RAMKARAN SINGH,PANCHKULA vs. INCOME TAX OFFICER, WARD-3, PANCHKULA, PANCHKULA

That the Ld. Commissioner of Income Tax (Appeals) has erred in upholding the finding that the rural agricultural land sold was short term capital gains and not long term capital gain without considering the date of acquisition, cost of acquisition, distance from the specified MC especially when specifically raised ns a ground of appeal

before him and as such the order passed Is arbitrary and unjustified.

7. That the appellant craves leave to add or Amend the grounds of appeal before the appeal Is finally heard or disposed off

8. That the order of Ld. Commissioner of Income Tax (Appeals) Officer is arbitrary, opposed to the facts of the case and thus untenable.

3.1 On perusal of the details available on record, the AO noticed that the assessee had sold land to M/s Muflah Builders and Pvt. Ltd. by executing two sale deeds. In the first sale, the assessee 's share was 1/3rd i.e. Rs.36,51,960/- and in the second sale, the assessee share is 912/4236 l.e. Rs.53,37,480/-. The total capital gain comes to Rs.89,89,440 As per the details available on record, the purchase price of the property could not be determined by the 3 AO and therefore the whole sale price of Rs.89,89,440/- was considered as short term capital gain and added to the total income of the assessee.

5. At the outset the Ld. AR submitted that the assessee has not pressing Ground No. 1 to 3 of the grounds raised before us and it was submitted that these grounds may kindly be dismissed as not pressed.

6. After considering the submissions of Ld. AR, we dismissed the abovementioned grounds as not pressed.

7. The other ground pertains to addition made by the Ld. AO and confirmed by the Ld. CIT(A), as the assessee had sold his ancestral Rural Agricultural Lands at Village Dhamala, Distt Panchkula (Haryana) on 02.06.2011 and the appellant 1/3d and 912/4236 share in the said agricultural Lands was Rs.36,51,960/- and Rs.53,37,480/-respectively. The above said Ancestral Agricultural lands were situated at Village Dhamala, Distt Panchkula (Haryana). Since the lands sold were Rural Agricultural lands and the assessee had not filed his return of Income. The Ld. AR in the written submission before the Ld. CIT(A) has submitted as under:

4 3. The learned Assessing Authority on dated 22.10.2019 asked the Assessee to file a certificate from Tehsildar that the land sold was Agriculture Land and the distance from the Nearest Municipal Committee (MC). On Jated 22.11.2019,admittedly the assessee had submitted a certificate from the Jurisdictional Tehsildar that the land sold was agricultural Land and the nearest Municipal Committee (MC) is of Pinjore which is 4 Km away from the village where the lands was sold was situated. The assessee further clarifies that the Municipal Committee (MC) Pinjore (Haryana) is not a specified M.C.as per Notification No. 9447 Dated 06.01.1994 of the Income Department (Copy Attached), Hence the agricultural Lands sold were not a Capital Asset, therefore not liable to Capital Gain Tax. Sir, the Ld. AO. had made a grave legal error in considering the Agriculture Land Sold as Capital Assets by ignoring the facts that MC Pinjore under which the Agriculture Lands sold fall is not a specified MC as per the notification no. 9447 dated 06.01.1994 of the Income Tax Department to ascertain the nature of land as Capital Assets. Copy of the Certificate of the Jurisdictional Tehsildar as submitted during the course of Assessment Proceeding and copy of the Notification No. 9447 dated 06.01.1994 is attached for your kind perusal and consideration. In view of the above, the Agricultural Lands sold by the assessee were not "CAPITAL ASSET" under section 2(14)(iii) of the Income Tax Act, 1961 being not filling under any specified MC and as such sale thereof is not liable for Capital Gains. That on the date of filing of the certificate from the Tehsildar i.e. 22.11.2019, the learned Assessing Officer passed the order u/s 144 r.w.s.147 of the Income tax Act, 1961 without giving the assessee a reasonable opportunity to explain the date of acquisition, period of holding, cost of Acquisition, investment in the purchase of Agricultural Lands etc after the sale. Sir, as mentioned above the Agriculture Lands sold under consideration were inherited property inherited on 28.05.1994 (copy of jamabandi and intkal ie revenue records of ownership are attached) for your kind perusal and consideration. Hence the Ld. Assessing Officer (AO) lind made the grave error in treating the sale of Rural Agriculture Lands liable for Capital Gain In view of the above the order of the Ld. AO is erroncous, arbitrary. opposed to law and facts of the case and principles of natural justice and is liable to be quashed.

8. It was submitted that the assesee has raised a subject ground of the applicability of the notification issued by the CBDT in the year 1994. Besides that the Ld. CIT(A) has failed to decide and adjudicate the other grounds and had wrongly recorded that the assessee had admitted that the subject matter of land falls within the 4 Km from the Municipal Limits of Pinjore and therefore is an capital asset and has denied the benefit to the assessee.

5 8.1 The subject matter is that the land is not situated within the Municipal Limit of the Kalka, Pinjore as the Municipal Corporation Pinjore was not constituted by that time. It was submitted that since the land is required to be measured from the Municipal Limit as notified by the CBDT in the Year 1994, therefore the findings recorded by the AO and the Ld. CIT(A) in para 5.3 & 6 of his order is contrary in law.

Similarly the Kolkata Tribunal in the case of Achhelal Yadav VS ITO [2024] 158 taxmann.com 507 (Kolkata - Trib.) has held as under: 7. Before us, ld. Counsel for the assessee, took us through the paper book containing 175 pages of which page 158 to 160 provides copy of Notification dated 6th January, 1994 vide Notification No. [SO 9447] (File No. 164/3/97-ITA.I), in order to prove that the land sold during the year is not a capital asset. We have gone through the said notification and also gone through the details of sale deeds as well as certificate issued by Dadpur Gram Panchayat and find merit in the claim of the assessee that the agricultural land sold during the year do not fall within the definition of capital asset provided u/s 2(14)(iii) of the Act and, therefore, the capital gain arising from sale thereto is exempt from tax. So far as the finding of the lower authorities that the assessee did not provide this fact during the course of assessment proceedings, we note that during the course of rectification proceedings, though the same were initiated by the Assessing Officer but once certain facts were placed before the Assessing Officer during the course of such rectification proceedings, then he ought to have taken note of the same and should have dealt with the said contentions. It has been consistently held by the Hon'ble Courts that no tax can be levied or collected except by the authority of law and that if the assessee by mistake or inadvertence or on account of ignorance included in his income any amount which is non-taxable or is not income within the contemplation of law, the assessee may bring the same to the notice of the Assessing Officer to which if the Assessing Officer is satisfied, he may grant the assessee necessary relief and refund the tax paid in excess. We draw support from the judgment of the Hon'ble Delhi High Court in the case of Vijay Gupta v. CIT [2016] 68 taxmann.com 131/238 Taxman 505/386 ITR 643 [WP(C) 1572 of 2013 dt. 23-3-2016] wherein, the Hon'ble Court has held so by referring to Article 265 of the Constitution of India. Similar view was also taken by this Tribunal in the case of Ritum Jain (supra).

by the assessee becomes merely academic in nature, still we would like to take note of the fact that the assessee also deserves to succeed on the alternative ground that even if the agricultural land is considered as capital asset, even then the assessee who has sold agricultural land and has purchased the agricultural land within a period of two years, after the date of sale for a total purchase consideration of Rs. 97,55,000/-, the assessee is entitled for exemption u/s 54B of the Act for the total sum of Rs. 97,55,000/- or the long term capita gain arising from sale of agricultural land whichever is lower. Thus, the grounds raised by the assessee are allowed. The Notification issued by the CBDT in 1994 provided as under:

11. The Ld. DR had not disputed that any subsequent notification was issued by the CBDT as on 01/04/2013 whereby Pinjore municipality was included in the list of municipalities notified by the CBDT.

7 12. Respectfully following the abovementioned decision of the Coordinate Benches we are of the opinion that the appeal of the assesse is required to be allowed.