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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI G. MANJUNATHA
आदेश /O R D E R Per G. MANJUNATHA, AM:
This appeal filed by the assessee is directed against order of learned Commissioner of Income Tax (Appeals), Coimbatore-1, dated 27.08.2019 and pertains to assessment year 2012-13.
The assessee has raised the following grounds of appeal:-
1. The Honb.CIT(A) has erred in law and facts by confirming the addition made by the Ld.AO under LTCG, for the sale of agricultural land exempted under Income Tax Act.
2. The Honb.CIT(A) & Ld.AO has not considered the law and facts, by making an addition under LTCG of profit on sale of agriculture land, only for the reason that there was no agriculture income shown in the return of income for the previous 3 assessment years.
3. The Honb.CIT(A) has erred in law and facts, by confirming, the property in question was not used for agriculture purpose merely because there was no agriculture income offered by the assessee in his return of income for the previous 3 years.
4. The Honb.CIT(A) fails to appreciate the documentary evidences(like:Chitta & Adangal) produced by the assessee.
The brief facts of the case are that the assessee is an individual derived income from salary, house property and income from business, filed his return of income for the assessment year 2012-13 on 30.03.2013, declaring total income of Rs.2,01,170/-. The case was selected for scrutiny and during the course of assessment proceedings, the AO noticed that the assessee had sold agricultural lands and arrived at a profit of Rs.20,52,325/- and claimed exempt from tax. Therefore, in order to verify correctness of claim, the AO called upon certain details. In response, the assessee had filed various details to prove that profit derived from sale of agricultural land is outside the scope of taxation. The AO on the basis of details filed by the assessee,
such as chitta, adangal, etc., observed that the assessee had failed to prove the fact that the lands sold were in fact agricultural lands thereby profit is exempt from tax. In the absence of documentary evidences, the claim of assessee that profit is not taxable cannot be accepted and accordingly the entire profit on sale of lands is brought to tax under the head ‘Long Term Capital Gains’. The assessee carried the matter in appeal before the first appellate authority but could not succeed.
3. The ld.CIT(A) affirmed the findings of the AO on the ground that no evidences has been placed to prove that the land in question was agricultural land and have been used for the purpose of carrying out agricultural operation. Aggrieved by the CIT(A) order, the assessee is in appeal before us.
The ld.AR for the assessee, at the time of hearing submitted that the ld.AO as well as the ld.CIT(A) have erred in arriving at a conclusion that profit derived from sale of agricultural lands is taxable, merely for the reason that no agricultural income was disclosed in the return filed for earlier years, ignoring the fact that the land was agricultural land from the revenue records and profit derived from transfer of such lands is outside the scope of taxation. Therefore, to file necessary evidences to prove that land was used for agricultural operations, the appeal may be set aside to the file of the AO to give one more opportunity of hearing to the assessee.
The ld.DR on the other hand fairly agreed that the issue may be set aside to the file of the AO to verify the facts with regard to the claim of the assessee that land was used for agricultural purpose.
We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. Whether profit derived from sale of agricultural land is taxable or not is essential question of fact, which needs to be ascertained on the basis of evidences filed by the assessee to prove that land was an agricultural land and the same was used for agricultural purpose. Although, the finding of fact recorded by the authorities below indicate that the assessee has not filed any evidence to prove that land was used for agricultural purpose but contention of the assessee is that the land in question was agricultural land and it was used for agricultural purpose. The assessee further claimed that if opportunity is given, he is ready to produce necessary evidence to prove his claim. Therefore, considering the arguments of both sides, we are of the considered view that the issue needs to be set aside to the file of the AO to ascertain the fact with regard to nature of the land when it was sold, to decide the taxability of profit derived from sale of land. Hence, the appeal is set aside to the file of the AO and we direct him to verify the issue in light of evidences filed by the assessee to prove that land in question is agricultural land and the same is used for agricultural purpose.
In the result, the appeal filed by the assessee is allowed for statistical purpose.
Order pronounced in the court on 10th March, 2021 at Chennai.