SMT.R.SEBASTHIAMMAL ,MADURAI vs. DCIT , CENTRAL CIRCLE - 1 , MADURAI

This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-19, Chennai in dated 10.06.2022. The assessment was framed by the DCIT, Central Circle-1, Madurai for the assessment year 2008-09 u/s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter the ‘Act’), vide order dated 30.03.2016.

The only issue in this appeal of assessee is as regards to the assessment of long term capital gain on sale of agricultural land by the assessee treated by AO as capital asset chargeable to tax and confirmed by CIT(A). For this, assessee has raised various grounds which need not be reproduced but the facets of the grounds are as under:- i. that the authorities below have erred in holding that transfer of land took place during the financial year 2007-08 relevant to this assessment year 2008-09, whereas the land actually transferred in financial year 2009-10 relevant assessment year 2010-11. ii. that the land in question is agricultural land or urban land in term of section 2(14) of the Act. iii. whether the AO is bound to furnish the relevant impounded material used against her including the copies of sworn statements. We noted that there is only one issue and these are three interconnected facets, which need to be decided.

Brief facts are that a survey u/s.133A of the Act was conducted in the office premises of Shri M.Ramachandran on 3 ITA No. 573/Chny/2022 19.10.2022 by the Income-tax Department. During the course of survey, a note book titlted “Mangalakudi, Alagar koil main road, Suriya nagar” was impounded wherein it is found that Shri C. Rajendran along with his wife Smt. Sebasthiammal and his brother Shri Devasahayam sold 7.49 acres of land to Shri M.Ramachandran and Shri M. Sivaramakrishnan during the financial year 2007-08 for a consideration of Rs.2,62,15,000/-. Consequent to these documents notice u/s.148 of the Act dated 05.03.2015 was issued and served. The assessee filed return of income in response to notice u/s.148 of the Act on 01.12.2015. The assessee also filed objection letter regarding the sale of land at Mangalakudi. The assessee raised the following objections:- i) 1 acre 69 cents of land at Mangalakudi Vilage was purchased in the year of 1989 by my husband, in my name. ii) He took care of the agricultural activities on the land alongwith the lands purchased by him in the village. iii) The agricultural income was offered in his assessment iv) The land was situated outside the Corporation limit and in Mangalakudi village, Uthangudi Panchayat, having a population of only 1300 and hence it is not a capital asset v)During the financial year 2007-08, We have executed only a power of attorney in favour of Mr.M. Ramachandran and Mr.Sivaramakrishran and not sale agreement and hence the transfer was mot made in the financial year 2007-08. In this circumstances, I have no income under the head Capital Gain The AO during the course of assessment proceedings taking into consideration impounded documents and the sworn statement of Shri M.Ramachandran noted that the possession of the assessee’s 4 land has been handed over on receipt of sum of Rs.2,62,15,000/- (for her share of 1.69 acres works out to Rs.59.15 lakhs) and also necessary power of attorney has been given to Shri M.Ramachandran during the financial year 2007-08 and hence, the above land transaction is a transfer of capital asset in accordance with section 2(47)(v) of the Act and it attracts capital gain tax for the assessment year 2008-09. Accordingly the AO assessed the sale consideration to long term capital gain by observing in para 7 as under:- “7. In view of the above, the above land transaction is a transfer and chargeable to capital gain tax. The sale consideration for assessee’s share of 1.69 acres works out to Rs.59,15,000/-(1.69*35000/-) during the financial year 2007-08. Therefore the above sum of Rs.59,15,000/- is assessed in the hands of the assessee under the head Long term capital gain for the assessment year 2008-09 on the basis of the cost price admitted by the assessee vide letter dated 12.08.2015. Accordingly penalty proceedings u/s.271(1)(c) are initiated separately for the concealment of income and furnishing of inaccurate particulars of income.” Aggrieved, assessee preferred appeal before CIT(A). The CIT(A) also confirmed the action of the AO. Aggrieved, now assessee is in appeal before the Tribunal.

Now before us, the ld.counsel for the assessee Shri I. Dinesh first of all stated that the AO and CIT(A) has not determined the nature of land whether that is agricultural land exempt from capital 5 gains tax or it is urban land assessable to long term capital gain. The ld.counsel for the assessee drew our attention to para 8.5 of the CIT(A) order, which reads as under:- “8.5 The other issue is whether the land is agricultural land or not. The Tehsildar, Madurai North has duly certified that the said land in issue is situated within 8 Kms. From the corporation limit. The relevant letter issued by the Tehsildar, pursued. In view of the confirmation issued by the Tehsildar, there can be no question about the nature of the land.” The ld.counsel for the assessee drew our attention to assessee’s paper-book page 99, wherein the letter given by Tahsildar to ADIT is reproduced. The ld.counsel for the assessee drew our attention to the relevant letter dated 22.02.2013, wherein the assessee’s village Mangalakudi was stated within 8 Kms. from the municipal limit of Madurai. He referred to the following noting of Tahsildar in the certificate:- “Madurai North, Othakadai, Mangalakudi Village is bound in Ward No.28 in Madurai Corporation Limits from the year 2011. Before 2011, the Mangalakudi Village was situated within 8 kms from Madurai Corporation Limits. This is informed.” The ld.counsel raised objection that it is the land which is within 8 Kms or outside 8 Kms of the municipal limits of Madurai Municipal Corporation, is not clear. Hence, this matter needs to go back to the file of the AO to ascertain whether this land is within the municipal limit of Madurai Corporation of 8 Kms or not. The 6 ITA No. 573/Chny/2022 ld.counsel stated that the AO has not provided the impounded documents during the course of survey which is against the assessee and the sworn statement of Shri M.Ramachandran. He stated that once these statements are not provided, the assessee is unable to do anything and even now, these are not provided to assessee.

When these facts are confronted to ld. Senior DR, he could not controvert the above fact situation.

After hearing rival contentions and going through the facts of the case, we are of the view that the factual situation is not clear that whether the land is agricultural land or urban land in term of section 2(4) of the Act. Secondly, it is not clear whether the impounded documents were provided to assessee, which is used against her and as objected by the ld.counsel these are not provided, we set aside this issue also back to the file of the AO to provide copies of documents used against her and then decide the issue. This will also decide the year of taxability once the documents are provided to assessee which are being used against her. In term of the above fact situation, we set aside the orders of the AO and that of the CIT(A) and remit the matter back to the file of the AO for