Shri krishna mohan choursiya, Rajgarh V. ITO, Rajgarh

ITA 853/Ind/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4148 (ITAT-INDORE)
• Duration Of Justice: 3 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-09-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-11-2020
• Assessment Year: 2014-2015
• Appeal Filed On: 22-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N AGRAWAL; BHAVESH AGRAWAL CAS
• Keywords: Unexplained cash credit; Capital asset; Cost of acquisition; Fair market value; Onus to prove; Set aside; Capital Gains
• Section: 143(3); 2(14); 250; 64; 13; 22; 131; 68

Judgement Text

ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HONBLE RAJPAL YADAV, VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING ITA NO.853/IND/2017 ASSESSMENT YEAR: 2014-15 SHRI KRISHNA MOHAN CHOURSIYA RAJGARH PAN:AEMPC3634G : APPELLANT V/S ITO RAJGARH : RESPONDENT APPELLANT BY S/ SHRI S.N. AGRAWAL & BHAVESH AGRAWAL, CAS REVENUE BY SHRI HARSHIT BARI, SR. DR DATE OF HEARING 06.08.2021 DATE OF PRONOUNCEMENT 30. 0 9. 2021 O R D E R PER MANISH BORAD, A.M THE ABOVE CAPTIONED APPEAL FILED AT THE INSTANCE O F THE ASSESSEE FOR ASSESSMENT YEAR 2014-15 IS DIRECTED AG AINST THE ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 2 ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS) [I N SHORT LD. CIT(A)], UJJAIN DATED 01.09.2017 WHICH IS ARISING O UT OF THE ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHORT THE ACT) DATED 28.12.2016 FRAMED BY ITO RAJGARH. THE ASSESSEE HAS R AISED THE FOLLOWING REVISED GROUNDS OF APPEAL IN ITANO.853/IN D/2017: REVISED GROUNDS OF APPEAL 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN IN W, THE LD ASSESSING OFFICER ERRED IN ADOPTING THE FAIR MARKET VALUE OF LAND AS ON 01-04-1981 ARBITRARILY WITHOUT DETERMINING THE FAIR MARKET VALUE OF LAND AS ON 01-04-1981 USING THE REVERSE INDEXATION METHOD WHICH IS A WELL SETTLED M ETHOD OF DETERMINATION OF FAIR MARKET VALUE. 2. THAT ON TILE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN JAW, THE LD CIT(A) ERRED IN MAINTAINING THE ADDITIO N OF RS. 88,78,365/ - AS MADE TO THE TOTAL INCOME OF THE APPELLANT ON ACCOUNT OF LONG-TERM CAPITAL GAIN EARNED ON SALE OF LAND WITHOUT PROPERLY APPRECIATING THE FACTS OF TILE CASE AND SU BMISSIONS MADE BEFORE HIM. 3. THAT ON TILE FACTS AND IN TILE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT(A) GROSSLY ERRED IN MAINTAINING THE ENTIRE ADDITION OFRS. 88,78,365/- AS MADE TO THE TOTAL INCOME OF THE APPELLANT ON ACCOUNT OF LONG-TERM CAPITAL GAIN EARN ED ON SALE OF LAND MORE SO WHEN THE SAID LAND IN QUESTION WAS DIV ERTED ONLY IN THE FINANCIAL YEAR 2010-11 AND THEREFORE, THE SA ID LAND IN QUESTION WAS NOT A CAPITAL ASSET TILL THE FINANCIAL YEAR 2010-11 AND CAPITAL GAIN EARNED TILL THE DATE OF DIVERSION WAS NOT LIABLE TO TAX UNDER THE PROVISIONS OF THE INCOME-TAX ACT, 1961. 4. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT(A) ERRED IN MAINTAINING THE ADDI TION OF RS. 9,25,047/- AS MADE TO THE TOTAL INCOME OF THE APPELLANT ON ACCOUNT OF LONG-TERM CAPITAL GAIN EARNED ON THE COM PULSORY ACQUISITION OF LAND WITHOUT PROPERLY APPRECIATING T HE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM. 5. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT(A] ERRED IN MAINTAINING THE ADDI TION OF RS. ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 3 3,42,358/ - AS MADE TO THE TOTAL INCOME OF THE APPE LLANT ON ACCOUNT OF LONG-TERM CAPITAL GAIN EARNED ON THE COM PULSORY ACQUISITION OF PART OF TILE HOUSE WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE H IM. 6.THAT ON THE FACTS AND IN TILE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT(A) ERRED IN MAINTAINING THE ADDI TION OF RS. 12,86,090/- AS MADE TO THE TOTAL INCOME OF THE APPE LLANT BY TREATING IT AS UNEXPLAINED CREDIT UNDER SECTION 68 OF THE INCOME-TAX ACT, 1961 WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSION MADE BEFORE HIM EVEN WHE N THE SAID AGRICULTURAL LAND WAS PURCHASED IN TILE PREVIOUS YEAR 2012-13 RELEVANT TO THE ASSESSMENT YEAR 2013-14. 7. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LD CIT(A) ERRED IN MAINTAINING THE ADDI TION OF RS. 4,12,148/- AS MADE TO THE TOTAL INCOME OF THE APPEL LANT ON ACCOUNT OF ESTIMATION OF NET PROFIT @ 8% WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM. GROUND NOS.1 TO 3 2. IN GROUND NOS. 1 TO 3, THE ASSESSEE HAS CHALLENGED THE FINDING OF LD. CIT(A) CONFIRMING THE ADDITION OF RS .88,78,365/- MADE BY THE LD. ASSESSING OFFICER ON ACCOUNT OF LON G-TERM CAPITAL GAIN ON SALE OF LAND. BRIEF FACTS AS CULLED OUT FROM THE ORDERS OF REVENUE AUTHORITIES ARE THAT THE ASSESSIN G OFFICER NOTED THAT THE ASSESSEE SOLD LAND FOR THE CONSIDERA TION OF RS.91 LACS ON 02.5.2013. THE ASSESSING OFFICER TREA TED THE LAND AS CAPITAL ASSET AS PER SEC. 2(14) OF THE I.T. ACT BUT THE ASSESSEE CONTENDED THAT THE LAND IS AGRICULTURAL, T HEREFORE, NOT CHARGEABLE AS CAPITAL GAIN. ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 4 3. BEING AGGRIEVED, THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE LD. CIT(A) WHO HAVING GONE THROUGH THE FACTS/CIRCUMSTANCES, MATERIAL AND SUBMISSIONS C ONFIRMED THE ADDITION. THE LD. CIT(A) NOTED THAT THE LAND IS SITUATED AT A DISTANCE OF 1.5 KM FROM THE BUS STAND, KURAWAR GRAM PANCHAYAT, THEREFORE, THE LAND IS A CAPITAL ASSET. LD. CIT(A) FURTHER NOTED FROM THE PERUSAL OF SALE DEED THAT TH E SOLD LAND WAS DIVERTED LAND FOR THE PURPOSE OTHER THAN AGRICULTUR AL, THEREFORE, THE LAND IS CAPITAL ASSET AND THUS, THE DISTANCE FR OM MUNICIPALITY OR GRAM PANCHAYAT HAD NO BEARING. THE LD. CIT(A) AL SO NOTED THAT THE ASSESSING OFFICER RECORDED THE STATEMENT OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN IN REPLY TO QUESTION NO.2 AND 15, THE ASSESSEE ADMITTED THAT TH E LAND HAS BEEN TRANSFERRED FOR THE PURPOSE OF DEVELOPING RESI DENTIAL PLOTS. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE T HIS TRIBUNAL. 4. LD. COUNSEL FOR THE ASSESSEE, REITERATING THE S UBMISSIONS MADE BEFORE REVENUE AUTHORITIES, SUBMITTED THAT THE CAPITAL GAIN ACCRUING TO THE ASSESSEE TILL THE DATE OF DIVERSION OF LAND IS EXEMPT FROM TAX AS THE LAND IN QUESTION WAS NOT A C APITAL ASSET ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 5 AS PER THE PROVISION OF SECTION 2(14)(III) OF THE A CT TILL THE DATE OF ITS DIVERSION. THEREAFTER, CAPITAL GAIN COMPUTED CO NSIDERING THE FAIR MARKET VALUE OF LAND ON THE DATE OF DIVERSION OF RS.68,90,415/- COMES TO NIL AND AS SUCH, NO CAPITAL GAIN IS CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE DURI NG THE AY 2014-15 IN RESPECT OF SALE OF LAND IN QUESTION. 5 . PER CONTRA, LD. SR. DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 6. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PART IES AND PERUSED MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE PURCHASED AGRICULTURAL LAND SITUATED AT SURVEY NO. 83, VILLAGE LASUDALYA RAMNATH, HALKA NO. 58, VILLAGE KURAWAR, NARSINGHGARH, RAJGARH ADMEASURING 2.529 HECTARES DUR ING THE FY 1978-79. THE ASSESSEE ALSO PURCHASED AGRICULTURA L LAND SITUATED AT SURVEY NO. 82/6, VILLAGE LASUDALYA RAMN ATH, HALKA NO. 58, VILLAGE KURAWAR, NARSINGHGARH, RAJGARH ADMEA SURING 0.772 HECTARES DURING THE FY 1988-89. OUT OF THE AG RICULTURAL LAND SITUATED AT SURVEY NO. 83 ADMEASURING 2.529 HE CTARES, AGRICULTURAL LAND ADMEASURING 2.312 HECTARES WAS DI VERTED ON ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 6 25.11.2010 AND OUT OF THE DIVERTED LAND, LAND ADMEA SURING 1.147 HECTARES WAS SOLD DURING THE YEAR. SIMILARLY, AGRIC ULTURAL LAND SITUATED AT SURVEY NO. 82/6 ADMEASURING 0.772 HECTA RES WAS DIVERTED ON 25.11.2010 AND OUT OF THE DIVERTED LAND , LAND ADMEASURING 0.368 HECTARES WAS SOLD DURING THE YEAR . THUS, THE ASSESSEE SOLD 1.515 HECTARES (1.147 HECTARES + 0.36 8 HECTARES) OF DIVERTED LAND DURING THE YEAR FOR A CONSIDERATION O F RS.91,00,000/-. THE ASSESSEE FILED THE FOLLOWING DE TAILS: S. NO. DETAILS OF THE DOCUMENTS ENCLOSED PAGE NO 1. COPY OF THE LETTER AS RECEIVED FROM GRAM PANCHAY AT OF LASUDALYA RAMNATH WITH REFERENCE TO THE DISTANCE OF LAND AS SOLD FROM THE OFFICE OF GRAM PANCHAYAT AND POPULATION OF THE SAID PLACE WHERE THE SAID LAND WAS SITUATED 1.1 DISTANCE OF LAND FROM PANCHAYAT OFFICE OF GRAM PANCHAYAT LASUDALYA RAMNATH 2.5 KMS 49 1.2 POPULATION OF GRAM LASUDALYA RAMNATH IN 2011 WAS 3838 49 2. COPY OF GOOGLE MAP REFLECTING DISTANCE FROM KURAWAR TO LASUDALYA RAMNATH 4 KMS 50 3. DETAIL OF THE POPULATION OF VILLAGE LASUDALYA RAMNATH AS PER LAST CENSUS FROM THE DATE OF SALE 4115 51 FROM THE PERUSAL OF THE ABOVE, WE FIND THAT AGRICUL TURAL LANDS PURCHASED DURING THE FYS 1978-79 AND 1988-89 WERE R URAL AGRICULTURAL LANDS AND WERE NOT CAPITAL ASSETS AS P ER SECTION 2(14)(III) OF THE ACT AS ALL THESE DOCUMENTARY EVID ENCES FILED BY THE ASSESSEE AND CONTENTS APPEARING THEREIN HAVE NO T BEEN FOUND ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 7 TO BE INCORRECT BY THE REVENUE AUTHORITIES AT ANY S TAGE. THE REVENUE AUTHORITIES MADE/CONFIRMED THE ADDITION ON ACCOUNT OF LONG-TERM CAPITAL GAIN ON SALE OF LAND MERELY ON TH E BASIS OF SALE DEED WHEREIN IT WAS MENTIONED THAT THE SOLD LAND WA S DIVERTED LAND AND THEREFORE, THE SOLD LAND, BEING NON-AGRICU LTURAL LAND, FELL UNDER THE DEFINITION OF CAPITAL ASSET U/S 2(14) OF THE IT ACT, 1961. BUT, THE REVENUE AUTHORITIES FAILED TO NOTE THAT TH E ASSESSEE NEVER DISPUTED THE FACT THAT THE LAND SOLD BY THE A SSESSEE WAS A DIVERTED LAND. THE ONLY CONTENTION OF THE ASSESSEE WAS THAT THE AGRICULTURAL LAND WHICH WAS INITIALLY PURCHASED BY THE ASSESSEE WAS A RURAL AGRICULTURAL LAND TILL THE DATE OF DIVE RSION I.E. TILL 25.11.2010 AND AS SUCH, CAPITAL GAIN TILL THE DATE OF DIVERSION WAS NOT LIABLE TO BE TAXED. THEREFORE, THE ONLY ISS UE WHICH REQUIRES CONSIDERATION NOW IS WHETHER THE LAND INIT IALLY PURCHASED BY THE ASSESSEE WAS A RURAL AGRICULTURAL LAND AND IF IT WAS SO, HOW MUCH OF THE AMOUNT OF CAPITAL GAIN SHAL L BE TREATED AS EXEMPT ON THAT COUNT. WE FIND THAT THE ASSESSING OFFICER OBSERVED THAT THE LAND SOLD BY THE ASSESSEE WAS SIT UATED AT A DISTANCE OF 1.5 KM (APPROX.) FROM THE BUS STAND OF KURAWAR GRAM PANCHAYAT HAVING POPULATION OF MORE THAN 10,000. TH US, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE LAND IN QUESTION WAS ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 8 ALREADY A CAPITAL ASSET AND THERE WOULD BE NO IMPAC T OF DISTANCE OF LAND AND ACCORDINGLY, PROVISIONS OF SECTION 2(1 4)(III) OF THE ACT SHALL NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE CATEGO RICALLY EMPHASIZED THAT SECTION 2(14)(III) OF THE ACT REFER S TO INCLUSION AS CAPITAL ASSETS OF AGRICULTURAL LAND SITUATED IN IND IA WITHIN THE JURISDICTION OF A MUNICIPALITY (WHETHER KNOWN AS A M UNICIPALITY, MUNICIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOW N AREA COMMITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BOARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAND. LD. COUNSEL FOR THE ASSESSEE RE-ITERA TED THAT LAND IN QUESTION WAS SITUATED WITHIN THE JURISDICTION OF A PANCHAYAT AND NOT WITHIN THE JURISDICTION OF A MUNICIPALITY A ND THAT PANCHAYAT IS TO BE UNDERSTOOD AS DISTINCT AND DIFFE RENT FROM MUNICIPALITY. FOR READY REFERENCE, THE PROVISION O F SECTION 2(14)(III) OF THE ACT ARE REPRODUCED HEREUNDER: - 2.. . (14) 'CAPITAL ASSET' MEANS BUT DOES NOT INCLUDE (III) AGRICULTURAL LAND IN INDIA, NOT BEING LAND SI TUATE ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 9 (A) IN ANY AREA WHICH IS COMPRISED WITHIN THE JURIS DICTION OF A MUNICIPALITY (WHETHER KNOWN AS A MUNICIPALITY, MUNI CIPAL CORPORATION, NOTIFIED AREA COMMITTEE, TOWN AREA COM MITTEE, TOWN COMMITTEE, OR BY ANY OTHER NAME) OR A CANTONMENT BO ARD AND WHICH HAS A POPULATION OF NOT LESS THAN TEN THOUSAN D; OR (B) IN ANY AREA WITHIN THE DISTANCE, MEASURED AERIA LLY, (I) NOT BEING MORE THAN TWO KILOMETRES, FROM THE LO CAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITE M (A) AND WHICH HAS A POPULATION OF MORE THAN TEN THOUSAND BU T NOT EXCEEDING ONE LAKH; OR (II) NOT BEING MORE THAN SIX KILOMETRES, FROM THE L OCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITE M (A) AND WHICH HAS A POPULATION OF MORE THAN ONE LAKH BUT NO T EXCEEDING TEN LAKH; OR (III) NOT BEING MORE THAN EIGHT KILOMETRES, FROM TH E LOCAL LIMITS OF ANY MUNICIPALITY OR CANTONMENT BOARD REFERRED TO IN ITEM (A) AND WHICH HAS A POPULATION OF MORE THAN TEN LAKH. EXPLANATION.FOR THE PURPOSES OF THIS SUB-CLAUSE, ' POPULATION' MEANS THE POPULATION ACCORDING TO THE LAST PRECEDIN G CENSUS OF WHICH THE RELEVANT FIGURES HAVE BEEN PUBLISHED BEFO RE THE FIRST DAY OF THE PREVIOUS YEAR; ON PERUSAL OF RECORDS FILED BEFORE US, WE FIND THAT THE LAND IN QUESTION WAS SITUATED AT A DISTANCE OF 2.5 KMS FROM THE PANCHAYAT OFFICE OF VILLAGE LASUDALYA RAMNATH WHICH IS A GRAM PANCHAYAT HAVING A POPULATION OF 4,115 AS PER THE C ENSUS OF 2011. FURTHER, DISTANCE OF VILLAGE KURAWAR FROM VIL LAGE LASUDALYA RAMNATH WAS 4 KMS WHICH IS ALSO A GRAM PA NCHAYAT AND BOTH VILLAGE LASUDALYA RAMNATH AND VILLAGE KURA WAR ARE GRAM PANCHAYATS AND THESE VILLAGES ARE NEITHER MUNI CIPALITIES NOR CANTONMENT BOARDS. HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. P.J. THOMAS AS REPORTED IN [1995] 211 ITR 897 (MAD.) HAS HELD THAT: ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 10 _____________EVEN AS REGARDS THE SECOND QUESTION, IT IS SEEN THAT UNDER SECTION 2(14) OF THE INCOME-TAX ACT, 196 1, THE EXCLUSION OF AGRICULTURAL LAND AS CAPITAL ASSET, WO ULD BE APPLICABLE TO LAND WITHIN THE LIMITS OF A MUNICIPAL ITY AND NOT A PANCHAYAT. THE LAND SOLD BY THE ASSESSEE WAS SITUAT E IN KOSHANCHERRY TOWN AND THAT WAS ONLY A PANCHAYAT. TH OUGH LEARNED COUNSEL FOR THE REVENUE STRENUOUSLY CONTEND ED THAT A PANCHAYAT WOULD ALSO BE COMPREHENDED WITHIN SECTION 2(14) OF THE INCOME-TAX ACT, 1961, WE ARE UNABLE TO ACCEPT T HE CONTENTION. SECTION 2(14)(III) REFERS TO THE EXCLUS ION AS CAPITAL ASSET OF AGRICULTURAL LANDS SITUATE IN AN AREA WHIC H IS COMPRISED WITHIN THE JURISDICTION OF A MUNICIPALITY (WHETHER KNOWN AS MUNICIPALITY OR MUNICIPAL CORPORATION, NOT IFIED AREA COMMITTEE, TOWN AREA COMMITTEE, TOWN COMMITTEE OR B Y ANY OTHER NAME) OR A CANTONMENT, WHICH HAS A POPULATION OF NOT LESS THAN 10,000 ACCORDING TO THE LAST PRECEDING CE NSUS. IN ORDER THAT THE BENEFIT OF EXCLUSION OF AGRICULTURAL LAND AS CAPITAL ASSET MAY NOT BE AVAILABLE, THE LAND SHOULD BE SITU ATED WITHIN THE JURISDICTION OF A MUNICIPALITY OR A CANTONMENT BOARD AS STATED EARLIER AND IS ALSO RELATED TO THE POPULATIO N. THOUGH THE EXPRESSION, 'MUNICIPALITY, MUNICIPAL CORPORATION, N OTIFIED AREA COMMITTED TOWN AREA COMMITTEE, TOWN COMMITTEE', ETC ., HAVE BEEN USED THEY REFER ONLY TO CERTAIN SPECIFIC ENTIT IES EITHER KNOWN BY THAT NAME OR BY ANY OTHER NAME AND THAT CA NNOT BE TAKEN TO APPLY TO A PANCHAYAT WHICH IS AND HAS ALSO ALWAYS BEEN UNDERSTOOD AS DISTINCT AND DIFFERENT FROM MUNI CIPALITY, ETC. IN THE ABSENCE OF CLEAR OR SPECIFIC WORDS IN T HE SECTION TO TAKE IN A PANCHAYAT, WE ARE UNABLE TO COUNTENANCE T HE ARGUMENT OF LEARNED COUNSEL FOR THE REVENUE. WE ARE SATISFIED THAT THE TRIBUNAL WAS QUITE JUSTIFIED IN DELETING T HE TAX ARISING ON CAPITAL GAINS ON ACCOUNT OF THE SALE OF THE AGRI CULTURAL LANDS BY THE ASSESSEE. THE TAX CASE PETITION IS DISMISSED . THERE WILL BE NO ORDER AS TO COSTS. IN LIGHT OF THE FACTS RE-ITERATED ABOVE AND AFTER G OING THROUGH THE FINDINGS OF THE HONBLE MADRAS HIGH COURT (SUPRA), WE FIND THAT THERE IS A CLEAR DISTINCTION BETWEEN A MUNICIPALITY AND A GRAM PANCHAYAT AS ALSO ENUNCIATED IN THE JUDGMENT (SUPRA ), THEREFORE, WE ARE OF THE VIEW THAT THE LAND IN QUESTION WAS NO T SITUATED ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 11 WITHIN THE LIMIT OF ANY MUNICIPALITY OR CANTONMENT BOARD. THUS, IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CAS E, WE FIND THAT THE AGRICULTURAL LAND INITIALLY PURCHASED BY THE AS SESSEE WAS NOT A CAPITAL ASSET AS PER SECTION 2(14)(III) OF THE AC T. ACCORDINGLY, THE AMOUNT OF CAPITAL GAIN ACCRUING TO THE ASSESSEE TIL L THE DIVERSION OF AGRICULTURAL LAND ON 25.11.2010 SHALL NOT BE ELI GIBLE TO TAX. FURTHER, FOR THE PURPOSE OF COMPUTATION OF THE AMOU NT OF CAPITAL GAIN THAT SHALL BE EXEMPT FROM TAX, THE ASSESSEE SU BMITTED THAT FAIR MARKET VALUE ON THE DATE OF DIVERSION SHALL BE CONSIDERED AS FULL VALUE OF CONSIDERATION AND SUCH FAIR MARKET VA LUE SHALL BE CONSIDERED AS COST FOR DETERMINATION OF THE AMOUNT OF CAPITAL GAIN CHARGEABLE TO TAX SUBSEQUENT TO DIVERSION OF LAND. THE ASSESSEE FILED DETAIL REGARDING RATE OF COMPENSATION DETERMI NED BY THE GOVERNMENT IN RESPECT OF COMPULSORY ACQUISITION AT PAGE NO. 64 OF THE PAPER BOOK FOR DETERMINATION OF FAIR MARKET VALUE OF LAND. THE FAIR MARKET VALUE OF LAND DETERMINED BY THE GOV ERNMENT WAS RS. 48,00,000/- PER HECTARE. THE ASSESSEE SOLD LAND ADMEASURING 1.515 HECTARES DURING THE YEAR AND THUS, FAIR MARKE T VALUE OF THE SAID LAND AS ON THE DATE OF DIVERSION WAS RS.72,72, 000/- (RS.48,00,000/- * 1.515 HECTARES). ALTERNATIVELY, T HE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT FAIR MARKET VALUE S HALL BE ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 12 DETERMINED ON THE BASIS OF REVERSE INDEXATION METHO D. THE FAIR MARKET VALUE OF LAND COMPUTED ON THE BASIS OF REVER SE INDEXATION METHOD COMES TO RS.68,90,415/-. THE REVERSE INDEXAT ION METHOD FOR DETERMINATION OF FAIR MARKET VALUE OF A CAPITAL ASSET IS DULY ACCEPTED AND APPROVED IN THE FOLLOWING JUDGMENTS: DEEN DAYAL RATHI VS ITO-3(4), JODHPUR ITA NO. 108 /JODH/2013 PREM BHAI KANJI BHAI TANDEL VS ITO ITA NO. 192/AH D/2016 DCIT VS SHRI RAJENDRA KUMAR SINGHVI ITA NO. 313/J ODH/2010 DASHRATHBHAI G PATEL VS DCIT 182 ITD 327 (AHD-TRI B.) SMT. MINA DEOGUN V. ITO [2008] 19 SOT 183 (KOL.) PFIZER LTD. V. DY. CIT [2015] 56 TAXMANN.COM 260/ 1 53 ITD 433 (MUM.) CIT V. ASHVEN DATLA [2013] 37 TAXMANN.COM 261/ 218 TAXMAN 74 (MAG.)(AP) ON CONSIDERATION OF ABOVE, WE FIND FORCE IN THE CON TENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT FAIR MARKET VALUE OF LAND AS ON THE DATE OF DIVERSION I.E. ON 25.11.2010 SHALL BE T AKEN AS RS.68,90,415/-. THUS, IN OUR VIEW, AS DISCUSSED SUP RA, CAPITAL GAIN ACCRUING TO THE ASSESSEE TILL THE DATE OF DIVE RSION USING FAIR MARKET VALUE OF RS.68,90,415/- SHALL BE EXEMPT FROM TAX. FURTHER, WE ARE OF THE VIEW THAT FAIR MARKET VALUE OF RS.68,90,415/- AS ON THE DATE OF DIVERSION SHALL BE CONSIDERED AS COST OF ACQUISITION FOR THE PURPOSE OF DETERMINATIO N OF THE AMOUNT OF CAPITAL GAIN CHARGEABLE TO TAX DURING THE YEAR UNDER CONSIDERATION. THE INDEXED COST OF ACQUISITION OF L AND COMES TO ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 13 RS.91,00,000/- FOR THE FY 2013-14 (AY 2014-15) WHIC H IS AS UNDER: FAIR MARKET VALUE OF LAND AS ON 25.11.2010 I.E. DUR ING FY 2010- 11 WHICH IS CONSIDERED AS COST OF ACQUISITION FOR T HE PURPOSE OF COMPUTATION OF CAPITAL GAIN RS.68,90,415/- COST INFLATION INDEX FOR THE FY 2010-11 711 COST INFLATION INDEX FOR THE FY 2013-14 939 INDEXED COST OF ACQUISITION RS.91,00,000/- (RS.68 ,90,415/- * 939/711) SALE CONSIDERATION RS.91,00,000/- THUS, EFFECTIVELY THERE SHALL BE NO CAPITAL GAIN CH ARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE DURING THE AY 2014-15 IN RESPECT OF SALE OF LAND IN QUESTION. THE CAPITAL GAIN ACCRUING TO THE ASSESSEE TILL THE DATE OF DIVERSION OF LAND IS EXEMPT FROM T AX AS THE LAND IN QUESTION WAS NOT A CAPITAL ASSET AS PER THE PROVISI ON OF SECTION 2(14)(III) OF THE ACT TILL THE DATE OF ITS DIVERSIO N. THEREAFTER, CAPITAL GAIN COMPUTED CONSIDERING THE FAIR MARKET VALUE OF LAND ON THE DATE OF DIVERSION OF RS.68,90,415/- COMES TO NIL AN D AS SUCH, CAPITAL GAIN IS CHARGEABLE TO TAX IN THE HANDS OF T HE ASSESSEE. IN VIEW OF THESE FACTS IN THE LIGHT OF THE JUDICIAL PRO NOUNCEMENTS (SUPRA), WE ARE OF THE VIEW THAT THE FINDINGS OF LD . CIT(A) DESERVE TO BE SET ASIDE AND ACCORDINGLY, WE DELETE THE ADDI TION OF RS.88,78,365/- MADE ON ACCOUNT OF LONG-TERM CAPITAL GAIN ON ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 14 SALE OF LAND. THUS, GROUND NOS.1 TO 3 RAISED IN THE APPEAL OF THE ASSESSEE ARE ALLOWED. GROUND NO.4 7. IN GROUND NO.4, THE ASSESSEE HAS CHALLENGED THE FIN DING OF LD. CIT(A) CONFIRMING THE ADDITION OF RS.9,25,047/- MADE BY THE LD. ASSESSING OFFICER ON ACCOUNT OF LONG-TERM CAPIT AL GAIN ON COMPULSORY ACQUISITION OF LAND. BRIEF FACTS AS CULL ED OUT FROM THE ORDERS OF REVENUE AUTHORITIES ARE THAT THE ASSESSEE RECEIVED THE COMPENSATION DUE TO COMPULSORY ACQUISITION OF LAND OUT OF SURVEY NO.83 FOR WHICH THE ASSESSING OFFICER MADE ADDITION OF RS.9,25,047/-. 8. BEING AGGRIEVED, THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE LD. CIT(A) WHO HAVING GONE THROUGH THE FACTS/CIRCUMSTANCES, MATERIAL AND SUBMISSIONS C ONFIRMED THE ADDITION. THE LD. CIT(A) NOTED THAT THE ASSESSE E RECEIVED THE COMPENSATION DUE TO COMPULSORY ACQUISITION OF LAND OUT OF SURVEY NO.83 FOR WHICH THE TAXABILITY HAS ALREADY B EEN DECIDED AGAINST THE ASSESSEE AND SINCE THE LAND HAS BEEN HE LD AS CAPITAL ASSET, THE ADDITION OF RS.9,25,047/- MADE BY THE AS SESSING ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 15 OFFICER IS JUSTIFIED. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 9. LD. COUNSEL FOR THE ASSESSEE, REITERATING THE S UBMISSIONS MADE BEFORE REVENUE AUTHORITIES, SUBMITTED THAT THE LAND PURCHASED BY THE ASSESSEE WAS A RURAL AGRICULTURAL LAND AND NOT A CAPITAL ASSET AS PER SECTION 2(14)(III) OF THE AC T. ACCORDINGLY, COMPENSATION RECEIVED BY THE ASSESSEE ON COMPULSORY ACQUISITION OF ITS RURAL AGRICULTURAL LAND SHALL NO T BE CHARGEABLE TO TAX UNDER THE IT ACT, 1961. P ER CONTRA, LD. SR. DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 10. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE GOVERNMENT COMPULSORILY ACQUIRED LAND ADMEASURING 0 .180 HECTARES OUT OF THE LAND ADMEASURING 0.217 HECTARES WHICH WAS NOT DIVERTED WHICH MAKES IT CLEAR THAT THE LAND COM PULSORILY ACQUIRED BY THE GOVERNMENT WAS AGRICULTURAL LAND AN D NOT DIVERTED LAND. WE FIND THAT IN THE ORDER DATED 25.1 1.2010 ISSUED BY SDM, NARSINGHGARH DATED 25.11.2010 PLACED ON PAG E NO. 114-116 OF THE PAPER BOOK, IT IS MENTIONED THAT THE LAND ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 16 ADMEASURING 2.312 HECTARES WAS ONLY DIVERTED OUT OF THE TOTAL AREA OF LAND ADMEASURING 2.529 HECTARES SITUATED AT SURVEY NO. 83, VILLAGE LASUDALYA RAMNATH, HALKA NO. 58, VILLAG E KURAWAR, NARSINGHGARH, RAJGARH. WE HAVE ALSO GONE THROUGH THE LIST OF LAND COMPULSORILY ACQUIRED BY THE GOVERNMENT ALONG WITH THE DETAIL OF COMPENSATION PROVIDED THEREON PLACED ON P AGE NO. 64 OF THE PAPER BOOK WHEREIN ALSO IT HAS BEEN MENTIONED T HAT THE LAND ACQUIRED BY THE GOVERNMENT WAS IRRIGATED LAND. IN VIEW OF THESE FACTS, WE ARE OF THE VIEW THAT THE LAND COMPULSORIL Y ACQUIRED BY THE GOVERNMENT WAS AGRICULTURAL LAND AND NOT DIVERT ED LAND. AS ALREADY DISCUSSED WHILE ADJUDICATING GROUND NOS. 1 TO 3 OF THE APPEAL, THE LAND PURCHASED BY THE ASSESSEE WAS A RU RAL AGRICULTURAL LAND AND NOT A CAPITAL ASSET AS PER SE CTION 2(14)(III) OF THE ACT, THEREFORE, THE COMPENSATION RECEIVED BY THE ASSESSEE ON COMPULSORY ACQUISITION OF ITS RURAL AGRICULTURAL LAND SHALL NOT BE CHARGEABLE TO TAX UNDER THE IT ACT, 1961. EVEN O THERWISE, ONCE IT IS ESTABLISHED THAT LAND COMPULSORILY ACQUIRED B Y THE GOVERNMENT WAS AGRICULTURAL LAND, IT MAKES NO DIFFE RENCE WHETHER THE SAID LAND IS RURAL OR URBAN SINCE COMPE NSATION RECEIVED ON COMPULSORY ACQUISITION OF RURAL AGRICUL TURAL LAND IS NOT CHARGEABLE TO TAX UNDER THE IT ACT, 1961 WHEREA S ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 17 COMPENSATION RECEIVED ON COMPULSORY ACQUISITION OF URBAN AGRICULTURAL LAND IS EXEMPT FROM TAX AS PER SECTION 10(37) OF THE ACT SUBJECT TO CONDITIONS SPECIFIED THEREIN. HOWEVE R, SINCE LAND COMPULSORILY ACQUIRED BY THE GOVERNMENT IN THE PRES ENT CASE WAS A RURAL AGRICULTURAL LAND, THERE ARISES NO QUES TION OF TAXABILITY OF CAPITAL GAIN ON COMPULSORY ACQUISITIO N OF SUCH LAND. ACCORDINGLY, WE SET ASIDE THE FINDINGS OF LD. CIT(A ) AND DELETE THE ADDITION OF RS.9,25,047/- MADE ON ACCOUNT OF LONG-T ERM CAPITAL GAIN ON COMPULSORY ACQUISITION OF LAND. THUS, GROUN D NO.4 RAISED IN THE APPEAL OF THE ASSESSEE IS ALLOWED. GROUND NO.5 11. IN GROUND NO.5, THE ASSESSEE HAS CHALLENGED THE FIN DING OF LD. CIT(A) CONFIRMING THE ADDITION OF RS.3,42,358/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LONG-TERM CAPITAL G AIN ON COMPULSORY ACQUISITION OF A PART OF HIS HOUSE. BRIE F FACTS AS CULLED OUT FROM THE ORDERS OF REVENUE AUTHORITIES ARE THAT THE ASSESSEE RECEIVED THE COMPENSATION OF RS.8,03,041/- DUE TO C OMPULSORY ACQUISITION OF PART OF HOUSE. THE ASSESSING OFFICER NOTED THAT THE PART OF HOUSE IS NOTHING BUT A CAPITAL ASSET BECAUS E IN THE YEAR 2001, THE ASSESSEE HAD TAKEN THE PERMISSION FROM GR AM ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 18 PANCHAYAT FOR BUILDING CONSTRUCTION WHICH WAS APPRO VED BY THE GRAM PANCHAYAT. 12. BEING AGGRIEVED, THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE LD. CIT(A) WHO HAVING GONE THROUGH THE FACTS/CIRCUMSTANCES, MATERIAL AND SUBMISSIONS C ONFIRMED THE ADDITION. STILL AGGRIEVED, THE ASSESSEE IS IN APPEA L BEFORE THIS TRIBUNAL. 13. LD. COUNSEL FOR THE ASSESSEE, REITERATING THE SUBMISSIONS MADE BEFORE REVENUE AUTHORITIES, SUBMITTED THAT THE PART OF THE HOUSE OF THE ASSESSEE WAS MERELY DEMOLISHED AND THA T THERE WAS NO TRANSFER OF ANY CAPITAL ASSET SO AS TO ATTRACT C APITAL GAINS TAX IN THE HANDS OF THE ASSESSEE. WITH REGARD TO COMPUL SORY ACQUISITION OF PLOT AREA OF 250 SQ FTS, THE LD. COU NSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE MERELY RECEIVE D AN AMOUNT OF RS. 15,840/- AS COMPENSATION IN LIEU OF COMPULSO RY ACQUISITION OF PLOT AREA WHICH WAS LESS THAN THE COST OF ACQUIS ITION OF THE SAID PLOT AREA, THEREFORE, NO CAPITAL GAIN WAS CHARGEABL E IN THE HANDS OF THE ASSESSEE EVEN IN RESPECT OF COMPULSORY ACQUI SITION OF PLOT AREA. PER CONTRA, LD. SR. DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 19 14. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE OWNED A HOUSE SITUATED AT WARD NO. 7, VILLAGE KURAW AR, NARSINGHGARH, RAJGARH WHEREIN THE PLOT AREA WAS 1,25 0 SQ FTS AND CONSTRUCTED AREA WAS 5,000 SQ FTS. THE GOVERNME NT COMPULSORILY ACQUIRED PLOT AREA OF 250 SQ FTS AGAIN ST WHICH COMPENSATION OF RS. 15,840/- WAS AWARDED TO THE ASS ESSEE AND ALSO DEMOLISHED CONSTRUCTED AREA OF 1,000 SQ FTS (2 50 SQ FTS * 4 FLOORS) AGAINST WHICH COMPENSATION OF RS. 7,87,201/ - WAS AWARDED TO THE ASSESSEE THEREBY TOTALING TO RS. 8,0 3,041/-. THE COST OF HOUSE APPEARING IN THE BALANCE SHEET OF THE ASSESSEE WAS OF RS.10,45,000/- AND ACCORDINGLY THE PROPORTIONATE COST OF PART OF THE HOUSE DEMOLISHED AND COMPULSORILY ACQUIRED B Y THE GOVERNMENT COMES TO RS.2,09,000/- (RS. 10,45,000/- * 1,000/5,000). WE FIND THAT THE ASSESSING OFFICER WO RKED OUT THE AMOUNT OF CAPITAL GAIN ON COMPULSORY ACQUISITION OF PART OF THE HOUSE OF THE ASSESSEE AS UNDER: FULL VALUE OF CONSIDERATION I.E. COMPENSATION RECEI VED ON COMPULSORY ACQUISITION OF PART OF HOUSE RS.8,03,041/- PROPORTIONATE COST OF PART OF THE HOUSE DEMOLISHED AND COMPULSORILY ACQUIRED BY THE GOVERNMENT RS. 2,09,000/- COST INFLATION INDEX FOR THE FY 2001-02 426 COST INFLATION INDEX FOR THE FY 2013-14 939 ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 20 INDEXED COST OF ACQUISITION RS.4,60,683/- (RS.2,0 9,000/- * 939/426) LONG-TERM CAPITAL GAIN RS.3,42,358/- ON CONSIDERATION OF ABOVE, WE FIND THAT THE GOVERNM ENT MERELY ACQUIRED 250 SQ FTS OF PLOT AREA AND DEMOLISHED THE CONSTRUCTED AREA OF HOUSE OF THE ASSESSEE BUILT UPON SUCH PLOT AREA AT THE TIME OF COMPULSORY ACQUISITION. WE FIND FORCE IN TH E ARGUMENTS OF THE LD. COUNSEL FOR THE ASSESSEE THAT PART OF THE H OUSE OF THE ASSESSEE WAS MERELY DEMOLISHED AND THAT THERE WAS N O TRANSFER OF ANY CAPITAL ASSET SO AS TO ATTRACT CAPITAL GAINS TAX IN THE HANDS OF THE ASSESSEE. THUS, WE ARE OF THE VIEW THAT THER E WAS NO TRANSFER AS PER SECTION 2(47) OF THE ACT AT THE TIM E OF DEMOLITION OF PART OF THE HOUSE OF THE ASSESSEE AND ACCORDINGLY, NO CAPITAL GAIN IS TAXABLE IN THE HANDS OF THE ASSESSEE IN RESPECT OF DEMOLITION OF PART OF HIS HOUSE. SO FAR AS THE COMPULSORY ACQUISI TION OF PLOT AREA OF 250 SQ FTS IS CONCERNED, WE FIND THAT THE A SSESSEE MERELY RECEIVED AN AMOUNT OF RS. 15,840/- AS COMPENSATION IN LIEU OF COMPULSORY ACQUISITION OF PLOT AREA WHICH WAS WAY L ESS THAN THE COST OF ACQUISITION OF THE SAID PLOT AREA WHICH COM ES TO RS.49,331/- (RS. 2,25,000/- (+) RS. 21,655/- *250/1 ,250) AS IS EVIDENT FROM THE PURCHASE REGISTRY WHICH HAS BEEN F ILED ON PAGE NO. 52-58 OF THE PAPER BOOK. THEREFORE, NO CAPITAL GAIN WAS ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 21 CHARGEABLE IN THE HANDS OF THE ASSESSEE EVEN IN RES PECT OF COMPULSORY ACQUISITION OF PLOT AREA. FURTHER, THE A SSESSEE INCURRED SUBSTANTIAL REPAIR AND RENOVATION EXPENSES TO THE TUNE OF RS.5,23,817/- TO BRING BACK THE HOUSE TO A SUITA BLE CONDITION FOR LIVING SUBSEQUENT TO DEMOLITION DONE BY THE GOV ERNMENT. THUS, IT IS CLEAR THAT THE ASSESSEE DID NOT EARN AN Y LONG-TERM CAPITAL GAIN. IN VIEW OF THESE FACTS AND CIRCUMSTAN CES, WE SET ASIDE THE FINDINGS OF LD. CIT(A) AND DELETE THE ADD ITION OF RS.3,42,358/- MADE ON ACCOUNT OF LONG-TERM CAPITAL GAIN ON COMPULSORY ACQUISITION OF A PART OF THE HOUSE OF TH E ASSESSEE. ACCORDINGLY, GROUND NO.5 RAISED IN THE APPEAL OF TH E ASSESSEE IS ALLOWED. GROUND NO.6 15. IN GROUND NO.6, THE ASSESSEE HAS CHALLENGED THE FIN DING OF LD. CIT(A) CONFIRMING THE ADDITION OF RS.12,86,090/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED/BOGUS L IABILITY BY TREATING IT AS UNEXPLAINED CREDIT U/S 68 OF THE IT ACT, 1961. BRIEF FACTS AS CULLED OUT FROM THE ORDERS OF REVENUE AUTH ORITIES ARE THAT AN AMOUNT OF RS.12,86,090/- WAS ADDED BY THE A SSESSING OFFICER ON ACCOUNT OF AGRICULTURAL LAND IN THE HEAD ASSETS IN THE ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 22 BALANCE-SHEET ON THE GROUND THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IN THE STATEMENTS U/S 131 O F THE I.T. ACT, RECORDED BY THE ASSESSING OFFICER, THE ASSESSE E FAILED TO EXPLAIN THE SOURCE OF THE INVESTMENT AND ALSO FAILE D TO PRODUCE BOOKS OF ACCOUNTS AND ANY OTHER DOCUMENTARY EVIDENC ES IN SUPPORT OF THE CLAIMED LIABILITY. 16. BEING AGGRIEVED, THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE LD. CIT(A) WHO HAVING GONE THROUGH THE FACTS/CIRCUMSTANCES, MATERIAL AND SUBMISSIONS C ONFIRMED THE ADDITION ON THE GROUND THAT THE ASSESSEE FAILED TO DISCHARGE THE BURDEN OF PROOF BY NOT ESTABLISHING THE SOURCE OF INVESTMENT. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE T HIS TRIBUNAL. 17. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE, R EITERATING THE SUBMISSIONS MADE BEFORE REVENUE AUTHORITIES, SUBMIT TED THAT CORRESPONDING ADJUSTMENT IN RESPECT OF ADDITION MADE TO AGRICULTURAL LAND WAS NOT ROUTED THROUGH THE CAPITA L ACCOUNT RATHER THE AMOUNT OF CASH TO THE EXTENT OF RS.12,86 ,090/- WAS TRANSFERRED FROM THE BOOKS OF ACCOUNTS OF THE BUSIN ESS TO THE PERSONAL BOOKS OF ACCOUNTS OF THE ASSESSEE AND THE AGRICULTURAL LAND IN QUESTION WAS PURCHASED DURING THE A.Y. 2013 -14 AND NOT ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 23 DURING THE AY 2014-15. BUT, THE ASSESSING OFFICER M ADE THE ADDITION ON MERE SURMISES AND CONJECTURES. PER CONTRA, LD. CIT- DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIE S. 18. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE PURCHASED AN AGRICULTURAL LAND SITUATED AT VILLAGE LASUDALYA RAMNATH, HALKA NO. 58, VILLAGE KURAWAR, NARSINGHGAR H, RAJGARH ON 30.03.2013 FOR A BASIC CONSIDERATION OF RS.11,00 ,000/- DURING THE AY 2013-14. THE ASSESSEE FURTHER PAID STAMP DUT Y OF RS.1,64,820/- AND INCURRED VARIOUS OTHER EXPENSES I N CONNECTION WITH PURCHASE OF THE SAID LAND. THUS, TOTAL COST OF LAND FOR THE ASSESSEE CAME TO RS.12,86,090/- WHICH THOUGH PERTAI NED TO AY 2013-14 BUT WAS INCORPORATED IN THE BOOKS OF ACCOUN TS ONLY DURING THE AY 2014-15. BUT, THE ASSESSING OFFICER P RESUMED THAT THERE WAS A STRONG POSSIBILITY OF BOGUS LIABILITY S INCE THE ASSESSEE COULD NOT FURNISH ANY EXPLANATION REGARDING THE COR RESPONDING ADJUSTMENT ENTRY IN THE LIABILITY SIDE OF THE BALAN CE SHEET. HOWEVER, WE FIND THAT THE LD. COUNSEL FOR THE ASSES SEE CATEGORICALLY EXPLAINED THAT CORRESPONDING ADJUSTME NT IN RESPECT OF ADDITION MADE TO AGRICULTURAL LAND WAS NOT ROUTE D THROUGH THE CAPITAL ACCOUNT BUT RATHER THE AMOUNT OF CASH TO TH E EXTENT OF ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 24 RS.12,86,090/- WAS TRANSFERRED FROM THE BOOKS OF AC COUNTS OF THE BUSINESS TO THE PERSONAL BOOKS OF ACCOUNTS OF THE A SSESSEE. THUS, THE SOURCE OF AGRICULTURAL LAND PURCHASED BY THE AS SESSEE WAS DULY EXPLAINED. WE ALSO FIND THAT THE AGRICULTURAL LAND UNDER CONSIDERATION WAS PURCHASED DURING THE AY 2013-14 A ND NOT DURING THE AY 2014-15. THEREFORE, ADDITION OF RS.12 ,86,090/- IS NOT SUSTAINABLE ON THIS COUNT ALSO. IN VIEW OF THES E FACTS, THE ORDER OF LD. CIT(A) ON THIS ISSUE DESERVES TO BE SE T ASIDE. ACCORDINGLY, WE DELETE THE ADDITION OF RS.12,86,090 /- MADE U/S 68 OF THE I.T. ACT, 1961. THUS, GROUND NO.6 RAISED IN THE APPEAL OF THE ASSESSEE IS ALLOWED. GROUND NOS.7 19. IN GROUND NO.7, THE ASSESSEE HAS CHALLENGED THE FIN DING OF LD. CIT(A) CONFIRMING THE ADDITION OF RS.4,12,148/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ESTIMATION OF N.P. @ 8%. BRIEF FACTS AS CULLED OUT FROM THE ORDERS OF REVENUE AUTH ORITIES ARE THAT THE ASSESSING OFFICER ESTIMATED THE N.P. AT 8% AS THE ASSESSING OFFICER WAS OF THE VIEW THAT IN THE ABSEN CE OF BOOKS OF ACCOUNTS, THE ASSESSEE FAILED TO EXPLAIN THE INCOME EARNED FROM THE BUSINESS. ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 25 20. BEING AGGRIEVED, THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE THE LD. CIT(A) WHO HAVING GONE THROUGH THE FACTS/CIRCUMSTANCES, MATERIAL AND SUBMISSIONS C ONFIRMED THE ADDITION ON THE GROUND THAT IN THE ABSENCE OF BOOKS OF ACCOUNTS, THE ASSESSING OFFICER HAD NO OPTION BUT TO ESTIMATE THE INCOME OF THE ASSESSEE BY ADOPTING REASONABLE N.P. STILL AGGR IEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 21. LD. COUNSEL FOR THE ASSESSEE, REITERATING THE S UBMISSIONS MADE BEFORE REVENUE AUTHORITIES, SUBMITTED THAT BOO KS OF ACCOUNTS OF THE BUSINESS CARRIED OUT BY THE ASSESSE E WERE MISPLACED. HOWEVER, THE ASSESSEE WAS SUBJECT TO TAX AUDIT FOR THE AY 2014-15 UNDER CONSIDERATION AND HIS BOOKS OF ACC OUNTS WERE DULY AUDITED BY AN INDEPENDENT CHARTERED ACCOUNTANT AND THE FINANCIAL RESULTS OF THE ASSESSEE FOR THE YEAR ENDE D 31.03.2014 WERE COMPARABLE WITH THE RESULTS OF THE PRECEDING A S WELL AS SUBSEQUENT YEARS. PER CONTRA, LD. CIT-DR RELIED UPON THE ORDERS OF THE REVENUE AUTHORITIES. 22. WE HAVE HEARD RIVAL CONTENTIONS OF BOTH THE PAR TIES AND PERUSED MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSING OFFICER ESTIMATED THE N.P. @ 8% SINCE THE ASSESSEE COULD NOT ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 26 PRODUCE HIS BOOKS OF ACCOUNTS DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ACCORDINGLY ADDED THE DIFFERENTIAL AMOUNT OF RS.4,12,148/- TO THE TOTAL INCOME OF THE ASSESSEE. FROM THE PERUSAL OF THE COPY OF N.C.R. (NON COGNIZABLE OFFEN CE INFORMATION REPORT) FILED IN THE HANUMANGANJ POLICE STATION, BH OPAL PLACED ON PAGE NO. 78-79 OF THE PAPER BOOK, WE FIND THAT I T WAS CLAIMED THAT BOOKS OF ACCOUNTS OF THE BUSINESS CARRIED OUT BY THE ASSESSEE WERE MISPLACED. HOWEVER, WE FIND THAT BOOK S OF ACCOUNTS FOR THE ASSESSMENT YEAR 2014-15 UNDER CONS IDERATION WERE DULY AUDITED BY AN INDEPENDENT CHARTERED ACCOU NTANT. THEREFORE, THE ASSESSEE CANNOT BE PUT IN A DISADVAN TAGEOUS POSITION MERELY FOR THE REASON THAT HIS BOOKS OF AC COUNTS WERE MISPLACED AFTER THE AUDIT WAS CONDUCTED BY AN INDEP ENDENT CHARTERED ACCOUNTANT. WE ARE OF THE VIEW THAT THE A SSESSING OFFICER/LD. CIT(A) FAILED TO BRING ON RECORD ANY EV IDENCE TO CONTROVERT THE FINANCIAL RESULTS AS PER THE AUDITED FINAL ACCOUNTS OF THE ASSESSEE FOR THE YEAR ENDED 31.03.2014 RATHE R THE ASSESSING OFFICER ESTIMATED THE NET PROFIT OF @ 8% IN ADHOC MANNER WHICH IS NOT JUSTIFIED. THE ASSESSING OFFICER /LD. CIT(A) DID NOT CONSIDER THE FACT THAT THE FINANCIAL RESULT S OF THE ASSESSEE FOR THE YEAR ENDED 31.03.2014 WERE COMPARABLE WITH THE RESULTS ITA NO.853 OF 2017 KRISHNA MOHAN CHOURASIA 27 OF THE PRECEDING AS WELL AS SUBSEQUENT YEARS. FURTH ER, THE CHARTERED ACCOUNTANT WHO AUDITED THE BOOKS OF ACCOU NTS ALSO DID NOT GIVE ANY ADVERSE FINDINGS REGARDING THE BOOKS O F ACCOUNTS MAINTAINED BY THE ASSESSEE. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, THE ADDITION IS NOT JUSTIFIED. THUS, THE FINDINGS OF LD. CIT(A) DESERVES TO BE SET ASIDE. ACCORDINGLY, W E DELETE THE ADDITION OF RS.4,12,148/- MADE ON ACCOUNT OF ESTIMA TION OF N.P. @ 8%. THEREFORE, GROUND NO.7 RAISED IN THE APPEAL O F THE ASSESSEE IS ALLOWED. 23. IN THE RESULT, THE ASSESSEES APPEAL I.E. ITA NO.853/IND/2017 IS ALLOWED. ORDER PRONOUNCED AS PER RULE 34 OF ITAT RULES, 1963 ON 30.9.2021. SD/- SD/- (RAJPAL YADAV) (MA NISH BORAD) VICE PRESIDENT ACCOUNTANT M EMBER / DATED : 30.9.2021 !VYAS! COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE