DCIT CORP. CIRCLE 2, COIMBATORE vs. S.BALASUNDARAM, COIMBATORE

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) -2, Coimbatore, dated 10.01.2018 and pertaining to assessment year 2009-10. The assessee has filed a cross-objection against the very same order of the CIT(Appeals). Therefore, we heard both the appeal of the Revenue and cross-objection of the assessee together and disposing of the same by this common order.

Shri R. Clement Ramesh Kumar, the Ld. Departmental Representative, submitted that originally the assessment was completed under Section 143(3) of the Income-tax Act, 1961 (in short 'the Act'). Referring to copy of the assessment order passed under Section 143(3) of the Act dated 28.12.2011, a copy of which is available at pages 22-28 of the assessee’s paper-book, the Ld. D.R. submitted that the land in question was used for agricultural purpose and the assessee had produced material in respect of the claim. Accordingly, the investment made by the assessee in the agricultural land was allowed under Section 54B of the Act. When the matter travelled before this Tribunal, according to the Ld. D.R., this Tribunal specifically found that the assessee sold the agricultural land and purchased agricultural land, which is not in dispute. According to the Ld. D.R., the Tribunal had no occasion to examine the materials that were collected by the Assessing Officer after reopening of assessment. The Assessing Officer reopened the assessment and examined the Village Administrative Officer and Tehsildar, Coimbatore North Taluk, who clarified that the land in question was not used for agricultural purpose and the same was used as cycle stand for the last 15 years.

Shri R. Clement Ramesh Kumar, the Ld. D.R. further submitted that the Village Administrative Officer and Tehsildar clarified that the Adangal extract and other copies of revenue records filed by the assessee earlier were not correct. The Ld. D.R. clarified that the Adangal extract and other revenue records were issued by the Village Administrative Officer. The Village Administrative Officer, on enquiry, found that no crop was cultivated for the last 15 years. Therefore, according to the Ld. D.R., these facts were not available before the Tribunal when the appeal was disposed of. Hence, according to the Ld. D.R., the CIT(Appeals) is not justified in allowing the claim of the assessee. Since the assessee has not cultivated the land and it was used as cycle stand, according to the Ld. D.R., the assessee is not eligible for deduction under Section 54B of the Act. Moreover, according to the Ld. D.R., the profit arising out of sale cannot be considered as agricultural income.

On the contrary, Shri G. Baskar, the Ld.counsel for the assessee, submitted that the Assessing Officer in the first round of litigation, found that the land in question was agricultural land and when the assessee had produced substantial evidence, he allowed exemption under Section 54B of the Act. The only dispute before the Tribunal in the first round of litigation was, according to the Ld. counsel, whether the assessee has invested in the new property within the specified time frame. The Tribunal found that since the land sold by the assessee and purchased by the assessee are not in dispute and both the parties agreed that the lands sold by the assessee and purchased by the assessee are agricultural lands, it concluded that the assessee purchased the property within the specified period and entitled for exemption under Section 54B of the Act. The Ld.counsel placed his reliance on the judgment of Bombay High Court in Bank of Baroda v. H.C. Shrivastava (2002) 256 ITR 385 and also on the judgment of Madras High Court in Seshasayee Paper & Boards Ltd. v. Inspecting Assistant Commissioner (1986)

We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, in the first round of litigation, the Assessing Officer by an order dated 28.12.2011 passed under Section 143(3) of the Act, found that the assessee sold agricultural land and purchased agricultural land and allowed deduction under Section 54B of the Act. When the matter travelled before this Tribunal with regard to period of investment in the new property, this Tribunal found that there was no dispute with regard to sale of agricultural land and purchase of agricultural land.

Now, after the order of this Tribunal, the Assessing Officer reopened the assessment and summoned the Village Administrative Officer and Tehsildar for examination. Even though the Adangal extract and other revenue records reveal that the assessee cultivated maze in the subject land, the Village Administrative Officer claims that on enquiry, the land in question was not used for cultivation and it was used as cycle stand. It is a common knowledge that the function of the Village Administrative Officer is to take cultivation account in every six months and which will be recorded in the Adangal. The Adangal is nothing but Village Account No.2 maintained for the purpose of recording the cultivation account in the village. A senior officer at the level of Deputy Tehsildra and Tehsildar will re-verify the accounts taken by the Village Administrative Officer. Subsequently, the cultivation account will be produced before the Taluk Statistical Committee for the purpose of estimating the food production of Taluk. The report of the Statistical Committee at Taluk level will be forwarded to the District Collector so that the District Statistical Committee could estimate the food production of the entire District.

This is the state of affairs existing in State Government. It is not known how the Village Administrative Officer made statement before the Assessing Officer that on enquiry he found that no cultivation was made, even though it was recorded in the Adangal extract that the assessee was cultivating maze. This Tribunal is of the considered opinion that the Adangal extract was maintained by the Village Administrative Officer in the course of performing his official duty. Therefore, when there was conflict between the oral statement made by the Village Administrative Officer and the record that was maintained by the Village Administrative Officer in the course of his official duty, the record maintained by the Village Administrative Officer, which was verified by the Tehsildar or Deputy Tehsildar, would prevail over the oral statement. Moreover, it is not known whether the Village Administrative Officer, who made the statement before the Assessing Officer, was working as Village Administrative Officer for the last 15 years. Therefore, the statement made by the Village Administrative Officer contrary to the revenue record, namely, Adangal extract were not believable one.

Since this Tribunal found that the land in question is agricultural land and what was purchased by the assessee is also agricultural land, the Assessing Officer cannot disturb the order of this Tribunal. If the Assessing Officer finds that the observation made by this Tribunal is contrary to the fact and is not correct, then it is open to him to take up the matter before the High Court or higher forum in a manner known to law. The Assessing Officer cannot take the law in his own hand and disturb the order of a higher forum in the guise of collecting material after reopening of assessment. The authority to adjudicate the dispute even though technically flows from the Income-tax Act, this Tribunal is of the considered opinion that in fact, such an authority flows from confidence reposed by the people of this country on judicial system.

This Tribunal time and again points out that when such case happens, it is open to the Department to move the higher forum in a manner known to law. In this case, the Assessing Officer or Commissioner would have moved this Tribunal for recall of the order by placing all these materials. Since such an exercise was not done, it is clear that the Assessing Officer has taken the law in his own hand and found that the land in question is not an agricultural land. This finding of the Assessing Officer, in fact, overturns the order of this Tribunal which cannot be allowed to happen. The order of this Tribunal is binding on the authorities, more particularly, the Assessing Officer who is party to the proceeding before this Tribunal. Having known that this Tribunal found that the land in question is agricultural land, the Assessing Officer has reopened the assessment. This Act of Assessing Officer is contrary to the established judicial discipline. Therefore, the CIT(Appeals) has rightly set aside the order of the Assessing Officer. Accordingly, the same is confirmed.

The cross-objection filed by the assessee is only to support the order of the CIT(Appeals). Therefore, the same is dismissed as infructuous.

In the result, both the appeal of the Revenue and the cross- objection of the assessee are dismissed.