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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI GEORGE MATHAN & SHRI S. JAYARAMAN
आदेश/ O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER :
The assessee filed this appeal against the order of Principal Commissioner of Income Tax, Puducherry, passed u/s. 263 in C.No 9127A/11/PCIT/PDY/17-18 dated 28.03.2018 for assessment year 2009- 10.
The AR submitted that M/s. Govindarajan (HUF), the assessee’s assessment u/s. 143(3) r.w.s. 147 was completed on 21.11.2013, inter alia, rejecting the assessee’s claim that the land sold was agricultural land and making an addition under the head “capital gains”. On an appeal, the Ld. CIT(A) by his order in dated 26.06.2014 allowed the assessee’s appeal by deleting the addition made by the AO, primarily for the reason that the Bahour was not a notified area in terms of Notification No. SO 10(E) dated 06.01.1994 as amended by Notification No. SO 1302 dated 28.12.1999. Against the order of the Ld. CIT(A), the Revenue filed an appeal before this tribunal and this tribunal in ITA No. 2180/Mds/2014 dated 20.02.2015, held as under:
“8. A close reading of section 2(14)(iii)(a) of the Act suggests with two criteria, (i) agricultural land should be in a area within the municipality and (ii) that the area should have a population of more than ten thousand. In the present case, no doubt that the land sold by the assessee is within Bahour Municipal limit, as per the schedule of the sale deed, but, so far as the population is concerned, neither the Assessing Officer nor the Ld. CIT(A) has discussed about the second criteria. Therefore, in the interest of justice, we set aside the order passed by the Ld. CIT(A) on this issue and remit the matter back to the Assessing Officer to decide the issue de novo keeping in view of our above observations as well as decision of the Hon’ble Supreme Court in the case of G. M. Omer Khan v. Addl. CIT (196 ITR 269) after giving opportunity of hearing to the assessee.
In the result, the appeal of the Revenue is allowed for statistical purpose.”
Complying with the directions of the Hon’ble ITAT, the AO examined the issue by deputing his inspector to verify the facts. The inspector furnished the report dated 28.05.2015, wherein, inter alia, he reported that the impugned land is situated at Panithittu, Puducherry which is 13.1 kms away from Kadalur Municipality and 10.4 kms from Puducherry and the total population of Bahour Panchayat as per 2011 sensus is 9221 only. Hence, Bahour is a communal panchayat and does not fall under the municipality limits of Puducherry panchayat. After considering such report etc., the Assessing Officer passed an order u/s. 143(3) r.w. 254 dated 28.05.2015, holding that the impugned land sold by the assessee was situated in panithittu village and it was in the Bahour Commune Panchayat, a village panchayat distinct and different from municipality and the chitta adangal issued by the Revenue authorities reveals that the land is an agricultural land etc.
The Ld. AR continued his submissions stating that the Ld. PCIT wrongly invoked the jurisdiction u/s. 263 on the order passed u/s. 143(3) r.w. 254 dated 28.05.2015 held that this order is erroneous and prejudicial to the interest of revenue and set aside the order. The AR submitted that the Ld. PCIT failed to appreciate that the impugned order dated 28.03.2018 passed u/s. 263 clearly barred by limitation as per provisions of section 263(2). The fact that the agricultural nature of the land was arrived at in the original assessment order passed u/s. 143(3) r.w. 147 dated 21.11.2013 and not in the order passed u/s. 143(3) r.w.
254 dated 26.05.2015. The Ld. PCIT overlooked the fact that in the assessment order dated 21.11.2013, the AO has impliedly gave a finding as to the agricultural nature of land by recording the fact of his visit to the land. The Ld. PCIT overlooked the fact that the AO need not have gone into the question of distance of the land from the nearest municipality, if the land in question was found or suspected to be non- agricultural. Further, the facts have attained finality in view of the decision of the ITAT, except for ascertaining the population of Bahour Commune Panchayat as per the ITAT order in ITA No 2180/Mds/2014.
Hence, the AR pleaded that the order passed by the Ld PCIT may be quashed. Per contra, the Ld. DR supported the order of the PCIT.
We heard the rival submissions. The facts remain that the ITAT directed the AO to verify whether the population of Bahour municipal is having a population of more than 10,000 and then decide the issue in accordance with that criteria, but for this issue, all other issues attained finality in the original order u/s. 143(3) r.w. 147 dated 21.11.2013.
Hence, the Ld PCIT is not right in invoking the jurisdiction u/s. 263 on the nature of “agricultural land” against the order passed u/s. 143(3) r.w. 254 dated 28.05.2015 and hence the impugned order passed by the Ld. PCIT dated 28.03.2018 is quashed.
In the result, the assessee’s appeal is allowed. 6.
Order pronounced in the open court on 24th October, 2018 at Chennai.