NAROTTAM ATMARAM WARDE,RAIGAD vs. INCOME TAX OFFICER, PANVEL

Submission of ld.AR : 2. Ld.AR for the Assessee filed a paper book. The relevant paragraphs of the ld.AR’s submission are reproduced here as under : “1.4 The learned CIT(A) relied upon decisions such as CIT v. Multiplan India Ltd. and other similar rulings. These authorities relate to ITAT's 2 discretionary powers and do not apply to first appellate proceedings 250. Courts have consistently held that the ratio of Multiplan India Ltd cannot be applied by CIT(A). The Hon'ble Supreme Court held in the matter of ITO v. S. Chenniappa Mudaliar 74 ITR 41 (SC) that appeals cannot be dismissed for default and must be decided on merits. 1.5Since the impugned order does not frame points for determination, does not decide the grounds raised

, and does not give reasons on merits, the same is void ab Initio, unsustainable in law, and liable to be set aside. On this ground alone, the impugned order passed by the learned CIT(A) deserves to be quashed, and the matter may either be decided by this Hon'ble Tribunal on merits or restored with a direction to decide afresh on merits. ………. 2.2 Revenue records conclusively establish agricultural character. The 7/12 extract, which is the most authoritative land record under Maharashtra Land Revenue Code, records the land as agricultural land. Honourable Bombay High Court in CIT v. Siddharth J. Desai 139 ITR 628 (Bom HC) held that Revenue records are a vital and reliable indicator to determine the nature of land. Honourable Bombay High Court in CIT v. Debbie Alemao 331 ITR

59. (Bom HC) held that "Actual earning of agricultural income is not a sine qua non for determining the character of agricultural land." Absence of agricultural income is legally irrelevant. The AO has implicitly assumed that because no agricultural income was shown, the land is not agricultural. This assumption is unsustainable in law. 2.3 Even if the land was later used for development, the law is settled that what matters is the character of land on the date of transfer, not future use. Honourable Bombay High Court in Gopal C. Sharma v. CIT 209 ITR 946 held that Potential non-agricultural use or purchaser's intention does not change agricultural character.

2.4 Section 2(14)(iii) excludes "Agricultural land in India" (subject to distance conditions) There is no exclusion for grass land, no requirement of crop rotation, no requirement of food grains. Once land is agricultural and rural it is outside capital asset definition. Burden of proof wrongly shifted by AO 3 Law is settled that: Revenue must prove land is non-agricultural Assessee is not required to prove agricultural income every year In the present case AO has not shown conversion order. not shown NA assessment, not rebutted revenue records. Thus, addition fails on burden of proof itself. 2.5 Accordingly, the land sold by the appellant being rural agricultural land, the addition of 19,02,350/- on account of capital gains deserves to be deleted in full.” Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of the Assessing Officer.

Findings & Analysis : 4. We have heard both the parties and perused the records. In this case, as per the assessment order, Assessee had not filed Return of Income for A.Y.2012-13 u/s.139(1) of the Act. Assessing Officer received information from ITO(I & C), Kalyan regarding sale of immovable property by Assessee during the year. It is mentioned in the Assessment Order that assessee along with 16 other co-owners have sold an immovable property for a consideration of 4 Rs.3,23,40,000/-. During the assessment proceedings, assessee [A] submitted that it is an agricultural land and hence, no capital gain is taxable on sale of agricultural income. Assessing Officer invoked Section-2(47)(v) of the Income Tax Act, and held that it is taxable. Assessing Officer accordingly taxed Assessee’s share out of the Capital Gain at Rs.19,02,350/-.

8. We have perused the agreement referred by Assessing Officer. Ld.AR has filed copy of the said document dated 31.01.2012. It is noted that it is a sale deed dated 31.01.2012 having sale consideration of Rs.3,23,40,000/- duly registered. Relevant document is scanned and reproduced here as under :

8.1 Thus, Assessee along with 16 co-owners have entered into a Sale Deed with Mr.Nitin Chatwal on 31.01.2012 for the sale of their ancestral land. It is specifically mentioned in the sale deed that the land belongs to Warde Family since 1900. Assessing Officer has not brought on record the distance of the land from the Municipal Council/Corporation. It is an important fact to determine whether 6 the land is agricultural or not!

10. The Hon’ble Bombay High Court has held in the case of Pr.CIT(Central) Vs. Premkumar Arjundas Luthra (HUF) (Bombay)/[2017] 297 CTR 614 (Bombay) as under : Quote, “8.From the aforesaid provisions, it is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act.

Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(1)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or penalty. Besides Explanation to sub-section (2) of Section 251 of the Act also makes it clear that while considering the appeal, the CIT(A) would be entitled to consider and decide any issue arising in the proceedings before him in appeal filed for its consideration, even if the issue is not raised by the appellant in its appeal before the CIT(A). Thus once an assessee files an appeal under Section 246A of the Act, it is not open to 7 him as of right to withdraw or not press the appeal. In fact the CIT(A) is [A] obliged to dispose of the appeal on merits. In fact with effect from 1st June, 2001 the power of the CIT(A) to set aside the order of the Assessing Officer and restore it to the Assessing Officer for passing a fresh order stands withdrawn.

Therefore, it would be noticed that the powers of the CIT(A) is coterminous with that of the Assessing Officer i.e. he can do all that Assessing Officer could do. Therefore just as it is not open to the Assessing Officer to not complete the assessment by allowing the assessee to withdraw its return of income, it is not open to the assessee in appeal to withdraw and/or the CIT(A) to dismiss the appeal on account of non-prosecution of the appeal by the assessee. This is amply clear from the Section 251(1)(a) and (b) and Explanation to Section 251(2) of the Act which requires the CIT(A) to apply his mind to all the issues which arise from the impugned order before him whether or not the same has been raised by the appellant before him. Accordingly, the law does not empower the CIT(A) to dismiss the appeal for non- prosecution as is evident from the provisions of the Act.” Unquote.

10.1 Thus, the Hon’ble Bombay High Court has categorically held that ld.CIT(A) has to decide the appeal on merit and ld.CIT(A) does not have any power to dismiss appeal for non-prosecution.