ITO, BARAN V. SH. HAZARI LAL NAGAR, BARAN

ITA 775/JPR/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2066 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 24-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: O P AGARWAL CA DH RK
• Keywords: Capital asset
• Section: 143(3); 2(14); 148

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH DQY HKKJR ] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 775/JP/2012 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 INCOME TAX OFFICER, WARD- BARAN CUKE VS. HAZARI LAL NAGAR, S/O- SHRI HAR NARAIN DHAKAD, VILLAGE- NALKA, BARAN. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ANEPM 2424 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL & SHRI O.P. AGARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 29/05/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 06/06/2017 VKNS'K@ ORDER PER: KUL BHARAT, J.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 27/07/2012 PASSED BY THE LD. CIT(A), KOTA FOR THE A. Y. 2007-08, WHEREIN THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: (I) DELETING THE ADDITION OF RS. 9,12,805/- MADE ON ACCOUNT OF UNEXPLAINED LAND CONVERSION CHARGES; (II) HOLDING THAT NO LONG TERM CAPITAL GAIN ACCRUED TO ASSESSEE ON SALE OF AGRICULTURAL LAND SINCE THE SAI D LAND ITA 775/JP/2012_ ITO VS HAZARI LAL NAGAR 2 FELL WITHIN THE DEFINITION OF CAPITAL ASSET AS PER S ECTION 2(14) AS A RESULT OF GOVERNMENTS NOTIFICATION NO. 2074 DATED 04/06/2008 AND NOT AS A RESULT OF GOVERNMENT S NOTIFICATION NO. 232 DATED 23/02/2006 AS HELD BY A. O. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE CASE OF THE ASSESSEE WAS REOPENED ON THE BASIS THAT THE ASSESSEE HAD SOLD AN AGRICULTURAL LAND SITUATE IN THE REVENUE AREA OF VILLAGE NALKA, TEHSIL - BARAN, KHASRA NO. 328, ADMEASURING 1.84 HECTARE OUT OF 4.24 HECTARE TO SH RI RAJIV SINGH, S/O- SHRI RANJIT SINGH, R/O- KRISHNA KUND, KOTA ON 15/06/2006 . THIS LAND WAS INCLUDED IN THE MUNICIPAL LIMIT ON 23/2/2006. FURTH ER THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD DEPOSITED CONVERSION CHARGES OF RS. 9,12,805/-. THE ASSESSING OFFICER SUBSEQUENTLY FRAME D THE ASSESSMENT U/S 148 READ WITH SECTION 143(3) OF THE ACT DATED 31/10/ 2011 THEREBY HE COMPUTED THE CAPITAL GAIN AT RS. 45.00 LACS AND MAD E ADDITION OF THE SAME INTO THE INCOME OF THE ASSESSEE AND ALSO ADDED THE CONVERSION CHARGES OF RS. 9,12,805/-. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A), WHO AFTER C ONSIDERING THE SUBMISSIONS, PARTLY ALLOWED THE APPEAL, THEREBY THE LD. CIT(A) DELETED THE ADDITION WITH REGARD TO CONVERSION CHARGES OF RS. 9, 12,805 AND ALSO HELD THAT THE LAND IN QUESTION CAME TO BE INCLUDED IN TH E AREA OF MUNICIPAL LIMIT ONLY W.E.F. 06/4/2010, THEREFORE, LAND BECAME CAPITA L ASSET ONLY ON ITA 775/JP/2012_ ITO VS HAZARI LAL NAGAR 3 04/6/2008 AND NOT BEFORE THAT AND ALL OTHER LEGAL C ONSEQUENCES WOULD FOLLOW. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. APROPOS G ROUND NO. 1, THE LD SR. DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE AS SESSING OFFICER AND SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DE LETING THE DISALLOWANCES. 5. ON THE CONTRARY, THE LD AR OF THE ASSESSEE HAS REITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS AND F URTHER SUBMITTED THAT THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DINGS FILED COPY OF AGREEMENT OF SALE ALONGWITH AFFIDAVIT OF BUYER WHEREI N IT IS CLEARLY STATED BY THE BUYER THAT THE CONVERSION CHARGES WAS PAID BY H IM. BESIDES THIS, THE BUYER ALSO FILED A SCHEDULE OF FIXED ASSETS AS PART OF BALANCE SHEET AS ON 31/3/2007 AS CONVERSION CHARGES WAS INCLUDED IN THE COST OF LAND. HOWEVER, THE ASSESSING OFFICER HAD REPRODUCED THE ST ATEMENT MADE BY THE BUYER. HE DID NOT ACCEPT THE SAME FOR THE REASON TH AT THE RECEIPT WAS IN THE NAME OF THE ASSESSEE. HE SUBMITTED THAT THE CAS E OF OTHER THREE INDIVIDUALS WERE ALSO REOPENED U/S 148 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) BUT SUCH EXPENSES WERE ONLY ADDED IN THE CASE OF ASSESSEE. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND ALSO GONE THRO UGH THE ORDERS OF THE ITA 775/JP/2012_ ITO VS HAZARI LAL NAGAR 4 AUTHORITIES BELOW. THE LD. CIT(A) HAS GIVEN HIS FINDIN G ON FACT IN PARAGRAPH NO. 5.12 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER: - 5.12 THE ASSESSEE CLAIMED THAT THE CONVERSION CHARG ES OF RS. 9,12,805/- WERE PAID BY SHRI RAJEEV HADA (THE PURCHA SER OF THE PROPERTY IN QUESTION) WHEREAS THE A.O. DOUBTED THE BALANCE SHEET OF SHRI RAJEEV HADA (SUBMITTED BY ASSESSEE) O N THE GROUND THAT IT WAS NOT SIGNED BY A CHARTERED ACCOUNT ANT. I HAVE GONE THROUGH THE SUBMISSIONS OF ASSESSEE AN D A.O.S FINDINGS. IT WAS SEEN THAT ASSESSEE ALONGWITH THE BAL ANCE SHEET OF SHRI RAJEEV HADA ALSO SUBMITTED AFFIDAVIT OF SHR I RAJEEV HADA, IF THE A.O. HAD ANY DOUBT ABOUT THE GENUINENE SS OF THE BALANCE SHEET THEN HE SHOULD HAVE VERIFIED THE DETA ILS FROM THE A.O. OF SHRI RAJEEV HADA OR COULD HAVE VERIFIED THE SAME BY ISSUING SUMMONS TO SHRI RAJEEV HADA. HOWEVER, THE A. O. HAS REJECTED THE CLAIM OF ASSESSEE WITHOUT BRINGING ANYT HING CONTRARY TO WHAT WAS CLAIMED BY ASSESSEE. IN VIEW OF THE ABOVE, THE A.O. IS DIRECTED TO DELET E THE ADDITION OF RS. 9,12,805/-. THE ABOVE FINDING ON FACT IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD AS THE BUYER HIMSEL F HAS CATEGORICALLY STATED THAT THE EXPENDITURE WITH REGARD TO CONVERSIO N CHARGES WAS INCURRED BY HIM AND STATEMENT TO THIS EFFECT WAS ALSO MADE. TH E ASSESSING OFFICER HAS NOT CONFRONTED THE SAME WITH THE ASSESSEE, THERE FORE, WE DO NOT SEE ITA 775/JP/2012_ ITO VS HAZARI LAL NAGAR 5 ANY REASON TO INTERFERE IN THE FINDING OF THE LD. C IT(A), THEREFORE, THE SAME IS HEREBY AFFIRMED. GROUND NO. 1 OF THE REVENUES A PPEAL IS DISMISSED. 7. GROUND NO. 2 OF THE APPEAL IS AGAINST THE FINDIN G GIVEN BY THE LD. CIT(A) THAT THE LAND IN QUESTION BECAME CAPITAL ASSE T IN CONSEQUENCE OF THE GOVERNMENTS NOTIFICATION DATED 04/6/2008 NOT A S A RESULT OF GOVERNMENTS NOTIFICATION DATED 23/2/2006. THE LD. S R. DR HAS SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THI S AS THE ASSESSING OFFICER HAS GIVEN A FINDING THAT THE LAND IN QUESTION I.E. KHASRA NO. 328 IN THE REVENUE AREA OF VILLAGE NALKA, TEHSIL-BARAN WAS INCL UDED ON 23/2/2006. HOWEVER, THE LD. CIT(A) ACCEPTING THE EXPLANATION OF THE ASSESSEE AND RELYING THE NOTIFICATION DATED 04/6/2008 HAS GIVEN THE FINDING. 8. ON THE CONTRARY, THE LD AR OF THE ASSESSEE HAS R EITERATED THE SUBMISSIONS AS MADE IN THE WRITTEN SUBMISSIONS. HE S UBMITTED THAT THE NOTIFICATION NO. 232 DATED 23/2/2006 AS RELIED BY T HE ASSESSING OFFICER WAS NOT A FINAL NOTIFICATION AND SUBJECT TO THE APPROVA L MADE BY THE CONCERNED AUTHORITY AS THE SAME WAS MERELY A DECLARATION. IN P URSUANCE TO THE SAID NOTIFICATION, A NOTIFICATION DATED 04/6/2008 WAS ISS UED WHEREBY THE VILLAGE NALKA WAS REMOVED FROM GRAM PANCHAYAT MELKHERI AND I NCLUDED IN THE BARAN MUNICIPAL AREA. 9. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES, PERUSED THE MATERIAL AVAILABLE ON THE RECORD AND ALSO GONE THRO UGH THE ORDERS OF THE ITA 775/JP/2012_ ITO VS HAZARI LAL NAGAR 6 AUTHORITIES BELOW. THE LD. CIT(A) HAS GIVEN HIS FINDIN G ON FACT IN PARAGRAPH NO. 5.12 OF HIS ORDER, WHICH IS REPRODUCED AS UNDER: - THE ASSESSEE SUBMITTED THAT NOTIFICATION DATED 23.0 2.2006 WAS NOT FINAL AND THAT IT WAS SUBJECT TO FINAL APPROVAL BY GRAMIN VIKAS & PANCHAYATIRAJ VIBHAG, RAJASTHAN, JAIPUR. THE ASSESSE E ALSO SUBMITTED THAT THE GRAM PANCHAYATS CONTINUED TO EXIST TILL, T HE NOTIFICATION DATED 04.06.2008, WHICH WAS AN ORDER U/S 101 OF THE RAJASTHAN PANCHAYATIRAJ ADHINIYAM, 1994, WAS NOT PASSED. THE ASSESSEE ALSO SUBMITTED THAT THE LAND IN QUESTION THEREFORE CONTIN UED TO BE PART OF PANCHAYAT SAMITI AND WAS SITUATED IN BARAN DISTRICT WHERE THE CONCEPT OF BOUNDARY OF 8 KM. WAS NOT APPLICABLE, AND THEREFORE THE LAND IN QUESTION WAS NOT CAPITAL ASSET WITHIN THE M EANING OF SECTION 2(14) OF THE I.T. ACT. I HAVE GONE THROUGH THE ABOVE NOTIFICATIONS AND I A M OF THE OPINION THAT THE NOTIFICATION DATED 23.02.2006 WAS NOT ABSO LUTE AND WAS SUBJECT TO FURTHER DIRECTIONS BY GRAMIN VIKAS & PAN CHAYATIRAJ VIBHAG, RAJASTHAN, JAIPUR. I AM ALSO OF THE OPINION THAT TH E LAND CONTINUED TO BE WITHIN THE LIMITS OF GRAM PANCHAYAT, NALKA TILL T HE ORDER DATED 04.06.2008 WHEN THE GRAM PANCHAYAT WAS REMOVED FROM PANCHAYAT AREA AND INCLUDED IN THE LIMITS OF NAGAR PALIKA, BA RAN. IN VIEW OF THIS, IT IS HELD THAT THE LAND BECAME CA PITAL ASSET ONLY W.E.F. 04.06.2008 AND NOT BEFORE THAT AND ALL OTHER LEGAL C ONSEQUENCE WILL FOLLOW. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. THE ABOVE FINDING ON FACT IS NOT DISPUTED BY THE REV ENUE EXCEPT THAT THE STAND OF THE REVENUE IS THAT THE LAND IN QUESTION C AME TO BE INCLUDED IN THE MUNICIPAL LIMIT VIDE NOTIFICATION DATED 23/02/2006 WHEREAS THE CASE OF THE ASSESSEE IS THAT THE VILLAGE WAS INCLUDED INTO THE M UNICIPALITY ONLY VIDE ITA 775/JP/2012_ ITO VS HAZARI LAL NAGAR 7 NOTIFICATION DATED 04/6/2008. NOW THE ISSUE REMAINS TO BE EXAMINED IS WHETHER THE NOTIFICATION DATED 23/2/2006 WOULD APPLY OR THE NOTIFICATION DATED 04/8/2008 WOULD APPLY. AS PER NOTIFICATION DAT ED 23/2/2006 ISSUED BY THE LOCAL SELF GOVERNMENT, THE FOLLOWING KHARAS WE RE TO BE INCLUDED IN THE AREA OF MUNICIPAL COMMITTEE, BARAN, WHICH IS AS UNDER:- 4. XZKE UYDK DS [KLJK UECJ 1 LS MRRHJ VKSJ XZKE ESY[KSMH DS [KLJK UECJKU 1251 LS ES<+ IJ PYRS GQ;S [KLJK UECJ 1167, 1166, 1165, 1164, 1162, 390, 387, 386, 381, 376, 377, 376, 375, 374, 380, 330, 329, 2 89, 280, 285, 217, 216, 214, 213, 210, 208, 206, 205 DKS LFEEFYR DJ NF{K.KH IF'PEH DH VKSJ PYRS GQ;S [KL JK UECJKU 102, 101, 100, 99, 89, 80, 76, 75, 24, 23, 20, 19, 18, 16, DPPK JKLRK ESY[KSMH] VKJMK IKJ DJ [KLJK UECJ 15, 14, 4, DKS LFEEFYR DJ NF{K.KH IWOHZ VKSJ XZKE ESY[KSMH DS [KLJK UECJKU 3, 2, 1, 7, 8, 9, 36, 37, 38, 39, 40, 130, 137, 138, 142, 143, 155, 160, 161, 749, 973, 974, 976, 9 77, 1008, 1323, 1325, 1327, 1334, 1335, 1336, 1351, 1352, 1350, 1290, 1276, 1272, 125 3, O 1252 L S 1251 DS [KLJK UECJKU RD DK {KS=K A XZKE UYDK DS [KLJK UECJKU 1 DH ES< LS PYRS GQ;S UECJ 32, 285, 287, 288, 289, 290, 291, 292, 34, 66, 65 LEEFYR DJ IF'PEH VKSJ ?KWEDJ [KLJK UECJKU 64 RD ,OA XZKE DKTH [KSMK DS [KLJK UECJKU 62, 57, 56, 53, 52, 51, 50, 49, 15 LS JSYOS IVJH DKSVK CKJKW CHUK IKJ DJ [KLJK UECJ 12 P 3 DKS LFEEFYR DJ IF'PEH VKSJ XZKE JTIKYH DS [KLJK UEC J 245, 244, 243, 239, 234, 55, 20, 21, 20/283, 19, 1, 2, 5, 5/285, 06, 7/284, 8, 9, 10, 11, 32, DH ES< LS NF{K.KH VKSJ ?KWEDJ PYRS GQ;S XZKE JTIKYH DS [KLJK UECJKU 33, 34, 36, 37, 38, 39, 40, 41, 42, 43 LS DKSVK CKWJK LM+D IKJ DJ [KLJK UECJ 74, 75, 76, 767, 82, 86, 87, 88, 89, 90 LS 102, 103, 104, 106, 110, 111, 276, 277, 273, 256, 255/286, 255, 246, RD DS [KLJK UECJKU RD DK {KS= A FROM THE ABOVE NOTIFICATION, IT IS SEEN THAT KHASRA NO. 328 WAS NOT PART OF THE NOTIFICATION. FURTHER THE SAID NOTIFICATION REQ UESTED THE DEPARTMENT OF ITA 775/JP/2012_ ITO VS HAZARI LAL NAGAR 8 PANCHAYAT DEVELOPMENT, RAJASTHAN GOVERNMENT TO ISSU E NECESSARY INSTRUCTION FOR INCLUDING SAID GRAM PANCHAYAT IN TH E MUNICIPAL LIMIT, THEREFORE, THE NOTIFICATION DATED 04/6/2008 WAS ISSU ED THEREBY THE PANCHAYAT SAMITI WAS INCLUDED IN THE MUNICIPALITY. F ROM THE ABOVE, IT IS EVIDENT THAT PANCHAYAT SAMITI WAS INCLUDED INTO THE MUNICIPALITY ONLY VIDE NOTIFICATION DATED 04/6/2008. UNDER THESE FACTS, WE ARE UNABLE TO ACCEPT THE FINDING OF THE ASSESSING OFFICER. ACCORDINGLY, FINDING OF THE LD. CIT(A) IS HEREBY CONFIRMED. THIS GROUND OF THE REVENUES APPE AL IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/06/2017. SD/- SD/- HKKXPAN DQY HKKJR (BHAGCHAND) (KUL BHARAT) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 06 TH JUNE, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE ITO, WARD- BARAN. 2. IZR;FKHZ @ THE RESPONDENT- SHRI HAZARI LAL NAGAR, NALKA, BARAN. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 775/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR