LATE SH. SHIV RAJ SINGH THROUGH LEGAL HEIR SMT. KAMLESH CHAUDHARY,SIRMOUR vs. INCOME TAX OFFICER, NAHAN

आदेश/Order

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order dated 23.03.2022 passed by the ld. PCIT exercising the Revisionary jurisdiction u/s 263 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

ITA No. 380/CHD/2022 A.Y. 2012-13 Page 2 of 9

Income Tax Act whereas the order of the Assessing Officer

(hereinafter referred to as ‘the AO’) passed u/s 147 read with

Section 143(3) of the Act was neither erroneous nor prejudicial

to the interests of the Revenue.

impugned order of the ld. PCIT stating the reasons, because of

which ld. PCIT was of the view that the order of the AO was

erroneous and prejudicial to the interests of the Revenue as

under :

reveal that the ld. PCIT noted that the AO had failed to conduct

necessary enquiries in respect of the reasons for which the

assessment was reopened by the AO u/s 147 read with Section

148 of the Act. The ld. counsel has further invited our

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attention to the following reasons recorded for re-opening of

the assessment :

“The assessee has not filed his Income Tax Return for the relevant period. As per assessee, he is an agriculturist and does not have any taxable income. 2. Information has been received from the office of Director of Income Tax (I & CI), vide letter F.No. DIT(I & C.I)/Chd/2016-17/582 dated 30.1 1.2016 that the assessee has sold his immovable property at Village Gulawali, Pargana- Dankaur, Distt. Gautam Budh Nagar (UP) vide Sale Deed No. 19818 of 2011 dated 18.01.2011. He has sold 2.4949 hectares of land for a total sale consideration of Rs.23,00,000/-. As per the value adopted by the Stamp Valuation Authority, the property has been valued at Rs. 1,24,75,000/- It has been further informed that the said property comes within the municipal limits of Noida and is thus covered u/s 2(14) of Income Tax Act, being capital asset 3. Information available on record further reveal that the assessee, during query raised in this regard has vide letter dated 01.05.20 17 stated that the said land is rural agricultural land. The relevant portion of the letter is reproduced here under: 1. "I am a agriculturist and have no taxable income and have not filed any income tax return. 2 1 had disposed off my ancestral rural agricultural land situated at Village Gulawali, Pargana Dankaur, and District Gautam Dudha Nagar(UP) in 2011-12. 3. Further the aforementioned land is located at a distance of approximately 22 Kilometers from municipal limits (Nagar Panchayat, Dankaur). A copy of the certificate issued by Tehsildar, Sadar, Gautam Budh Nagar (UP) dated 24.04.2014 is also enclosed for ready reference. This land is rural agricultural land sale proceeds of the same are not taxable under Income Tax Act 1961, not being a capital asset u/s 2(l4| of the Act." 4. 1 have analyzed the case and have also considered the information available on record. The issue involved is whether the land sold by assessee is capital asset or not. Letters issued by the undersigned to the Tehsildar. Gautam Budh Nagar have not been responded. However independent enquiries have revealed that the said property comes under notified area of NOIDA "(New Okhla Industrial Development Authority), and is Sector 162 of NOIDA. The official website http://www.noidaauthorityonline.com has been explored in this regard and it has been revealed that vide Special Board meeting held on 09.09.2005, the master plan of notified area was approved which includes Sector 162 under the said notified area. Apparently the property sold by assessee is a capital asset, being under the notified area.

ITA No. 380/CHD/2022 A.Y. 2012-13 Page 4 of 9 5. From the records available, it is seen that the sale consideration of said capital asset works out at Rs. 1,24,75,000/-, being value as per the Section 50C of Income Tax Act. The land is stated to be ancestral land and therefore value for cost indexation is to be adopted for the year 1981, As on date, there is no such data of value of land available as on 01.04.1981. 1 presume the value of land at Rs. 10,00,000/-, for the purpose of capital gain, subject to verification of it, at the time of assessment. Accordingly the Long Term Capital Gain works out at Rs.46,25,000/-. I therefore prima facie have reasons to believe that income of Rs.46,25,000/- have escaped assessment. 6. In this case no return of income was filed for the year under consideration accordingly, in this case, no assessment was made and the only requirement to initiate proceeding u/s 147 is reason to believe which has been recorded above. 7 . It is pertinent to mention here that in his case the assessee has chosen not to file return of income for the year under consideration although the total income of the assessee has exceeded the maximum amount which is not chargeable to tax as discussed in paragraph 5 above and the assessee was assessable under the Act. In view of the above, the provisions of clause [a) of Explanation 2 to section 147 are applicable to facts of this case and the assessment year under consideration is deemed to be a case where income chargeable to tax has escaped assessment . 8. In this case more than four years have lapsed from the end of assessment year under consideration. Hence necessary sanction to issue notice u/s 148 has been obtained separately from Pr CIT as per the provisions of Section 151 of the Act.” 5. A perusal of the above reasons recorded shows that

earlier the office of DIT(I) had issued Show Cause Notice to the

assessee stating that the land sold by the assessee was within

the municipal limits and thus was a capital asset as per the

provisions of Section 2(14) of the Income Tax Act. However, the

assessee replied to the said notice of the Investigation Wing

that this land in question was a rural land which was located

at a distance of approximately 22 kms. from the municipal

limits of Nagar Panchayat, Dankaur. The assessee also

furnished a copy of certificate issued by Tehsildar, Gautam

Budh Nagar (UP) dated 24.04.2014 in this respect. Thereafter,

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the Investigation Wing did not proceed with the further

enquiries.

5.1 However, later on the AO reopened the assessment

observing that from the independent enquiries, it revealed that

the property in question comes under the Notified Area of Noida

(new Okhla Industrial Development Authority). The AO,

therefore, reopened the assessment and show caused the

assessee as to why the land in question be not treated as

capital asset and why the capital gains on the sale of the land

may not be taxed. However, the assessee in the re-assessment

proceedings furnished the necessary details not only relating to

the distance of the property from the limits of the municipal

limits but also regarding the fact that the population of the

village Gulavali, where the land was situated, was 1828 only

and that as per provisions of Section 2(14) of the Income Tax

Act, since the population in an area which is comprised within

the jurisdiction of a municipality or Notified Area Committee

was less than 10000, the land in question will not be

considered as capital asset u/s 2(14) of the Act.

attention to the application moved by the assessee to the

Tehsildar, Gautam Budh Nagar requesting him to issue him a

certificate regarding the distance of his land from the limits of

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the Municipal Council where upon, the Tehsildar called report

from the Land Revenue officials, who after verification, reported

that the land was situated at a distance of 22 kms. from Nagar

Panchayat. The report was duly signed by the Tehsildar under

his seal/stamp. The ld. counsel for the assessee has further

invited our attention to the assessment order dated

30.09.2012, wherein, the AO has also noted that information

was also obtained u/s 133(6) of the Act from the Tehsildar,

Gautam Budh Nagar (UP) which was placed on record. After

examining the information/documents placed on record, the AO

accepted the returned income. However, the ld. PCIT in para 3

of the Show Cause Notice observed as under :

“3. A perusal of the relevant assessment records reveals that the assessee had sold 2.4949 hectares of land at Village Gulavali Dankaur, Distt. Gautam Budh Nagar vide sale deed no. 199818 of 2011 dated 18.10.2011 for a consideration of Rs. 23,00,000/-, but the value of the given land was determined at Rs. 1,24,75.000/- by the Stamp Valuation Authority for the stamp valuation purpose. From the perusal of the assessment record, it is further noted that, during the course of assessment proceedings, the AO had not made any enquiry or verification regarding the distance of the said land from the notified area. The distance certificate submitted by the assessee that the land was situated more than 23 Kms from the limits of the Municipal Corporation Dankaur is found contrary to the facts of the case, as the assessee himself had admitted that some parts of the Gautam Budh Nagar where the land was situated had been notified. The assessee had further stated simply that the said land was never a part of such notified land, but had failed to furnish any documentary evidence to prove that the distance of the said land was more than 8 Kms form the notified area.”

6.1 Further, the ld. PCIT in para 4 of the impugned order

passed u/s 263 has observed under :

ITA No. 380/CHD/2022 A.Y. 2012-13 Page 7 of 9 “4. A perusal of the relevant assessment records reveals that the assessee had sold 4949 hectares of land at VHlag© Gulavali Dankaur, Dist: Gautarn Budh Nagar vide sale deed no.199818 of 2011 dated 18.10.2011 for a consideration of Rs. 23,00,000/- but value of the given land was determined at Rs.1,24,75,000/- by the Stamp Valuation uthority for the stamp valuation purpose. From the perusal o1 the assessment record, it is further noted that, during the course of assessment proceedings, the AO had not made any enquiry or verification regarding the distance of the said land from the notified area. The distance certificate submitted by the assessee that the land was situated more than 23 Kms from the limits of the Municipal Corporation Dankaur is found contrary to the facts of the case, as the assessee himself had admitted that some parts of the Gautam Budh Nagar where the land was situated had been notified. The assessee had further stated simply that the said land was never a part of such notified land, but had failed to furnish any documentary evidence to prove that the distance of the said land was more than 8 Kms form the notified area.

PCIT coupled with the Show Cause Notice would reveal that the

main concern of the ld. PCIT forming the belief that order of

the AO was erroneous and prejudicial to the interests of the

Revenue was that the AO has not made proper enquiries.

However, the order of the ld. PCIT is silent as to what further

enquiries the AO was required to make. It seems that the PCIT

has formed his belief that the order of the AO was erroneous

only after perusal of the assessment order without consulting

the assessment records. The documents furnished by the

assessee reveal that initially the enquiry was conducted by the

Office of the DIT(I) in this respect where upon, the assessee

furnished a reply and certificate to the Tehsildar that the land

in question was situated at a distance of 22 kms from Gram

Panchayat. Thereafter, the office of DIT(I) did not proceed with

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further enquiries. Thereafter the assessment was reopened on

the same issue whereupon the assessee furnished the

necessary documents not only in respect of the fact that the

land was situated at a distance of 22 kms. from Gram

Panchayat but also in respect of the fact that the total

population of the area was less than 10000 and therefore, the

land did not fall within the definition of ‘capital asset’ as per

the provisions of Section 2(14) of Income Tax Act.

Apart from that, the AO made independent enquiry by

seeking information u/s 133(6) of the Act from the Tehsildar of

Gautam Budh Nagar and after perusal of the information and

evidences furnished by the assessee, the AO had accepted the

claim of the assessee.

7.1 The order of the ld. PCIT does not speak of the aforesaid

evidences nor any discussion has been made by the ld. PCIT as

to how the AO was not justified in relying upon the aforesaid

evidences. The ld. PCIT has passed the impugned revision

order without consulting the assessment records and without

pointing out the error or omission in the evidences furnished

by the assessee based upon which the ld. AO had accepted the

claim of the assessee. For exercise of jurisdiction u/s 263 of

the I.T.Act, the twin condition must be satisfied that the order

is erroneous and prejudicial to the interest of Revenue. In this

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case, the first and foremost condition that the “order of the AO

should be erroneous” has not been satisfied. In view of this,

we hold that the ld. PCIT was not justified in exercising his

jurisdiction u/s 263 of the Act and thereby setting aside the

assessment order. The impugned Revisionary Order passed by

the ld. PCIT is, therefore, not sustainable and the same is

hereby quashed. The appeal of the assessee stands allowed.

Order pronounced on 27th October, 2022.

Sd/- Sd/-

(VIKRAM SINGH YADAV) (SANJAY GARG) लेखा सद�य सद�य/ Accountant Member �याियक �याियक सद�य सद�य/ Judicial Member लेखा लेखा लेखा सद�य सद�य �याियक �याियक सद�य सद�य “Poonam.” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��यथ�/ The Respondent 2. आयकरआयु�त/ CIT 3. आयकरआयु�त (अपील)/ The CIT(A) 4. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड�फाईल/ Guard File 6.

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar