SHRI RAJESH RAMCHANDRA DAKE,PANVEL V. DY CIT CC-1, MUMBAI

ITA 3/MUM/2021

AI Insights

This case involves an appeal by Shri Rajesh Ramchandra Dake against the order of the Commissioner of Income Tax (Appeals) which confirmed the additions made by the Assessing Officer under sections 143(3) and 153A of the Income Tax Act, 1961. The additions pertained to brokerage income and short-term capital gains alleged to have been earned by the Assessee. The Tribunal examined whether the additions were justified based on the materials available at the time of the search and subsequent assessments. The Tribunal found that the additions were not supported by any incriminating evidence discovered during the search, leading to the decision to allow the Assessee's appeal and dismiss the Revenue's Cross Objection.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 37304 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2008-2009
• Other Referred Cases: National Thermal Power Corporation Ltd. vs. CIT, Principal CIT, Central-3 Vs Abhisar Buildwell Private Limited, Shivraj Gupta vs. Commissioner of Income Tax, Delhi, CIT vs. Wallchand & Co., SA Builders Ltd. Vs. CIT, CIT vs. Nitish Ramesh Chandra Chordia, Ashok Chaganlal Thakkar vs. National Faceless Assessment Centre
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Business income; Capital asset; Opportunity of being heard; Additional evidence; Corroborative evidences; Salary income; Capital Gains; Principle of natural justice; TDS; Search and seizure; Block assessment
• Section: 143(3); 250; 143(1); 271(1)(c); 48; 132; 153A; 139(1); 22; 54B; 133(6); 153C; 10; 2(14); 20

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “D”, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER AND- MS. PADMAVATHY S, ACCOUNTANT MEMBER ITA No.03/M/2021 Assessment Year: 2008-09 Shri Rajesh Ramchandra Dake, B/2, Usha Prabha CHS, Ram Ganesh Gadkari Marg, Prabhu Ali, Panvel, Raigad-410206 PAN: AFQPD1100D Dy. Commissioner of Income Tax, Central Circle-1, 6\" Floor, Vs. | Room No.10, A-Wing, Ashar 1.T. Park, Road No.16-Z, Wagle Industrial Estate, Thane (W)- 400 604 Maharashtra (Appellant) (Respondent) CO no.44/M/2023 Assessment Year: 2008-09 DCIT, Shri Rajesh Ramchandra Central Circle-1, Dake, Room No.10, 6\" Floor, Vs B/2, Usha Prabha CHS, A-Wing, Ashar I.T, Park, * | Ram Ganesh Gadkari Marg, Road No.16-Z,Wagle Industrial Estate, Prabhu Ali, Thane (W) - 400 604 Panvel, Raigad- 410206 Maharashtra PAN: AFQPD1100D (Appellant) (Respondent) Present for: Assessee by Revenue by : Shri Nilesh Kariya, Ld. A.R. : Ms, Sanyogita Nagpal, Ld. CIT-DR. Date of Hearing : 06.12.2024 Date of Pronouncement : 23.01.2025 ORDER Per : Narender Kumar Choudhry, Judicial Member: This instant appeal and Cross Objection have been preferred by the Assessee and the Revenue Department respectively, against the order dated 29.09.2019 impugned herein passed by the Ld. Commissioner of Income Tax (Appeals)-11, Pune (in short “Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the Assessment Year (in short ‘AY’) 2008-09. 2 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake. 2. Relevant facts in brief for adjudication of the present litigations are that a search action u/s 132 of the Act was carried out in Valuable group of cases and its associate concerns on 10% April 2013 which were engaged in the business of media technology and infrastructure development. Search action u/s 132 on 10-04- 2013 was also carried out at the residential premises of the Assessee. Consequently, on the basis of search, the notice dated 26.10.2013 was issued to the Assessee, whereby he was requested to prepare a true and correct return of income for the assessment year under consideration. The Assessee in response filed its return of income on 15.12.2013 by declaring total income of Rs.37,81,904/- as against the income of Rs.37,81,900/- as declared previously by filing his original return of income u/s 139(1) of the Act on 31.03.2010, which was initially processed u/s 143(1) of the Act and thereafter resulted into passing the assessment order dated 14.12.2010 u/s 143(3) of the Act assessing the total income of the Assessee at Rs.37,81,900/-. The AO in the assessment order dated 31.03.2016 u/s 143(3) rw.s. 153A of the Act has also made two additions of Rs.6,81,11,103/- on account of brokerage income and Rs.10,42,97,083/- on account of short-term capital gain. The Assessee, being aggrieved, before the Ld. Commissioner also challenged these additions along with other addition of Rs.15,00,000/- which is not in controversy before us. 2.1 The Ld. Commissioner affirmed the addition of Rs.6,81,11,103/- in total, however partly sustained the addition of Rs.10,42,97,083/- to the extent of Rs.9,61,76,321/- (Rs.4,44,48,125/- + Rs.5,17,28,196/- respectively, as short-term capital gain and long-term. capital gain). 3 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 3. Both the parties i.e. the Assessee and the Revenue Department have challenged the impugned order by filing instant Appeal and CO respectively. 4. The Assessee has raised the following original grounds and additional grounds of appeal: “Ground of appeal: The appellant is aggrieved by the order dated 29/09/2019 passed by Id. CIT (A) - 11, Pune confirming the assessment order dated 31/03/2016 passed by Deputy Commissioner of Income Tax, Central circle-1, Thane u/s. 143(3) of the Income Tax Act, 1961 and is in appeal: 1. BECAUSE, Ld. CIT(A)-11; Pune erred in law and on facts in confirming the addition to the tune of INR 17,40,04,186/- made by the AO. 2. BECAUSE, Ld. CIT(A) 11 Pune erred in law and on facts in not appreciating the confirmation given by M/s _ Valuable Infrastructure Private Limited stating that no such income has accrued to the Appellant to the tune of INR 6,81,11,103/-. 3. BECAUSE, Ld. CIT(A)- 11 Pune erred in law and on facts in upholding the addition to the tune of INR 10,42,97,083/- even though the.same is exempt under section 10 of Income Tax Act, 1961 being sale of agricultural land. 4. BECAUSE, Ld. CIT(A)- 11 Pune erred in law and on facts in not appreciating the revenue records (7/12 extract) maintained by talathi under state laws, which evident that the land was agricultural land and was being cultivated with crops. The Appellant craves leave to add, alter, amend, modify or delete any of the ground. PRAY JUSTICE” Additional Grounds of Appeal: \"BECAUSE in the facts and circumstances of the case, Ld. Deputy Commissioner of Income-tax, Central Circle - 1, Thane erred in framing an assessment order under section 153A r.w.s. 143(3) of the Act and Ld. CIT{A) erred in upholding the action of the Deputy Commissioner of Income-tax, Central Circle - 1, Thane inasmuch as no incriminating documents belonging to the appellant are found during the course of search and seizure proceedings 4 ‘ ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake / carried out on the appellants and hence, the impugned assessment order dated: 31/03/2016 is bad in law and needs to be quashed\" 5. The Revenue Department has raised the following grounds/objections in CO: “1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in computing the sale consideration received from sale of lands under the head ‘capital gains, without appreciating the fact that assessee is not the owner of the said lands. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has failed to appreciate that the profit from impugned sale of lands of Rs.10,42,97,083/- should be computed under the head 'income from other sources.” 6. As in the present litigations, the controversy involved relates to making of two additions of Rs.6,81,11,103/- and Rs.10,42,97,083/- respectively on account of alleged brokerage income and Short-Term.Capital Gain (STCG) earned from the sale of lands by the Assessee as made by the AO and affirmation of the addition of Rs.6,81,11,103/- in full and of Rs.10,42,97,083/- in part to the extent of Rs. 9,61,76,321/- (Rs.4,44,48,125/- + Rs.5,17,28,196/- respectively as short-term capital gain and long- term capital gain), hence for the sake of brevity, we are inclined to decide the present litigations on the basis of additions/issues individually. 7. Coming to the 1% issue/addition of Rs.6,81,11,103/-, we observe that the Assessee, in his books of accounts for the AY under consideration, has shown an amount of Rs.6,81,11,103/- as advance received from M/s. Valuable Infrastructure Pvt. Ltd. (in short “VIPL”) and therefore in order to verify the same, the Assessing Officer (AO) vide order sheet noting dated 07.03.2010 -~ asked the Assessee to submit supporting evidence in support of the 5 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake same. Simultaneously the AO during the course of assessment proceedings of M/s. Valuable Properties Pvt. Ltd. (in short “VPPL”) on verification has observed that the Assessee has received brokerage of Rs.6,81,11,103/- from VPPL and the said payment was made by VIPL on behalf of VPPL. However, the Assessee ‘has not offered the income of brokerage of aforesaid amount, but has shown the same in the balance sheet, as advance received and therefore the AO show caused the Assessee. 7.1 The Assessee in response to show cause, before the AO contended that the said amount was received as advance for lands, however the AO not being impressed with said contention, ultimately made the. addition of Rs.6,81,11,103/- by holding as under: “The Assessee’s contention that it is an advance against land cannot be accepted, as the Assessee has not shown any sale of land to VPPL or VIPL against the alleged advance received for land and also not returned the alleged advance to VPPL or VIPL. Without prejudice to the above findings, alternatively the same can be considered as income u/s 41(1) of the Act. The Assessee has received the brokerage income but failed to offer the same to tax and therefore brokerage income fk Rs. 6,81,11,103/- is added to the total income”. 8. The Assessee, being aggrieved, challenged this addition along with another addition {which we will deal later}, before the. Ld. Commissioner and mainly claimed as under: “If the amount of Rs.6,81,11,103/- was brokerage then VIPL and/or VPPL would have deducted tax as per the provision of section 194H of the Act. As no TDS was deducted therefore the payments cannot be treated as brokerage income of the Assessee. The Assessee also claimed that the AO was orally requested to allow the Assessee to cross examine the Directors of VIPL or VPPL. However, the AO, without giving any opportunity to the Assessee to cross-examination has made the said addition. The Assessee before the Ld. Commissioner also filed additional evidence in the form of confirmation letter from VPPL wherein a confirmation of payment of Rs.8,84,87,859/- given to the 6 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake Assessee and ledger confirmations in the books of VPPL of the amount of the Assessee from F.Y. 2007-08 to 2014-15 were also filed and it was also stated in the letter that the land deal was not concluded and the same is yet to be recovered from Mr. Rajesh Dake and that the payments were given as advance for purchase of agricultural land”. 8.1 The Assessee before the Ld. Commissioner also filed certain documents as additional evidence and therefore the Ld. Commissioner vide letter dated 30.04.2019, forwarded the same to the AO for his comments. 8.2 The AO though conducted the enquiry in the remand Proceedings, however by submitting remand report dated 06.06.2019, formally objected to the admissibility of the additional evidence filed by the Assessee in the appeal proceedings, by submitting as under: “4,1 In the present case, the case of the assessee does not fall with the any of the exceptions in rule-46A. The assessee is not entitled to produce oral or documentary evidence afresh before the appellate authority, as a matter of right. Under special and/or certain circumstances only, as mentioned, in clauses (a), (b), (c), & (d) of Rule- 46A(1) additional evidence can be adduced. Rule-46A itself contains the principles of natural justice. That being so, sub rule(4) of rule-46A, does not permit to accept any additional evidence in contravention of provisions of sub rule (2) &(3) of Rule-46A. Ample opportunities’ were provided to the assessee during the assessment proceedings to present his case before the AO. However, the assessee failed to present his case by submitting. cogent evidences during the assessment. The evidence now sought to be adduced was never filed before the AO and the assessee had not even filed this explanation. Hence, it is requested that this additional evidence filed by the assessee, may not be admitted\". 8.3 The Ld. Commissioner before going into the admissibility of the confirmation of letter from VPPL qua payments made to the 7 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake Assessee as advance for purchase of agricultural lands, preferred to examine the nature of confirmation letter etc. and observed as under: “That search in the case of Assessee was carried out as part of search on the Valuable Group of cases and its associates’ concerns, which are all engaged in the business of media technology and infrastructure. The Assessee is also closely associated with the group. The AO has clearly mentioned in the assessment order at para 8 that vide order sheet noting dated 07.03.2010 the Assessee was asked to submit supporting evidence in respect of advance of Rs.6,81,11,103/- shown in his books of account as received from VIPL. It is only during the assessment proceedings of VPPL, the AO could discover that the Assessee had received brokerage from VPPL though the payment was made by VIPL.on behalf of VPPL. The confirmation letter from VPPL along with ledger account of the Assessee in the books of VPPL for the period 01.04.2007 to 31.03.2015, indicating advance of Rs.8,84,87,859/- as on 22.05.2009 and Journal entry of Rs.6,81,11,103/- on the basis of voucher No. 1436, as an amount paid to Mr. Rajesh Dake by VIPL on 15.04.2008. These account statements were not available to the AO at the time of assessment proceedings and the books of accounts of VPPL and VIPL were also not available at the time of search, as is shown in the ledger account on 15.04.2008. The sum of Rs.6,81,11,103/- is only a Journal entry through VIPL expense payable account, except for the document which is being produced now, there is no independent verification is possible regarding veracity of the payment entry. However, the fact is that even in the confirmation filed from VPPL, it is stated that the same is yet to be received from Mr. Rajesh Dake as reportedly the deal was not concluded. No facts regarding the proposed deal were brought on record either during the assessment proceedings or during the appellate proceedings”. 8.4 The Ld. Commissioner therefore on the aforesaid reasons agreed with the preliminary objection raised in Remand Report by the AO that sufficient opportunities were given in the assessment proceedings to provide documentary. evidence in support of his claim in the books of account that the amount was shown as 8 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake advance received from VPPL. Even during the appellate proceedings, no sufficient cause within the meaning of Rule 46A(4) of the Income Tax Rules 1962 ( in. short ‘Rules’) has been brought on record, to indicate that the Assessee was prevented from producing evidence, which he was called upon to produce by the AO. 8.5 The Ld. Commissioner further even on merits observed that the confirmation. and ledger account cannot be relied upon, as the necessary supporting details such as the details of proposed land deal, why the land deal could not be materialized, why the money to the extent of Rs.6,81,11,103/- if it is an advance, yet to be returned by Mr. Rajesh Dake, if the deal could not materialize. Further, while the confirmation letter claims that the deal was not concluded and the same is yet to be received from Mr. Rajesh Dake i.e. the Assessee, the letter does not bear the date of issue to Mr. Rajesh Dake and it is not clear, as till what date this amount is outstanding in the hands of the Assessee or is it that it is still outstanding. till as on date, which makes it extremely suspect and therefore low in evidentiary value. 8.6 The Ld. Commissioner ultimately by holding that in view of the above, both under Rule 46A of the Rules and on merits, the above said additional evidence of the Assessee is not accepted and therefore there is no ground to interfere with the addition made of Rs.6,81,11,103/- in the hands of the Assessee by the AO, treating the said receipts as un-explained income. 9. The Assessee by filing a petition for admission of additional ground under Rule 11 of the Appellate Tribunal Rules, 1963, has raised the following ground of appeal: 9 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake \"BECAUSE in the facts and circumstances of the case, Ld. Deputy Commissioner of Income-tax, Central Circle - 1, Thane erred in framing an assessment order under section 153A r.w.s. 143(3) of the Act and Ld. CIT(A) erred in upholding the action of the Deputy Commissioner of Income-tax, Central Circle - 1, Thane inasmuch as no incriminating documents belonging to the appellant are found during the course of search and seizure proceedings carried out on the appellants and hence, the impugned assessment order. dated: 31/03/2016 is bad in law and needs to be quashed\". The Assessee in support of aforesaid ground of appeal, has placed reliance on the decision of National Thermal Power Corporation Ltd. vs. CIT (1998) 97 Taxman 358 (SC). 10. On the contrary the Ld. D.R. refuted the claim of the Assessee. 11. We have heard the parties and considered the rival claims of the parties qua raising of additional ground of appeal. As the ground raised by the Assessee goes to the root of the case and admittedly the same is legal in nature and based on the facts and documents available on record already and therefore in view of the dictum laid down by the Hon’ble Apex Court in the aforesaid judgment i.e. NTPC, we are inclined to allow the Assessee to raise the aforesaid additional ground of appeal and hence the same is allowed to be raised. 11.1 As the additional ground raised by the Assessee, is legal in nature and goes to the root of the case, hence for the sake of brevity, we deem it appropriate to decide the legal ground first, in the context of the additions made. 12. Coming to the addition of Rs.6,81,11,103/-, we observe that in the instant case, the search action u/s 132 of the Act was carried out in the Valuable group of cases and its associated concerns on 10.04.2013 as well as at the premises of the Assessee and 10 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake therefore the case of the Assessee was re-opened by issuing a notice u/s 153A of the Act on 26.10.2013, in response to which the Assessee e-filed his return of income on 05.12.2013 declaring total income of Rs.37,81,907/- which was processed by the AO, who by considering the relevant details filed by the Assessee as called for and observing that the Assessee has derived income from salary, capital gain and other sources, ultimately vide assessment order dated 31.03.2016 u/s 143(3) r.w.s 153A of the Act, made various additions including the addition of Rs.6,81,11,103/- on account of brokerage income and added the same to the total income of the Assessee by concluding as under: “08. Brokerage of Rs.6,81,11,103/- The Assessee, in his books of accounts has shown advance of Rs. 6,81,11,103/- as advance received from M/s Valuable Infrastructure Pot. Ltd. Vide ordersheet noting dated 07.03.2010, the assessee was asked to submit supporting evidence in respect of the same. Simultaneously, on verification during the course _of assessment proceedings of M/s Valuable Properties Put. Ltd. it was observed that the assessee has received brokerage from M/s Valuable Properties Put. Ltd. of Rs.6,81,11,103/-. The said payment was made by M/s Valuable Infrastructure Put. Ltd. on behalf of M/s Valuable Properties Put. Ltd. It is thus observed that the assessee has not offered the income of brokerage of Rs. 6,81,11,103/- but has shown the same in the Balance sheet as advance received. The assessee's contention that it is an advance against land cannot be accepted as it is observed that the assessee has not shown any sale of land to M/s Valuable Properties Put. Ltd. or M/s Valuable Infrastructure Put. Ltd. against the alleged advance received for land. The assessee has also not returned the alleged advance to M/s Valuable Properties Put. Ltd. or M/s Valuable Infrastructure Pvt. Ltd. Without prejudice to the above findings, alternatively, the same can be considered as income u/s 41(1) of the Income Tax Act, 1961. Thus, the assessee has received the brokerage income but has failed to offer the same for tax. Therefore, the brokerage income of Rs.6,81,11,103/- is added to his total income. As the assessee has furnished inaccurate particulars of income and concealed income, penalty proceedings u/s. 271(1)(c) are initiated separately. (Addition -Rs. 6,81,11,103/-)” (Highlighted by us for better application) 11 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 12.1 The Assessee by relying on the judgment of Hon'ble Apex Court in the case of Principal CIT, Central-3 Vs Abhisar Buildwell Private Limited reported in [2023] 149 taxmann.com399 (SC) {in short “Abhisar case” }, wherein it has also been laid down \"that in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961”, has submitted that as the assessment proceedings of the Assessee are unabated and the addition in hand is not based on any incriminating material found during the course of search and therefore on the basis of aforesaid judgement, the addition in hand is not sustainable. 12.2 The Ld. DR. on the contrary by filing its reply to the legal ground raised by the Assessee qua aforesaid addition, has claimed that the Hon’ble Apex Court in the aforesaid judgment has also laid down “that in case any incriminating material is found/unearthed even in case of unabated/completed assessment, the AO would assume jurisdiction to assess or reassess the total income, taking into consideration the incriminating material unearthed during the search and other material available with the AO including the income declared in the returns” and in the instant case the addition is based on the incriminating material such as the information qua selling of lands by the Assessee, found during the course of search in the Valuable group of cases, and therefore the aforesaid ratio decidendi as laid down, is squarely applicable to the Assessee’s case. In simple terms, once the AO assumes jurisdiction u/s 153A of the Act to assess the total income of the Assessee for that year during the course of assessment, he shall not only proceed to make the addition based on incriminating search material, but also can assess the total income based on other material available with him including income declared in the returns. Hence the addition of Rs.6,81,11,103/- made by the AO is squarely covered by the 12 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake principles laid down by the Hon'ble Apex Court in para 14(iii) of the above judgment. 13.. We have heard the parties on the issue in hand and given thoughtful considerations to the peculiar facts and circumstances of the case and the relevant material available on record and the findings arrived at by the authorities below. First, we will deal with the issue raised by the Assessee in the context of decision in Abhisar case and thereafter at later stage the issue raised by Ld. DR. For better understanding and clarity, the conclusion drawn by the Hon’ble Apex Court in para 14 of the judgment in Abhisar case (supra) is reproduced herein below: “14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ti) all pending assessments) Teassescments shall stand abated; ti) in case any incriminating material is found/unearthed, even, in case of unabated/completed assessments, the AO would assume the jurisdiction to assess or reassess the ‘total income’ taking into’ consideration the incriminating material unearthed during the search and the other material available with the AO including the income declared in the returns; and iv) in case no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any 13 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake incriminating material found during the course of search under Section 132 or requisition under Section 132A of the Act, 1961. However, the completed/unabated assessments can be re-opened by the AO in exercise of powers under Sections 147/148o0f the Act, subject to fulfilment of the conditions as envisaged/mentioned under sections 147/148 of the Act and those powers are saved. The question involved in the present set of appeals and review petition is answered accordingly in terms of the above and the appeals and review petition preferred by the Revenue are hereby dismissed. No costs.” (Highlighted and segregated by us for better understanding) 13.1 The Hon’ble Apex Court in para no 14(iii) of the judgment has laid down the dictum that in case of any incriminating material is found/unearthed, even in case of unabated/completed assessment, the AO would assume the jurisdiction -to. assess or reassess the total income taking into consideration the incriminating material unearthed during the search and other material available with the AO including the income declared in the returns. 13.2 | Further in para no. 14(iv) of the judgment, the Hon’ble Apex Court also laid down the dictum that in case of completed assessment/unabated assessment, no addition can be madé by the AO in the absence of any incriminating material found during the course of search u/s 132 or requisition u/s 132A of the Act. 13.3 Admittedly in the instant case, the assessment is unabated and it clearly appears from the opening stanza for making the addition in hand by the AO, that there is no reference of any incriminating document found during the search action carried out 14 ITA No.03/M/2021 & ors, Shri Rajesh Ramchandra Dake on 10.04.2013 but in fact the addition has been made on the following reasons/documents: “(i) That the Assessee in his books of accounts has shown such advance of Rs.6,81,11,103/- as “advance received from VIPL” (ii) On the basis of a done during the course of assessment proceedings of VPPL that the Assessee has received brokerage from M/s. VPPL.” 13.4 Admittedly the Assessee in his books of account, had shown advance of Rs.6,81,11,103/- as advance received from VIPL, which resulted into making the addition, which goes to show that the addition under consideration does not emanate from any incriminating material found during the course of search and seizure operation carried out, but in fact the same is based on firstly the books of account of the Assessee, which were already available and considered by the AO while framing the original assessment order dated 14.12.2010 u/s 143(3) of the Act and secondly on the basis of verification done post search and during the course of assessment proceedings of VPPL that the Assessee has received brokerage from VPPL, therefore in view of the dictum laid down by the Hon’ble Apex Court in Abhisar case (Supra), the addition in hand is unwarranted, hence the same is liable to be deleted on this score itself . 14. Coming to the merits of this addition, we observe that this addition under consideration has been made by the AO on the ground that during the course of assessment proceedings of VPPL, it was observed that the Assessee has received brokerage from VPPL of Rs.6,81,11,103/- and the said payment was made by VIPL on behalf of VPPL. Thus, the AO has observed that the Assessee has not offered the income of brokerage of Rs.6,81,11,103/- but has shown the same in the balance sheet as advance receipt. The 15 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake contention of the Assessee that it is an advance against lands cannot be. accepted, as the Assessee has not shown any sale of land to VPPL or VIPL. The Assessee has also not returned the alleged advance to VPPL or VIPL. The AO also alternatively treated the aforesaid amount as income u/s 41(1) of the Act and ultimately by holding that the Assessee has received the brokerage income of Rs.6,81,11,103/-, added the same in the income of the Assessee. 14.1 The Assessee before the Ld. Commissioner in appeal claimed that the Assessee is into the business of land/property dealing and has/is received/receiving advances from various parties and on finalizing the land deals, adjusted/adjusting the advances received. It is admitted fact that the advance received from VIPL towards land deal has been shown as advance in the balance sheet of the Assessee and VPPL during the remand proceedings confirmed the advance given for purchase of agricultural land along with ledger account statement for the period 01.04.2007 to 31.03.2015. VIPL further confirmed the advance given to the Assessee by submitting a letter dated 24.05.2019 during the assessment proceedings, in response to the notice u/s 133(6) of the Act. 14.2 The Ld. Commissioner though considered the said claim/ contentions of the Assessee, however not being impressed with the same, ultimately affirmed the addition under consideration. 14.3 The Assessee being aggrieved with the addition on merit, before us mainly claimed that the advance received from VIPL towards land deal, has been shown as advance in the balance sheet of the Assessee, which clearly appears from page No.110-149 of the paper book. Further, the Assessee during the remand proceedings before the AO also filed various details and submissions, which appears from remand report (page No.14-22 of the paper book). 16 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake VPPL duly confirmed the advance given for purchase of agricultural land by filing confirmation letter along with the ledger account statement for the period from 01.04.2007 to 31.03.2015 and also confirmed that the amount is receivable from the Assessee, as it appears from page 18 of the paper book. It is also a fact that VIPL also confirmed the advance given to the Assessee, vide letter dated 24.05.2019 submitted to the AO during the remand proceedings in response to the notice u/s 133(6) of the Act. It is also a fact that no opportunity for cross-examination was given by the AO before making addition, thereby violating the principle of natural justice. It is also a fact that the AO held the addition.as brokerage income, whereas the Ld. Commissioner affirmed the advance as receipt of unexplained income, which shows flaw in the classification of income, though the income was not taxed at special rate as specified under the Act. The Assessee is in regular course of business of land deals and it is the modus operandi of the business to take the advance from the buyer and then sell the land. . This can also be inferred from the ledger account of the Assessee in the books of VPPL, wherein the advance money was given to the Assessee to buy various lands and on later dates the transactions were executed and adjusted against the advance received. Thus, the transaction was in the normal course of business and therefore cannot be treated as brokerage income. The Assessee further claimed that despite receiving the confirmation from VIPL by the AO, during the remand proceedings in response to notice u/s 133 of the Act, the Ld. Commissioner still rejected the additional evidence. 14.4 The Assessee further claimed that without prejudice to the above, it is submitted that the AO alternatively treated the said amount as addition u/s 41(1) of the Act, whereas the amount has been received during the assessment year under consideration and shown. as advance in the balance sheet and the same has been 17 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake confirmed as receivable by VPPL in the confirmation letter and thus there has not been any remission or cessation of liability within the meaning of provision u/s 41(1) of the Act during the relevant. year under consideration. Therefore, the provision of section 41(1) of the Act, is at all not applicable in the absence of any remission or cessation of liability. The Assessee in this regard also relied on various judgments including CIT vs. Sugauli Sugar Works (P) Ltd. (1999) 236 ITR 518 (SC). 14.5 On the contrary the Ld. D.R. refuted the claim of the Assessee. The Ld. D.R. vehemently submitted that the Assessee not only failed to bring on record the relevant documents qua advance received under consideration, however, also failed to justify receiving the advance, as has not placed on record any relevant material qua the property transacted and/or agreed upon and/or not materialized and therefore the addition under consideration is liable to be sustained. As the Assessee also failed to produce the relevant documents before the AO during the assessment proceedings, as filed before the Ld. Commissioner, therefore the Ld. Commissioner rightly rejected the admission of the additional evidence or documents produced before him by the Assessee. 15. We have heard the parties on merits of the addition in hand. We observe that the Ld. Commissioner has not admitted the confirmation letter from VPPL regarding the payments made to the Assessee_ as advance for purchase of agricultural land and the ledger account of the Assessee in the books of VPPL for the period from 01.04.2007 to 31.03.2015 indicating advance of Rs.8,84,87,859/- as on 22.05.2009 and a Journal entry of Rs.6,81,11,103/- on the basis of voucher No.1436 as an -amount paid to the Assessee by VIPL on 15.04.2008. The Ld. Commissioner 18 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake doubted the said documents and details mainly on the reasons that the same were not made available at the time of assessment proceedings and no facts regarding the proposed deal were brought on record either during the assessment proceedings or during the appeal proceedings. Further as to why the land deal could not be materialized and that the money to the extent of Rs.8,84,87,859/-, if it is an advance, yet to be returned by the Assessee and still outstanding as on date, which makes it extremely suspect in view of both under rule 46A and on merits and therefore the above said additional evidence of the Assessee is not accepted. 15.1 We observe that in the Assessee’s ledger accounts of various years including the year under consideration, it clearly depicts that receiving of advances from various perspective buyers have been shown as received/credited in the account of the Assessee, which also strengthens the modus operandi of the Assessee’s business to take the advances from the buyers and then to sell the land. Receiving the advances by the Assessee from the land buyers and later on after execution of the transactions, adjusting the advances received against the land deals, appears to be a normal course of business of the Assessee. The copy of the sample sale deeds executed by the Assessee in favor of buyers also strengthens the case of the Assessee qua dealing in land/property. 15.2 We further observe that in the remand proceedings, extensive investigation was carried out by the AO, wherein the VPPL by filing relevant documents confirmed the advance given to the Assessee and also confirmed the liability of the Assessee. It also clearly appears from the Assessment order and: books of accounts of the Assessee, that the amount under consideration has been shown as advance received from VIPL and from the confirmation letter received from VPPL along with ledger account in the name of the 19 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake Assessee for the period from 01.04.2007 to 31.03.2013 indicating outstanding advance of Rs.8,84,87,859/- as on 22.05.2009 and on the basis: of a Journal entry and voucher No.1436 , the amount of Rs.6,81,11,103/- has been shown as an amount paid to the Assessee by the VIPL on 15.04.2008, which also strengthens the genuineness of the claim of the Assessee. 15.3 No doubt, the Assessee has failed to demonstrate the land deal in respect of this particular amount and upto the date of passing of the impugned order on 29.09.2019, the Assessee has not returned the aforesaid amount, however, it is a fact that the Assessee is in the business of land deal and has received various amounts from various prospective buyers of the land, as it clearly appears from ledger accounts of the Assessee and it is also a fact that the Assessee has also sold various lands to VPPL as it appears from the sample sale deeds produced before us by the Assessee in order to substantiate its claim. It is also a fact that on the basis of details of “fixed assets’ schedule”, the AO had observed that the Assessee_ has sold land of Rs.10,22,17,123/- at Vardoli and Bherle during the year under consideration and the Assessee claimed the profit of Rs.4,21,05,989/- earned from the sale of such lands, as exempt however, the AO made the alleged addition of Rs.10,42,97,083/-, which also strengthens the genuineness of the claim of the Assessee that the Assessee is into the business of land deals and therefore would has taken the advance amounts from various parties including the VPPL/VIPL and during the year under consideration, the amount of Rs.6,81,11,103/- was reflecting in the books of accounts of the Assessee, as advance received from VIPL. 15.4 We further observe that the Assessee’s activities in the land dealings also reflect from the impugned order at para 18, wherein the Ld. Commissioner has observed as under: 20 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake “That from the facts of the case at hand it is evident that the Assessee is a key associate of the valuable group of cases, which is involved in the business of infrastructure development. The said land parcels were acquired for a period of time from 2003 to 2005 by separate sathe Karan (POA in favour of the Assessee and sold during the year under consideration to VPPL which is one of the group concerns of the valuable group). It is a common practice that to overcome the provisions of Bombay Land Revenue Court, which prohibits purchase of agricultural land for commercial use i.e. other than agricultural purposes by business entities; and the land is first taken over through a POA by an individual from the farmers for the intervening period, when the permission for change of land used is pursued and thereafter the land is transferred from the individual to the business entity for commercial exploitation. The case of the Assessee is nothing but this only”. The aforesaid observation of the Ld. Commissioner is also supporting the case of the Assessee that he was in the business of land dealings and therefore the probable cause for receiving the advance money from VPPL/VIPL cannot be ruled out. 15.5 We further observe that where the payer confirmed by submitting the confirmation letter qua receiving the amount by the Assessee and has not given any remission/cessation of liability within the meaning of provisions of section 41(1) of the Act, therefore the alternative treatment of the said amount t by the AO is also not sustainable. 15.6 We further observe that in this case, the AO treated the amount of Rs.6,81,11,103/- as brokerage income, whereas the Ld. Commissioner affirmed the.same as un-explained income, which goes to show that. considering the addition/income under consideration, there was no clarity between the authorities below, which also strengthens the case of Assessee qua its genuinity. 15.7 The Hon’ble Apex Court in the case of Shivraj Gupta vs. Commissioner of Income Tax, Delhi 425 ITR 420 (SC)/(2020) 117 Taxmann.com 871 (SC) has considered the dictum laid down by the 21 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake Hon’ble Apex Court in the case of CIT vs. Wallchand & Co. (1967) 3 SCR 214 and SA Builders Ltd. Vs. CIT (2007) 158 taxman 74/288 ITR 1 (SC) and reiterated the dictum that the Income Tax Authorities must put themselves in the shoes of the Assessee and to see how a prudent businessman would act. The Authorities must not look at the matter from their own point of view but that of a prudent businessman. Thus, on the aforesaid analyzations, we are of the considered view that this addition of Rs.6,81,11,103/- on merit as well, at all is not sustainable. 15.8 Resultantly, the addition of Rs.6,81,11,103/- is deleted on legal issue in view of judgments in Abhisar case and on merit as well. 16. Coming to the second addition of Rs.10,42,97,083/-, in context of the decision in Abhisar case, the Assessee has claimed that this addition is also not based on any incriminating material found during the course of search. The Assessee in its submissions dated 17.03.2016 filed before the AO stated that the lands at village Vardoli and Bherle were agricultural lands and the sale of same resulted into profit of Rs.4,21,05,989/- which was claimed as exempt. 16.1 The AO though considered the claim of the Assessee, however, not found the same as acceptable and on the basis of report of Survey of India, treated the capital gains arising from the sale of lands under consideration as taxable. The AO in the absence of land purchase agreements and date of purchase, treated the entire sale consideration on sale of land as STCG and consequently added the aforesaid amount to the total income of the Assessee. 16.2 The Ld. Commissioner in the impugned order treated the lands sold partly as LTCG and remaining as STCG and ultimately 22 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake affirmed the addition of Rs.10,42,97,083/- to the extent of Rs.9,61,76,321/- only (Rs.4,44,48,125/-{STCG} + Rs.5,17,28,196/- {LTCG}) by treating the lands sold by the Assessee as non-agriculture. 16.3. The Ld. D.R. during the hearing of this case, by filing some pages of Appraisal Report, drew our attention to para numbers 7.11, 7.11.1, 7.11.2 & 7.11.3 of the Report and submitted that in the search proceedings in the case of VPPL, it was unearthed that the VPPL has undertaken a Mega city project and on 31.03.2012 acquired certain land parcels from approximately 1200 land owners in different villages including Bherle (88 land owners) and Vardoli (306 land owners). The Ld. D.R. further submitted that the Assessee was also found to have sold the land, as it appears at srl. nos. 8 and 18 of the Index of the land owners, who received sale consideration of above Rs.1,00,00,000/- qua lands sold to the VPPL. Two to three land owners, were examined by the Revenue Department, who submitted that since the ‘land in question was agricultural land, hence the transaction does not attract capital gain tax. As the land owners have not paid the capital gain tax but claimed the land as agricultural land and therefore to decide the issue “whether the land acquired by VPPL is agricultural land” and “whether the transactions involved these sale of land attract capital gain tax or not”, the Revenue Department requested the Director of Survey of India, Maharashtra and Goa Geospatial Data Centre, Pune to verify: “whether the lands. purchased falls within the jurisdiction of 8 kms from the municipal limits of Panvel Municipal Council”. The Survey of India vide report dated 12.06.2013 submitted that “villages as listed in the report falls within 8 kms from the outer limits of Panvel Municipal Council”. M/s. Lotus Environments, Bangalore-Pune who were in a 33 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake profession of land surveys .and appointed by various Government Authorities for land surveys, distance, measurements and satellite based aerial map of land areas, was also asked to prepare and submit a report qua “aerial map of proposed site acquired by VPPL from. the outer margins of Panvel Municipal Council”. M/s. Lotus Environments Pune also submitted a report that on perusal of “aerial map” it is noted that majority of the lands purchased fall within the radius of 8 kms from the outer limits of Panvel Municipal Council. The Ld. D.R. further submitted that even two inspectors were deputed to examine the agricultural activity on the land parcels, who in their report submitted that the land parcels are barren and no sign of any agricultural activities were found. The Ld. DR at last submitted that on the aforesaid facts and documents, it is clear that the addition under consideration is based on the incriminating material found during the course of search in the case of VIPL/VPPL. 17. On the contrary the Ld. A.R. refuted the claim of the Revenue. 18. Heard the parties on this issue and perused the material available on record. For clarity and _ better understanding, we are reproducing the conclusion drawn by the AO for making this addition under consideration. “09. STCG on sale of lands at village Vardoli & Bherle — On perusal of details of fixed assets schedule, it was seen that the assessee has sold land of Rs, 10,22,17,123/- at village Vardoli & Bherle during the year under consideration. From the post search findings with respect to land at village Vardoli & Bherle, the Survey of India in its report had submitted that the land at village Vardoli & Bherle is situated within 8kms jrom the Municipal limits of Panvel Municipality. The Survey of India's report in this matter is hereby reproduced below — 24 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 9.1 Accordingly, vide order sheet noting dated 07/03/2016, the assessce was asked as to why the capital gains was not offered for taxation with respect to sale of land at village Vardoli & Bherle. The assessee in its submission dated 17/03/2016 stated that the land at village Vardoli & Bherle was agricultural land and the sale of lands resulted in profits of Rs. 4,21,05,989/- which is claimed as exempt. : Nome ON tages rep “noe 120) Das Hubs “ane ‘Scanned with ACE Scanner 9.2. As stated earlier, the contention of the assessee is not acceptable as per Survey of India report, the said land at village Vardoli & Bherle is situated within 8 kms from the Municipal limits of Panvel Municipality. Thus the 25 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake capital gains arising from the sale of lands at village Vardoli & Bherle are taxable as the said land is not an agricultural land. The assessee has not submitted copy of purchase agreements till date. Therefore, in the absence of land purchase agreements and the date of purchase, the entire sale consideration on sale of land is treated as short term capital gain. 9.3. In view of the facts of the case and the above discussion, Rs. 10,42,97,083/ is hereby added to the total income of the assessee under the head \"Short Term Capital Gains\". As the assessee. has furnished inaccurate particulars of income and concealed income, penalty proceedings w/s. 271(1)(c) are initiated separately. (Addition - Rs. 10,42,97,083/-)” (Copy of Report as produced by the parties before us and reproduced by the AO in the Assessment order is not clearly legible and therefore the same is reproduced herein as it is) 18.1 From the opening stanza for initiating and making the addition under consideration in the assessment order, it clearly appears that the AO “on perusal of details of fixed assets’ schedule, observed that the Assessee had sold lands for Rs.10,22,17,123/- at Vardoli and Bherle, during the year under consideration. The AO further observed that from the post search findings with respect to land at village Vardoli and Bherle, the Survey of India in its report has submitted that the land at village Vardoli and Bherle is situated within 8 kms from the municipal limits of Panvel Municipal Council and therefore the Assessee was asked as to why the capital gains were not offered for taxation on the sale of lands at village Vardoli and. Bherle. 18.2 In the findings arrived at by the AO for making the addition in hand, there is no whisper about any __ incriminating material/documents on the basis of which the AO reopened the case and made the addition under consideration, whereas in the instant case_admittedly the assessment proceedings are unabated and as it 26 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake appears from the findings of the AO, the addition under consideration has been made FIRSTLY on perusing and verifying the details of “fixed assets’ schedule” wherein the Assessee had shown to have sold the land at Rs.10,22,17,123/- at village Vardoli and Bherle, during the year under consideration and SECONDLY on the basis of the report of Survey of India prepared and submitted post search findings with respect to lands at village Vardoli and Bherle reported as situated within 8 kms from the municipal limits of Panvel Municipal Council. 18.3. In para nos. 7.11.1 & 7.11.2 of the appraisal report, it is noted as under: “7.11.1 Few of the land owners' I.T. records were verified on AST data, and it was noted that these land owners have not offered any tax on the Capital Gain on these sale of land to Valuable Properties Put ltd. Two ‘to Three land owners were examined and the land owners submitted that since the land in question is Agriculture land, hence the transaction does not attract Capital Gain tax Following is the list of land owners who received sale consideration in excess of Rs. 100.00 lakhs from M/s Valuable Properties Put. Itd. 7.11.2 It is apparent that substantial amount has been passed to all these land owners in the process of acquisition. of land by Valuable Group. The land owners' Income tax records were perused on AST and it is noticed that none of these land owners have paid any Capital Gain tax. Some of the land owners such as M/s Maa Agro Developers, M/s La-Tim Life Style & Resorts, Rajesh Dake, Narayan Saraf, Vrindavan Horticulture, M/s La-Tim Enterprises, Shrikrishna Saraf, Kartik Timbadia have shown these land transactions as a business transaction and after claiming expenses, the balance amount has been claimed as business income.” 18.4 Perusing the aforesaid paras of the appraisal report, it can be easily construed that in the post search proceedings, income ‘tax records of the land owners were perused on AST data, wherefrom it was noticed that none of the land owners have paid 27 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake any capital gain tax and on examination of 2 to 3 land owners, they submitted that since the land in question is agricultural land hence the transaction does not attract capital gain tax. And therefore, in order to verify the claims of the land owners including the Assessee, the subsequent proceedings vis-a-vis inquiry from Survey of India and M/s. Lotus Environments Pune, were carried out. 18.5 From the aforesaid facts and circumstances, it is clear that addition in hand has been made only on the basis of “fixed assets’ schedule” which was available prior to search proceedings and Survey of India Report which is admittedly based on enquiry conducted post search but not before to that. 18.6 It is also admitted fact that the assessment order has been passed u/s 153A of the Act but not u/s 153C of the Act, hence even otherwise any incriminating document found during the search of VPPL and VIPL (3 person) but not the Assessee, has no relevance, until and unless the assessment proceedings have been initiated u/s 153C of the Act by following the due procedure of law, as enshrined in the provisions of section 153C of the Act, which is not the case here. 18.7 Even otherwise, the Revenue Department during the course of search action carried out in the case of the Assessee also, had not found any incriminating material/documents leading to the addition in hand or the other addition adjudicated above, as appears from the Panchnama drawn during the course of search on 10.04.2013 at the premises of the Assessee. And therefore, both the authorities below in the respective orders passed by them, have also not pointed out any such incriminating material/document. Whereas it is an admitted fact that the details of the property sold depicting in the “fixed assets’ schedule” of the Assessee and the 28 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake AO for making the addition used the details of “fixed assets’ schedule” only but admittedly not = any _ incriminating material/documents. 18.8 On the aforesaid considerations and analyzations, as in the regular assessment proceedings, the original assessment order dated 14.12.2010 u/s 143(3) of the Act has been passed by perusing the return of income and financials of the Assessee and as on the date of search proceedings, no assessment/reassessment proceedings were pending, therefore the assessment u/s 143(3) of the Act stands unabated and the addition under consideration is not based on any incriminating material/documents found during the course of search and seizure operation and therefore hit by the dictum laid down by the Hon’ble Apex Court in Abhisar case (supra), wherein it is laid down “that where no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments”, meaning thereby, in respect of completed/unabated assessments, no addition can be made by the AO in absence of any incriminating material found during the course of search under section 132 or requisition under section 132A of the Act, 1961, and therefore, the addition in hand is un-sustainable and consequently liable to be deleted on this score itself. 19. Now coming to the contention raised by the Ld. DR to the effects that the Hon’ble Apex Court in the aforesaid judgment has also laid down “that in case any incriminating material is found/unearthed even in case of unabated/completed assessment, the AO would assume jurisdiction to assess or reassess the total income, taking into consideration the incriminating material unearthed during the search and other material available with the AO including the income declared in the returns” and as in the instant case the addition is based on the incriminating material such as the 29 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake information qua selling of lands by the Assessee, found from the valuable group of cases, during the course of search and therefore the aforesaid ratio decidendi as laid down in para 14(iii), is squarely applicable to the Assessee’s case. As we have analyzed above the peculiar facts and circumstances of the case and held “that both the additions are not based on any incriminating material/documents found during the course of search and seizure operation and therefore are liable to be deleted” and therefore the aforesaid contention of the Ld. DR that ratio decidendi as laid down in para 14(iii) of the judgment in Abhisar case is applicable, is devoid of merits and untenable. 20. Now coming to the merits of the addition, we observe that various land owners including the Assessee (detailed in appraisal report at sr. no. 8 & 18) as observed above and as it appears in appraisal report, had not offered any tax on the capital gain on the sale of land on the pretext that lands in question were agricultural land, hence the transaction does not attract capital gain tax. The Revenue Department therefore in order to verify “as to whether the land under consideration is an agricultural and does not attract capital gain tax’, requested the Director of Survey of India, Maharashtra and Goa Geospatial Data Centre, Pune to prepare “aerial map” and verify the land purchased by the VPPL whether falls within 8 kms. from the outer limits of Panvel Municipal Council. 20.1 The Survey of India vide Letter/report dated 12.06.2013 submitted its report, as reproduced by us in para number 20 of this order, from which it appears that the Survey of India has submitted that various villages (including Vardoli and Bherle emphasized by us) fall within 8 kms from the outer limits of Panvel Municipal 30 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake Council. The Assessee contended that though the Survey of India was asked specifically to verify whether the lands purchased by the VPPL for the proposed site of energy city fall within 8 kms from the outer limits of Panvel Municipal Council or not, however the Survey of India has reported the distance of various villages from Panvel Municipal Council. Even otherwise it is not clear “whether the measurement of distance as reported, is based on the physical verification or measurement/shorter road distance or on the basis of aerial map/distance”, and therefore the report lacks sanctity /applicability to the instant case. 21. On the contrary the Ld. D.R. refuted the claim of the Assessee by submitting that it is a Government report and therefore the same can be relied on. 22. We have heard the parties on this issue and given thoughtful considerations to the peculiar facts and circumstances of the case. For clarity and ready reference, let us peruse the definition of capital assets as defined in section 2(14)<{iii}(b) of the Act prior to amendment made vide Finance Act 2013, which reads as under: “Definition of Capital Asset u/s 2(14)(iii)(b) (14) \"capital asset\" means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include i) .. see (ii) .. a5 (iii) agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a populations of not less than ten thousand according to the last preceding census, of which the relevant figures have been published before the first day of the previous year; or 31 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette;] 22.1 Definition of Capital Asset u/s 2(14)(iii) post amendment vide Finance Act 2013, reads as under: ‘capital asset\" means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include..... (ii) agricultural lands in India, not being land situate- The following item (b) shall be substituted for the existing item (b) of sub- clause (iii) of clause (14) of section 2 by the Finance Act, 2013, w.e.f. 1-4-2014 (bo) in any area within the distance, measured — aerially, - (I) not being more than two kilometres, from the local limits. of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (I) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (I) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh.” 32 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 22.2 Perusing the aforesaid provisions qua definition of capital asset u/s 2(14)(iii)(b) of the Act, it is clear that any agricultural land being situated in any area within such distance being more than 8 kms from the local limits of any Municipality or Cantonment Board, does not include in the definition of capital asset. 22.3 Prior to the Finance Act, 2013, the area or distance of the agricultural land from the local limits of any municipality or cantonment board, was supposed to be measured physically with shorter road distance. However, with effect from 01.04.2014, as per Finance Act, 2013 which came into operation from 01-04-2014 whereby the provisions of sub section (b) in clause (iii) of section 2(14) of the Act have been amended, the distance is supposed to be measured aerially but not physically as also clear from. the judgment of Hon’ble Bombay High Court in the case of CIT vs. Nitish Ramesh Chandra Chordia ITA No.120 of 2013 and Shri Malti R Kadu & Others ITA No.151 of 2013 & others decided on 30.03.2015, wherein the applicability of the measurement of distance “aerially” within the meaning of section 2(14)(iii)(b) of the Act which came into effect from 01.04.2014 vide Finance Act, 2013, was dealt with and decided by the Hon'ble High Court by holding that amendment prescribing distance to be measured aerially applies prospectively i.e. in relation to A.Y. 2014-15 and subsequent assessment years. For the period prior to A.Y.2014-15 the distance between the municipal limit and the agricultural land is to be measured having regard to the shortest road distance. The Hon’ble High Court also noted that it is settled law that in such matters when there is any doubt or confusion, the view in favour the Assessee needs to be adopted. 33 ITA.No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 22.4 It is also a fact that vide circular No.17/2015 dated 06.10.2015, the CBDT has taken the cognizance of the aforesaid judgment of the Hon'ble Bombay High Court and accepted the same and therefore directed the Revenue Authorities not to file any appeal, henceforth on this ground and if appeals filed already then, the same may be withdrawn/not pressed upon, as the issue is being a settled issue. 22.5 From the aforesaid decision of the Hon’ble Jurisdictional High Court and the CBDT circular No.17/2015, it is clear that for the period prior to A.Y.2014-15, the distance between the municipal limit and the agricultural land, is to be measured physically having regard to the shortest road distance. 22.6 Coming to the Report of Survey of India, we observe that from the report it is not clear “whether the same is based on the physical verification of distance or aerial distance/aerial map”. Therefore, the. report of thé Survey of India lacks its applicability. in the facts and circumstances of the instant case as the Hon’ble High Court reiterated “that it is settled law that in such matters, when there is any doubt or confusion, the view in favour the Assessee needs to be adopted”. 22.7. We, by perusing the appraisal report again, observe that M/s. Lotus Environments, Pune (which was being engaged in the profession of land surveys and appointed by various government authorities for land surveys, distant measurements and satellite based aerial mapping of the land areas) was also asked by the Revenue Department to prepare the “aerial map” of 34 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake proposed site acquired by VPPL from the outer margins of Panvel Municipal. Council and to submit the report. M/s. Lotus Environments, Pune therefore has submitted a Report along with “aerial map” of the land acquired by VPPL from the outer margins of Panvel Municipal Council. The DDIT on perusing the report and aerial map, noted in the appraisal report that perusing the aerial map, it is noted that majority of the land purchased falls within the radius of 8 kms from the outer limits of Panvel Municipal Council. 22.8 Both the authorities below in the respective orders neither mentioned anything about “aerial map” nor “the Report of M/s. Lotus Environments, Pune. Even the measurement of subjected lands, through “aerial map” otherwise is at all not applicable to the case of the Assesse, as the assessment year involved is 2008- 09, when the provisions for aerial measurement of land from the outer limits of the Municipal Council was not there and therefore report of M/s. Lotus Environments, Pune, also having no relevance/value in this case. 22.9 Admittedly, the Assessee before the authorities below has submitted the copy of google maps showing the distance of Panvel Municipal Council from villages, where subjected lands situated, which for the sake of brevity and ready reference, are reproduced herein below: “Map data ©2019 Panvel Municipal ‘Corporation, Laci S03 Ta Department , Uran Rd, Old Panvel, Panvel, Navi Mumbai, Maharashtra 410206 @ Pass by Big Bright tgnnfen théleft): 2 2 At the ‘nie th the Sih exit and stay. ‘on. ea, oe > Uran Rd : © @BSothiougtt roundabout 6 ie i in A nba Heine Ge re 3. Tum dght att R Mobiles wi z @rass oy keptina ‘obile Shop (oa wet 7 “ nia mace romemnecrnetss BGO * Pollondy 48: Sheckng Vardoli.Rd in Ajivali: % pier bet ~Jarnin(73k) 74 Une ny ae uno tons 36 , _ ITANo.03/M/2021 & ors. Shri Rajesh Ramchandra Dake if\" ‘Corporation, Looal tment to Bherle, Mahatashtra Map dats 2019 Lhe el Panvel Municipal: Corporation, , Local Body Tax * Department: : Uran Rd, Old:Panvel, Panvel, Navi Mumbai, Maharashtra 4 0206 are: t 4 \"Head southwestion Uran'Ra ‘ 0 Pasir ap soph Unitus ep ten ont acon 1BQ)EM 9 £. \"oon th Sendo on sg Sothrough 1 roundabout ‘ : ties siscp eanamuaee OES ah asim a a Tum fight atR RMobiles - : Pans by Ksishna Mablle Shop (on the et t & Continue straight to stay on NH 8 i iad ‘Shree Panchmukh! Maruti Mandir: (on the ? Jef eliaaeatainmmminamencaomet f: 6. «ne i eins 5 @ Pais by Palaspe Phata Bue Station (onthe left) 3 ny Se pe ee 42h 37 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 22.10 For clarity and better understanding, we also downloaded and perused the google maps concerning the issue, as reproduced below: 107/24, 4:89 PM Panvel Municipal Corporation, Locel Body Tax Department to Vardoll, Maharashtra ~ Google Maps: Google Maps Panvel Municipal Corporation, Local Body Tax Department, Drive 12,0 kim, 34 min X4P6+QR7, Uran Rd, Old Panvel, Panvel, Navi Mutnbai, Maharashtra 410206 to Vardoli, Maharashtra Rd WRK Lighter traffic than usual &\\ vieMahatma Gandhi Rd and NH = 34 min co 18.0 km Restaurants “Hotels Ga atations Parking Lote More: bntips: zw google. corn/mspaldinPanveltMuniclpat+ Corporation «Local Body taxeDepartmant,+X4PE%IBORT, tUraneRd, Old PanvelsPany... 4/4 38 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 10/7724, 4:58 PM Google Maps 4 viaNH 4a Fastest route ‘Parwvat Municipat Corporation, Local Body Tax Departmont ta Vardoll, Maharashtra - Google Maps: Panvel Municipal Corporation, Local Body Tax Department, Drive 13.0 km, 34min XAP6+QR7, Uran Rd, Old Panvel, Panvel, Navi Mumbai, Maharashtra 410206 to Vardoli, Maharashtra . 33 min 138 km 4 viaNH 48 and Shedung Vardoli_ 34 min Rd 118 ken Lighter traffic than usual § WaMahatmaGandhiRdandNH 34 min 4B 130k Explore Vardoli bt ed a Restaurants — Hotel Gus stations Parking Lote — More hilpsihwwe google. com/inape/diiPenvelMuricipalt Comoration +Loval*Body?Tax¢ Department, +X4P@%2B0R7,+UrantRd,+Oid+Panvel,#Panv... 14 | 39 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 1026, 488 PA Panvel Munielpal Corporation, Local Barly Tex Department to Bharle, Maharashtra - Google Maps joogle Maps Pavel Municipal Corporation, Local Bady Tax Department, Drive 9.4 km, 22 min G ieee Panvel, Panvel, Navi Mumbai, Maharashtra 410206 to Bherle, Maharashtra fA WaNHas 22 min Fastest route, despite the usual 94k tralic _ & This rome has tolls, @% via NH 348 and NH 48 27 min ‘Some traffic, as usual 12.4% Explore Bherle 4 © B&B P = untaurants Hotels Gas statlons Parking Lots Mote _ntips.twwwegaoigle.comimapsidirPanvetshunleizal+ Corporation, +Local+BodyTax+Depariment,+X4PE%2BQR7,.*UrantRd,+Old+Panvel,sPanv... “4/4 40 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 1007124, 487 PRA Panvel Municipal Corporation, Locaf ody Tax Departmant to Bherla, Maharashtra - Google Maps Google Maps Panvel Municipal Corporation, Local Body Tax Department, Drive 12.4 km, 27 min X4P6+QR7, Uran Rd, Old Panvel, Panvel, Navi Mumbai, Maharashtra 410206 to Bherle, Maharasht via NH 48 2 min Fastest route, lighter traffic then 94 kin usual Via NH 348 and NH 48 a? min Some traffic, a9 usual 124k 4, This route has tolls, Explore Bherle wo om @ Pw Restaurants. Hotels. Gas stations Parking Lots — More ‘nttpsiddveane google. coov’mapa/di/PanvelMunicipal¥omporation, ¢Local+Body*Tax+Dapartment, HAPBR2BOR?, ranted +0ld+Penvel,sPanv.. A/4 41 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 22.11 From the Google maps depicted above, it clearly appears that the shortest road distance from any way/road, between Vardoli village to Panvel Municipal Corporation and Bherle village to Panvel Municipal Corporation is more than 8 Kms. Even the Revenue Department neither doubted nor refuted the Google maps and the shortest route as depicted in the Google maps produced by the Assessee, by producing any evidence, which strengthens the case of the Assessee. Further the Revenue Department also failed to bring any other substantive evidence to prove the shortest road distance was measured physically. Whereas the Assessee by producing Google maps established that the villages whereas lands were situated did not fall within 8 Kms. of the outer limits of Panvel Municipal Council. Even otherwise in spite of cropping up ard emphasizing this issue qua not falling the lands in question within the radius of 8 kms from the outer limits of Panvel Municipal Council, by the Assessee during post search proceedings i.e. assessment and appellate proceedings respectively before the AO and Ld. Commissioner, the authorities below failed to verify the exact facts/distance of the subjected lands from outer limits of Panvel Municipal Council. Thus considering the aforesaid facts and circumstances in totality, we are of the considered view that the Revenue Department failed to bring on record any authentic evidence to prove that the lands sold. by the Assessee fall within a distance of 8 Kms. from the outer limit of Panvel Municipal Council, as per distance measured physically by shorter road distance, as per the provisions of section 2(14)(iii) applicable to the instance case, whereas the Assessee by submitting Google maps established by taking refuge of rule of preponderance of probability, the distance of villages where lands situated, more than 08 kms. from the outer limits of Panvel Municipal Council, as prescribed in the provisions 2(14) as applicable and therefore on this score itself, the 42 TTA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake instant addition is liable to be deleted in view of dictum laid by the Hon’ble Jurisdictional High Court in CIT vs. Nitish Ramesh Chandra Chordia (supra) to the effect “that it is settled law that in such matters when there is any doubt or confusion, the view in favour the Assessee needs to be adopted”. 23. Now coming to the issue “whether the land sold by the Assessee falls within the category of agricultural land or not”, we observe that the Ld. Commissioner doubted the claim of the Assessee mainly on the reason that the lands sold by the Assessee were never acquired for agricultural purposes, as it was meant to be transferred to the business entity for development of the commercial projects, for which permission dated 09.08.2007 u/s 63 of the Bombay Tenancy and Agricultural Lands Act was also obtained, as the sale was intended to a non-agriculturist i.e. valuable properties. The old as well as new owners of the land parcels, never. meant or intended to use the agricultural land for agricultural purposes. The only evidence produced by the Assessee is 7/12 extracts and there is no evidence that during the period when the land was in possession of the Assessee, the Assessee had carried out any agricultural operation. No income or expense related to the agricultural operations could be produced on behalf of the Assessee either during the course of assessment proceedings or remand proceedings or even in appeal proceedings. There is no corroborative evidence in form of bills, purchase of agricultural inputs such as seeds, fertilizers, labour payments etc. or sale bills for sale of agricultural produce. The Ld. Commissioner also observed that even though it is presumed that some income may have accrued to the Assessee in the form of agricultural income, which is immensely dis-proportionate to the amount of investment made and did not bear any rational proportion to the investment made in acquiring the land. 43 ITA-No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 23.1 The Ld. D.R. therefore on-the aforesaid observations of the _Ld. Commissioner supported the decision of the Ld. Commissioner in treating the land sold by the Assessee as non-agricultural land. 23.2 On the contrary the Ld. A.R. before us demonstrated the extracts of 7/12 and tried to justify the cultivation. Further the Ld. AR drew our attention to the judgment of the Hon’ble Jurisdictional High Court in the case of Ashok Chaganlal Thakkar vs. National Faceless Assessment Centre writ petition No.3099 of 2022 decided on 13.02.2024 and claimed that as per judgment, the actual carrying on of agricultural operation is not a necessary condition for deciding that the parcels of land were agricultural lands. 24. We have heard the parties on this issue and given thoughtful considerations to the peculiar facts and circumstances of the case. It is not in controversy here that in the documents such as sale deeds etc., the lands sold in favor of Assessee have been shown as agricultural lands. Further, the Assessee also sold the said. lands to the VPPL as agricultural lands only. Only controversy raised by the Revenue Department is that the lands sold may be agricultural lands but the same were not being used for the. agricultural purposes and therefore no benefits can be given to the Assessee as applicable qua agriculture land. The Assessee in order to substantiate its claim that the lands sold by the Assessee were agricultural lands, has submitted the copies of revenue record i.e. 7/12 extracts confirming the. year-wise calculation of the agricultural produces sold. Admittedly, the lands sold were appearing as agricultural lands on the documents executed in favour of the Assessee as well as in the sale deeds executed in favour of the VPPL and the extracts of 7/12 also support the case of the Assessee. 44 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 24.1 We further observe that the Hon’ble Jurisdictional High Court in the case of Ashok Chaganlal Thakkar (supra) also dealt with the issue “whether the provisions of section 2(14)(iii) of the Act do not require that agricultural operation should be undertaken on the land at the time of transfer or immediately prior to the transfer”. Further, for claiming the exemption being not covered u/s 2(14)(iii) of the Act, “is there any requirement for the land should be used for agricultural purposes”. For clarity, the conclusion drawn by the Hon’ble Jurisdictional High Court is reproduced herein below: “7 Despite the matter being remanded for denovo consideration and the ITAT directing the AO to grant reasonable opportunity of being heard before deciding the issue, an assessment order dated 5th May 2021 came to be passed. A petition was filed challenging the said assessment order on the ground that the AO did not strictly follow the mandatory provisions of Section 144B of the Act. The said order does not indicate that any personal hearing was granted. The said order was quashed and set aside by this court on 3rd January 2022 in Writ Petition No.1292 of 2021 and the matter was remanded for denovo consideration. The AO was directed to strictly comply with the mandatory requirements of Section 144B of the Act and also the order passed by the ITAT on 28th September 2019. Subsequently, a fresh assessment order dated 24th March 2022 has been passed which is impugned in this petition. The fresh assessment order also proceeds on the basis that petitioner did not show any evidence of carrying on of agricultural operation in the land. This is despite recording in the impugned order, what the ITAT had held that the CIT(A) has accepted petitioner's contention that actual carrying on of agricultural operation is not a necessary condition for deciding that a particular parcel of land was agricultural land. Therefore, the AO should have, instead of passing the impugned order, restricted his scope to ascertain whether the documents submitted by petitioner would indicate that the land was an agricultural land. The AO should have restricted his scope of work only to determine whether the land was situated in an area which is comprised within the jurisdiction of municipality or cantonment board and whether it has a population in excess of ten thousand. If the additional evidence submitted by petitioner mentioning that the land sold as agricultural land did not inspire confidence or require further 45 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake verification, the AO should have conducted proper enquiry to ascertain the authenticity of certificates issued by Talati and Gram Sevak. Without disproving the correctness of the confirmation / certificates issued by the Talati and Gram Sevak, the AO was not justified in rejecting petitioner's claim of agricultural land particularly when evidence shows that the lands are recorded as agricultural lands in the Government records. We do not think it would have been difficult for the AO to ascertain / verify the exact nature of land as mentioned in Government records by conducting necessary enquiry with the concerned Government authorities. When petitioner has brought © some evidence on record to establish its claim that the land sold is in the nature of agricultural land, revenue authorities are duty bound to verify the authenticity of such evidence and if they want to reject petitioner's claim, they must bring contrary material on record to disprove petitioner's claim. As there is nothing on record to indicate that the AO has conducted any enquiry to verify the nature of land sold by petitioner. Whether agricultural or otherwise, the AO has failed in his duty to examine the evidence in the proper perspective. 8 Mr. Sharma submitted that because the ITAT has directed the AO to adjudicate denovo, the AO was entitled to disregard the findings of the CIT{A) in its entirety. We do not agree with. Mr. Sharma's submission that the AO was being directed to deal with the entire matter on its own merits. The order of the ITAT must be read and understood in the proper context and in law. All that is stated in the order itself. There was considerable force in the submission of Mr. Jain that the order must be read as restricting the scope of the AO only to question the evidence filed by petitioner and nothing more, and to ascertain whether the land would not be covered under definition of capital asset as stated in Section 2(14)(iii) of the Act. Moreover, the ITAT has_not disturbed the findings of the CIT(A) that actual carrying on of agricultural operation is not a necessary condition for deciding that a particular parcel of land was agricultural land. As noted earlier, we agree with the opinion of the CIT(A) in this regard because Section 45(1) of the Act reads as under: Capital gains. \"45. (1) Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H, be chargeable to income-tax under the head \"Capital gains\", and shall be deemed to be the income of the previous year in which the transfer took place. 46 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake HAAKARARA RAR AAA AR ARAL EBERT RETIRE Capital asset is defined under Section 2(14) of the Act, and reads as under: (14) \"capital asset\" means-- (a) property of any kind held by an assessee, whether or not connected with his business or profession; CE but does not include ----- RRR EAR RR ER RIE RE EE (iii) agricultural land in India, not being land situate-- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand 3or (b) in any area within the distance, measured aerially,-- (I) not being more than two kilometres, from the local limits of any municipality or cantonment. board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (I) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the 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 preceding census of which the relevant figures have been published before the first day of the previous year; ARHKR RRNA AAA A ARG AR KITA AER EEA IR RAR IA BEER EA EIT RTE 47 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake None of these provisions require that it has to be used for agricultural purpose. Only Section 10(37) and Section 54Bof the Act provide for agricultural activity to be carried out and these sections read as under: Section 10(37): In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- ERRAA EAA AAA EAHA KERR AA HHA HAAR RRA RARER AREER AR lnhnninhinbbnnbnniinniniiinihishbnbberinbhinnibiiisniibiie (377) in the case of an assessee, being an individual or a Hindu undivided family, any income chargeable under the head \"Capital gains\" arising from the transfer of agricultural land, where— (i) such land is situate in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of section 2; (ii) such land, during the period of two years immediately preceding the date of transfer, was being used for agricultural purposes by such Hindu undivided family or individual or a parent of his; (iii) such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Government or the Reserve Bank of India; (iv) such income has arisen from the compensation or consideration for such transfer received. by such assessee on or after the Ist day of April, 2004. Explanation.--For the purposes of this clause, the expression \"compensation or consideration\" includes the compensation or consideration enhanced or further enhanced by any court, Tribunal or other authority; (emphasis supplied) Section 54B \"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 48 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 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 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. Snbnnbnbhinehinbinrinhhnbinhninehnnhshe (em phasis supplied) It is nobody's case that petitioner's case falls under these two categories. Further, the ITAT has in its order StAte vesssinsesensee It is evident, the Revenue authorities have not conducted any enquiry to verify the nature of land sold by the assessee, whether agricultural or otherwise. In fact, the evidences furnished by the assessee have not at all been examined in proper Perspective.........ccceeeeees and restore the issue to the file of the Assessing Officer for de novo adjudication after examining the evidences filed by the assessee and conducting enquiry, if necessary, with the concerned authorities of the Government to find out the true nature and character of the land sold. Only after the Assessing Officer comes to a conclusion on the basis of material brought on record that the lands sold by the assessee are not in the nature of agricultural land, hence, come within the purview of \"Capital Asset\" as defined_u/s 2(14) of the Act, then the question of applicability of section SOC of the Act would arise.\" Therefore, it is obvious that the matter has been restored to the AO only to examine the evidence filed by petitioner and conducting enquiry, if 49 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake necessary, with the concerned authorities of the Government to find out the true nature and character of the land sold and only if, the AO comes to a conclusion on the basis of material brought on record that the lands sold by petitioner are not in the nature of agricultural land, can he come to conclusion that the land would come within the purview of \"capital asset\" as defined under Section 2(14) of the Act. 9 In the circumstances, we hereby quash and set aside the impugned order dated 24th March 2022 and remand the matter for passing the fresh assessment order. The AO will only examine whether the evidence brought on record to establish the claim that the lands sold are in the nature of agricultural land, was authentic. If the AO has to reject the evidence filed by petitioner, he shall bring contrary material on record. For that, the AO has to conduct an enquiry to ascertain the authenticity of the certificates filed by petitioner. The AO may take such steps as required by conducting necessary enquiry with the concerned Government authorities. The contention of petitioner cannot be rejected purely on presumption that the lands sold were not an agricultural land because petitioner sold the parcels of lands within two years of purchase. If the AO is satisfied that the parcels of land actually are not situated in an area which will fall under Section 2(14)(iii), the AO shall proceed on the basis that in the facts and circumstances of the case, actual carrying on of agricultural operation is not a necessary condition for deciding that the parcels of lands were agricultural lands.” {highlighted by us for clarity and better understanding } 24.2 From the decision of the Hon’ble Jurisdictional High Court, it is clear that for considering the claim of the Assessee u/s 2(14)(iii) of the Act, actual carrying on of the agricultural activity is not a necessary condition for deciding that nature of land as agriculture. Only Section 10(37) and Section 54Bof the Act provide for agricultural activity to be carried out, as held by Hon’ble high Court and this is not the case of the Revenue here. 50 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 24.3. As the Hon'ble Bombay High Court in Nitish Ramesh Chandra Chordia (supra) has reiterated “that it is settled law that in such matters when there is any doubt or confusion, the view in favour the Assessee needs to be adopted”, thus, on aforesaid analyzations, we are of the considered view that the lands sold by the Assessee were agricultural lands and did not fall within 8 Kms. from the outer limit of Panvel Municipal Council, hence the same cannot be considered as capital asset under the provisions of section 2(14) of the Act and therefore the Assessee has correctly not offered any profit earned from sale of agriculture lands situated outside limit as prescribed in section 2(14)(iii) of the Act. Consequently, addition under considerations on merits as well, is also liable to be deleted. 25. Resultantly, both the additions under consideration are deleted on the legal ground raised by Assessee in view of the dictum laid down by Hon’ble Apex Court in Abhisar Case (supra) and on merits as well and appeal of the Assessee is allowed accordingly. 26. Coming to Cross Appeal, we observe that there is a delay of 592 days in filing of the same on which the Revenue Department by filing the petition for condonation for. delay dated 12.06.2023 has claimed that the AO being in charge of Central Circle-1 holding the charge since mid of September 2021 and after restructuring the charges in the Income Tax Department, there were various time barring matters with respect to scrutiny assessment, judicial work, budget target, allocation and other related work. It was further submitted that the AO had a large number of assessment cases and other day to day work and therefore on the aforesaid reasons the delay in filing of the CO has been occurred unintentionally and bonafidely but not on any deliberate negligence or carelessness on 51 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake the part of the Department, hence, the delay is requested to be condoned. 26.1 On the contrary, the Assessee though not refuted the aforesaid claim of the Revenue Department, however, objected to the condonation of delay. ; 26.2 Having heard the parties, we observe that the reasons stated by the AO for the delay occurred in filing the CO appears to be bonafide, inadvertent and with no malafide intention. Even otherwise in our considered view, as the appeal of the Assessee also pertains to the impugned order which has partly being challenged by the Revenue Department and the appeal of the Assessee is to be decided by us and therefore no prejudice shall be caused to the Assessee, in case the CO is also adjudicated along with the appeal of the Assessee, hence for the just decision of the case and substantial justice and fair play, the delay of 592 days in filing the instant CO by the Revenue Department is condoned, as an exceptional case under the peculiar facts and circumstances of the ) case. 26.3 Coming to the merits of CO, we observe that the Revenue Department has raised following grounds of CO. “1. On the facts and in the circumstances of the case, the Ld. CIT(A) erred in computing the sale consideration received from sale of lands under the head ‘capital gains, without appreciating the fact that assessee is not the owner of the said lands. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has failed to appreciate that the profit from impugned 52 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake sale of lands of Rs.10,42,97,083/- should be computed under the head ‘income from other sources.” 26.4 From the cross objections filed by the Revenue Department, it appears that the Revenue department has challenged the decision of the Ld. Commissioner in computing the sale consideration received from sale of lands under the head “capital gains”. The grievance of the Revenue Department is that the Assessee was not owner of the said lands and therefore profit earned from the impugned sale of lands to the tune of Rs.10,42,97,083/- should be computed under the head “income from other sources”. The grounds/issues raised by the Revenue Department by way of present CO, in fact are contrary to the determination made by the AO as well as the Ld. Commissioner, as both the authorities below considered the profits earned by the Assessee from sale of land as short-term capital gain (by the AO) and short-term capital gain & long-term capital gain (by the Ld. Commissioner). Therefore, the grounds/issues raised by the Assessee, if are allowed then the addition on account of short-term capital gain as made by the AO and partly affirmed by the Ld. Commissioner on account of short-term capital gain and long-term capital gain, would lack its foundation and automatically collapse. However, as we have deleted the additions including under consideration in the CO, hence, in order to avoid the controversy and not to make futile exercise, we are inclined not to adjudicate the grounds/issues raised in the cross objection. Even otherwise in view of our decision in Assessee’s appeal, the CO. has become infructuous. Accordingly, the CO filed by the Revenue Department is dismissed being infructuous. 53 ITA No.03/M/2021 & ors. Shri Rajesh Ramchandra Dake 27. In the result, the appeal filed by the Assessee is allowed, whereas the CO filed by the Revenue Department is dismissed being infructuous. Order pronounced in open court on 23.01.2025. Sd/- Sd/- (MS. PADMAVATHY S) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. "