RAJENDRAKUMAR R PANDYA,SURAT vs. ITO, WARD 3(1)(3), SURAT

We have heard the submission of Ld. Authorized Representative (Ld.AR) for the assessee and Ld. Senior Departmental Representative (Ld. Sr-DR) for (A.Y.11-12) Rajendrakumar R Pandya the Revenue. The ld. AR of the assessee submits that in the present appeal, a very short issue but crucial and legal issue are involved. The assessee has challenged the validity of reopening on the ground that the reasons recorded by the Assessing Officer are not correct. The Assessing Officer at one place recorded that no return of income was filed by assessee, however, at the same time, the Assessing Officer mentioned that return of income was filed, thus, the Assessing Officer was not sure at the time of recording reasons of reopening. Reasons were recorded without verification of facts and application of find. The reasons recorded are inconsistent, therefore, the reopening is liable to be quashed as has been held by the Hon’ble Jurisdictional High court in Vithalbhai G Prajapati Vs ITO (supra). Secondly, the land sold by assessee and other co-owners were purely rural agricultural land, situated beyond 8 Km from the boundary of Surat Municipal Corporation. The distance of land had to be measured by road distance. To substantiate such fact of road distance, the assesse furnished certificate of Talati. The concept of measurement of distance by aerial distance was introduced by Finance Act, 2013 and is applicable from 01/04/2015 only and to support such contention, the assessee relied on CBDT Circular No. 17/2015 dated 06/10/2015. The Assessing Officer relied on the certificate issue by Surat Urban Development Authority dated 21/12/2018 wherein the distance of village Kharvasa is mentioned as 2.97 KM. The ld. AR of the assessee disputed such measurement of distance and submits that boundary of Surat Municipal Corporation was extended in A.Y. 2014-15 and its distance has to be seen at the time of transaction of land. And thirdly in (A.Y.11-12) Rajendrakumar R Pandya alternative, the assessee claimed that in case, action of Assessing Officer in reopening is upheld and/or again the land is treated as capital asset, the capital gain on the share of assessee is only of Rs. 7,86,236/-, which is based on the working on the basis of report of DVO with regard to the value of land as on 01/04/1981 as well as on the date of sale. In case, capital gain is computed/added, the assessee claimed deduction under Section 54B. It is settled land that Assessing Officer cannot be accept revised claim in absence of revised return of income, however, such restriction is not applicable on the power of appellate authorities as has been held by the Hon’ble Jurisdictional High court in CIT Vs Mitesh Impex (2014) 46 taxmann.com 30 (Guj). The ld. AR of the assessee submits that before Assessing Officer as well as before the ld. CIT(A), the assessee furnished complete details of agricultural land purchased by assessee from the sale proceed of his ancestral land. Such facts are not disputed by the lower authorities. The lower authorities simply rejected the claim on the ground that the Assessing Officer was not empower to entertain fresh claim in absence of revised return. The ld. AR of the assessee reiterated that in the event, if assessee is not allowed relief on his primary or secondary submission, since all facts regarding claim of Section 54F was available on record, therefore, the Assessing Officer may be directed to allow deduction under Section 54B of the Act.

On the other hand, the ld. Sr.DR for the revenue by referring the fact that the assessee alongwith his co-owner sold land for a consideration of Rs. 40.00 lacs, out of which the assessee has 1/4th share. The Stamp Valuation (A.Y.11-12) Rajendrakumar R Pandya Authority valued the market value of land at Rs. 2.34 crore. The assessee made a request to refer the matter to DVO. At the time of passing of assessment order, the report of DVO was not received, thus the Assessing Officer made addition on the basis of legal fiction under Section 50C of the Act. Now the report of DVO has been received and the ld. CIT(A) has already directed Assessing Officer to recompute capital gain on the basis of his report. So far as deduction under Section 54B for purchase of another agriculture land, the Assessing Officer rightly not allowed the claim of assessee in absence of revised return as per decision of Hon’ble Supreme Court in Goetze (India) Limited (supra). On the validity of reopening, the ld. Sr.DR submits that at the time of reopening, reasonable belief of Assessing Officer is sufficient. On the issue of distance of land from boundaries of Surat Municipal Corporation, the ld. Sr.DR for the revenue submits that distance of village Kharvasa from Dindoli is about 5.00 K.M. as per Google Maps, copy of which was downloaded on 14/11/2024 and filed before the Bench. On the issue of deduction under Section 54B, the ld. Sr. DR for the revenue submits that for claiming such deduction, various conditions are required to be satisfied for such deduction, the Tribunal is a last fact finding authority and it is difficult to ascertain at this stage that assessee fulfilled all the conditions for claiming such deduction. Thus, in alternative, ld. Sr. DR prayed to restore the matter to the Assessing Officer for verification of eligibility of deduction under Section 54B.

In the rejoinder submission, the ld. AR of the assessee submits that the land sold by assessee is agriculture land and this fact is mentioned in the sale (A.Y.11-12) Rajendrakumar R Pandya deed itself. There is no evidence that land has been put to non-agriculture use. More than 13 years passed as matter relates to A.Y. 2011-12 and expeditious resolution would serve the principle of natural justice instead of restoring matter back to the file of Assessing Officer.

We have considered the rival submissions of both the parties and have gone through order of lower authorities carefully. We have also deliberated the case laws relied upon by Ld. AR of the assessee. On considering the entire facts and circumstances of the case, we find that once the DVO has given his report on the value of asset as on 01/04/1981 as well as on the date of sale of asset, in absence of any objection or adverse material on record, such valuation needs to be accepted as it is. We find that the ld. CIT(A) has already directed the Assessing Officer to recompute the capital gain on the basis of valuation of DVO with regard to cost of acquisition as well as on the value of sale. We also find that on the basis of such values, the assessee has given his own working which seems to be correct as the same is not disputed either by ld. CIT(A) except for verifying nor by the ld. Sr. DR at the time of his submission. On the basis of such working we find that the assessee has earned capital gain of Rs. 7,86,236/- on the sale of such land. We further find that the assessee has claimed deduction under Section 54B for purchase of another agricultural land. No doubt, that the Assessing Officer was not entitled to admit such claim in absence of revised return of income, however, such restriction are not applicable on the power of appellate jurisdiction. Therefore, keeping in view the said decision of Hon’ble High Court in CIT Vs Mitesh Impex (supra), the additional claim of assessee is accepted. Further (A.Y.11-12) Rajendrakumar R Pandya considering the fact that the assessee has raised his claim before Assessing Officer as well as before the ld. CIT(A), therefore, the Assessing Officer is directed to verify the fact and allow relief to the assessee for the claim of Section 54B of the Act. Thus, ground No. 3 of appeal is allowed for statistical purpose.

So far as reopening is concerned, we find that at the time of reopening in the present case, the Assessing Officer was having sufficient reason to believe that income of assessee has escaped assessment, therefore, we do not find much convincing force in the submission of ld. AR of the assessee.

We further find that parties have also locked their horn on the issue of distance of location of land whether it was more than 8 KM or less than 8 KM. The ld. Sr. DR for the revenue filed the evidence of Google Map which was not the case of Assessing Officer, though, before Assessing Officer, the assessee furnished certificate of Talati and Gram Panchayat. On the other hand, the Assessing Officer relied on the certificate issue by Surat Urban Development Authority dated 21/12/2018 wherein the distance of village Kharvasa is mentioned as 2.97 KM. Though, such fact was strongly disputed by the ld. AR of the assessee on the ground that boundaries of S.M.C. was increased from time to time and various areas was included in A.Y. 2014-15. Considering the aforesaid fact that more than 14-15 years have passed from the date of transaction and due to rapid development of area, all geographical position have been changed, therefore, at this stage, we are not inclined to give any direction to the Assessing Officer for extracting such fact which may consume much more time. Hence, the submission of (A.Y.11-12) Rajendrakumar R Pandya assessee is not acceptable at this stage. At the time of submission, ground No. 2 of appeal was not pressed, thus, the same is dismissed as not pressed.

In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 23/01/2025.