DY CIT, CC-7(1), MUMBAI V. MRS. NITTA VINODKUMAR JATIYA , MUMBAI

ITA 95/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9117 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2022
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 07-02-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJIV JAIN
• Keywords: Capital asset; Capital Gains
• Section: 68; 54; 271(1)(c); 143(3); 54B; 142(1); 133(6); 143(1); 250; 143(2); 208; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI M BALAGANESH, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA No. 95/Mum/2021 (A.Y: 2015-16) DCIT, CC-7(1) Room No. 676B, 6 th Floor, Aayakar Bhavan, MK Road, Mumbai – 400020. Vs. Mrs. Nitta Vinodkumar Jatiya, 1, Pearl Mansion (N), 91, Marine Lines, MK Road, Mumbai – 400020. ./ज आइआर ./PAN/GIR No. : ACCPJ8343D Appellant .. Respondent Appellant by : Mr.Sanjiv Jain. DR Respondent by : Mr.Snehal Shah. C A. DR Date of Hearing 15.11.2021 Date of Pronouncement 11.02.2022 आद श / O R D E R PER PAVAN KUMAR GADALE JM: The revenue has filed the appeal against the order of the CIT(A)-49, Mumbai passed u/s 143(3) and 250 of the Act. The revenue has raised the following grounds of appeal: 1."Whether On the facts and in the circumstances of the case and in law, the Ld. CJT(A)-49, Mumbai has erred in deleting the addition to the extent of 80% with respect to ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 2 - Agricultural Income, made by Assessing Officer (A0) despite the fact that the AO has disallowed 100% of the Agricultural Income, as claimed by the assessee, after making factual enquiries including satellite imaging from ISRO." 2. "Whether On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-49, Mumbai has erred in deleting the disallowance made by the AO u/s.54B of the I. T Act, 1961, ignoring the fact that the land was not used for agricultural purpose for the relevant assessment year and hence the exemption claimed by the assessee as capital gain cannot be sustained. 3. The appellant craves leave to amend or alter any ground and / or add new grounds which may be necessary. 2. The Brief facts of the case are that, the assessee is engaged in the business of agricultural farming and derives income from agriculture operations and income from other sources. The assessee has filed the return of income electronically on 29.08.2015 for the A.Y 2015-16 disclosing a total income of Rs.1,46,34,160/- and the return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act along with the questionnaire was issued. In compliance, the Ld. AR of the assessee appeared from time to time and furnished the details and the case was discussed. The Assessing ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 3 - officer (A.O) find that in the F.Y 2014-15, the assessee has disclosed the agricultural income of Rs. 1,03,02,193/- in the return of income. The assessee has claimed that the income is generated from sale of mango and other vegetables. The A.O. observed that out of (913.3 guntha) 22.82 acres land in Panvel, Raigad District, As seen from the 7/12 extracts downloaded from official website of Maharashtra Government, ( 414.5 guntha )i.e 10.36 acres of land is- not fit for agriculture” referred at Para 3 of the order. The A.O has deputed the inspector to visit the actual lands and prepare a field report and the inspector had visited the lands and filed the field report referred at Para 3.1 of the order. 3. Similarly, the A.O has issued the notice u/s 133(6) of the Act to the Director ISRO, Ahmadabad to provide the photographic image of said lands for the period from 01.04.2013 and thereafter from every month till 31.03.2016. In compliance the ISRO has given the information referred at Para 3.2 of the AO order. Whereas, the assessee has issued a show cause notice in respect of the images of the ISRO and the report. In compliance, the assessee has filed the reply on 28.12.2017 referred at para 3.3 in respect of lands at Akruli, Harigram, Vihighar, Chiple and Koproli. Further ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 4 - the A.O. has issued notice u/s 133(6) of the Act to the office superintendent agricultural officer to know the approximate yield. The A.O has dealt on the information received from various organizations/ institutions and and relied on the facts with respect to the income generation and expenditure incurred. Finally the A.O relied on the various factual matrix and legaldecisions at Para 3.8 of the order as under: 3.8 The factual-legal matrix of the issue is summarised as follows: As per 7/12 documents, most of the land is categorized under the head "not fit for agriculture" for the entire year. As per 7/12 documents, land was under paddy (rice) cultivation. There is no mention of any other agriculture produce as claimed by the assessee. The Inspector of this office reported from the field that no agricultural activity is carried out. He also took photos of the barren land. The historical (for FY 2014-15) images sent by ISRO and their report reveal that no active agriculture is being carried out. The Google Earth satellite historical images (for FY 2015-15) also show no activity like ploughing, standing crop, etc on the assessee's land. The practical yields (as per technical expert) from fruits and vegetables mentioned by the assessoc arc negligible as compared to the assesee's clain. Even if the assessee's contention of these crops being actually grown is considered the market value of the produce is barely enough to cover the various costs. ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 5 - None of the vegetables mentioned by the asse,ssee are grown round the year as claimed. There are barely any labour charges shown by the assessee. The expenses claimed to be borne by the assessee are insignificant In Mustafa Ali Khan vs. C!T(1948) 16 ITR 330(PC), the court held that income from sale of forest trees, fruits and flowers growing on land naturally and spontaneously and without the intervention of human agency is not agriculture income. Thus the mango sale is not agricultural income. Only income from basic operations of cultivation land and requiring the expenditure of human skill and labour on land is agricultural income as held in CIT Vs Raja Benoy Kumar Sahar Roy (SC) 32 ITR 466, CIT Vs Maddi Venkatasubbayya & another (Mad) 20 ITR 151, Papaya Farms Pvt, Ltd. Vs DOlT (Mad)325 ITR 60 The assessees land is situated within the jurisdiction of Municipality of Panvel and is not assessed to land revenue. As per the Allahabad High Court in the case of Srnt, Anand Bala Bhushan vs Commissioner Of Income-Tax (217 ITR 144), the produce from this land is not agricultural income. In the case of Gopi Ram Lila Vs CIT (Raj) 225 ITR 320, Rakhkarandas Poonamchand Bhura Vs CIT(MP) 231 ITR 604 the courts have held that when assessee claims exemption as gricultural income, it is the duty of assessee to substantiate it and the unsubstantiated portion can be treated as income from other sources. Hence, in the light of the above discussion, the amount of Rs. 1,03,02,193/- shown as agriculture income is hereby treated as income from other sources. Penalty proceedings u/s 271(1)(c) as separately initiated for concealment of income. 4. Further, the A.O has denied the deduction U/sec54B of the Act based on the discussions on land and no ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 6 - agriculture activity was carried out by the assessee referred at Para 4 of the order and assessed the total income of Rs. 5,56,55,850/- and passed the order u/s 143(3) of the Act dated 29.12.2017. 5.Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas, the CIT(A) has considered the grounds of appeal, submissions of the assessee, findings of the A.O and dealt exhaustively on the facts. Finally the CIT(A) has observed that the 80% of the claim of the assessee to be treated as agricultural income and 20% is added u/s 68 of the Act. Whereas in respect to second ground of appeal of claim of exemption of capital gains u/s 54B of the Act of Rs. 3,08,06,574/-, the CIT(A) has dealt on the facts and remand report and the judicial decisions and allowed the claim of the assessee and partly allowed the assessee appeal. Aggrieved by the CIT(A)order, the revenue has filed an appeal before the Hon’ble Tribunal. 6.At the time of hearing, the ld. DR submitted that the CIT(A) has erred in not considering the facts and the inquires conducted by the A.O. Contra, the Ld. AR has supported the order of the CIT(A) and submitted that the assessee has been in agricultural operations from ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 7 - earlier years and on the similar issue the Hon’ble Tribunal has granted the relief. The Ld. AR supported the submissions with the paper book and judicial decisions and prayed for dismissal for revenue appeal. 7. We heard the rival submissions and perused the material on record. The contentions of the Ld. DR are in respect of two disputed issues i.e. the CIT(A) has erred in deleting the addition considering the agricultural income to the extent of 80% and the CIT(A) has allowed the deduction u/s 54B of the Act ignoring the fact that the land was not used for agricultural purpose. Whereas, the Ld.AR has substantiated the arguments relying on the decision of the Hon’ble Tribunal in assessee’s own case. We refer to the observations of Hon’ble Tribunal in assessee’s own case for the in ITA No. 4883 & 4884/Mum/2019 at Para 5 & 6 read as under: 5. After hearing the rival parties, in this case, we notice that undisputedly, the assessee is the owner of the land measuring 22.82 acres in Panvel, District Raigad. We note that the 7/12 extracts downloaded from the official website of Government of Maharashtra has categorized 70% of the land as not fit for agricultural operation. However, it is also undisputed that there were substantial plantations of mango trees and also seasonable vegetables being grown in the said land. The only objection of the AO is that the assessee is having a farmhouse and income was received from the natural activity which is not agricultural activity as per the ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 8 - provisions of the Act and AO has merely acted on the basis of surmises and conjuncture in estimating 20% of the total receipt as unexplained cash credit without carrying out any further verification from the buyer/purchasers of these agricultural products/produce. The ld. CIT(A) affirmed the order of the AO on the ground that the assessee has incurred a very meager expenses of 2% on agricultural expenses and thus sustained the addition as stated hereinabove. In this case, we note that both of the authorities have failed to discharge their duties properly as none of the parties have brought any substantial material on record to prove that assessee has incurred expenses over and above what has been stated by the assessee. The AO has made a ground that some income received by the assessee was in the nature of non-agriculture and substantial too in nature, whereas ld. CIT(A) has gone on a different footing that assessee has incurred expenses to earn the said income which seems to be understated . Under these circumstances, we are not in a position to sustain the order of the ld. CIT(A) as the same appeared to be a guess work to sustain the addition made by the AO and therefore, we are inclined to set aside the order of first appellate authority and direct the AO to delete the addition of Rs. 10,30,694/-. Accordingly, the appeal of the assessee is allowed. ITA No.4884/Mum/2019 6. We have already decided the issue under identical facts in favour of the assessee in ITA No. 4883/Mum/2019 allowing the appeal of the assessee by directing the AO to delete the addition. Therefore, our decision in ITA No. 4883/Mum/ shall apply, mutatis mutandis, to this appeal also. Accordingly, we allow this appeal by directing the AO to delete the addition. 8.We find the Ld. DR could not controvert the observations of the CIT(A) with any new cogent material or information and relied on the findings of the A.O. Accordingly, we find that the Honble Tribunal in the ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 9 - present assessment year upon the appeal of the asssessee in respect of disallowance of 20% of assessee claim of agriculture income sustained by the CIT(A) has vacated the disallowance in ITA NO. 1815/Mum/2020 dated 24.09.2021 and granted the relief. Accordingly, we do not find any merits in the ground of appeal and dismiss. 9.Whereas in respect of second ground of appeal on claim of deduction u/s 54B of the Act, we find the Ld. CIT(A) has dealt on the facts and law and considered the submissions at Para 7.5 to 7.5.9 as under: 7.5 I have considered the facts of the case, the submissions of the assessee and the findings in the Remand Report. 7.5.1 Prior to considering the issue on merit, it would be relevant to refer to the provisions of section 54B of the Act which is as follows: [Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. 54B. [(1)] [Subject to the provisions of sub-section (2), where the capital gain arises] from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by [the assessee being an individual or his parent, or a Hindu undivided family] for agricultural purposes [(hereinafter referred to as the original asset)], and the assessee has, within a period of two years after that date; purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 10 - with the following provisions of this section, that is to say,— (I) if the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced, by the amount of the capital gain.] [(2) The amount of the capital gain which is not utilised by the assessee for the purchase of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme L8 which the Central Government may, by notification in the Official Gazette, frame in - this behalf and such return shall be accompanied by proof of such deposit; and, for the purposes of sub-section (1), the amount, if any, already utilised by the assessee for the purchase of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset Provided that if the amount deposited under this sub-section is not utilised wholly or partly for the purchase of the new asset within the period specified in sub-section (1), then,- (I) the amount not so utilised shall he charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 11 - (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. 7.5.2 The investment made by the assessee in new agricultural land is not in dispute. The only issue in dispute is whether the Vihighar land of the assessee, which has been sold during the year under reference, could be said to be eligible for claiming benefit under section 54 B of the Act. In the impugned assessment order, the Assessing Officer has denied this benefit as it was held that the assessee did not had any agricultural Income during year under reference. This no longer hold valid as I have upheld this head. 7.53 In the Remand Report the Assessing Officer has contended that the land had spontaneously grown trees which could not be considered as agricultural activity and accordingly, the condition of usage of the land under consideration for 'agriculture purpose' for the immediate two preceding years from the date of transfer, is not satisfied in this case. 7.5.4 I have already discussed in earlier paragraphs that the character of the land is not determined by the nature of the products raised, so long as the land is used or can be used for raising valuable plants or crops or trees or for any other purpose of husbandry and that the assessee had large number of trees which are systematically maintained for growing mangos and the said activity was held as aricultural activity. 7.5.5 Further, it is evident that even in the ISRO report the Vihighar land was acknowledged to have been used for agricultural purposes. In the interpretation summary for the Vihighar land the comments of ISRO is as below: "We have used the Google Earth images for the period from Jan 2013 to December 2016. Overall, from the analysis of images, it is concluded that only 30% of the total area marked was under agricultural activity during the period 2014-15. No active agriculture was observed for the ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 12 - remaining 70% area of Vihighar land parcel. Note: land parcel was not marked exactly, It may be interpreted as per your requirement." (emphasis added) 7.5.6 It is, therefore, evident that even the ISRO report acknowledges proper agricultural activity at least in part of the area of the total land parcel assessee had in Vihighar. Moreover, it is also mentioned in the report that land parcel was not marked exactly and it may be interpreted as per requirement. Hence, from the aforesaid interpretation summary of ISRO, it is not at all possible to ascertain that out of the total land parcel of the assessee in Vihighar, land appearing in which survey number was covered in this 30% of area under agricultural activity and which was not covered by the same. 7.5.7 On perusal of the relevant sale deed in respect of sale of the said Vihigadh land, it is evident that what been sold was land only and there was no construction mentioned on the said land in the sale deed. 7.5.8 I also find that the assessee had furnished necessary details before the Assessing Officer to establish that the land was used for the purpose of agriculture. 7/12 extracts were submitted before the Assessing Officer which acknowledge the land as Agricultural land. Further to the above, vide a letter dated 26.12.2017 addresses to the Additional commissioner of Income Tax-1(1) Mumbai, a copy of which has been filed in the office of the AO as well, the assessee has also filed a Certificate from the Talati dated 02.11.2015, certifying that the land purchased and sold was "Agricultural Land" and also that Agricultural activity has actually been carried out in the said land during the period 2013-14 and 2014-15. The said certificate of the Talati is very specific and categorical as to the fact that the land was used for agricultural purposes. The AO has not doubted the 7/12 extracts submitted before him and the said certificate issued by the Talati. He has not commented adversely in respect of the same in the assessment order. ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 13 - Even in the Remand Report, no adverse comments were made in respect of these crucial evidences being 7/12 extracts and the certificate from the Talati, which is specific and categorical in certifying that the said land was used for agricultural purposes during the period of last two years. 7.5.9. Even otherwise, an agricultural land registered in land records as such does not become non- agricultural land merely by not carrying out agricultural operations on said land, and also not merely by the intention of the purchaser of said land. The above principle was laid down by the Hon'ble Bombay High Court in the case of CWT vs. 11.V. Mungale [1983] 145 ITR 208 (Born.) wherein the Hon'ble High Court has elaborately explained the treatment of a land as agriculture land in following words: section 2(e)( I) of the W.T. Act. On the facts of that case, the lands were held to be agricultural lands. What we are concerned with is the proposition which was set out by the Division Bench after reference to the several cases. The Division Bench has made the following observations: "In a given case agricultural land may or may not yield agricultural income. If there is land which was once cultivated or put to agricultural use but is now fallow or barren, it would not merely by reason of such fact cease to be agricultural land. Conversely what is patently non- agricultural land may in extraordinary circumstances be used for a purpose to which agricultural land is usually put and may, therefore, yield agricultural income. However, merely by reason of the yield it cannot be designated as agricultural land." In the same decision it was pointed out by the Division Bench that "...where the land is being assessed as agricultural land, then, normally, although it is not being put to actual agricultural use, it may be presumed that it continues to be agricultural land, unless it can be shown that it has been in fact put to some non-agricultural use, or there is some ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 14 - relevant circumstance to indicate that it cannot be properly regarded as agricultural land." We may also point out that the land which is recorded as agricultural land in the revenue papers cannot be used for a non-agricultural purpose by the owner, unless the land is allowed to . be converted to non-agricultural purposes by the Collector under the provisions of the relevant Land Revenue Act or the Land Revenue Code. This is a circumstance which must necessarily be taken into account while determining the character or the nature of the land." (emphasis supplied) 10.The CIT(A) has granted the relief by allowing the deduction u/s 54B of the Act referred at Para 7.5.10 to 7.5.12 of the order as under: 7.5.10 It is well settled that entries in revenue records are good prima fade evidence with regard to the character of the land and the purpose for which it is intended to be used and the burden is on the Assessing Officer to rebut this presumption. That apart, as observed by the Hon'ble High Court in the decision referred to above, while determining the character or the nature of the land, it must necessarily be taken into account that the land which is recorded as agricultural land in the revenue papers cannot be used for non-agricultural purposes by the owner, unless the land is allowed to be converted to non-agricultural purposes by appropriate authorities. 7.5.11 There is no dispute about the fact that the land in question is registered in the revenue records in the name of the assessee as on the date of sale. The 7/12 extracts taken from the Talati of the lands of the assessee clearly states that the nature of the land is agricultural land. The assessee has also furnished a certificate from the Talati which specifically sates that the land was used for agricultural purposes and it also refers to the agricultural products grown ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 15 - in the said land. All these facts clearly prove that the nature of the land in question is agricultural land which cannot be disputed in view of the revenue records of the area. The Assessing Officer has not placed any evidence on record disputing the above revenue records. Even in the Remand Report, these documents have neither been doubted nor disputed. Till the above revenue records are not in dispute, the lands sold by the assessee cannot be treated as non- agricultural land. 7.5.12 I am, therefore, of the considered view that in the given facts of the case, there is no plausible evince on record to deny thc claim of the as- s e--see as to Vihighar land having been used for agricultural purposes when the same Is duly supported by the land revenue records and the certificate issued by the Talati. Hence, the claim of the benefit as per provisions of section 54k of the Act could not be disallowed to the assessee. The Assessing Officer is accordingly directed to allow the benefit as per provisions of section 54B of the Act in respect of sale proceeds of the land sold at Vihighar as claimed by the assessee. The Ground No. 2 is accordingly allowed. 11.The CIT(A) has considered the land revenue records and the information from the revenue department and the remand report and the facts that the Vihighar land has been used for the agricultural purpose supported by the revenue records and certificate which cannot be disputed. The Ld.DR could not controvert the observations of the CIT(A) with any new cogent material or information and the CIT(A) has passed a logical and reasoned order. Accordingly, we are not inclined to interfere with the order of the CIT(A) on this ground of ITA No. 95/Mum/2021 Mrs. Nitta Vinodkumar Jatiya, Mumbai. - 16 - appeal and uphold the same and dismiss the ground of appeal of the revenue. 12.In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 11.02.2022. Sd/- Sd/- ( M BALAGANESH) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated 11.02.2022 KRK, PS /Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent. 3. आ र आ / The CIT(A) 4. आ र आ ( ) / Concerned CIT 5. "#$ % & &' , आ र ) र*, हमद द / DR, ITAT, Mumbai 6. % -. / 0 / Guard file. ान ु सार/ BY ORDER, " & //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai