Ashok Jain, CHENNAI V. ITO, CHENNAI

ITA 896/CHNY/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9343 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 28-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-04-2014
• Court: TRIBUNAL
• Department Lawyers: AJIT KUMAR VARMA
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Capital asset
• Section: 143(3); 2(14); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.896/MDS/2014 & 232/MDS/2016 / ASSESSMENT YEAR : 2009-10 SHRI ASHOK JAIN 193, MINT STREET PARK TOWN CHENNAI 600 003 VS. THE INCOME TAX OFFICER BUSINESS WARD X(3), CHENNAI/ BUSINESS WAR X(1)/ NON-CORPORATE WARD4(1) CHENNAI [PAN AAAPJ 7188C ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : DR. ANITA SUMANTH, ADVOCATE /RESPONDENT BY : SHRI AJIT KUMAR VARMA, CIT / DATE OF HEARING : 05 - 04 - - 2016 ! / DATE OF PRONOUNCEMENT : 19 - 05 - 2016 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED A GAINST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME-TA X, AND COMMISSIONER OF INCOME-TAX(APPEALS), CHENNAI. SINCE COMMON ISSUE ARISES FOR CONSIDERATION IN BOTH THE APPEALS, WE HE ARD THEM TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. ITA NO.896/14 & 232/16 :- 2 -: 2. DR. ANITA SUMANTH, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT AFTER PROPER ENQUIRY. ACCORDING TO THE LD. CO UNSEL, THE ASSESSING OFFICER CALLED FOR ALL THE DETAILS REGARDING THE SA LE OF AGRICULTURAL LAND AND ACCEPTED THAT THE LAND SOLD BY THE ASSESSEE WA S AGRICULTURAL LAND AND ALLOWED EXEMPTION U/S 2(14) OF THE ACT. HOWEV ER, THE ADMINISTRATIVE COMMISSIONER IN THE GUISE OF EXERCIS ING HIS POWER U/S 263 OF THE ACT FOUND THAT THE GUIDELINE VALUE PORTA L OF THE GOVERNMENT OF TAMILNADU SHOWS THAT THE LAND IN QUESTION WAS CL ASSIFIED AS RESIDENTIAL AREA CLASS I AND CLASS II. ACCORDING LY, HE FOUND THAT THE LAND IN QUESTION IS NOT AGRICULTURAL LAND. ACCOR DINGLY, THE CIT DIRECTED THE ASSESSING OFFICER TO WITHDRAW THE EXEMPTION GRA NTED ON THE SALE OF THE LAND AS AGRICULTURAL LAND. CONSEQUENT TO THE DIRECTION OF THE CIT, THE ASSESSING OFFICER PASSED ORDER TREATING THE LAN D AS NON- AGRICULTURAL LAND AND LEVIED CAPITAL GAIN TAX. ACC ORDING TO THE LD. COUNSEL, THE ASSESSEE WAS CULTIVATING THE LAND WIT H COCONUT, MANGO AND CASHEW NUT TREES. THE ASSESSEE WAS ALSO OBTAI NED ELECTRICITY SERVICE CONNECTION. THE CIT, IN FACT, ADMITS THAT WHEN THE ASSESSEE PURCHASED THE LAND IN 2007 IT WAS AN AGRICULTURAL LAND. THE CLASSIFICATION WAS CHANGED INTO RESIDENTIAL ZONE ON LY IN THE YEAR 2009. ACCORDING TO THE LD. COUNSEL, IRRESPECTIVE OF THE CHANGE OF CLASSIFICATION BY THE STATE GOVERNMENT, WHEN THE A SSESSEE CULTIVATED ITA NO.896/14 & 232/16 :- 3 -: THE LAND, THE LAND HAS TO BE TREATED AS AGRICULTUR AL LAND. REFERRING TO THE PAPER BOOK, THE LD. COUNSEL SUBMITTED THAT IN F ACT, THE SAID LAND WAS CLASSIFIED AS PUNJA LAND IN THE STATE GOVERNM ENT RECORDS. THE LD. COUNSEL FURTHER SUBMITTED THAT ANOTHER CLASSIFICATI ON OF THE STATE GOVERNMENT SHOWS THAT THE LAND WAS CLASSIFIED AS C OASTAL REGULATION ZONE-III. THE LD. COUNSEL FURTHER SUBMITTED THAT C LASSIFICATION MADE BY THE STATE GOVERNMENT IS IMMATERIAL WHEN THE ASSESS EE ACTUALLY CARRIED ON AGRICULTURAL ACTIVITIES IN THE SAID LAND . THE FACT THAT THE ASSESSEE CULTIVATED MORE THAN 100 COCONUT, MANGO AN D CASHEW TREES IS NOT IN DISPUTE. THE LAND WAS SITUATED BEYOND 8M S RADIUS OF THE MUNICIPALITY. THEREFORE, THE LAND IN QUESTION HAS TO BE TREATED AS AGRICULTURAL LAND, HENCE, THE CIT IS NOT JUSTIFIE D IN REVISING THE ORDER OF THE ASSESSING OFFICER. 3. CONSEQUENT TO THE ORDER OF THE CIT, THE ASSESSING O FFICER HAS SIMPLY TREATED THE LAND AS NON-AGRICULTURAL LAN D AND ON APPEAL BY THE ASSESSEE, THE CIT(A) CONFIRMED THE ORDER OF TH E ASSESSING OFFICER ON THE GROUND THAT THE ASSESSMENT WAS MADE ON THE D IRECTION OF THE CIT U/S 263 OF THE ACT. 4. ON THE CONTRARY, SHRI AJIT KUMAR VARMA, LD. DEPARTM ENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSING OFFICER HAS NOT DISCUSSED ANYTHING IN THE ASSESSMENT ORDER. ACCORDING TO THE LD. DR, THE ITA NO.896/14 & 232/16 :- 4 -: ASSESSING OFFICER, WITHOUT ANY PROPER ENQUIRY, HAS ACCEPTED THE RETURN FILED BY THE ASSESSEE. THEREFORE, THE CIT FOUND T HAT THE ASSESSING OFFICER SHOULD HAVE MADE FURTHER ENQUIRY BEFORE ACC EPTING THE CLAIM OF THE ASSESSEE THAT THE SUBJECT LAND WAS AN AGRICUL TURAL LAND. THE CIT FURTHER FOUND THAT OMISSION TO MAKE FURTHER ENQUIRI ES WOULD RENDER THE ORDER OF ASSESSMENT AS ERRONEOUS. THE CIT ALSO FOU ND THAT THE ORDER OF THE ASSESSING OFFICER IS PREJUDICIAL TO THE INT EREST OF THE REVENUE. ACCORDINGLY, THE CIT DIRECTED THE ASSESSING OFFICER TO WITHDRAW THE EXEMPTION GRANTED TO THE EXTENT OF ` 56,61,300/-. THE ASSESSING OFFICER HAS ALSO PASSED A CONSEQUENTIAL ORDER WHICH WAS FURTHER CONFIRMED BY THE CIT(A). NOW THE ASSESSEE IS CHAL LENGING THE ORDER OF THE CIT AND THE CIT(A) BEFORE THIS TRIBUNAL. SI NCE THE LAND IN QUESTION IS NOT AN AGRICULTURAL LAND, ACCORDING T O THE LD. DR, THE CIT HAS RIGHTLY EXERCISED HIS JURISDICTION U/S 263 OF THE ACT AND THE CIT(A) HAS RIGHTLY CONFIRMED THE CONSEQUENTIAL ORDER PASSE D BY THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE IS CHALLENGING THE ORDER OF THE CIT PASSED U/S 263 OF THE ACT IN I.T.A.NO.896/MDS/2014. THE ASSESSEE HAS ALSO FILE D ANOTHER APPEAL IN I.T.A.NO.232/MDS/2016 AGAINST THE ORDER OF THE C IT(A). THE ASSESSEE CLAIMS THAT THE SAID LAND IS AN AGRICULTU RAL LAND. THE CIT, IN ITA NO.896/14 & 232/16 :- 5 -: FACT, OBSERVED THAT THE LAND WAS PURCHASED BY THE ASSESSEE IN 2007. THE CLASSIFICATION OF THE LAND IN 2007 WAS AGRICUL TURAL LAND. THE CIT FURTHER FOUND THAT WITH EFFECT FROM 1.8.2007 THE CL ASSIFICATION OF THE LAND WAS CHANGED TO RESIDENTIAL LAND. THE ASSES SEE SOLD THE LAND ON 26.3.2009 AS RESIDENTIAL LAND AND NOT AS AGRICUL TURAL LAND. THEREFORE, THE CIT FOUND THAT THE SAID LAND IS A CAPITAL ASSET HENCE, IT IS NOT EXEMPTED U/S 2(24)(III) OF THE ACT. 6. WE HAVE CAREFULLY GONE THROUGH THE ORIGINAL ORDER P ASSED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAS N OT DISCUSSED ANYTHING IN THE ASSESSMENT ORDER. AS RIGHTLY SUBMI TTED BY THE LD. DR, THE ASSESSING OFFICER SIMPLY ACCEPTED THE CLAIM OF THE ASSESSEE. THE ASSESSMENT PROCEEDING IS A JUDICIAL PROCEEDING U/S 136 OF THE INCOME- TAX ACT, 1961, AND THEREFORE, THE ASSESSING OFFICER IS EXPECTED TO DISCUSS ALL THE FACTS AND REASONS IN THE ASSESSMENT ORDER. THE REASONS FOR THE CONCLUSION SHALL BE REFLECTED IN THE ASSESS MENT ORDER. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT RECORDIN G OF THE REASONS IS MANDATORY IN ALL ADMINISTRATIVE AND JUDICIAL ORDERS . THE RECORDING OF THE REASONS WOULD ESTABLISH THE LINK BETWEEN THE MA TERIAL AVAILABLE ON RECORD AND THE MIND OF THE DECISION MAKER. IN OTHE R WORDS, THE ASSESSING OFFICER IS EXPECTED TO PASS A SPEAKING OR DER. IN THIS CASE, ADMITTEDLY, THE ASSESSING OFFICER HAS NOT APPLIED H IS MIND TO THE MATERIALS AVAILABLE ON RECORD. THE APPLICATION OF MIND NOT REFLECTED IN ITA NO.896/14 & 232/16 :- 6 -: THE ASSESSMENT ORDER. THEREFORE, THE REASONS FOR T HE CONCLUSION REACHED BY THE ASSESSING OFFICER CANNOT BE SUBSTITU TED BY WAY OF FILING ADDITIONAL MATERIAL BEFORE THE APPELLATE FORUM. T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT SINCE THE APPLICATION OF MI ND WAS NOT REFLECTED IN THE ASSESSMENT ORDER, THE CIT HAS RIGHTLY EXERCI SED HIS POWER U/S 263 OF THE ACT. 7. THE ASSESSEE CLAIMS THAT THE ASSESSEE WAS CULTIVA TING THE LAND AND THERE ARE MORE THAN 100 COCONUT TREES, MAN GO TREES AND CASHEW NUT TREES. THIS FACT IS NOT REFLECTED IN TH E CITS ORDER AS WELL AS THE ASSESSMENT ORDER. THE CONSEQUENTIAL ORDER W AS PASSED BY THE ASSESSING OFFICER SIMPLY FOLLOWING THE DIRECTION OF THE CIT U/S 263 OF THE ACT WITHOUT MAKING ANY FURTHER INVESTIGATION. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHEN THE ASSESSEE CLAI MS THAT THE LAND WAS SUBJECTED TO CULTIVATION, IT NEEDS TO BE VERIFI ED BY REFERRING TO THE REVENUE RECORDS OF THE STATE GOVERNMENT. THE STATE GOVERNMENT IS MAINTAINING CULTIVATION ACCOUNT. IN FACT, THE VILL AGE ADMINISTRATIVE OFFICER OF THE CONCERNED VILLAGE TAKES CULTIVATION ACCOUNT IN EVERY SIX MONTHS AND RECORDS THE SAME IN THE VILLAGE ACCOUNT NO.2 OR THE ADANGAL. THEREFORE, THE ADANGAL EXTRACT NEEDS TO B E VERIFIED BY THE ASSESSING OFFICER BEFORE TAKING A DECISION WHETHER THE ASSESSEE WAS CULTIVATING THE LAND OR NOT. SINCE THE AUTHORITIES BELOW HAVE NOT EXAMINED THE RECORDS MAINTAINED BY THE STATE GOVERN MENT FOR ITA NO.896/14 & 232/16 :- 7 -: CULTIVATION OF THE SAID LAND, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASS ESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES AR E SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE AS SESSING OFFICER. THE ASSESSING OFFICER SHALL REEXAMINE THE ISSUE AFRESH AFTER CALLING FOR THE NECESSARY MATERIAL FROM THE RESPECTIVE TAHSILDAR AN D VILLAGE ADMINISTRATIVE OFFICER AND THEREAFTER DECIDE THE SA ME IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO T HE ASSESSEE. 8. IT IS MADE CLEAR THAT THE ASSESSING OFFICER SHALL D ECIDE THE ISSUE AFRESH INDEPENDENTLY WITHOUT BEING INFLUENCED BY THE OBSERVATION MADE BY THE CIT IN THE IMPUGNED ORDER. 9. WITH THE ABOVE OBSERVATION, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MAY, 2016, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 19 TH MAY, 2016 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF