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Income Tax Appellate Tribunal, ‘C’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI MANOJ KUMAR AGGARWAL
आदेश /O R D E R
PER MAHAVIR SINGH, VICE PRESIDENT:
This appeal by assessee is arising out of the Revision order passed by the Principal Commissioner of Income Tax-2, Coimbatore u/s.263 of the Income Tax Act, 1961 (hereinafter the ‘Act’) in C.No.220/PCIT-2/cbe/2018-19 dated 19.12.2019. The assessment was framed by the ACIT, Circle-1, Ootacamund for the assessment year 2016-17, u/s.143(3) of the Act, vide order dated 25.03.2018.
The only issue in this appeal of assessee is as regards to the order of PCIT revising the assessment framed by the AO u/s.143(3) of the Act dated 25.03.2018 for assessment year 2016-17 by holding that the assessment framed is erroneous as well as prejudicial to the interest of Revenue for the reason that the AO has accepted the sale consideration of land at Rs.1.05 crores as exempt without verifying that the said land is within 1.5 kms from the municipal limits of Coonoor municipality.
Brief facts are that the original assessment was framed u/s.143(3) of the Act for the assessment year 2016-17 vide order dated 25.03.2018. The AO framed assessment by noting the fact in para 3 as under:- “3. The Authorised Representative ha submitted copy of ITR for A.Y.2015-16, copy of sale deed, copy of family partition deed, computation statements, balance sheet, Trading and Profit and Loss account. The assessee is doing a civil contract work at Coonoor and produced books of accounts and the same was examined. The assessee has sold on agricultural land to the extent of 4.60 acres for a sale consideration of Rs.1,05,00,000/- on 13.11.2015 and claimed this sale consideration as an exempt income. After discussion and necessary verification on the issues raised in scrutiny, the returned income of the assessee is accepted.”
3.1 Subsequently, the PCIT noted from the assessment records that the assessee has sold agricultural land situated at Hubbathalai Village, Coonoor Taluk and claimed the sale of agricultural land as exempt on the total sale consideration of Rs.1.05 crores. The PCIT
- 3 - on verification of information available on Google map noted that the said land was situated within the municipal limit of Coonoor municipality i.e., within 1.5 kms, which has a population of about 45,500 a per 2011 census. According to PCIT, the said land falls within the purview of provisions of section 2(14) of the Act and qualifies to be a capital asset liable for capital gains. Accordingly, he issued show cause notice dated 24.01.2019. In response to show cause, the assessee’s son Shri Sriram appeared on 19.12.2019 and case was discussed with him by PCIT. The PCIT noted that the agricultural land sold by assessee and claimed to have been exempt for a total consideration of Rs.1.05 crores was falling within the distance of 1.5 km from the municipal limit of Coonoor municipality which as a population of 45,500 as per 2011 census. According to him, the AO has not conducted any verification and hence, the assessment order framed suffers from error and thereby prejudicial to the interest of Revenue. Therefore, he set aside the assessment order and directed the AO to redo the assessment afresh after verification of facts. Aggrieved, assessee came in appeal before us.
Before us, the ld.AR for the assessee first of all drew our attention to the assessment order particularly para 3, which is reproduced above in para 3, wherein according to him, the AO has - 4 - examined the issue of sale of agricultural land for a total consideration of Rs.1.05 crores as claimed by assessee as exempt. He stated that the AO has carried out verification and there is no issue remains for which revision proceedings were taken up by PCIT.
4.1 The ld.AR for the assessee however relied on the following decisions: (i) Hon’ble High Court of Gujarat in the case of S.R. Koshti vs. CIT, 276 ITR 165 (ii) Hon’ble Calcutta High Court in the case of Maynak Poddar (Huf) vs Wealth Tax Officer, 262 ITR 633 (iii) ITAT, Chennai Third Member decision in the case of R. Natarajan vs. ACIT, 135 ITD 55 4.2 We have gone through these case law cited by the ld.AR and noted that these case laws are for considering alternative claim or on some other aspects not related to the issue before us. Hence, these cases are factually distinguishable and not relevant to the present case. Hence cannot be relied on.
As regard to another argument taken by assessee in his ground that the assessment order is non-est in law for lack of jurisdiction and hence, revision made u/s.263 of the Act by the PCIT is also invalid. For this, he raised following Ground No.2:-
- 5 - “2. When the returned income is only Rs.2,89,330/-, Income Tax Officer only has jurisdiction and the ACIT,Circle I, Ooty has no jurisdiction to make assessment on 25.03.2018. When the assessment order passed lacks jurisdiction and non est in law, the revision made u/s.263 by learned Principal Commissioner of Income Tax is also invalid and is to be set aside.”
5.1 The ld.AR for the assessee made no arguments on this despite brought to his notice and hence, the same is treated as not argued and hence, dismissed.
The ld.AR for the assessee made another argument that the property belongs to HUF and for this, he drew our attention to Ground No.3 raised by assessee, which reads as under:- “3. When the property belong to the HUF of which the assessee is the Kartha and when the sale deed was executed by all the family members and also Mr.A. Julius Alexander to whom some portion of the property was already sold admitting the entire sale consideration on sale of Agricultural land amounting to Rs.1,05,00,000/- in the return by the assessee in individual status is wrong. It was also wrong in individual status directing to assess the same by the Principal Commissioner of Income Tax u/s 263 without making minimal enquiries in this regard.”
On this, Bench pointed out to ld.AR whether this issue was raised by assessee before AO despite the fact that the assessee himself filed return of income in his individual capacity and no pleadings or issue before AO during the course of original assessment proceedings or even before PCIT during revision
- 6 - proceedings u/s.263 of the Act. Even otherwise, the assessee has not brought any evidence before us there exist any HUF of assessee, where he is karta. Since there is no evidence, we cannot adjudicate this issue and even otherwise, this is not raised before AO or before CIT(A) and moreover no facts are available on record, we dismiss this issue as not arising out of orders of the lower authorities.
Coming back to the merits of the case, we noted that the assessee’s case was selected for scrutiny to examine “claim of large exempt income’ and AO noted this in his assessment order para 3, which we have already reproduced above in para 3. We noted from para 3 of the assessment order that the AO has considered sale of agricultural land of 4.60 acres for total sale consideration of Rs.1.05 crores and claiming the sale consideration as exempt which was accepted by AO while framing assessment u/s.143(3) of the Act. But, we noted that the AO has not examined whether land is situated within the distance of 2 kms. of the town municipality of Coonoor. Admittedly, it has a population of 45,500 as per 2011 census. We are of the view that PCIT has raised a very pertinent issue that in case the assessee’s land is situated within 1.5 kms from the municipal limit of Coonoor municipality, the assessee cannot claim as exempt and it has not been examined by AO at all. Hence
- 7 - according to us, the PCIT has rightly directed the AO to verify the facts and thereafter reframe the assessment after allowing reasonable opportunity of being heard. Hence, we confirm the order of PCIT and dismiss this appeal of assessee.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on 20th December, 2022 at Chennai.