THE ACIT-3(1), INDORE vs. M/S. JAWAHARLAL PANNALAL NEMA (HUF), INDORE

आदेश / O R D E R

PER KUL BHARAT, J.M: This appeal and cross objection in quantum

proceedings and appeal in penalty proceedings were taken

up together and are being disposed of by way of

consolidated order. First we take up the revenue’s appeal

in IT(SS)A No.81/Ind/2015. The revenue has raised

following grounds of appeal:

[IT(SS)A 81/Ind/2015, CO 66/Ind/2015 & ITA 324/Ind/2015] [M/s. Jawaharlal Pannalal Nema, Indore]

“On the facts and in the circumstances of the case, the Ld. CIT(A):- i. Erred while deleting the addition of Rs.1,06,00,956/- made by the A.O. under the head ‘Long Term Capital Gain’ owing to the sale of land having Survey No.231/1, 207, 211,212 & 213 at Gram: Umaria, Tehsil: Mhow, Distirct; Indore. ii. Erred while placing undue reliance upon the report of Patwari, Rau thouigh the Anuvibhageeya Adhikari Rau has not endorsed the said report and merely forwarded the same without inking his/her specific remarks with regard to consent or dissent with the Patwari’s report; and after considering the said report deleted the addition made by the A.O. iii. The appellant reserves the right to add, amend or alter the ground of appeal on or before the date the appeal is finally heard for disposal.” 2. The only effective ground in the revenue’s appeal is

against deletion of addition of Rs.1,06,00,956/- made by

the A.O. treating the sale of agricultural land as sale of

capital asset. The facts in brief are that a search & seizure

operation u/s 132 of the Income Tax Act, 1961 (hereinafter

called as ‘the Act’) was conducted on 2.5.2008 at the office

premises of Rajesh Nema and at his residence. The A.O.

issued a notice after case was transferred on DCIT-1 Indore

dated 12.8.2010 for taking action u/s 153C of the Act. The

A.O. thereafter framed assessment u/s 153C r.w.s. 143(3)

[IT(SS)A 81/Ind/2015, CO 66/Ind/2015 & ITA 324/Ind/2015] [M/s. Jawaharlal Pannalal Nema, Indore]

of the Act vide order dated 30.12.2010. The A.O. while

framing the assessment treated the sale of agricultural

land as transaction in the nature of transfer of capital asset

and computed long term capital gain arising there from of

Rs.1,06,00,956/- and added the same into the income of

the assessee.

Ld. CIT(A) where the assessee had challenged proceedings

on both legal and factual grounds. The legal ground of the

assessee’s appeal was against not recording of satisfaction

by the assessing officer of the searched person. This

ground of the assessee’s appeal was not adjudicated by the

Ld. CIT(A) on the basis that the relief was given in

assessee’s appeal on merit i.e. on factual basis. Against

this order, both revenue as well as the assessee have filed

appeal and cross objection respectively.

[IT(SS)A 81/Ind/2015, CO 66/Ind/2015 & ITA 324/Ind/2015] [M/s. Jawaharlal Pannalal Nema, Indore]

and submitted that Ld. CIT(A) was not justified in deleting

the addition. He further submitted that the Ld. CIT(A) has

wrongly appreciated the facts by coming to the conclusion

that the said land did not fall within the Municipal limit.

Per contra, Ld. Counsel for the assessee submitted that Ld.

CIT(A) has considered the notification governing the issue

of asset being capital or not.

materials available on record and gone through the orders

of the authorities below. There is no dispute with regard to

the fact that Ld. CIT(A) has considered the certificate of the

revenue official who has categorically stated that the land

in question do not fall within 4 kms. of the limit of Mhau

Cantonment Board. Further, it is noticed that Ld. CIT(A)

has duly considered the objections of the assessing officer

and rejected the same on the basis of notification. The 5

[IT(SS)A 81/Ind/2015, CO 66/Ind/2015 & ITA 324/Ind/2015] [M/s. Jawaharlal Pannalal Nema, Indore]

revenue has not controverted this finding by placing any

contrary material. The finding of the Ld. CIT(A) is based

upon the notifications issued by the competent authority.

Therefore, we do not see any infirmity into the finding of

the Ld. CIT(A) and the same is hereby affirmed. Ground of

the revenue’s appeal is dismissed.

assessee has raised following grounds of cross objection:

i. On the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals)-I, Indore has rightly deleted the addition so made by the learned Assessing Officer of Rs.1,06,00,956/- under the head “Long term Capital Gain” owning to the sale of land having Survey No.231/1, 207, 211, 212 & 213 at Gram Umaria, Tehsil Mhow, District Indore by relying on the report of Patwari, Rau. ii. On the facts and in the circumstances of the case the learned Commissioner of Income Tax (Appeals)-I, Indore has observed that the alternate plea of the respondent relating to claim of exemption u/s 54B though justified and allowable but, erred in rejecting the same in view of the allowance of main ground of appeal. iii. The respondent craves leave to make an addition alteration, deletion and/or amendment in the grounds of appeal arising out of this order. 7. Ld. Counsel for the assessee submitted that the Ld.

CIT(A) was not justified in rejecting the grounds merely on

[IT(SS)A 81/Ind/2015, CO 66/Ind/2015 & ITA 324/Ind/2015] [M/s. Jawaharlal Pannalal Nema, Indore]

the basis that the assessee has succeeded on merit as the

addition has been deleted. He submitted that the legal

ground raised by the assessee goes to the route of the

jurisdiction of the A.O. and the same ought to have been

adjudicated. He further submitted that the revenue has

grossly failed to furnish satisfaction recorded by the A.O. of

the searched person. He submitted that in the recent

judgement of jurisdictional High Court in the case of CIT

Vs. Mechmen in ITA No.44/2011 dated 10.7.2015 has held

that the satisfaction is to be recorded not only by the A.O.

of the searched person but also the assessing officer of the

assessee. He has placed reliance on the decision of the

Tribunal in the case of Mansingh Chouhan Vs. ACIT in ITA

No.235/Ind/2016.

[IT(SS)A 81/Ind/2015, CO 66/Ind/2015 & ITA 324/Ind/2015] [M/s. Jawaharlal Pannalal Nema, Indore]

materials available on record and gone through the orders

of the authorities below. We find that the assessee had

raised issue of recording of satisfaction by the assessing

officer of the searched person as well as allowability of

deduction u/s 54B of the Act. Both these grounds have

not been adjudicated by the Ld. CIT(A). We are of the view

that the Ld. CIT(A) ought to have adjudicated this ground.

Therefore, respectfully following the judgement of the

Hon'ble jurisdictional High Court in the case of CIT Vs.

Tolaram Hassomal 298 ITR 22 (MP) we restore both the

grounds to the file of the A.O. to decide the case afresh.

No.324/Ind/2015. The revenue has raised following

grounds of appeal:

[IT(SS)A 81/Ind/2015, CO 66/Ind/2015 & ITA 324/Ind/2015] [M/s. Jawaharlal Pannalal Nema, Indore]

On the facts and in the circumstances of the case, the Ld. CIT(A):- i. Erred while deleting the penalty of Rs.20,96,410/- levied by the A.O. u/s 271(1)(c) of the Income Tax Act, 1961. ii. The appellant reserves the right to add, amend or alter the ground of appeal on or before the date the appeal is finally heard for disposal. 11. At the outset, Ld. Counsel for the assessee submitted

that the addition made by the A.O. has been deleted by the

Ld. CIT(A). He further submitted that the appeal against

deletion of addition has been filed by the revenue in IT(SS)A

No.81/Ind/2015. The assessee has raised cross objection

regarding validity of the assessment. He reiterated the

submissions as made before the Ld. CIT(A).

materials available on record and gone through the orders

of the authorities below. In quantum appeal in IT(SS)A

No.81/Ind/2015, we have already affirmed the view of the

Ld. CIT(A) deleting the addition. We therefore, do not see

[IT(SS)A 81/Ind/2015, CO 66/Ind/2015 & ITA 324/Ind/2015] [M/s. Jawaharlal Pannalal Nema, Indore]

any reason to interfere in the finding of the Ld. CIT(A). The

grounds raised by the revenue are dismissed.

dismissed and the cross objection filed by the assessee is

partly allowed for statistical purposes.

Order was pronounced in the open court on 08 .01.2019.

Sd/- Sd/- (MANISH BORAD) (KUL BHARAT) ACCOUNTANT MEMBER JUDICIALMEMBER

Indore; �दनांक Dated : 08/01/2019 VG/SPS

Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order

Assistant Registrar, Indore