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Income Tax Appellate Tribunal, “C” BENCH : BANGALORE
Before: SHRI N.V. VASUDEVAN & SHRI B.R. BASKARAN
Date of hearing : 22.01.2019 Date of Pronouncement : 15.02.2019 O R D E R
Per N.V. Vasudevan, Vice President
This is an appeal by the Assessee against the order dated 29.10.2013 of the CIT(Appeals), LTU, Bangalore relating to assessment year 2004-05.
The Assessee is an individual. He filed return of income for AY 2004-05 on 5.7.2005 declaring income of Rs.8,25,937 and agricultural income of Rs.1,49,450/-. An intimation u/s.143(1) of the Income Tax Act, 1961 (Act) was issued by the AO on 26.12.2005 accepting the return of income.
Subsequently a notice u/s.148 of the Act for making an assessment of income that has escaped assessment u/s.147 of the Act, was issued by the AO on 3.5.2007. In grounds No.1 to 3, the Assessee has challenged the validity of initiation of proceedings u/s.147 of the Act on the ground that the AO did not furnish the reasons recorded before issuing notice u/s.148 of the Act. There is no material on record to show that the Assessee demanded copy of reasons recorded in the course of assessment proceedings, except a statement by the learned counsel for the Assessee that it was demanded orally in the course of assessment proceedings. The law is settled that unless such reasons are demanded, the AO is not obliged to furnish the same. In that view of the matter, ground Nos.1 to 3 raised by the Assessee are held to be without any merit and dismissed.
In grounds No.4 to 8, the Assessee has challenged the action of the revenue authorities in coming to the conclusion that the Assessee carried out adventure in the nature of trade in the matter of buying and selling lands and therefore the gain arising from such activities had to be regarded as income from business. Without prejudice to the aforesaid conclusion, the revenue authorities also denied the benefit of deduction u/s.54B of the Act claimed by the Assessee. To decide the question of deduction u/s.54B of the Act, the question whether the lands in question were agricultural lands used for the purpose of agricultural operations was relevant. The revenue authorities held that the conditions for allowing deduction u/s.54B of the Act were not satisfied on the lands in question being regarded as agricultural lands.
We have heard the rival submissions on grounds No.4 to 8. At the time of hearing, the learned counsel for the Assessee brought to our notice the decision of the Hon’ble Karnataka High Court in Assessee’s own case in AY 2003-04 in of 2009 dated 9.3.2015 wherein the Hon’ble Court remanded the issue for fresh consideration with the following observations:-
“4. The learned counsel for both the parties agree that the entire dispute in the present appeal hinges upon the fact as to whether the properties which were sold and also the properties which were purchased are the agricultural lands as per Section 2(14) of the Act and also as to whether the same were being used for agricultural purpose so as to attract the provisions of Section 54B of the Act. The learned counsel for both the parties have also stated that though the evidence from both sides were adduced before the Assessing Authority, which formed part of paper book of the Tribunal, but there is no discussion with regard to such evidence on the basis of which the Tribunal has come to a finding that the properties in question which were sold and purchased by the Assessee were agricultural properties and were used for agricultural purposes. The learned counsel for both the parties thus jointly stated that the matter be remanded back to the Assessing Authority for considering such question of fact afresh after taking into account the evidence which was lead by the parties.
5. In such view of the matter, the appeal is allowed. The order dated 17.04.2009 passed by the Tribunal in as well as the order of the Authorities below are hereby quashed. The matter is remitted back to the Assessing Authority with a direction to consider the matter afresh in the light of the observations made herein above. In view of the fact that the questions, which have been referred for decision of this court, have to be decided afresh in the light of the evidence adduced by the parties by the Assessing Authority, we are not answering the questions framed at the time of Admission of this appeal and the same shall be looked into by the Assessing Authority.”
It is undisputed that the aforesaid observations will apply to the present assessment year also, as some of the properties on which deduction was claimed in AY 2003-04 were sold in this year and the nature of those properties, whether they were agricultural lands or not depends on the findings in AY 2003-04. Therefore, it would be just and proper to set aside the order of the CIT(Appeals) on the grounds raised in Gr.No.4 to 8 to the AO for consideration afresh on the same directions as given by the Hon’ble High Court. The learned counsel for Assessee pleaded for liberty to file additional evidence before the AO in the set aside proceedings to show the character of the lands that were sold on the basis of revenue records. The prayer is accepted. Thus, grounds 4 to 8 are decided accordingly.
In grounds No. 9 to 12, the Assessee has challenged the addition made on account of unexplained investments in construction of a Kalyani Mandapam. In AY 2003-04 similar addition was made on account of unexplained investment and the Tribunal vide paragraph 16 of its order in order dated 16.4.2009 held that the valuation of plinth area should be made by adopting the State PWD rates as against the CPWD rates adopted by the District Valuation Officer (DVO). The learned counsel for the Assessee prayed for similar direction in the present Assessment year also, which prayer, in our opinion, deserves to be accepted. Thus, grounds No.9 to 12 are decided accordingly.
In the result, appeal by the Assessee is partly allowed.
Pronounced in the open court on this 15th day of February, 2019.