ITO, Jaipur V. LATE SMT. SHWETA SHARMA THROUGH L/H SHRI SUNDER LAL SHARMA, Jaipur

ITA 790/JPR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5547 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Business income; Principle of natural justice
• Section: 143(3); 68

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 VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA- @ ITA NO. 790/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 INCOME TAX OFFICER, WARD 6(4), JAIPUR. CUKE VS. LATE SMT. SHWETA SHARMA THROUGH L/H SUNDER LAL SHARMA, B-18, SHREEJI NAGAR, DURGAPURA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: BBDPS 6398 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT IZR;K{KSI.K @ C.O. NO. 60/JP/2013 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 790/JP/2013) FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 LATE SMT. SHWETA SHARMA THROUGH L/H SUNDER LAL SHARMA, B-18, SHREEJI NAGAR, DURGAPURA, JAIPUR. CUKE VS. INCOME TAX OFFICER, WARD 6(4), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA- @ PAN/GIR NO.: BBDPS 6398 J IZR;K{KSID @ OBJECTOR IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI KAILASH MANGAL (JCIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 02/12/2015 MN?KKS'K .KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 29/01/2016 ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 2 VKNS'K@ ORDER PER: T.R. MEENA, A.M.: THE APPEAL BY REVENUE AND CROSS OBJECTION BY ASSESS EE ARISE FROM THE ORDER DATED 20/08/2013 OF LD. CIT (A)-II, JAIPUR . EFFECTIVE GROUNDS OF APPEAL AS WELL AS C.O. ARE AS UNDER:- GROUNDS IN REVENUE APPEAL. 1.(I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN DELETI NG THE ADDITION OF RS.76,83,277/- ON ACCOUNT OF SHORT TERM CAPITAL GAIN ON SALE OF AGRICULTURAL LAND HOLDING THAT SAID AGRICULTURAL LAND IS NOT A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14)(III)(B) OF THE I.T. ACT, 1961. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN IGNORI NG THE REPORT OF THE SETTLEMENT COMMISSION, JAIPUR THAT TH E AGRICULTURAL LAND IS SITUATED AT 7.78 KMS. FROM THE MUNCIPAL LIMIT. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) HAS ERRED IN ALLOWIN G RELIEF TO THE ASSESSEE BY FOLLOWING THE DECISION OF THE HON BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS. SATINDER PAL SINGH (229 CTR 82) WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) WAS JUSTIFIED IN HOL DING THAT THE MUNICIPAL LIMITS EXISTING ON THE DATE OF I SSUE OF NOTIFICATION NO.9447 DATED 06.01.1994 U/S. 2(14)(II I)(B) SHOULD BE CONSIDERED FOR THE PURPOSE OF DETERMINATI ON OF ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 3 AGRICULTURAL LAND INSTEAD OF THE MUNICIPAL LIMITS E XISTING ON THE DATE OF SALE/TRANSFER. (II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) WAS JUSTIFIED IN HOL DING THAT AGRICULTURE LAND SOLD BY THE ASSESSEE IS NOT A CAPITAL ASSET US/. 2(14)(III)(B) AS IT WAS SITUATED BEYOND 8 KMS. FROM THE MUNICIPAL LIMITS ON THE DATE OF ISSUE OF N OTIFICATION NO. 9447 DATED 06.01.1994. (III) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (APPEALS) WAS JUSTIFIED IN ADM ITTING AND DECIDING THIS ISSUE FOR THE FIRST TIME AT APPEL LATE STAGE WITHOUT GIVING OPPORTUNITY TO THE ASSESSING OFFICER TO REBUT THE SAME. THE ACTION OF ID. CIT(A) IS AGAINST THE PRI NCIPLE OF NATURAL JUSTICE. GROUNDS IN CROSS OBJECTION 1. THE LD CIT(A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE ADDITION OF RS. 2,92,580/- OUT OF ADDITION OF R S. 3,78,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH DEP OSIT IN THE BANK. 2. ALL THE GROUNDS OF THE REVENUES APPEAL ARE REVO LVING AROUND DELETING THE ADDITION OF RS. 76,83,277/- ON ACCOUNT OF SHORT TERM CAPITAL GAIN. THE ASSESSEE IS IN THE BUSINESS OF GARMENT PRO CESSING WORK. THE RETURN FOR A.Y. 2010-11 WAS FILED ON 4/8/2010 AT RS. 1,93,810/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT , 1961 (IN SHORT THE ACT). AS PER AIR REPORT THE ASSESSEE HAD SOLD L AND OF RS. 82,25,777/- ON 11 TH JUNE, 2009. THE ASSESSING OFFICER GAVE REASONABLE O PPORTUNITY OF ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 4 BEING HEARD ON THIS ISSUE. THE ASSESSEE SUBMITTED RE PLY VIDE LETTER DATED 03/6/2012 AND CLAIMED THAT AGRICULTURAL LAND BEARIN G KHASRA NO. 201/212/2 IN VILLAGE CHAKHALYAWAS, KACHERAWALA, TEHSIL - AMER, DISTRICT JAIPUR ADMEASURING 1.09 HECTARES HAD BEEN SOLD VIDE SALE DEED EXECUTED ON 10/6/2009 TO SHRI MAQSOOD ALI S/O- SHRI AHMED BU X FOR CONSIDERATION OF RS. 82,25,777/-. THE LAND IS SITUATED 10 KMS OUTS IDE THE JAIPUR MUNICIPAL LIMITED, AS SUCH THE TRANSACTION WAS EXCLU DED FROM THE MEANING OF CAPITAL ASSETS U/S 2(14)(III) OF THE ACT . THE LD ASSESSING OFFICER CONSIDERED THE GOVERNMENT OF INDIA, MINISTR Y OF FINANCE, DEPARTMENT OF REVENUE NOTIFICATION NO. S.O.10(E) DA TED 06/01/1994 AND FOUND THAT THE LAND IS LOCATED WITHIN THE LIMIT OF 8 KMS FROM THE LIMIT OF JAIPUR MUNICIPAL CORPORATION. HE CONDUCTED ENQUIRY FROM COMMISSIONER OF JAIPUR MUNICIPAL CORPORATION, AMER ZONE, WHO HAD INFORMED THAT THE WARD NO. 77 IS UPTO JAIPUR GOLDEN PETROL PUMP AS SUC H THE DISTANCE OF THE AGRICULTURAL LAND SOLD IS TO BE MEASURED FROM T HE LOCATION OF JAIPUR GOLDEN PETROL PUMP TO THE ACTUAL LOCATION OF THE IM PUGNED LAND. HE ENQUIRED THROUGH WARD INSPECTOR OF THE DISTANCE FRO M THE MUNICIPAL LIMIT OF THE IMPUGNED LAND. THE INSPECTOR HAD REPORTED THA T THE DISTANCE OF THE SAID LAND BY WAY OF APPLYING THE PYTHAGORAS THE OREM COMES TO 7.07 KMS. THE APPLICATION OF PYTHAGORAS THEOREM WAS REQUI RED TO GET THE ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 5 STRAIGHT LINE DISTANCE OF THE SAID LAND FROM THE LA ST POINT OF THE JAIPUR MUNICIPAL CORPORATION. AFTER ENSURING THAT THE SAID LAND WAS WITHIN THE DISTANCE OF EIGHT KMS FROM THE LIMITS OF JAIPUR MUN ICIPAL CORPORATION A REFERENCE WAS ALSO SENT TO THE SETTLEMENT COMMISSION ER, JAIPUR FOR PROVIDING ACTUAL MEASUREMENT OF DISTANCE OF THE LAN D FROM JAIPUR GOLDEN PETROL PUMP. THE ADDITIONAL COMMISSIONER, SETTLEMENT COMMISSION, JAIPUR VIDE HIS LETTER NO. 257 DATED 01/2/2013 HAD INFORMED THAT THE POINT TO POINT DISTANCE OF THE IMPUGNED LAND FROM J AIPUR GOLDEN PETROL PUMP IS 7.78 KMS. THE DISTANCE BETWEEN THE IMPUGNED L AND AND THE JAIPUR GOLDEN PETROL PUMP HAD BEEN MEASURED SCIENTI FICALLY USING IMAGERY AND GEO STATIONARY REFERENCES. THE LD ASSESS ING OFFICER AGAIN GAVE THE SHOW CAUSE NOTICE ON SHORT TERM CAPITAL GAI N. THE ASSESSEE AGAIN REPLIED VIDE LETTER DATED 27/2/2013, WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER ON PAGE NOS. 4 TO 6 OF THE AS SESSMENT ORDER. AFTER CONSIDERING THE ASSESSEES REPLY, IT HAS BEEN HELD THAT NAGAR NIGAM AS WELL AS THE TEHSILDAR AND THE AEN PWD HAD GIVEN THE D ISTANCE FROM JAIPUR GOLDEN PETROL PUMP TO THE IMPUGNED LAND BY R OAD. THE ASSESSEE RELIED ON VARIOUS DECISIONS BEFORE HIM. THE LD ASSES SING OFFICER DID NOT FIND ACCEPTABLE THE MEASUREMENT BY ROAD AND DECIDED THAT STRAIGHT LINE METHOD OR CROW FLIGHT METHOD IS THE SUITABLE METHOD TO MEASURE THE ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 6 DISTANCE. HE FURTHER ANALYSED THE DISTANCE BY COVER ING THE VARIOUS DECISIONS, MEASUREMENT OF DISTANCE OF GENERAL CLAUS E ACT WHEREIN IT HAS BEEN PROVIDED THAT THE DISTANCE HAS TO BE MEASURED IN THE STRAIGHT LINE ON A HORIZONTAL PLANE UNLESS A DIFFERENT INTENTION HAS BEEN PROVIDED IN THE ACT. IN THE INCOME TAX ACT, THERE IS NO DEFINITI ON OF DISTANCE. HE FURTHER DEFINED OBJECTS AND FUNCTIONS OF THE JAIPUR DEVELOPMENT AUTHORITY AND TREATED WITH MUNICIPAL CORPORATION ON PAGE 8 AND 9 OF ASSESSMENT ORDER AND HELD THAT THE JURISDICTION OF THE JAIPUR DEVELOPMENT AUTHORITY IS DEFINED IN SECTION 2(8) OF THE JAIPUR DEVELOPMENT AUTHORITY ACT WHEREIN THE JAIPUR REGION INCLUDES THE AREAS IN THE LIMIT OF THE CITY, TOWNS AND VILLAGES SPECIFI ED IN SCHEDULE-1. THE SCHEDULE-1 OF JAIPUR DEVELOPMENT AUTHORITY ACT COMP RISES A NUMBER OF TOWNS, VILLAGES AND TEHSILS INCLUDING VILLAGE CHOKLI YAWAS ALIA KACHERAWALA, TEHSIL AMER, WHEREIN THE IMPUGNED LAND IS LOCATED AND SHE TREATED THE JAIPUR DEVELOPMENT AUTHORITY AS A MUNIC IPAL AUTHORITY WITHIN THE MEANING OF SECTION 2(14)(III)(A) OF THE ACT. AC CORDINGLY, SHE CALCULATED THE SHORT TERM CAPITAL GAIN AT RS. 76,83 ,777/- AND ADDED THE SAME IN THE INCOME OF THE ASSESSEE. ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 7 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD ALLOWED THE APPEAL BY OBSERVING AS UNDER:- 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASSES SMENT ORDER AND APPELLANTS WRITTEN SUBMISSION. APPELLANT SOLD AGRICULTURAL LAND DURING THE YEAR AND CLAIMED THE S AME AS EXEMPT WITHIN THE DEFINITION OF CAPITAL ASSET UNDER SECTION 2(14)(III). ASSESSING OFFICER FOUND THAT THE AGRICU LTURAL LAND SOLD BY THE APPELLANT DURING THE YEAR WAS SITUATED WI THIN 8 KM FROM JAIPUR MUNICIPAL LIMIT AND THEREFORE THE LA ND WAS CAPITAL ASSETS AND SALE THEREOF WAS LIABLE FOR CAPIT AL GAINS. ASSESSING OFFICER GOT LETTER FROM ADDL. COMMISSIONE R LAND SETTLEMENT, JAIPUR THAT LAND SITUATED IN THE VILLAG E WAS WITHIN 8 KM OF AIR DISTANCE/FROM THE LIMIT OF JAIPUR MUNIC IPAL CORPORATION. DURING APPEAL, APPELLANT TOOK TWO ARGUM ENTS- (1) FOR CALCULATING DISTANCE FROM MUNICIPAL LIMIT, ROAD DISTANCE IS TO BE SEEN AND NOT AIR DISTANCE AS DONE BY THE AO. APPELLANT SUBMITTED SEVERAL JUDICIAL DECISIONS SUPPORTING ITS CONTENTION. (2) THE SETTLEMENT COMMISSIONER HAS TAKEN PRESENT MUNICIPAL LIMIT WHEREAS MUNICIPAL LIMIT HAS EXPANDED OVER A PERIOD OF TIME. CONSIDERING THE ENTIRE SUBMISSIONS AND DOCUMENTS R ELIED UPON BY BOTH SIDES, THIS ISSUE CAN BE DIVIDED IN TWO PARTS- (1) WHILE COMPUTING DISTANCE FROM MUNICIPAL LIMIT, WHICH DISTANCE- AIR DISTANCE OR ROAD DISTANCE TO BE CONSI DERED. (2) ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 8 WHICH MUNICIPAL LIMIT SHOULD BE CONSIDERED FOR COMPUTING DISTANCE FROM AGRICULTURE LAND- MUNICIPAL LIMIT ON THE DATE OF SALE OR MUNICIPAL LIMIT ON THE DATE OF ISSUE OF THE NOTIFICATION BY THE GOVERNMENT OR MUNICIPAL LIMIT AS ON DATE? AS REGARDS THE FIRST PART OF THE ISSUE, APPELLANT SUBMITTED DECISION OF HONOURABLE PUNJAB AND HARYANA HIGH COUR T IN WHICH IT IS CLEARLY HELD THAT IT IS THE ROAD DISTANC E FROM MUNICIPAL LIMIT AND NOT AIR DISTANCE TO BE CONSIDER ED. SEVERAL TRIBUNAL DECISIONS HAVE ALSO UPHELD THIS VIEW. THERE IS NO JUDICIAL DECISION CONTRARY TO THIS VIEW. EVEN IF DEP ARTMENT HAS NOT ACCEPTED THESE DECISIONS, THESE ARE BINDING ON THE APPELLATE AUTHORITIES. TO REMOVE THIS CONTROVERSY, THERE IS AN AMENDMENT IN THE ACT WITH EFFECT FROM 1-4-2013 THAT AIR DISTANCE WILL BE CONSIDERED IN COMPUTING DISTANCE FO R CAPITAL ASSET. THIS IS NOT RETROSPECTIVE AND THEREFORE NOT A PPLICABLE FOR THIS YEAR. RESPECTFULLY FOLLOWING THESE DECISIONS. I HOLD THAT ASSESSEE I S JUSTIFIED IN COMPUTING DISTANCE OF THE AGRICULTURAL LAND SOLD BY HER BY TAKING ROAD DISTAN CE FROM THE LIMITS OF JAIPUR MUNICIPAL CORPORATION SINCE UN DOUBTEDLY ROAD DISTANCE IS MORE THAN 8 KM FROM JAIPUR MUNICIP AL LIMIT, THE LAND SOLD IS NOT A CAPITAL ASSETS AS PER 2(14)( III). ACCORDINGLY CAPITAL GAIN TAXED BY AO IS DELETED SIN CE LAND SOLD WAS NOT A CAPITAL ASSET. AS REGARDS THE ISSUE AS TO MUNICIPAL LIMIT AS ON WH ICH DATE IS TO BE CONSIDERED, AS PER CLAUSE (B), IN ORDER TO BE EXCLUDED FROM THE DEFINITION OF CAPITAL ASSET, THE LAND SHOU LD NOT BE ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 9 SITUATED WITHIN SUCH DISTANCE FROM THE LOCAL LIMITS OF ANY MUNICIPALITY {REFERRED TO IN CLAUSE(A)} AS SPECIFIE D BY THE CENTRAL GOVERNMENT BY NOTIFICATION IN THE OFFICIAL GAZETTE. THE SAID NOTIFICATION I.E NOTIFICATION NO. (SO 9447) (FILE NO.164/3/87-ITA.I) DATED 06.01.1994 FOR THE PURPOSE OF ITEM (B) OF SUB CLAUSE (III) OF CLAUSE (14) OF SECT ION 2 OF THE INCOME TAX ACT 1961 IS REPRODUCED BELOW: INCOME-TAX ACT, 1961: NOTIFICATION UNDER SECTION 2(1A)(C), PROVISO, CLAUSE (LL)(B) AND SECTION 2(14)(III)(B): URBANISATION OF AREAS NOTIFICATION NO. [SO 9447] (FILE NO. 164/3/87- ITA.I)], DATED. 6-1-1994 WHEREAS A DRAFT NOTIFICATION WAS PUBLISHED BY THE CE NTRAL GOVERNMENT IN EXERCISE OF THE POWERS CONFERRED BY IT EM (B) OF CLAUSE (II) OF THE PROVISO TO SUB-CLAUSE (C) OF CLAUSE (1A), AND ITEM (B) OF SUB-CLAUSE (III) OF CLAUSE (14), OF SECTION 2 OF THE INCOME-TAX ACT, 1961 (43 OF 1961), IN THE GAZET TE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUBSECTIO N (II), DATED FEBRUARY 13, 1991, UNDER THE NOTIFICATION OF THE GO VERNMENT OF INDIA IN THE MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) NO. S.O. 91(E), DATED FEBRUARY 8, 1991, FOR SPECIFY ING CERTAIN AREAS FOR THE PURPOSES OF THE SAID CLAUSES AND OBJECTIONS AND SUGGESTIONS WERE INVITED FROM THE PUB LIC WITHIN A PERIOD OF 45 DAYS FROM THE DATE THE COPIES OF THE GAZETTE OF INDIA CONTAINING SUCH NOTIFICATION BECAM E AVAILABLE TO THE PUBLIC; AND WHEREAS COPIES OF THE SAID GAZETTE WERE MADE AVA ILABLE TO THE PUBLIC ON FEBRUARY 13, 1991; AND WHEREAS THE OBJECTIONS AND SUGGESTIONS RECEIVED FROM THE PUBLIC ON THE SAID DRAFT NOTIFICATION HAVE BEEN CONSIDERED BY THE CENTRAL GOVERNMENT; ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 10 NOW, THEREFORE, IN EXERCISE OF THE POWERS CONFERRED BY ITEM (B) OF CLAUSE (II) OF THE PROVISO TO SUB-CLAUSE (C) OF CLAUSE (1A) AND ITEM (B) OF SUB-CLAUSE (III) OF CLAUSE (14 ) OF SECTION 2 OF THE INCOME-TAX ACT, 1961 (43 OF 1961), AND IN SUPERSESSION OF THE NOTIFICATION OF THE GOVERNMENT OF INDIA IN THE ERSTWHILE MINISTRY OF FINANCE (DEPARTMENT OF REVENUE AND INSURANCE) NO. S.O. 77(E), DATED FEBRUARY 6, 19 73, THE CENTRAL GOVERNMENT HAVING REGARD TO THE EXTENT OF, AND SCOPE FOR URBANISATION OF THE AREAS CONCERNED AND O THER RELEVANT CONSIDERATIONS, HEREBY SPECIFIES THE AREAS SHOWN IN COLUMN (4) OF THE SCHEDULE HERETO ANNEXED AND FALLI NG OUTSIDE THE LOCAL LIMITS OF MUNICIPALITY OR CANTONM ENT BOARD, AS THE CASE MAY BE, SHOWN IN THE CORRESPONDING ENTRY IN COLUMN (3) THEREOF AND AGAINST THE STATE OR UNION TE RRITORY SHOWN IN COLUMN (2) THEREOF FOR THE PURPOSES OF THE ABOVE MENTIONED PROVISION OF THE INCOME-TAX ACT, 1961 (43 OF 1961). SCHEDULE RAJASTHAN JAIPUR AREAS UP TO A DISTANCE OF 8 KMS F ROM THE MUNICIPAL LIMITS IN ALL DIRECTIONS EXPLN 1(2) - THE REFERENCE TO MUNICIPAL LIMITS OR THE LIMIT OF CANTONMENT BOARD IN THE SCHEDULE TO THIS NOTIFICATI ON IS TO THE LIMITS AS EXISTING ON THE DATE ON WHICH THE NOT IFICATION IS PUBLISHED IN THE OFFICIAL GAZETTE. FROM THE ABOVE, IT IS CLEAR THAT THE LAND SITUATED WITHIN 8 KILOMETERS FROM JAIPUR MUNICIPAL CORPORATION LIMIT IS URBAN LAND AND TO BE TREATED AS CAPITAL ASSET. HOWEVER LAN D SITUATED OUTSIDE 8 KM LIMIT WILL BE AGRICULTURAL LAN D NOT TO BE TREATED AS CAPITAL ASSET FOR COMPUTING THE DISTANCE OF 8 KM. THE MUNICIPAL LIMIT IS ALSO DEFINED. SINCE MUNICIPA L LIMIT IS DYNAMIC AND CHANGING OVER A PERIOD OF TIME, AN EXPL ANATION IS GIVEN AT THE END OF THE AFORESAID NOTIFICATION T HAT ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 11 MUNICIPAL LIMIT IS THE LIMIT AS EXISTING ON THE(DAT E OF PUBLICATION OF THE NOTIFICATION AND NOT THE LIMIT O N THE DATE OF TRANSACTION OR AS ON DATE. THE NOTIFICATION IS PUBLISHED ON 6-1- 1994 AND THEREFORE THE MUNICIPAL LIMITS AS ON 6-1-1994 IS TO BE TAKEN FOR COMPUTING 8 KM ROAD DISTANCE TO DECIDE WHETHER AGRICULTURAL LAND IS A CAPITAL ASSET OR NOT. THE MUNICIPAL LIMIT ON THE DATE OF TRANSACTION IS NOT R ELEVANT AS FAR AS APPLICATION OF THIS NOTIFICATION IS CONCERNE D. APPELLANT SUBMITTED THAT PRIOR TO 1995, THE MUNICIPAL LIMIT O F JAIPUR MUNICIPAL CORPORATION WAS VERY RESTRICTED AND FROM T HAT LIMIT, AGRICULTURAL LANDS WERE SITUATED MUCH BEYOND 8 KM DISTANCE. CONSIDERING THIS ALSO AGRICULTURE LAND SO LD IS NOT CAPITAL ASSETS. AS REGARDS AOS CLAIM THAT LAND IS SITUATED IN VIL LAGE WHICH IS PART OF JAIPUR DEVELOPMENT AUTHORITY AND THEREFORE COVERED IN CLAUSE (A) OF SECTION 2(14)(III) IS NOT CORRECT SINCE JDA IS NOT MUNICIPALITY OR CANTONMENT BOARD AS REQUIRED UN DER THAT CLAUSE. APPELLANT ALSO ARGUED THAT AO HAS NOT BROUG HT ANY EVIDENCE TO ESTABLISH THAT THE LAND UNDER CONSIDERA TION IS LOCATED IN THE JURISDICTION OF JDA. FURTHER, JDA CA NNOT BE EQUATED TO BE A MUNICIPALITY. JDA IS A DEVELOPMENT AUTHORITY AND NOT A TOWN AUTHORITY. THE ROLE OF MUNICIPALITY IS ALL TOGETHER DIFFERENT THAN JDA. IT HAS NO POWER TO COLL ECT TAX OR CESS AND IT DOESNT PROVIDE CIVIC AMENITIES ETC. THE REFORE, JDA IS NOT A MUNICIPALITY. CONSIDERING THESE FACTS, JDA IS NOT CONSIDERED AS MUNICIPALITY FOR THE PURPOSE OF SECTI ON ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 12 2(14)(III)(A) AND ACCORDINGLY LAND SOLD IS OUTSIDE THE PURVIEW OF CAPITAL ASSETS. 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LD ASSESSING OFFICER. AT THE OUTSET, THE LD AR OF THE ASSESSEE HAS REITERATED THE ARGUMENTS MADE B EFORE THE LD CIT(A) AND FURTHER SUBMITTED THAT THE IMPUGNED LAND IS BEY OND 8 KMS OF THE MUNICIPAL LIMIT AND THE PROPER WAY TO MEASURE THE DI STANCE IS BY ROAD, NOT STRAIGHT LINE METHOD OR CROW FLIGHT METHOD, FOR WHICH HE RELIED VARIOUS DECISIONS PARTICULARLY THE DECISION OF HON BLE ITAT, INDORE BENCH IN CASE OF ITO VS. ASHOK SHUKLA ITA NO. 207/IND/2012 ORDER DATED 31 ST AUGUST, 2012 AND OTHER VARIOUS CASE LAWS, WHICH IS AS UNDER:- (I) LAUKIK DEVELOPERS VS DY.CIT (2007) 105 ITD 657 ( MUM). (II) MANGLAM INORGANICS (P) LTD. VS ASST.CIT (IT APPE AL NOS. 622 AND 622A (PN) OF 2001) (III) SANJAY NAGORAO PAIDLEWAR & NITISH RAMESHCHANDR A CHORDIA VS. ACIT ITA 112 & 113/NAG/2012 DECIDED ON 22/3/2013 . (IV) SHRI PRAKASH LAXMINARAYAN VS. ACIT ITA NO. 164/ NAG/2012. (V) SHRI MAINRAJ VS. ACIT 1371/MDS/2011 (MAD-TRIB) (VI) ACIT VS GAURAV KHANDELWAL 194/AGRA/2010 (AGRA-TRI B). (VII) KHACHERU SINGH VS ITO IT APPEAL NO. 2953 (DELHI ) OF 2009 DATED 30/11/2009. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS HELD BY THE VARIOUS HONBLE COURTS AS WELL AS THE ITATS THAT FOR MEASURIN G THE DISTANCE FROM ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 13 MUNICIPAL LIMIT TO THE LAND IS BY ROAD, NOT STRAIGH T LINE METHOD OR CROW FLIGHT METHOD. THEREFORE, THE IMPUGNED LAND IS NOT C APITAL ASSETS AS PER SECTION 2(14)(III) OF THE ACT. ACCORDINGLY, WE UPHOL D THE ORDER OF THE LD CIT(A). 6. THE SOLE GROUND OF THE ASSESSEES C.O. IS AGAINS T CONFIRMING THE ADDITION OF RS. 2,92,580/- OUT OF ADDITION OF RS. 3 ,78,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOSIT IN THE BANK. THE LD ASSESSING OFFICER OBSERVED THAT IN SAVINGS BANK ACCOUNT NO. 367010141 6887 MAINTAINED WITH THE BANK OF RAJASTHAN LTD., GOPALPURA BYE PASS ROAD, JAIPUR HAD REVEALED THAT THE ASSESSEE HAD DEPOSITED RS. 6,74,0 00/- IN CASH ON DIFFERENT DATES, THE DETAILS OF WHICH HAS BEEN REPRO DUCED BY THE ASSESSING OFFICER ON PAGE NO. 11 AND 12 OF THE ASSE SSMENT ORDER. THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BE ING HEARD ON THIS ISSUE. AFTER CONSIDERING THE ASSESSEES REPLY, IT WA S FOUND THAT THE RECEIPT SHOWN IN THE CASH FLOW STATEMENT REVEALED THAT TOTAL SALES MADE DURING THE YEAR WERE OF RS. 4,02,758/- AND OUT OF IT TILL 0 5/05/2009 I.E. IN ONE MONTH AND FIVE DAYS SALE OF RS. 3,18,000/- HAD BEEN MADE. IF FURTHER FOUND THAT DURING THE PERIOD UP TO 01/5/2009 SHE HA D SHOWN RECEIPTS FROM DEBTORS OF RS. 41,136/-. THEREAFTER THERE WAS VE RY MEAGRE SALE. ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 14 THE SALE BILLS FILED REVEALED THAT THE SALE WAS MADE COMPLETELY IN CASH WITH NO NAME OF THE BUYER OR SIGNATURE OF RECEIPT OF GOODS IN THE BILL BOOK. ALL THE PURCHASES HAD BEEN SHOWN IN CASH. ALL THE ABOVE ENTRIES IN THE CASH FLOW STATEMENT SHOWED THAT IT WAS A COOKED U P STORY TO CREATE CASH BALANCE FOR CASH DEPOSITS MADE IN THE BANK ACC OUNT AS SUCH THE SOURCE OF CASH DEPOSITS SHOWN BY THE ASSESSEE WAS NOT ACCEPTABLE FOR WANT OF INDEPENDENT EVIDENCE AND ALSO ON HUMAN PROBA BILITY THAT ALL THE PURCHASES WERE MADE ON CREDIT DURING THE MONTH OF AP RIL AND SOLD IN CASH IN THE SAME MONTH AND THEREAFTER THE SALES OF THE ENTIRE YEAR WERE VERY NOMINAL. THUS THE CREATION OF BILL BOOK IS AN A FTERTHOUGHT AND HENCE NOT ACCEPTABLE TO HER. THE ASSESSEE WAS SELLING GOOD S WITHOUT ISSUING BILLS AND THE SAME WAS DEPOSITED IN HER BANK ACCOUNT WITH BANK OF BARODA BUT WHEN SPECIFIC QUERY WAS RAISED SHE WAS HAVI NG NO SATISFACTORY IMMEDIATE SOURCE OF THE CASH DEPOSITS AS SUCH SHE HAS SHOWN CASH SALE BILLS BUT THE SAME ARE NOT SUPPORTED WITH THE PURCHASES. THERE WAS A CREDIT IN THE BANK OF RAJASTHAN OF RS. 3, 00,000 ON 22/06/2009. THE SALE CONSIDERATION OF RS. 82,25,777 /- WAS RECEIVED BY THE ASSESSEE ON 12/06/2009 IN HER ACCOUNT WITH BANK OF BARODA. THE FIRST WITHDRAWAL MADE BY HER FROM THIS ACCOUNT POST R ECEIPT OF THE SALE PROCEEDS WAS ON 13/7/2009 OF RS. 4,00,000/-. THUS THE DEPOSITS MADE ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 15 THEREAFTER COULD BE LINKED WITH THE WITHDRAWAL OF RS. 3,00,000/-. AND OF RS. 4,00,000/- MADE ON 13/7/2009 FROM BANK OF BAROD A. SHE FURTHER HELD THAT THE ASSESSEE HAD UTTERLY FAILED TO EXPLAI N THE CASH DEPOSIT AT RS. 3,78,000/-, ACCORDINGLY, HE MADE ADDITION U/S 6 8 OF THE ACT. 7. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD ALLOWED THE APPEAL PARTLY BY OBSERVING AS UNDER: 4.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASSES SMENT ORDER AND APPELLANTS WRITTEN SUBMISSION. ASSESSING OFFICE R MADE ADDITION OF RS 3,78,000 ON ACCOUNT OF UNEXPLAI NED CASH DEPOSITS IN THE BANK ACCOUNT. APPELLANT SUBMIT TED THAT THE SOURCE OF CASH DEPOSIT IS FROM THE INCOME FROM BUSINESS ACTIVITY AND OPENING CASH BALANCE. ASSESSI NG OFFICER FOUND THAT THERE WERE NO BOOKS OF ACCOUNTS O F THE ALLEGED BUSINESS ACTIVITY IN WHICH ENTIRE SALES WERE REFLECTED IN CASH. THE CASH FLOW STATEMENT SUBMITTED BY THE APPELLANT HAD NO EVIDENTIARY VALUE SINCE IT IS NOT PART OF REGULAR BOOKS OF ACCOUNTS KEPT BY THE APPELLANT. THERE IS NO CONTEMPORARY EVIDENCE TO EXPLAIN THE SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT AND THEREFORE I A GREE WITH THE ASSESSING OFFICER THAT THE SOURCE OF CASH D EPOSIT IS NOT EXPLAINED. HOWEVER I ALSO AGREE WITH THE APPEL LANT THAT INCOME FROM BUSINESS ACTIVITY IS DISCLOSED AT RS ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 16 85,420 AND AT LEAST TO THAT EXTENT SOURCE OF CASH D EPOSIT CAN BE EXPLAINED BECAUSE THAT MUCH CASH REMAINED WIT H THE APPELLANT FOR DEPOSIT IN THE BANK. ACCORDINGLY OUT OF THE DISALLOWANCE OF RS 3,78,000, A RELIEF OF RS 85,4 20 IS GRANTED AND BALANCE ADDITION IS CONFIRMED. 8. NOW THE ASSESSEE IS IN C.O. BEFORE US. THE LD AR OF THE ASSESSEE HAS REITERATED THE ARGUMENTS MADE BEFORE THE LD CIT( A). HE HAS DRAWN OUR ATTENTION ON PAGE NO. 27 OF THE PAPER BOOK, WHIC H REPRESENTS CASH ACCOUNT FOR THE PERIOD OF 01/4/2009 TO 31/3/2010 AN D ARGUED THAT CASH DEPOSITED IN THE BANK ACCOUNT REPRESENTS THE ASSESS EES BUSINESS TRANSACTION, WHICH WAS MADE IN CASH. HE FURTHER SUBM ITTED THAT THE CASH DEPOSITED IN THE BANK ACCOUNT IS FULLY VERIFIABLE F ROM THE BANK ACCOUNT SUBMITTED BY THE ASSESSEE IN COURSE OF ASSESSMENT P ROCEEDINGS. THE ASSESSEE HAD INCOME FROM GARMENT PROCESSING WORK AN D FOR ITS OWN SHE HAD NOT MAINTAINED ANY REGULAR BOOKS OF ACCOUNT BUT HAD DISCLOSED INCOME OF RS. 85,420/- FROM THE BUSINESS. IN THE RE TURN, THE ASSESSEE HAD MENTIONED THE GROSS RECEIPT AND NET PROFIT OF T HIS BUSINESS AS ALSO THE CASH BALANCE AS ON 31/3/2010. THIS CASH BALANCE WITH THE CASH STATEMENT SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ONLY COMES PURCHASES AND SALES ARE MADE IN CASH. CASH AC COUNT SUBMITTED BY THE ASSESSEE CANNOT BE DOUBTED MORE PARTICULARLY WHE N THE INCOME FROM ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 17 SUCH BUSINESS IS ASSESSED TO TAX. THE LD ASSESSING O FFICER HAD CONSIDERED THE CASH DEPOSIT OF RS. 3,78,000/- MADE IN THE BANK ACCOUNT UP TO 22/6/2009 AS UNEXPLAINED. IN DOING SO, SHE IGNORED THE FACT THAT THE ASSESSEE HAD OPENING CASH BALANCE OF RS. 28,896/- A ND ALSO THE REALIZATION FROM THE DEBTORS AND SALE PROCEEDS OF T HE GOODS FROM WHICH THE DEPOSIT IS MADE IN THE BANK ACCOUNT. THUS SOURCE OF THE DEPOSIT IN THE BANK ACCOUNT IS FULLY EXPLAINED. ACCORDINGLY, H E PRAYED TO DELETE THE ADDITION CONFIRMED BY THE LD CIT(A). 9. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE ASSESSING OFFICER AND ARGUED THAT THE LD CIT(A) HAS ALREADY GIVING THE CREDIT OF BUSINESS INCOME OF RS. 85,420/-, THEREFOR E, THE SAME MAY BE CONFIRMED. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE LD CIT(A) HAS FAIRLY CONSIDERED THE BUSINESS INCOME OF RS. 85,420/- AND ALLOWED THE CREDIT OF IT. IT IS A FACT THAT NO BOOKS OF ACCOUNT HAD BEEN MAINTAINED BY THE ASSESSEE AND SALES AND PURCHASES WERE MADE IN CASH. THE CASH FLOW STATEMENT SUBMITTED BEFORE THE ASSESSING OFFICER HA S THOROUGHLY EXAMINED BY THE LOWER AUTHORITY. THE ASSESSEE HAD SEL F GENERATED ITA 790/JP/2013 & CO 60/JP/2013_ ITO VS. LATE SMT. SHWETA SHARMA 18 EVIDENCE FOR SELLING THE GOODS IN CASH AND SAME CAN NOT BE VERIFIED FROM THE THIRD PERSON. THEREFORE, WE UPHOLD THE ORDER OF THE LD CIT(A). 11. IN THE RESULT, THE REVENUES APPEAL AS WELL AS THE ASSESSEES C.O. ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2016. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29 TH JANUARY, 2016 * RANJAN VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO, WARD 6(4), JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- LATE SMT. SHWETA SHARMA THROUGH L/H SUNDER LAL SHARMA, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 790/JP/2013 & CO 60/JP/2013) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR