OM PRAKASH RASORIA,ALWAR vs. ITO, ALWAR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,o Jh HkkxpUn] ys[kk lnL; lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM vk;dj vihy la-@ITA No. 46/JP/2014 fu/kZkj.k o"kZ@Assessment Year: 2006-07 cuke Shri Om Prakash Rajoria The ITO Vs. 267, Arya Nagar, Ward- 1(1) Scheme No. 1, Alwar Alwar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAOPR 6556 N vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ITA No. 282/JP/2016 fu/kZkj.k o"kZ@Assessment Year: 2012-13 cuke The DCIT Shri Om Prakash Rajoria Vs. Circle-1 267, Arya Nagar, Alwar Scheme No.1, Alwar LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAOPR 6556 N vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by:Smt.Seema Meena,JCIT - DR fu/kZkfjrh dh vksj ls@Assessee by: Shri Rohan Sogani, CA and Shri Rajeev Sogani, CA lquokbZ dh rkjh[k@ Date of Hearing : 19/04/2018 ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 01/05/2018 vkns'k@ ORDER PER BHAGCHAND, AM The assessee has filed an appeal against the order of the ld. CIT(A) , Alwar dated 6-11-2013 for the Assessment Year 2006-07 while the Revenue has filed an appeal against the order of the ld. CIT(A), Alwar

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

dated 18-01-2016 for the Assessment Year 2012-13 raising following

grounds of appeal in the respective appeal.

ITA No. 46/JP/2014 – Assessee , A.Y.2006-07

‘’1. The ld. CIT(A) was not justified and correct in making the addition on account of disallowance of investment made in name of wife of Rs. 15,23,260/- as detailed in assessment order although this will be allowed as deduction u/s 54B as upheld in following cases. (i) CIT vs Gurnam Singh, 327 ITR 278 (2008), P&H (ii) ITO vs Saraswati Ramanathan, 300 ITR 410 (2007), ITAT Del. (iii) Tribunal Judgement of Bench ‘1’ (2010) – copy of judgement has been submitted earlier with ld. CIT(A) and since it was well explained and supported with full details at the time of appeal. 2. The ld. CIT(A) was not justified in disallowing the investment made in construction of boundary wall as it is to be deemed as investment in agriculture land and not correct in valuation of the same. 3. The ld. CIT(A) has erred in making the addition on account of disallowance of other expense of Rs. 1,86,400/- which is not tenable and correct. 4. The ITO is not justified in the initiation of reassessment proceedings under provision of section 147 of the Act as this is bad in law and liable to be quashed.’’

ITA No. 282/JP/2016 – Revenue, A.Y. 2012-13 ‘’1. The ld. CIT(A) has erred on the facts and circumstances of the case in deleting the disallowance u/s 54B of the I.T. Act, 1961 made by the on account of claimed deduction for Rs. 71,23,440/-‘’

2.1 Apropos Ground No. 1 of the assessee, the facts as emerges from

the order of the ld. CIT(A) are as under:-

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

‘’5.3 I have gone through the assessment order and submissions made by the A.R. alongwith judicial citations and find that the deduction u/s 54B claimed has been restricted by the AO to the extent of land purchased by the appellant in his name only. The AO has disallowed the claim of deduction u/s 54B of the I.T. Act in respect of the amount of capital gain which has been utilized for purchase of land in the name of wife. The contention of the AO is that the provisions of Section 54B do not permit the investment in any other name and it has to be made in the name of the assessee only.

5.4 The appellant has contended that investment made for purchase of agricultural land in the name of wife of Rs. 15,23,360/- may be considered for the purpose of claim of deduction u/s 54B of the I.T. Act. It is also stated that as per the provisions of Section 54B of the Act, the investment in the new asset is required to the extent of capital gains and not to the extent of sales consideration received from sale of land being used for agricultural purposes. It is submitted that while passing the order, AO has compared the figure of investment made by the appellant with the sales consideration and not with the amount of capital gains while computing the disallowance after disregarding the investment made in the appellant’s wife’s name.

5.5 It is also stated that if correct mechanism of computation is adopted and amount of investment made is compared to the capital gains amount then the disallowance would be Rs. 11,67,100/- instead of Rs. 15,91,270/- made by the AO. It is stated that the investment made in the name of wife may also be allowed for the purpose of claim of deduction u/s 54B of the I.T. Act in view of judicial decisions in their favour.

5.6 I have carefully considered the submissions made and find that the provisions of Section 54B of the I.T. Act do not permit the utilization of the amount of capital 3

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

gain for the purchase of new asset i.e. agricultural land in any other name. The provisions of sub-section (1) and sub- section (2) specifically mention only about ‘assessee’. Thus there is no ambiguity in the provisions of this section and thus it does not leave any scope for any other interpretation. The legislative intent gets defeated by importing any other person within the meaning of section. In fact, by the Finance Act, 2012, the provisions of sub-section (1) of section 54B were amended to enlarge the scope of the land which has been sold and was being used by the assessee, to include ‘’or a parent of his’’. On the other hand, the provisions of sub- section (2) which require utilization by the assessee for the purpose of new asset have been left untouched i.e. their scope remains unchanged.

5.7 For this purpose, it would be relevant to refer to a judgement of the Hon'ble Punjab and Haryana High Court in the case of Jai Narayan vs ITO, 306 ITR 335 – Capital Gains-Exemption-Sale of agricultural land and purchase of agricultural land-condition precedent for exemption-New asset purchased must be in the name of assessee himself- Assessee purchasing land in name of son or grandson-Not entitled to exemption under section 54B-Incom-tax Act, 1961.

5.8 Accordingly, I hold that the purchase of land amounting to Rs. 15,23,360/-in the name of wife Smt. Anita Rajni is not eligible for the purpose of computing deduction u/s 54B of the I.T. Act and the disallowance made by the AO on this amount is confirmed. As regards the computation of deduction u/s 54B of the I.T. Act, I find no infirmity in the computation made.

2.2 During the course of hearing, the ld.AR of the assessee prayed for

deletion of addition of Rs. 15,23,360/- on account of investment made in

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

the name of wife. The ld.AR of the assessee filed the following written

submission which has been taken into consideration.

‘’3. SUBMISSION

3.1 During the year under consideration, the assessee after selling his three agriculture lands for Rs. 31,43,000, made investment in 4 lands, details of which are as under:

S.No Particulars Amount In the name of 1 BakheraKhasra No 198 4,20,440 Assessee 2 Bakhera, Khasra No. 205 6,67,380 Assessee’s Wife

3 Bakhera, Khasra No. 206 8,55,980 Assessee’s Wife

4 Bakhera, Khasra No. 255 9,88,550 Assessee

Total 29,32,350

3.2 The lands were purchased in the name of assessee’s (second) wife Mrs. Anita Rajni in order to avoid family dispute. The fact that the entire consideration has flown from the assessee has not been doubted by any of the ld. lower authorities.

3.3 It is submitted that ld. CIT(A) only for the reason that the assessee had purchased the new lands in the name of his wife, affirmed the action of ld. AO of denying the exemption u/s 54B. It is pertinent to note the other conditions for claiming exemption were not in dispute and were found satisfactory by the ld. lower authorities.

3.4 Ld. CIT(A) misplaced his reliance on the judgment of Jai Narayan (supra). It is submitted that in the recent judgment ofHon’ble Rajasthan High Court in the case of Sh. MahadevBalai v. The Income Tax Officer D.B. ITA No. 136/2017[CLC 1-50]pronounced on 07.11.2017, the Hon’ble High Court considered the following question of law: “Whether the Ld. ITAT was justified in disallowing the exemption under Section 54B of the act without appreciating that the funds utilized for the investment for purchase of the property eligible under Section 54B 5

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

belonged to the Appellant only and merely the registered document was executed in the name of the wife and further, the wife had no separate source of income?(Emphasis Supplied) [CLC 2-3]

It was held that when the investment is made in the name of wife, no disallowance can be made. Relevant extract is set out here for reference:

“7.2 On the ground of investment made by the assessee in the name of his wife, in view of the decision of Delhi High Court in Sunbeam Auto Ltd. and other judgments of different High Courts, the word used is assessee has to invest it is not specified that it is to be in the name of assessee. [CLC 49]

7.3 It is true that the contentions which have been raised by the department is that the investment is made by the assessee in his own name but the legislature while using language has not used specific language with precision and the second reason is that view has also been taken by the Delhi High Court that it can be in the name of wife. In that view of the matter, the contention raised by the assessee is required to be accepted with regard to Section 54B regarding investment in tubewell and others. In our considered opinion, for the purpose of carrying on the agricultural activity, tubewell and other expenses are for betterment of land and therefore, it will be considered a part of investment in the land and same is required to be accepted.” [CLC 49-50]

3.5 Attention is further drawn to the following case of Hon’ble Jurisdictional ITAT wherein it was held that when investment is made in the name of the wife, no disallowance of deduction can be made where the entire fund has flown from the assessee:

• Vivek Jain vs. DCIT - ITA No. 139/JP/2016[CLC 51-62] Hon’ble ITAT has followed the judgment of Hon’ble Rajasthan High Court in the case of Sh. MahadevBalai v. ITO (supra) and has held that deduction u/s 54F shall not be denied when property has been purchased in the name of wife.

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

• Shri BhagwanSwaroop Agarwal vs. Income Tax Officer ITA No. 263/JP/2014.

“11. I have considered the rival submissions as well as relevant material on record. The first aspect of this issue is regarding the investment made by the assessee in the new residential houses in the name of his wife and claim exemption under section 54 against the acquisition of these two houses. As regards the houses purchased in the mane of wife there is no embargo or legal impediment as held by the Hon’ble High Court in case of CIT vs. V. Natarajan (supra), CIT vs. Kamal Wahal (supra) as well as CIT vs. Ravinder Kumar Arora (supra). The Hon’ble High Court has gone even to the extent that section 54 postulate purchase of new house by the assessee and does not contemplate that the house shall be purchased in the name of the assessee only. I further note that when the entire purchase consideration has been flown from the proceeds of the sale of the existing house of the assessee then the condition of investing the sale proceeds in purchase of new house by the assessee is satisfied.

Therefore, following the decision of Hon’ble High Court as relied upon by the assessee I hold that the mere fact of the assessee purchased of new house in the name of his wife would not disentitle the assessee for claiming the benefit u/s 54 when the other conditions as provided u/s 54 are satisfied. The decision of Hon’ble jurisdiction High Court in case of Kalya vs. CIT (supra) as relied upon by ld. DR. is clearly in respect of the claim u/s 54B wherein the assessee is required invest the proceeds in the agricultural land. The Hon’ble High Court has denied the claim of the assessee when the land was purchased by the assessee in the name of his son and daughter and it is not a case of purchase of house in the name of wife. Therefore, the said decision of the Hon’ble jurisdictional High Court will not help the case of the revenue.”

In view ofabove ld. CIT(A) has erred in confirming the action of ld. AO by denying proportionate exemption u/s 54B. Relief may please be granted by allowing the benefit of investment made in the name of assessee’s wife.’’

2.3 On the other hand, the ld. DR supported the order of the AO.

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

2.4 We have heard the rival contentions and perused the materials

available on record. The AO during the course of assessment proceeding

noted that Shri O.P. Rajoria had purchased the land of Rs. 15,23,360/- in

the name of his wife Smt. Anita Rajni. The AO on verification of the

registry deed and other documents found that land earlier sold at Sohana

(Haryana) was on the name of the assessee Shri O.P. Rajoria. Therefore,

the land purchased on the name of the wife of the assessee should not

have right to claim the benefit u/s 54B of the Act. Hence the AO

disallowed the benefit of section 54B of the Act to the total amount of

land purchased in the name of the wife of the assessee and added back to

the total income of the assessee. Thus the assessee was denied the benefit

of section 54B of the Act on account of purchase of land in the name of

wife of the assessee. However, the AO allowed the benefit u/s 54B of the

Act pertaining to the land purchased by the assessee in his name. In first

appeal, the ld. CIT(A) has confirmed the action of the AO for disallowing

the benefit of section 54B of the Act on purchase of the land by the

assessee in the name of his wife Smt. Anita Rajini. During the course of

hearing, the ld.AR of the assessee placed reliance in the case of Mahadev

Balai vs ITO (DBIT No. 136/2017) wherein the Hon'ble High Court on

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

the similar issue has given the verdict in favour of the assessee. The

relevant para of the decision of Hon'ble Rajasthan High Court (supra) on

the issue in question is as under:-

“7.2 On the ground of investment made by the assessee in the name of his wife, in view of the decision of Delhi High Court in Sunbeam Auto Ltd. and other judgments of different High Courts, the word used is assessee has to invest it is not specified that it is to be in the name of assessee. 7.3 It is true that the contentions which have been raised by the department is that the investment is made by the assessee in his own name but the legislature while using language has not used specific language with precision and the second reason is that view has also been taken by the Delhi High Court that it can be in the name of wife. In that view of the matter, the contention raised by the assessee is required to be accepted with regard to Section 54B regarding investment in tubewell and others. In our considered opinion, for the purpose of carrying on the agricultural activity, tubewell and other expenses are for betterment of land and therefore, it will be considered a part of investment in the land and same is required to be accepted.”

In view of the decision of Hon'ble Rajasthan High Court (supra) on the

issue of investment made by the assessee in the name of his wife, we hold

that the ld. CIT(A) is not justified in confirming the action of the AO with

regard to purchase of land amounting to Rs. 15,23,360/- in the name of

assessee's wife Smt. Anita Rajini. Thus Ground No. 1 of the assessee is

allowed.

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

3.1 Apropos Ground No. 2 of the assessee, the facts as emerges from

the order of the ld. CIT(A) are as under:-

‘’6.3 I have gone through the assessment order and submission made by the A.R. and find that the AO had made the disallowance on account of investment made in construction of boundary wall based on the site verification report submitted by an Inspector. The assessee could not furnish the details of expenses incurred for construction of the same before the AO.

6.4 The appellant has reiterated the same submissions and stated that the disallowance is not justified. It is stated that the expenses relating to construction of wall have been reflected in the statement of affairs of the appellant. However, in the copy of statement filed F.Y. 2006-07, it is noticed that there are overwritings in certain key figures and also this statement of affairs was never filed with the Income Tax Return. Further, the appellant has failed to furnish any other evidence to substantiate its claim of having spent the amount on construction of boundary wall. No details of construction expenses incurred were filed and also no supporting bills/vouchers for those expenses could be filed. Even a copy of the bank account could not be produced to support the payments made on construction account.

6.5 In view of the above discussion, I hold that the AO was justified in disallowing the claim of construction expenses and addition made on this account is confirmed. Further, the action of the AO in disallowing the claim of such expenses for the purpose of computation of deduction u/s 54B of the I.T. Act is also confirmed.

3.2 During the course of hearing, the ld.AR of the assessee prayed for

deletion of construction of boundary wall expenses. The ld.AR of the

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

assessee filed the following written submission which has been taken into

consideration.

‘’3. SUBMISSION 3.1 From perusal of the Purchase Deed [PB 8-41], it is clearly established that the lands were purchased by the assessee without any boundary wall as there is no mention of the same. It is a settled practice that at the time of executing Sale Deed or any other document relating to any asset its description is provided and all the specifications are mentioned.

3.2 Ld. AO during the assessment proceedings while examining the claim of expense in boundary wall, deputed his inspector MrVishanKalara to verify authenticity of the same(AO page 7).

3.3 Mr. VishanKalara in his report clearly submitted that the lands owned by the assessee and his wife were surrounded by boundary wall. He also in his report submitted the measurements of the wall and estimated the cost of construction at Rs. 600 per sqmtr(AO page 8). 3.4 The assessee informed Mr. VishanKalara that the construction of boundary wall took place between April 2006 and July 2006. Mr. VishanKalara, inspector who is expert in this regard, accepted the period of construction without any doubt. (AO page 8)

3.5 In view of above it is established beyond doubt that the assessee after purchasing the lands, constructed boundary walls around the same.

3.6 Ld. CIT(A) ignored the aforementioned facts and disallowed the claim due to the following:

3.6.1 The statement of affairs in which expense of the construction were reflected contains many over writings and the same was never filed with Income Tax Return. 3.6.2 No details and supporting of construction were filed. 3.6.3 Bank Account reflecting payment for construction were also not produced.

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

3.7 It is submitted that it is not the case of CIT(A) that such expenses are not allowable. Ld. CIT(A) has accepted the fact that construction of boundary wall is very important for the intended agriculture use. However, only because the assessee could not produce supporting evidences the claim was disallowed. In this regard it is submitted ld. CIT(A) has erred in ignoring the fact that the presence of boundary wall is affirmed by the inspector of ld. AO. Ld. CIT(A) has further failed to appreciate that Bakhera is an interior area where the small workers who are engaged into construction of boundary wall do not generally maintain bank account. Thus, the contention of ld. CIT(A) that no bills/ vouchers and bank account evidencing payment were produced is theoretical. Further, ld. CIT(A) has misdirected himself in holding that the statement of affair was also not submitted along with ITR. The assessee does not derive income from business and, therefore, he is not under an obligation to submit statement of affairs along with his return of income.

3.8 It is further submitted that ld. CIT(A) has grossly erred in not giving any cognizance to the estimate of ld. AO’s inspector(AO page 8). The inspector after site visit and after taking into consideration all the relevant facts submitted the report as per which the cost of construction of boundary wall was of Rs. 8,56,800.In view of this even without any supporting evidence the assessee is eligible for benefit of atleastRs. 8,56,800 for construction of boundary walls around all the 4 lands as in view of submissions made in Ground 1 above, the assessee shall be eligible for exemption benefits of the lands purchased in the name of his wife also.

In view of above the action of ld. CIT(A) in disallowing the expense on construction of boundary wall is illegal and, therefore, appropriate relief may please be provided.’’

3.3 On the other hand, the ld. DR supported the order of the lower

authorities.

3.4 We have heard the rival contentions and perused the materials

available on record. The AO during the course of assessment proceeding

noted that assessee had claimed investment of Rs. 9.50 lacs in the 12

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

construction of boundary wall but did not submit any bills/ vouchers of

the investment. The AO during the course assessment proceeding relied

upon the report of Inspector and held the expenses on construction of

boundary wall for all four lands at Rs. 8,56,800/-. The AO calculated Rs.

4,08,208/- as proportionate allowable expenses construction of boundary

wall. However,the AO rejected the construction expenses claimed

towards investment of boundary wall by the assessee u/s 54B of the Act.

In first appeal, the ld. CIT(A) has confirmed the action of the AO.

‘’6.3 I have gone through the assessment order and submission made by the A.R. and find that the AO had made the disallowance on account of investment made in construction of boundary wall based on the site verification report submitted by an Inspector. The assessee could not furnish the details of expenses incurred for construction of the same before the AO. 6.4 The appellant has reiterated the same submissions and stated that the disallowance is not justified. It is stated that the expenses relating to construction of wall have been reflected in the statement of affairs of the appellant. However, in the copy of statement filed F.Y. 2006-07, it is noticed that there are overwritings in certain key figures and also this statement of affairs was never filed with the Income Tax Return. Further, the appellant has failed to furnish any other evidence to substantiate its claim of having spent the amount on construction of boundary wall. No details of construction expenses incurred were filed and also no supporting bills/vouchers for those expenses could be filed. Even a copy of the bank account could not be produced to support the payments made on construction account. 6.5 In view of the above discussion, I hold that the AO was justified in disallowing the claim of construction expenses and addition made on this account is confirmed. Further, the action of the AO in disallowing the claim of such expenses for the purpose of computation of deduction u/s 54B of the I.T. Act is also confirmed.

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

After hearing both sides and considering the factual and legal position,

we sustain the order of the ld. CIT(A). Thus Ground No. 2 of the assessee

is dismissed.

4.1 Apropos Ground No. 3 of the assessee on account of disallowance

of other expenses amounting to Rs. 1,86,400/-, the facts as emerges from

the order of the ld. CIT(A) are as under:-

‘’7.3 I have gone through the assessment order and submissions made by the A.R. and find that in the absence of any material placed on record by the appellant to contradict the findings given by the AO, I confirm the disallowance made by the AO of Rs.1,86,400/- on this account.’’

4.2 During the course of hearing, the ld.AR of the assessee prayed for

deletion of addition of Rs. 1,86,400/- made by the lower authorities. The

ld.AR of the assessee filed the following written submission which has

been taken into consideration.

SUBMISSION ‘’3. 3.1 During the year under consideration the assessee purchased four lands in the area Bakhera for a total consideration of Rs. 29,32,350. The assessee claimed to have paid brokerage of Rs. 3,46,400 (i.e. 11.81%) for all the four lands.

3.2 During the assessment proceedings the assessee produced one of the broker who agreed to have received Rs. 1,50,000(43% of total brokerage) as brokerage. Ld. AO accepted the same, however, disallowed the remaining amount. It is submitted that ld. AO accepted the fact that brokerage is payable on such purchases. However, since the assessee could not produce other brokers, ld. AO disallowed the remaining amount.

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

3.3 Ld. CIT(A) also in the appellate proceedings accepted the fact that brokerage in such cases is payable and the assessee has also paid the same, but has upheld the action of ld. AO just by stating the fact that the assessee could not controvert the finding of ld. AO

3.4 In the above background, it is submitted that ld. Lower authorities have failed to appreciate that in land dealings, brokerage of 10% to 11% is justified. Further, purchase of land is not a regular activity and, therefore, the assessee met the brokers only once. Thus, he was not in a position to produce them. Just because on failure on the part of the assessee to produce brokers, disallowance is devoid of merits.

In view of above disallowance made by ld. AO and confirmed by ld. CIT(A) deserves to be deleted. ‘’

4.3 On the other hand, the ld. DR supported the orders of the

authorities below.

4.4 We have heard the rival contentions and perused the materials

available on record. During the course of assessment proceeding, the AO

noted that the assessee had claimed brokerage and commission expenses

amounting to Rs. 3,46,400/- towards purchase of land at Bakhera. The

assessee during the assessment proceeding produced the broker Shri

Mohammad Khan before him who accepted that he took the brokerage

and commission amounting to Rs. 1.50 lacs from the assessee . The AO

thus allowed Rs. 1.50 lacs and disallowed Rs. 1,86,400/- as no receipt on

account of brokerage and commission was submitted before the AO. It

appears from the submissions of the assessee that he had purchased the 15

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

four lands in the area of Bakhera for a total consideration of Rs.

29,32,350/-. The assessee has paid the brokerage & commission

amounting to Rs. 3,46,000/- for all the four lands but the assessee could

produce only Shri Mohmmad Khan before the AO who accepted that he

took the brokerage and commission. The same was allowed by the AO

but remaining amount was not allowed by the AO because of non-

production of other brokers. The ld. CIT(A) has confirmed the action of

the AO. We find no contrary material on record which controverts the

findings of the ld. CIT(A) and AO. Hence, we confirm the order of the

ld. CIT(A) on this issue. Thus Ground No. 3 of the assessee is dismissed.

5.1 Apropos Ground No. 4 of the assessee, the facts as emerges from

the order of the ld. CIT(A) are as under:-

‘’4.5 I have gone through the assessment order, remand report and submissions made by the A.R. and find that the appellant has raised an additional ground of appeal and the same was admitted. The appellant has objected to the reassessment proceedings by stating that it amounts to change of opinion on the part of the AO as this issue has already been considered in the earlier assessment framed u/s 143(3) of the I.T. Act. A copy of the order passed u/s 143(3) dated 23-12-2008by ACIT, Gurgaon Circle was also filed on record. A number of judicial citations have been given in support of the contention. I have gone through the orders as well as the assessment order of the AO and find that this was issue was never considered by the AO in the assessment order dated 23-12-2008. Thus the contention of the appellant 16

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

that there is change of opinion on the part of the AO is not correct.

4.6 The appellant has also stated that reasons to believe that income chargeable to tax has escaped the net of taxation must be coherent and has cited a number of decisions in support of the claim made. It is requested that the proceedings initiated u/s 148 needs to be dropped. I have carefully considered the submissions made and decisions cited and have gone through a copy of the reasons recorded which had been given to the appellant before initiating the reassessment proceedings. I find no infirmity or any inconsistency in the said reasons recorded by the AO. Therefore, there is no force in the arguments taken by the appellant.

4.7. I have perused the detailed submissions of the A.R. and find that AO has issued notice to the appellant before initiating reassessment proceedings. Reassessment proceedings were started after considering the objections raised by the appellant and on the basis of material available on record. I find that AO had issued the notice u/s 148 based on the material available and discrepancies noticed in the income declared by the appellant. The AO has given reasonable opportunity of being heard to the appellant before initiating the reassessment proceedings. The AO has discharged the duty which lay upon him before initiating the reassessment proceedings.

4.8 However, the case laws relied upon by the appellant does not have applicability to the facts of the present case. The function of the Assessing Officer is to administer the status with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayer (Asstt. CIT vs Rajesh Jhaveri Stock Brokers (P) Ltd [2007] 291 ITR 500 (SC). In determining whether commencement of reassessment proceedings is valid, the court has only to see whether there is prima facie some material on the basis of 17

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

which the Department opened the case. The sufficiency or correctness of the material is not a thing to be considered at this stage as held by the Supreme Court in the case of Raymond Woollen Mills Ltd.vs ITO [1999] 236 ITR 34 (SC), Great Arts (P) Ltd vs ITO [2002] 257 ITR 639 (Del.). The assessee cannot challenge sufficiency to belief – ITO vs Lakhmani Mewal Das [1976] 103 ITR 437 (SC).

4.9. It has been held by various courts that it is the duty of the assessee to disclose primary facts and truly. Reliance is placed upon the following.

(a) Zohar Siraj Lokhandwala vs M.G. Kamat[1994] 210 ITR 956 (Bom.) ‘’ Assessee primarily must disclose particular portions of documents which are material’’.

(b) Parushuram Pottery Works Co. Ltd vs ITO [1977]106 ITR 1 (SC)

© Indian Oil Corporation vs ITO [1986] 159 ITR 956 (SC)

(d) Calcutta Discount Co. Ltd vs ITO [1961] 41 ITR 191 (SC)

(e) ITO vs Lakhmani Mewal Das [1976] 103 ITR 437 (SC)

4.10 In the above quoted cases, mainly it was held that the assessee must disclose all primary facts full and truly. The words ‘omission’ or failure to disclose fully and truly all material facts necessary for his assessment for the year, postulate a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material and necessary for assessment will differ from case to case. There can be no doubt that the duty of disclosing all the primary facts relevant to the decision or the question before the assessing authority, lies on the assessee. 18

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

4.11 Further in the case of A.G. Group Corporation vs Hars Prakash – 583 ITR 158 Hon'ble Gujarat High Court has upheld the issue of notice u/s 148 as there was alleged suppression of stock on the part of the assessee. Also in the case of Aquagel Chemicals P. Ltd vs ACIT – 353 ITR 131, Hon'ble Gujarat High Court upheld the initiation of reassessment proceedings on the ground of failure on the part of the assessee to disclose facts necessary for assessment. Also Hon'ble Delhi High Court has upheld the reassessment proceedings in the case of Ram Bagh Palace Hotels Pvt. Ltd vs DCIT 350 ITR 660. Further Hon'ble Delhi High Court has also upheld the reassessment proceedings in the case of A.G. Holdings Pvt Ltd vs ITO 352 ITR 364 and also in the case of Contel Medicare System Pvt. Ltd vs CIT , 349 ITR 649 and in the case of Video Electronics Ltd. vs JCIT 353 ITR 73.

4.12 Thus in view of the above discussion, I hold that the AO had rightly initiated the proceedings u/s 147 / 148 of the I.T. Act.’’

5.2 During the course of hearing, the ld.AR of the assessee prayed that

the AO is not justified in the initiation of reassessment proceedings and

under provision of section 147 of the Act which is bad in law and liable to

be quashed. The ld.AR filed the written submission which has been taken

into consideration.

5.3 On the other hand, the ld. DR supported the order of the ld.

CIT(A).

5.4 We have heard the rival contentions and perused the materials

available on record. In this case, it is noted from the available records that 19

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

the AO has issued notice to the assessee before initiating reassessment

proceedings. Reassessment proceedings were started after considering the

objection raised by the assessee on the basis of material available record.

In the appellate proceedings, the ld. CIT(A) observed that the AO had

issued the notice u/s 148 of the Act based on the material and

discrepancies noticed in the income declared by the appellant. From the

order of the ld. CIT(A), it is noted that the ld. CIT(A) has elaborately

discussed the issue taking into considerations various decisions as

mentioned above and held that the AO had rightly initiated the

proceedings u/s 147/148 of the Act. We have also taken into

consideration the factual aspects of the case and did not find merit in the

arguments raised by the assessee as to the issue of initiation of

proceedings u/s 147/148 of the Act by the AO. In this view of the matter,

we concur with the findings of the ld. CIT(A). Thus Ground No. 4 of the

assessee is dismissed.

6.1 Now we take up the appeal of the Revenue in ITA No. 282/JP/2016

for the Assessment Year 2012-13 raising the solitary ground of appeal

that the ld. CIT(A) has erred in deleting the disallowance u/s 54B of the

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

I.T. Act, 1961 made by the AO on account of claimed deduction for Rs.

71,23,440/-.

7.1 Apropos solitary ground of the Revenue, the facts as emerges from

the order of the ld. CIT(A) are as under:-

‘’4.14 It is seen from the above that the title of the property, the identity of the executor etc. have been accepted by the Sub-Registrar and thus the nature of land use has to be determined based on the actual usage as seen from the ground realities and other facts available on record. For this purpose, the Khasra Girdawari report filed by the appellant confirms the usage of land for cultivation of vegetables and wheat etc. and this fact was confirmed by the Tehsildar also in his statement, in para4. The fact that land was used for agricultural operations has also been confirmed by the Inspector of Income Tax in his report and in the statement of Shri Shyam Singh recorded by him. The agricultural income earned by the appellant for the period under consideration and in the preceding years has also been accepted by the AO.

4.15 I have carefully examined these facts available on record and find that the fact that agricultural income earned by the appellant was less than what is estimated by the AO cannot be a valid ground for rejection of the claim that land was not used for agricultural purposes. The issue for consideration in this case before the AO was not the adequacy of the quantum of agricultural income declared by the appellant but was whether the land is used for the purposes of agriculture or not. The quantum of income declared therefrom cannot be basis of decision regarding the nature of land. Further, I find that the AO has not denied the fact that the land was used for carrying out agricultural activities as the income declared on this account has been accepted in the preceding years and in this year also. Thus I 21

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

find that there is no justification in the action of the AO in holding that the land sold by the appellant was not used for agriculture purposes in the period of two years prior to the date of sale of land. Accordingly, I hold that the land was used for agricultural purposes, as provided in the provisions of section 54B of the I.T. Act and therefore, appellant is entitled for claim of deduction under this section.

4.16 As regards the claim of the appellant with regard to the quantum of disallowance to be made in this year is concerned, there is no need for adjudication in view of the finding given above.

4.17 In view of the above discussion, I delete the disallowance of Rs. 71,23,440/- made by the AO u/s 54B of the IT Act.’’

7.2 We have heard the rival contentions and perused the materials

available on record. It is noted that the similar issue in the case of ITO vs

Shri Vishal Rajoria in ITA No. 272/JP/2016 for the Assessment Year

2012-13 has been decided against the Revenue. Since the present issue in

the case of DCIT vs Shri Om Prakash Rajoria in ITA No. 282/JP/2016 for

the Assessment Year 2012-13 are same, therefore, the decision taken in

the case of Shri Vishal Rajoria shall apply mutatis mutandis in the case of

Shri Om Prakash Rajoria also being similar facts and circumstances of

the case. Thus the appeal of the Revenue is dismissed.

ITA No.46 /JP/2014 Shri Om Prakash Rajoria vs ITO, Ward- 1(1), Alwar

8.0 In the result, the appeal of the assessee in ITA No. 46/JP/2014 is partly allowed and the appeal of the Revenue in ITA No.

282/JP/2016 is dismissed. Order pronounced in the open Court on 01 -05-2018. Sd/- Sd/- ¼ fot; iky jko ½ ¼HkkxpUn½ (Vijay Pal Rao) (Bhagchand) U;kf;d lnL; /Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 01 /05/ 2018 *Mishra आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- Shri Om Prakash Rajoria, Alwar izR;FkhZ@ The Respondent- The ITO, Ward- 1(1), Alwar / DCIT, 2. Circle – 1, Alwar vk;dj vk;qDr¼vihy½@ CIT(A). 3. vk;dj vk;qDr@ CIT, 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. 6. xkMZ QkbZy@ Guard File (ITA No. 46/JP/2016) vkns'kkuqlkj@ By order, सहायक पंजीकार@ Aेेपेजंदज. त्महपेजतंत