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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 आदेश आदेश आदेश
PER MAHAVIR SINGH, VP:
This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals)-15, Chennai in dated 13.11.2019. The Assessment was framed by the Income Tax Officer, Business Ward IV(1), Chennai for the Assessment Year 2007 - 2008 u/s.143(3) r.w.s. u/s.147 of the Income Tax Act, 1961 (hereinafter ‘the Act’) vide his order dated 26.03.2014.
The impugned penalty was levied by the Income Tax Officer, Non-Corporate Ward – 15(3), Chennai, u/s.271(c) of the Act vide order dated 28.02.2019.
At the outset the learned Counsel for the Assessee stated that the Tribunal in quantum in order dated 05.12.2017 has deleted the addition made by the Assessing Officer treating the land sold by the Assessee as agricultural land by observing paragraph – 6 as under:
“6. Thus, whether a particular land sold is agricultural land or not is to be determined as per the definition provided in Section 2(14)(iii). What for, the purchaser of the land uses the said land, will not determine, the character of the land sold in the hands of the Assessee. When the facts in the Assessee’s case are examined in line with the provisions of Section 2(14)(iii), it shows that the nearest Taluk being Chinglepet Taluk, Kancheepuram District and the village Taiyur shows that a population of only 7609 and the distance from the Chinglepet is 23.5 kms and the distance from Kancheepuram is 64.1 kms. A perusal of the Chitta and Adangal shows the names of the Assessee and the Kist having been paid as agricultural land and the Village Administrative Officer certified as specifying both single crop and double crop. The Assessee has placed such substantial evidences and this is not rebutted by the Assessing Officer in respect of the nature of the land, as to whether it is agricultural or not? The Assessing Officer has read into only the Sale Agreements and no other documents. Admittedly, the Assessee is entitled to sell his land for the best possible price that can be generated, but if the nature of the land is agriculture, the same cannot be brought under the definition of capital asset for the purpose of levying long term capital gains.
Further, what has been sold by the Assessee is not converted lands. This being so, in the present case, as it is noticed that the land sold by the Assessee is agricultural land, we are of the view that the same is not giving rise to any long term capital gains in the hands of the Assessee. In these circumstances, the findings of the learned CIT(A) and the Assessing Officer on this issue stands reversed.”
The learned Counsel for the Assessee further stated that the Revenue has carried this matter before the Hon’ble High Court reported in [2019] 104 taxmann.com 30 (Madras) in the case of PCIT, Chennai Vs. A. Lalichan vide order dated October 11, 2018 reversed the order of the Tribunal vide paragraphs 17 and 18 as under:
“17. It is to be noted that before the Appellate Tribunal, it was contended by the Assessee that the entire extent of 301 cents does not belong to him. It is evident from the records produced by the Assessee that the entire sale consideration was Rs.15,30,00,000/- and the share of the Assessee was Rs.8,61,41,416/-.
Keeping in view the principles laid down in the above decisions and for the foregoing reasons, the order of the Income Tax Appellate Tribunal, Madras “B” Bench, Chennai, dated 05.12.2017 is liable to be set aside and accordingly, set aside. The questions of law are answered in favour of the Revenue and the Tax Case Appeal is allowed. There is no order as to costs.”
Further, the learned Counsel for the Assessee stated that the Assessee carried this matter in SLP vide SLP(C) No.9874 of 2019 before the Hon’ble Supreme Court and the Hon’ble Supreme Court
Hon’ble High Court and remanded the matter back to the file of the Hon’ble High Court by keeping all the issues open vide order dated 13th September, 2021 by observing in paragraph 10, 11 & 12 as under:
“10. We have heard Ms. Aishwarya Bhati, learned Additional Solicitor General in response to the above submissions. There is justification in the submission which has been urged on behalf of the Union of India by Ms. Aishwarya Bhati that by its very nature, it would not be appropriate for this Court to look into the documents which have been produced in the application for permission to file additional documents, particularly in the absence of the High Court haing carried out the exercise. It would be unsafe for this Court to rely on the material which has been produced for the first time in the present proceedings, without the genuineness and authenticity of the documents being tested earlier. This aspect of the submissions of the ASG has weighed with this court.
At the same time, the manner in which the case appears to have proceeded before the High Court creates a sense of disquiet. Was the appeal by the Revenue initially dismissed? It so, why was the appeal listed again before the Division Bench? Was the original order recalled by the High Court after apprising parties and their Counsel? Were any reasons for recall recorded? While we have flagged these issues, we are not venturing into the exercise of finding answers on the state of the record as it stands the better course being to remand the proceedings for hearing before another Bench of the High Court. In the above conspectus of facts, and particularly having regard to the checkered history of the appeal which we have referred to the above, we are of the view that the appropriate course of action would be to set aside the judgement of the High Court and to remand the proceedings for disposal afresh. We are inclined to pass an order of remand since it appears that the High Court while exercising its jurisdiction in an appeal under Section 260A reversed the view of the Tribunal on the basis of an evidently cursory view which appears in paragraph 15 of the impugned order extracted above.
In this view of the matter, without this Court expressing any opinion on the merits of the appeal filed by the revenue against the order of the Income Tax Appellate Tribunal, we allow the appeal and in consequence, restore Tax Case (Appeal) No.504 of 2018 to the file of the High Court of Judicature at Madras for disposal afresh. All the rights and contentions of the parties are specifically kept open to be addressed before and decided by the High Court.”
In view of the above, the learned Counsel for the Assessee stated that, since the Hon’ble Supreme Court has set aside the order of the Hon’ble High Court and now the appeal is actually pending before the Hon’ble High Court.
Once the appeal is pending before the Hon’ble High Court and there is no stay or there is no stay of operation of the order of the Tribunal by the Hon’ble High Court, the order of ITAT is surviving.
According to him, once the addition is deleted on the date, the penalty levied by the Assessing Officer u/s.271(1)(c) of the Income Tax Act, 1961 on the sale of the agricultural land and assessing the capital gains will not survive.
When this was put up to the learned senior Departmental Representative, he only requested that the facts may be noted and the rest is for the Bench to take a call.
After hearing both the sides and in the given facts and circumstances, we are of the view that as on date the order of ITAT in quantum proceedings stands and ITAT in quantum proceedings is deleted the assessment of capital gains on the land sold by the Assessee holding the same as agricultural land.
Hence, we delete the penalty and allow the appeal of the Assessee. Needless to say, in case in further proceedings before the Hon’ble High Court or before the Hon’ble Supreme Court, the addition stands revived, the Revenue can move for rectification proceedings.
In the result, the appeal of the assessee is allowed.
Order pronounced in the court on 4th March, 2022 at Chennai.