KEDAR ARVIND SARASWATE,PUNE vs. INCOME-TAX OFFICER,

आदेश / ORDER

PER PARTHA SARATHI CHAUDHURY, JM :

This appeal preferred by the assessee emanates from the order of the Ld.CIT (Appeals)-13, Pune dated 22.07.2015 for the assessment year 2011-12 as per following grounds of appeal on record:

“1.The learned CIT(A)-13, Pune and the learned ITO (IT)-I, Pune (hereinafter referred to as learned AO) erred in law and on facts in disallowing deduction claimed by the appellant u/s 54 B of the ITA, 1961 amounting to Rs.60,08,199/-.

2 ITA No.1319/PUN/2015 A.Y.2011-12

Indian. He filed his return of income for the assessment year 2011-12

declaring total income of Rs.18,15,114/-. He has declared income earned

from salary, house property and capital gain and other sources. During the

year under consideration, the assessee has declared income from capital

gains, on which he claimed the deduction u/s.54B of the Income Tax Act,

1961 (hereinafter referred to as ‘the Act’) by investing the amount of capital

gain by purchasing agricultural land. The Assessing Officer in the order

passed u/s.143(3) of the Act denied the deduction claimed u/s.54B of the Act

which resulted in to the addition of Rs.60,68,199/- to the assessee’s total

income. With the result, the Assessing Officer assessed the assessee’s total

income at Rs.78,23,313/- as against his returned total income of

Rs.18,15,114/-.

observed that the land sold by the assessee is urban land and was not an

agricultural land. According to the 7/12 extract, the transferred land was

barren land and was not used for any agricultural purposes. The Assessing

Officer stated that the assessee did not declare agricultural income in his

returns of income filed for AY 2007-08 to AY 2010-11. The assessee did not

3 ITA No.1319/PUN/2015 A.Y.2011-12

claim any expenditure on agricultural activities carried out by him. The

assessee also did not furnish any documents in support of its contention that

he carried out agricultural activities on the land sold by him.

land was agricultural land. It was used for the agricultural purposes and the

agricultural produce, was used only for the household. However, the assessee

did not produce any evidence in support of its claim. The Assessing Officer

stated that 7/12 extract attached to sale deed furnished by the assessee

shows that land is a barren land and was not used for the agricultural

purposes. It is known that 7/12 extract records crops cultivated, water taxes,

land revenue etc. The assessee did not produce any material to contradict the

contents of 7/12 extract issued by Talathi.

submissions which are on record.

The first limb of submissions of the assessee before the Ld.

CIT(Appeals) was that the principles of natural justice was not followed by the

Assessing Officer and that sufficient opportunity of hearing to substantiate

the claim of the assessee was not allowed to him.

The second limb of submissions of the assessee before the Ld.

CIT(Appeals) was that only relying on 7/12 extract issued by Talathi, the

Assessing Officer has come to the conclusion that land was not used for

agricultural purpose instead of making any physical verification.

Thereafter, the assessee relied on certain case laws and submitted that

even if a part of the land was actually not used for agricultural activities still

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such land holds the character of agricultural land even though the income

was not derived. To substantiate the land as agricultural land, the assessee

relied upon the following decisions:

i) CIT Vs. Smt. Debbie Alemao 331 ITR 59 ( Bom.)

ii) ACIT Vs. N Raghu Verma 142 ITD 421 ( ITAT HYD)

deduction u/s.54B of the Act, the land should have been used for agricultural

purposes for two years prior to the date of transfer. Whether the land was

used for agricultural purposes for two years prior to date of transfer or not is

a question of fact. The assessee has only raised legal arguments as to why the

deduction should not be denied to him. However, neither before the Assessing

Officer nor before the Ld. CIT(Appeals), the assessee has filed any evidence to

support that transferred land was used for agricultural purposes for two

years prior to the date of transfer. Thereafter, the Ld. CIT(Appeals) makes

detailed order and as per reasons recorded therein which is on record

confirmed disallowance of deduction u/s.54B of the Act.

additional evidences placed in paper book at page No. 87 and 216. Page

No.87 is the certificate obtained from Govt. Registered Agricultural Valuer

and Page 216 is the photograph of land sold at Bhugaon. The assessee wants

to submit the same to justify that there were mango & coconut trees and also

vegetable crops like brinjal, tomatoes etc. on the land sold.

7.1 The Ld. AR of the assessee further submitted that it was never a barren

land and only placing reliance on the 7/12 extract satisfaction should not be

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taken rather detailed physical verification has to be done. Hence, Ld. AR of

the assessee has prayed that in view of the additional evidences filed, the

matter may be restored to the file of Assessing Officer for verification and re-

adjudication of the same.

analyzed the facts and circumstances in the case. In this case, the assessee

has claimed deduction u/s.54B of the Act. In order to claim such deduction,

legal ingredient is that the land should have been used for agricultural

purpose for two years prior to the date of transfer. The Revenue Authorities

have relied on the 7/12 extract and lack of evidence by the assessee and have

come to the conclusion that the land sold was not agricultural land and

thereby denied deduction u/s.54B of the Act to the assessee.

That on other hand, the assessee all throughout states that there have

been ongoing agricultural activities on the said land sold from very beginning.

In absence of physical verification of the land and without any specific report

obtained, it was not fair on the part of the Revenue Authority to deny the

deduction claimed u/s.54B of the Act.

verified by the Revenue Authorities. Furthermore, in the totality of facts and

circumstances, the matter demands detailed factual verification and enquiry

regarding the nature of land and whether it was being used for agricultural

purpose throughout, most particularly with regard to specified conditions laid

down u/s.54B of the Act. The twin conditions of the Section 54B which

requires to be examined are:

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i) That the land which was sold was used for agricultural purpose in the two years immediately preceding the date on which the sale took place.

ii) That the assessee has, within a period of two years after that date i.e. when the sale was completed, purchased any other land for agricultural purpose.

With these above observations, we set aside the order of the Ld. CIT(Appeals) and remand the matter back to the file of the Assessing Officer to comply with our directions as herein above stated and thereafter, shall adjudicate the matter after providing reasonable opportunity of hearing to the assessee.

In the result, appeal of the assessee is allowed for statistical purposes. 11.

Order pronounced on 01st day of February, 2019.

Sd/- Sd/- R.S.SYAL PARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER

पुणे / Pune; �दनांक / Dated : 01st February, 2019. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :

अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT (Appeals)-13, Pune. 4. The CIT (IT/TP), Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” ब�च, 5. पुणे / DR, ITAT, “B” Bench, Pune. गाड� फ़ाइल / Guard File. 6.

// True Copy // आदेशानुसार / BY ORDER,

�नजी स�चव / Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.

7 ITA No.1319/PUN/2015 A.Y.2011-12

Date 1 Draft dictated on 31.01.2019 Sr.PS/PS 2 Draft placed before author 01.02.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order