRIVEDI (SUPRA) AND GOPAL C. SHARMA VS. CIT (SUPRA), WE FIND NO MERI T IN THE RELIANCE PLACED UPON BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ON THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN HINDUSTAN INDUSTRIAL RESOURCES LTD. VS. ACIT (SUPRA). REJECTING THE SAME, WE HOLD THAT IN THE ABSENCE OF THE ASSESSEE HAVING ESTABLISHED ITS CASE OF THE LAND SOLD BY HIM WAS ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 15 AGRICULTURAL LAND, WE UPHOLD THE ORDER OF CIT(A) IN ASSESSING THE INCOME UNDER THE HEAD INCOME FROM CAPITAL GAINS AT RS.96 LAKHS. IN THE ABSENCE OF ASSESSEE HAVING FAILED TO FURNISH ANY EV IDENCE VIS - - VIS ITS CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT, THE SAME IS ALSO REJECTED. UPHOLDING THE ORDER OF CIT(A), WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 27. ANOTHER ASPECT CONSIDERED BY THE CIT(A) WAS THE CLAIM OF ASSESSEE THAT IT HAD GROWN CROPS FROM ASSESSMENT YEAR 2006 - 07 ONWARDS. 2 8 . THE CIT(A) FURTHER MENTIONS THAT WHILE THE APPELLATE ORDER WAS UNDER DRAFTING, THE JOINT CIT (CENTRAL), SUBMITTED A LETTER DATED 28.12.2012, UNDER WHICH HE REPORTED AS BELOW: - 'IN THE ABOV E CASES CAPITAL GAINS ON LAND WAS TAXED ON THE BASIS OF INSPECTORS REPORT & 7/12 EXTRACT SUBMITTED BY THE ASSEESSEE PRIOR TO THE A SSTT. HOWEVER SUBSEQUENT TO THIS THE AR OF THE ASSESSEE FI L ED A 7/12 EXTRACT INDICATING AGRICULTURAL ACTIVITY ON THE LAND SO L D BY THE ASSESSEE. THEREFORE ENQUIRIES WERE CONDUCTED WITH TALATHI DONJE IN WHOSE JURISDICTION THE LAND SOLD BY THE ASSESSEE EXISTS. IN RESPONSE TO OUR QUERIES TAL A THI HAS VISITED THE LAND WITH THE INSPECTOR OF INCOME TAX. IT IS REPORTE D THAT THE LAND WAS NOT USED FOR AGRI C ULTURAL ACTIVITY FOR MANY YEARS. IT HAS ALSO BEEN CERTIFIED BY THE TALATHI THAT THE LAND RECORDS IN HIS OFFICE HAS ALSO BEEN CERTIFIED BY THE TALATHI THAT THE LAND RECORDS IN HIS OFFICE HAVE BEEN TAMPERED TO SHOW CROPS GROWN FROM 2006 - 07 ONWARDS. THIS FINDING WAS COMMUNICATED TO THE ABOVE ASSESSEE VIDE THIS OFFICE LETTER DATED 21/12/2012 BY RPAD & WAS ALSO PHYSICALLY SERVED ON THE ASSESSEE 24/12/2012 SEPARATELY. A COPY OF THE LETTER DATED 21/12/2012 ALONG WITH THE TALATHIS REPORT IS ENCLOSED FOR READY REFERENCE. IN RESPONSE THE ASSESSEES ABOVE HAVE NOT AVA ILED THE OPPORTUNITY OF JOINT VISIT TO THE LAND GIVEN TO THEM. THEIR REPLY IS VAGUE WITHOUT ANY DOCUMENTARY EVIDENCE IN SUPPORT THEIR CLAIM. THEREFORE THE 'FACTS' BROUGHT OUT IN THE ASSESSMENT ORDER GETS SUBSTANTIATED & THE FOLLOWING FACTUAL POSITION IS VERY CLEAR. 1) LAND WAS NOT AT ALL USED FOR A AGRICULTURAL ACTIVITY AS BEING CLAIMED BY THE ABOVE ASSESSEES. 2) LAND IS INFACT A BARREN LAND AS REPORTED IN THE 7/12 EXTRACTS FURNISHED PRIOR TO THE COMPLETION OF THE ASSESSMENT. 3) SOMEONE TAMPERED THE LAND RE CORDS OF TALATHI DONJE TO SHOW THAT CROPS WERE GROWN SUBSEQUENT TO 2006 - 07. 4) ALL THE ABOVE FACTUAL POSITION IS ALSO CONFIRMED BY THE TALATHI DONJE IN HIS LETTER DATED 05/12/2012 . SUBMITTED FOR KIND CONSIDERATION OF THE CIT(A). ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 16 2 9 THE LETTER FURNISHED BY THE JCIT WAS AS UNDER: - TO 1. SHRI SUBHASH GAIKWAD 2. SHRI ABJIJEET GAIKWAD 3. SHRI AJIT GAIKWAD, S.NO. 126/2, AUNDH, PUNE - 411 007. SUB: - TAXING OF CAPITAL GAINS IN YOUR CASE FOR THE A. Y. 2009 - 10 REG. *** KINDLY REFER TO THE ABOVE. 02. IN YOUR RET URN OF INCOME FOR THE A. Y. 2009 - 10, CAPITAL GAIN ON ACCOUNT OF SALE OF LAND WAS CLAIMED AS EXEMPT ON THE PLEA THAT THE LAND IS AGRICULTURAL LAND. YOUR CLAIM WAS REJECTED BASED ON 7/12 EXTRACT FURNISHED BY YOUR AUTHORIZED REPRESENTATIVE PRIOR TO COMPLETION OF THE ASSESSMENT AND THE REPORT OF THE INSPECTOR WHO VISITED THE LAND. 03. HOWEVER ON THE DAY OF WHICH THE ASSESSMENT WAS COMPLETED, YOUR AUTHORIZED REPRESENTATIVE FILED A 7/12 EXTRACT IN TAPAL WHICH INDICTED THAT CROPS WERE GROWN ON THE LAND SOLD BY YOU. AS THE 7/12 EXTRACT PRODUCED BY YOUR CA IN TAPAL ON 28/12/2011 WAS CONTRARY TO THE EARLIER 7/12 EXTRACT ENCLOSED TO THE ASSESSMENT ORDER ENQUIRIES WERE CONDUCTED WITH TALATHI'S OFFICE. IN RESPONSE TO THE ENQUIRIES CONDUCTED BY THE INSPECTOR OF INC OME TAX, TALATHI HAS PERSONALLY VISITED THE LAND WITH THE INSPECTOR OF INCOME TAX AND HAS REPORTED THAT THERE WAS NO CULTIVATION ON INSPECTOR OF INCOME TAX AND HAS REPORTED THAT THERE WAS NO CULTIVATION ON THE LAND EVEN IN THE PAST. HE HAS FURTHER NOTICED THAT SOMEONE HAS RECENTLY TRIED TO TAMPER GOVT. RECORDS BY MAKING ENTRI ES REGARDING CROPS GROWN IN THE LAND RECORDS SOLD BY YOU. THIS INDICATES THAT SOME ONE ON BEHALF OF YOU HAS TRIED TO TAMPER THE GOVT. RECORDS WITH AN INTENTION TO AVAIL THE BENEFITS OF EXEMPT INCOME. 4. IN VIEW OF THE FINDINGS AND THE REPORT OF THE TAL ATHI, AN OPPORTUNITY TO GIVE YOUR SAY WAS GIVEN TO YOUR AUTHORIZED REPRESENTATIVE ORALLY ALONG WITH A COPY OF TALATI'S REPORT. HOWEVER, EVEN AFTER A LAPSE OF A WEEK, THE AUTHORIZED REPRESENTATIVE HAS NOT RESPONDED. THEREFORE AN OPPORTUNITY TO GIVE YOUR SAY ON THIS ISSUE IS GIVEN TO YOU ON 28/12/2012. IF YOU SO DESIRE A JOINT VISIT TO THE SITE CAN BE ARRANGED WITH YOU THE TALATHI AND MY INSPECTOR, EVEN THE RECORDS OF TALAHTI'S OFFICE CAN BE SENT TO FORENSIC LABORATORY TO KNOW THE APPROXIMATE DATE OF E NTRY/TAMPERING OF 7/12 EXTRACTS PERTAINING TO THE LAND SOLD BY YOU. THEREFORE, YOU ARE REQUESTED TO GIVE YOUR SAY ON THE MATTER BY 28/12/2012. IF NOTHING IS HEARD FROM YOUR SIDE, KINDLY NOTE THAT I SHALL PRESUME THAT YOU HAVE NOTHING TO SAY IN THE MATT ER AND A REPORT BRINGING OUT ALL THE FACTS WILL BE SENT TO THE CIT[A] TO TAKE NOTE OF THE FACTS. YOUR COOPERATION IS SOLICITED.' THE ABOVE LETTER OF THE AO IS ACCOMPANIED BY A LETTER OF THE TALATHI, DONJE HAVING JURISDICTION OVER THE AREA WHERE THE LAND IS LOCATED. IT IS STATED IN THE TALATHI'S LETTER THAT THE LAND WAS NEVER USED FOR AGRICULTURAL ACTIVITY. 30 . THE CIT(A) AFTER CONSIDERING THE SAID EVIDENCE OBSERVED AS UNDER: - ITA NO S. 699 TO 701 /PN/2 01 3 ABHIJIT SUBHASH GAIKWAD AND OTHERS 17 THE ABOVE FACTS ARE BEING INCORPORATED IN THIS ORDER ONLY FOR THE SAKE OF R ECORD. I HAVE ALREADY REACHED THE CONCLUSION THAT THE LAND IN QUESTION WAS NOT AGRICULTURAL LAND INDEPENDENT OF THE FACTS NOW REPORTED BY THE AO THROUGH THE JT. CIT. 31. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE HAS FAILED TO CONTROVERT T HE FINDING OF CIT(A) IN THIS REGARD AND IN THE ABSENCE OF THE SAME, WE FIND NO MERIT IN THE CONTENTION OF THE ASSESSEE AND THE SAME IS DISMISSED. HENCE, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMISSED. 3 2 . THE FACTS AND ISSUE S IN ITA NO S . 700 A ND 701 /PN/ 201 3 ARE IDENTICAL TO THE FACTS AND ISSUE S IN ITA NO. 699 /PN/201 3 AND OUR DECISION IN ITA NO. 699 /PN/201 3 SHALL APPLY MUTATIS MUTANDIS TO ITA NOS. 700 AND 701 /PN/2013 . 3 3 . IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER P RONOU NCED ON THIS 27 TH DAY OF MAY , 201 5 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 27 TH MAY , 201 5 . GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A) - CENTRAL , PUNE ; 4) THE CIT - CENTRAL , PUNE ; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE