DEPUTY COMMISSIONER OF INCOME TAX RAIPUR, vs. SHRI MADAN LAL LODHA

Facts

The Revenue is in appeal against the order of the Income Tax Appellate Tribunal (ITAT), Raipur Bench, dated January 18, 2018. The ITAT had dismissed the Revenue's appeal, upholding the order of the Commissioner of Income Tax (Appeals) [CIT(A)]. The Assessing Officer (AO) had made an addition of Rs. 3,39,49,274/- for assessment year 2011-12, disallowing deduction under Section 54B of the Income Tax Act. The AO's basis was that the assessee, Shri Madan Lal Lodha, had not conducted agricultural operations on the land sold within the prescribed period. The CIT(A) allowed the assessee's appeal, finding the assessee's stand to be sustainable based on the facts and figures. The Revenue's subsequent appeal to the ITAT was unsuccessful.

Held

The High Court held that the appeal raised no substantial question of law. The Court noted that the submissions before the CIT(A) and the Tribunal were primarily on the factual aspect of whether agricultural operations were conducted on the property within the two-year period prior to sale, as required by Section 54B. These factual aspects were considered by the CIT(A) and the Tribunal based on the materials on record, and findings were rendered accordingly. The Court found no dispute with the law laid down by the Apex Court but concluded that the appeal was purely on a question of facts, not law. Therefore, interference was declined, and the appeal was dismissed.

Key Issues

The High Court was to decide the following substantial questions of law: 1. Whether the ITAT was justified in confirming the deletion of the addition of Rs. 3,39,49,274/- by the AO on account of disallowance of deduction under Section 54B of the Act. 2. Whether the ITAT was justified in confirming the CIT(A)'s order by ignoring evidence that no agricultural activity was done on the impugned land prior to its sale. 3. Whether the ITAT was justified in confirming the CIT(A)'s order, who deleted the addition by relying on the assessee's submission which lacked evidentiary value and was found untrue by the land revenue authority. 4. Whether the ITAT erred in giving a finding contrary to the ratio of the Supreme Court decision in Sarifabibi Mohammed Ibrahim and others Vs CIT(SC) 204 ITR 631. 5. Whether the ITAT erred in giving a decision in favour of the assessee though there was no nexus between the conclusion of fact and the primary fact. 6. Whether the ITAT erred by upholding the CIT(A)'s order, which accepted the assessee's bills for alleged agricultural activities and other documents as genuine, despite them being factually incorrect. Contentions: Assessee: Not recorded in the judgment. Revenue: Argued that the finding was not in conformity with the law declared by the Supreme Court in Sarifa bibi Mohmed Ibrahim (Smt) & Others. v. Commissioner of Income Tax, Gujarat. The Revenue contended that the factual aspect regarding agricultural operations within two years prior to sale, as mandated by Section 54B, was not properly considered.