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Before: Shri V. Durga Rao & Shri G. Manjunatha
O R D E R
PER V. DURGA RAO, JUDICIAL MEMBER:
Both the appeals filed by the assessee are directed against different orders of the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [NFAC], Delhi both dated 14.07.2022 relevant to the assessment years 2011-12 and 2012-13.
Both the appeal filed by the assessee are delayed by three days in filing the appeal, for which, the assessee has filed petitions for condonation of the delay in support of affidavits, to which; the ld. DR has 2 & 787/Chny/22 not raised any serious objection. Consequently, since the assessee was prevented by sufficient cause, the delay of three days in filing of the appeal stands condoned and the appeals are admitted for adjudication.
Facts are, in brief, that the assessee is an individual and filed his return of income for the assessment year 2011-12 on 02.11.2012 admitting an income of ₹.41,91,445/-. The return filed by the assessee was duly processed under section 143(1) of the Income Tax Act, 1961 [“Act” in short]. Subsequently, the Assessing Officer noticed that there is an escapement of income for taxation and issued notice under section 148 of the Act and the assessment was completed after following due procedure under section 143(3) r.w.s. 147 of the Act dated 25.03.2016. In the assessment order, the Assessing Officer has noted that the assessee sold following properties: 1. All that piece and parcel of agricultural land comprised in old survey Nos. 235/1 to 10 and 236/1 to 5 to the extent of 14 acres and 97 cents. Total sale consideration: Rs. 6,53,26,800/- 2. All that piece and parcel of agricultural land comprised in old survey Nos. 238/1 to 10 to the extent of 9 acres and 48 cents. Total sale consideration: Rs.85,32,000/- 3. All that piece and parcel of agricultural land comprised in old survey Nos. 234, 237 and 220 to the extent of 27.24 acres. Total sale consideration: Rs.12,50,000/- During the course of scrutiny proceedings, the Assessing Officer asked the assessee to submit the details with regard to the above transactions. Before the Assessing Officer, the assessee has submitted that the sale of properties in respect of Sl. No. 1 and 2 have been executed jointly by the following entities: Name of the person PAN No. Relationship with the assessee Shri Alhaj Hasan Mohiuddin Papa Sahib GI No. 29780/H Father Smt. Ghiasunissa Begum GI No. 8/G Mother Dr. Hsamuddin Papa Sahib AJUPP4054E Self (assessee) Mrs. Praveen Papa AJUPP4053D Wife Shri Mohammed Nezamuddin Papa AJUPP4055F Son Shri Mohammed Kaleemuddin Papa AAGPP8886P Son The Assessing Officer asked the assessee to submit details in respect of the above properties and the assessee has submitted that the whole property was acquired vide three sale deed documents executed in favour of Aljah Mohiuddin Papa Sahib and family in the year 2003 as detailed below: Sl. No. Document No. Extent of land Date of execution 1. 1187/2003 11 acres & 85 cents 12.04.2003 2. 1186/2003 15 acres & 41 cents 12.05.2003 3. 1080/2003 20 acres & 94 cents 30.04.2003 Further, the Assessing Officer asked the assessee the nature of the land. The AR of the assessee vide letter dated 12.06.2015 stated that the lands are situated in agricultural village and is beyond 8 kms from the nearest municipality along with certificate issued by the Village Administrative Officer and also submitted that the agricultural operations are mostly of long gestation variety such as mango trees, coconut trees were planted and no income as such was received. The assessee further submitted that the land sold by the assessee was situated in a small village named Sembakkam which is 6 kms from Thiruporur and has a population of less than 10,000 people. As per provisions of section 2(14)(iii) of the Act, the said land is an agricultural land which is beyond 8 kms from the nearest municipality. The classification of the land as per Tamilnadu Government website viz. tnreginet.net is “dry land”. It was also submitted that the assessee has carried out agricultural operations during the period with mostly long gestation variety such as mango trees, coconut trees and other fruit bearing trees and till date the land is used for agricultural purposes and submitted that the land is an agricultural land and exempt from taxation as per provisions of section 2(14)(iii) of the Act. The Assessing Officer considered the explanation and he has noted that the entire property was sold to M/s. Akshya Private Limited and to Shri Chitty Babu (MD of M/s. Akshya Private Limited) in 4 parts. Further, the assessee purchased the lands in question during 2003 through the deeds of purchase mention the description of lands as agricultural dry lands, a careful perusal of the factual matrix goes to show that the assessee has not utilized the said lands for agriculture. Further the assessee has not 5 & 787/Chny/22 offered any agricultural income for the assessment year 2011-12. Therefore, the Assessing Officer came to conclusion that the land is not in use for agricultural purposes and not eligible for claiming exemption under section 2(14)(iii) of the Act. On appeal, the ld. CIT(A) confirmed the order of the Assessing Officer.
On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the assessee has purchased the land in 2003 as an agricultural land and sold it as it is. The purchase deed and sale deed both mentions the title of the land as an agricultural land. The VAO certificate also filed before the Assessing Officer stating that the assessee was carrying agricultural operations and in the land in which coconut trees and mango trees are planted. He further submitted that the Assessing Officer denied the claim of the assessee on the ground that the land sold to M/s. Akshya Private Limited, which is a real estate company and no agricultural income has been offered for the year under consideration. He also submitted that once the land in the hands of the assessee is an agricultural land though no agricultural income has been declared in the year under consideration cannot change the character of the land and it cannot be differently treated by the Assessing Officer. Simply because the land was sold to 6 & 787/Chny/22 real estate company, it cannot be said that the land is not an agricultural land.
On the other hand, by filing written submissions, the ld. DR strongly supported the orders of authorities below and submitted that the assessee has failed to prove that the assessee has carried agricultural operations.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including written submissions filed by the ld. DR. In this case, the assessee has purchased the land in the year 2003 and as per the purchase deed, it is an agricultural land, which is accepted by the Assessing Officer. The land is situated beyond 8 kms from the nearest municipality. The same land has been sold by the assessee in 2012 as an agricultural land as per the sale deed. The nature of the land has not been changed and these facts are also not in dispute. Moreover, the Assessing Officer has not brought on record that the land has been converted for non-agricultural purposes. The Revenue records show that the land is an agricultural land. Before the Assessing Officer the assessee has filed a certificate issued by the Village Administrative Officer, wherein, it was stated that the land which was sold by the assessee mango trees and coconut trees were planted and this fact was not disputed by the Assessing Officer. The only case of the Assessing Officer is that the land sold by the assessee was to a real estate company and the assessee has not carried out agricultural operations and shown any agricultural income.
6.1 So far as objections raised by the Assessing Officer are concerned, the land purchased by the assessee was an agricultural land and the same was sold as it is. It is immaterial as to whether the land was sold to Real Estate Company or any other person. The point for consideration is only whether the land is an agricultural land or not. The Revenue records of the Tamil Nadu Government shows that the land is an agricultural land and the certificate issued by the Revenue authority, the land which is in dispute, where mango trees and coconut trees are in existence and therefore, the Assessing Officer was not correct in saying that the land is not an agricultural land. The certificate issued by the VAO clearly shows that the land sold by the assessee as per Revenue records as punja land and also fit for cultivation. Moreover, the assessee has not converted the land into non-agricultural purposes before the land was sold. Not showing agricultural income in the return of income filed by the assessee out of agricultural operations carried by the assessee cannot change the title of the land as non-agricultural land. Under the above facts and 8 & 787/Chny/22 circumstances of the case, we are of the considered opinion that the land sold by the assessee was an agricultural land and eligible for exemption under section 2(14)(iii) of the Act.
6.2 Moreover, the Hon’ble Jurisdictional High Court has considered similar issue in the case of PCIT v. M/s. K.P.R. Developers Ltd. [2019] 311 CTR 832 (Mad), wherein, the Hon’ble Madras High Court has held that merely because an agriculture activity could not be carried on for various reasons including natural causes, it will not cease to be an agricultural land. The relevant portions of the order are reproduced as under: “12. It is noteworthy to mention, at this juncture, that the VAO while issuing the Adangal extract is expected to re-produce the entries which are maintained in the Adangal register. Similarly, in the Chitta register. In other words, the Adangal extract is aof the Adangal register. Therefore, if he has given false certificates contrary to the entries in the Adangal register, the VAO has to be proceeded departmentally as well as criminal action has to be initiated against him. However, that would not arise in the instant case because, the Tahsildar who submitted a report to the Assessing Officer on 27.01.2014, has enclosed the copies of the Patta which clearly show that the lands are wet lands. Patta is a document which proves possession and classification of the land. The copy of the patta issued is a computerised patta.
There is a presumption to the validity of such official document and if a party states that the entry is incorrect or the document is false, the onus is on the party to prove the same. There is no allegation made by the Assessing Officer that the patta, copy of which was furnished by the Tahsildar, is a bogus patta. Even going by the Adangal extracts, which were furnished by the VAO, on being summoned under Section 131 of the Act, we find that in column no.19 of the Adangal extract, the land has been described as “Tharisu”. Therefore, even going by the subsequent records, the character of the land is not stated to be non agriculture. A land, which is an agricultural land, at many at times, cannot be put to use for agricultural purposes. Merely because an agriculture activity could not be carried on for various reasons including natural causes, it will not cease to be an agricultural land. In the instant case, the CIT(A) and the Tribunal have done an elaborate exercise, assessed the documents placed before it and given a categorical finding that the land continues to 9 & 787/Chny/22 remain as an agricultural land. Apart from that, the land in question upon being transferred to the purchaser, still continues to remain as agricultural land. Therefore, we cannot be called upon to examine the factual findings recorded by the Tribunal while affirming the factual findings rendered by the CIT(A) as if we are third appellate authority. A similar view was taken in the case of CIT(A) vs. P. Ashok Kumar, in T.C.A.No.268 of 2011, dated 02.01.2019.
Mr. T.R. Senthil Kumar, learned Senior Standing Counsel referred to the decision in the case of PCIT vs. A. Lalichan reported in [2019] 104 taxmann.com 30 (Madras). We find that the said decision cannot be of any assistance to the case of the Revenue because the finding given by the Division Bench in paragraph 9 clearly shows that the land though was mentioned as an agricultural land in the sale deed, in the agreement for sale entered much prior to the sale, it was not described as an agricultural land and the agreement clearly shows that the land was being sold to a promoter, who has paid the entire sale consideration and the vendors are also executed an irrevocable power of attorney in favour of the purchaser to enable him to sell the property upon development.
In the said decision, reference was made to the decision of the Hon'ble Supreme Court in the case of Sarifabibi Mohmed Ibrahim vs. CIT reported in [1993] 204 ITR 631 (SC), which decision was relied on by the Revenue to state that the burden of proof to show that the land is an agricultural land is always on the assessee, who seeks exemption under Section 3 of the Act because, the Revenue cannot be expected to produce negative evidence. This decision cannot be applied to the facts of the present case, as the assessee has produced statutory records/revenue records to establish the character of the land.
The statement given by the VAO pursuant to summons issued under Section 131 of the Act by deposing before the Assessing Officer cannot improve or delete the entries maintained in the registers. The VAO would have no jurisdiction to make any changes in the register. Apart from that, the extracts which were given by the VAO, during the course of cross examination pursuant to summons under Section 131 of the Act also shows the land as 'Tharisu'. Above all, the Tahsildar while submitting the report to the Assessing Officer has enclosed the copies of the computerised patta, which shows that the lands are Panchami lands and deemed to be agriculture. Therefore, the Revenue having miserably failed to establish the factual matrix before the CIT(A) and the Tribunal, cannot call upon this Court to embark upon a fact finding exercise. Therefore, the assessee has discharged the onus caused upon him to establish that the lands are agricultural lands. The revenue record, via., the patta issued, shows that the land is an agricultural land. Thus, the assessee having discharged the onus caused upon him, it is for the Department to prove that the entries in the revenue records and the patta were false or bogus. The two authorities have concurrently found that the Revenue has not been able to make any headway in this regard.
Thus, for all the above reasons, this tax case appeal is dismissed and no substantial question of law arises for consideration. No costs.”
6.3 In the present case, in the land sold by the assessee, already mango trees and coconut trees are in existence. The assessee has not reported any agricultural income and simply because income was not reported, the agricultural land cannot be held as non-agricultural land.
6.4 Under the above facts and circumstances of the case, we hold that the land sold by the assessee is an agricultural land and the income is eligible for claiming exemption under section 2(14)(iii) of the Act. Thus, the ground raised by the assessee is allowed.
6.5 So far as assessment year 2012-13 in is concerned, since the facts and ground raised by the assessee in the assessment year 2011-12 are similar and our decision hereinabove shall apply for the assessment year 2012-13 as well.
In the result, both the appeals filed by the assessee are allowed.