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Facts
The assessee sold agricultural land in AY 2005-06 and claimed various exemptions under sections 54B and 54F for cost of improvement, new agricultural land investment, and house construction. The Assessing Officer (AO) denied these claims due to lack of documentary evidence and based on a Halka Patwari report for land valuation, which was upheld by the CIT(A). The CIT(A) also rejected the admission of additional evidence regarding land purchases.
Held
The Income Tax Appellate Tribunal (ITAT) observed that the assessee did not controvert the CIT(A)'s findings. Furthermore, the assessee had passed away and no legal heirs came forward to pursue the appeal. Consequently, the ITAT found no grounds to interfere with the CIT(A)'s order.
Key Issues
Whether the reassessment proceedings were valid; whether claimed deductions under sections 54B and 54F for capital gains were admissible; and whether additional evidence should have been admitted.
Sections Cited
143(3), 147, 148, 54B, 54F, 131
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Income Tax Appellate Tribunal, DELHI BENCH “B”: NEW DELHI
O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in AY 2005-06, arises out of the order of the Commissioner of Income Tax (Appeals)-2, Gurgaon [hereinafter referred to as „ld. CIT(A)‟, in short] in Appeal No. 34/13-1416 dated 15.12.2015 against the order of assessment passed u/s 143(3)/147 of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 25.03.2013 by the Assessing Officer, ITO, Ward-II, Panipat (hereinafter referred to as „ld. AO‟).
None appeared on behalf of the assessee despite issuance of notice. Hence we proceed to dispose of this appeal on hearing the ld. DR and based on materials available on record.
The assessee has raised the following grounds of appeal:-
“1) That on facts, in law and circumstances of the case the of the appellant the order the Learned Assistant Commissioner of Income-Tax in initiating proceedings u/s147/148 is out of jurisdiction, arbitrary, illegal and uncalled for.
2.) That on facts, in law and circumstances of the case the Learned Commissioner is not justified in disallowing our request to admit additional evidence under rule 46A for agriculture land purchased through Iqrarnama's dated 14/03/2005 for Rs. 1,75,20,000/- at Garhi Multan dt. 14/03/2005 for Rs. 32,85,000, dt. 29/03/2005 for Rs. 92,59,500/- for deduction under section 54B of the Income-Tax Act. 3.) That on facts, in law and circumstances of the case the Learned Assessing Officer and the Learned Commissioner of Income-Tax (Appeals) in relying on the report of the Patwari called at the back of the appellant and never confronted with the same is against the provisions laid down under the law, arbitrary, illegal, void and uncalled for. The Commisisoner of Income-Tax(Appeals) in not appreciating this fact is against the facts and the circumstances of the case.
That on facts, in law and circumstances of the case of the appellant the order of the Learned Income-Tax Officer in adopting the valuation of land as on 01/04/1981 at Rs. 31,709/- per acre on the bases of average rates of patwari from 1975 to 1981 is against the provisions of the law and is altogether arbitrary, illegal, void and uncalled for.
That in facts and circumstances of the case of the Appellant the Order of the Learned Income-Tax Officer and the Order of the Learned Commssioner of Income- Tax (Appeals) in denying the benefit of the 'Cost of Farm House', Cattle Shed, Tubewells, Godowns, Boundary Wall, Pipe Line at Rs. 15,14,550/- which were in existences standing on the land sold to Eldico Company is altogether arbitrary, illegal, void and uncalled for.
6. That the Order of the Learned Income-Tax Officer and the Order of the Hon'ble Commissioner of Income-Tax Appeals in denying the benefit of claim of deduction u/s 54B in respect of cost of claim of deduction u/s 54B in respect of cost of improvement of new Agriculture Land purchased at Garhi Multan Vill. Kohnd by way of construction of Tubewell/Shed/Water Tank at Rs. 6,00,000/- is highly arbitrary, illegal, void and uncalled for.
7. That the Order of the Learned Income-Tax Officer in disallowing deduction under section 54F amounting to Rs. 32,00,000/- in respect of construction cost of new residential valuer's report is altogether, arbitrary, illegal and uncalled for.
That on facts and in law it is a fit case to remand the proceedings back to the Income-Tax Officer to consider the additional evidence given to the Learned Commissioner of Income-Tax (Appeals) regarding purchase of agriculture land for deduction claimed under section 54B of the Income-Tax Act.
The Assessee may crave to add, delete, modify any of the Grounds of Appeal before the final hearing.”
4. We have heard the ld DR and perused the materials available on record. The assessee is an individual and sold agricultural land measuring 10.7 acres in Village Nizampur on 24.03.2005 to M/s Eldico Infrastructure & Properties Ltd at a consideration of Rs. 3,09,16,700/-. Since, no return of income was filed by the assessee, notice u/s 148 of the Act was issued to the assessee on 27.03.2012. The assessee claimed exemption u/s 54B of the Act on the capital gains arising on sale of land. The assessee was asked to furnish documentary evidence in support of cost of improvement claimed by the assessee amounting to Rs. 15,14,550/- as well as the basis for cost of land as on 01.04.1981 arrived by the assessee at Rs. 2,25,000/- per acre. The assessee vide reply dated 06.03.2013 furnished a report of the Halka Patwari which estimated the cost of the land as on 01.04.1981 of Rs. 4 lakhs per acre. Subsequently, summons u/s 131 of the Act was issued to the Halka Patwari on 06.03.2013 who attended and furnished his report on the basis of Intiquals enclosed with its report and estimated the cost of land as on 01.04.1981 at Rs. 31,709.75 per acre. Accordingly, the ld AO adopted the cost of land as on 01.04.1981 at Rs. 31,709.75 per acre. The ld AO also observed that the assessee had not furnished any documentary evidence with regard to claim cost of improvement at Rs. 15,14,550/- and accordingly denied deduction towards the same. With regard to claim of exemption u/s 54B of the Act amounting to Rs. 32 lakhs on construction of property situated at Village Nizampur, the ld AO observed that assessee has not furnished any documentary proof on account of expenses incurred on construction of house. Even the map of the house constructed duly approved by the competent authorities was not furnished by the assessee. The assessee however, furnished a report from the registered valuer vide report dated 01.03.2013. The ld AO on perusal of the report noticed that the assessee has constructed an office, shops, garage, cattle shed, turi store whereas exemption u/s 54B of the Act is allowable only on the construction of residential house and the assessee had failed to furnish any bills for building material used thereon. With these observations, the claim of exemption u/s 54B was denied. The assessee had further claimed exemption amounting to Rs. 6 lakhs for construction of tubewell/ water tank/ shed on the land purchased in village Kohand. The assessee was asked to give proof of the investment made in the new agricultural land which was not furnished by the assessee. Accordingly, exemption u/s 54B of the Act was denied on the same. The capital gains of the assessee on sale of agricultural land was arrived by the ld AO at Rs. 1,98,18,084/-. The assessee preferred an appeal before the ld CIT(A). The ld CIT(A) upheld action of the ld AO by observing as under:-
“4.7. I have considered the appellant's submissions. It is evident from the facts on record that the AO had specific information regarding the sale of land by the appellant for an amount of Rs. 3,09,16,700/-. No return of income had been filed by the appellant. In these circumstances the AO had reason to believe that the income of the appellant had escaped assessment. The AO was therefore fully justified in initiating the proceedings u/s 148. This ground of appeal is dismissed.
5. Ground No. 3 & 4: These grounds of appeal are against estimating the cost of land as on 01.04.1981 at Rs. 31,709 per acre. 5.1. Brief facts have been discussed in para 4.1 to 4.5 above. 52 The AR of the appellant submitted that the rate of Rs. 31,709.75 per acre adopted by the AO was not justified. 5.3. I have carefully considered the appellant's submissions. The cost of land as on 01.04.1981 was adopted by the AO on the basis of report submitted by Halka Patwari in response to notice u/s 131. The AO has specifically pointed out in the assessment order the Halka Patwari had based his report on the intequals. The appellant has not furnished any evidence to controvert the report of the Halka Patwari. The AO was therefore fully justified in adopting the rate of Rs. 31709.75 acre on this issue. This ground of appeal is dismissed.
6. Ground No. 5:- This ground of appeal is against not allowing the claim of cost of improvement of Rs. 15,14,550/- 6.1. Brief facts have been discussed in para 4.1 to 4.5. above. 6.2. The AR of the appellant submitted that the disallowance was not justified. 6.3. it is an admitted fact on record that the appellant had not furnished any evidence in support of his claim of cost of improvement amounting to Rs. 15,14,550/-. It is also an admitted fact on record that no such construction on account of cost of improvement was existing at the time of assessment proceedings. The appellant's claim that the Eldeco Company had demolished the construction and the appellant's contention that he had furnished an affidavit regarding the existence of thee assets on the date of sale is a mere self serving statement without any supporting evidence. The AO was therefore fully justified in rejecting the appellant's claim on this account. This ground of appeal is accordingly dismissed.
7. Ground No. 6:- This ground of appeal is against denying the benefit of deduction u/s 54B amounting to Rs. 6,00,000/-,
7.1. Brief facts have been discussed in para 4.1 to 4.5 above. Page | 4
7.2 The AR of the appellant submitted that the disallowance was not justified. 7.3. I have carefully considered the appellant's submissions. It is an admitted fact on record that the appellant did not furnish any evidence in support of its contention that the investment of Rs. 6,00,000/- had been made towards construction of tubewell etc. the onus for submitting the requisite evidence in support of its claim lies on the appellant. The appellant having failed to discharge his onus, no deduction u/s 54B was allowable to him. The AO was therefore fully justified in disallowing this deduction. This ground of appeal is dismissed.
8. Ground No. 7:- This ground of appeal is against disallowance of deduction u/s 54F amounting to Rs. 32,00,000/-. 8.1. Brief facts have been discussed in para 4.1 to 4.5 above. 8.2. The AR of the appellant submitted that the disallowance was not justified. 8.3. I have carefully considered the appellant's submissions. It is an admitted fact on record that the appellant did not furnish any evidence in support of its contention that the investment of Rs. 32,00,000/- had been made towards construction of house. Further the AO has also pointed out that the appellant had constructed office/shops/garriage/Cattle shed/Tori store as per the valuers report. The appellant has not controverted this finding of the AO. The onus for submitting the requisite evidence in support of its claim lies on the appellant. The appellant having failed to discharge his onus, no deduction u/s 54F was allowable to him. The AO was therefore fully justified in disallowing this deduction. This ground of appeal is dismissed.
9. Additional ground:- During the course of appellate proceeding the appellant has taken following additional ground of appeal:- "The Agriculture Land purchased through Iqrarname dated 14.03.2005 purchased for Rs. 1,75,20,000/- at Garhi Multan, dated 14.03. 2005 for Rs. 32,85,000/-, dated 15.04.2005 for Rs. 27,50,000/- be considered for deduction under section 54B of Income Tax Act. These igrarnama be admitted as additional evidence under rule 46A of Income Tax Rules." 9.1. Brief facts have been discussed in the para 4.1 to 4.5 above. 9.2. The AR of the appellant requested that additional ground may be admitted. 9.3. I have carefully considered the appellant's request for admission of additional ground raised by the appellant. The additional ground pertains to claim of deduction u/s 54B based on iqrarnamas. These iqrarnamas were not filed before the AO during the course of assessment proceedings. In fact as pointed out in the facts above, in the return of income filed by the appellant, the deduction u/s 54B pertaining to the purchase of the agricultural lands was claimed on the basis of actual registered documents showing lesser amount of investment which was duly considered by the AO and allowed s per claim. At no stage during the course of assessment proceedings was any iqrarnama filed before the AO nor was it submitted before the AO that such iqrarnama had been signed. The additional ground is accordingly based purely on facts and is not merely a legal ground. Hon'ble Jurisdictional Punjab & Haryana High Court in the case of Arawali Engineers Pvt. Ltd. CIT(2011) 335 ITR 508 held that no doubt an appellate authority can allow a question to be raised for the first time even if such question was not raised at lower forum, but such discretion has to be exercised in the interest of justice and not mechanically. The question of fact may not be allowed to be raised for the first time as it may lead to prejudice to other side. 9.4. Keeping in view the aforesaid factual and legal position the appellant's request for admission of additional ground of appeal is rejected.
10. In the result, the appeal of the appellant is dismissed.”
5. None of the aforesaid findings of the ld CIT(A) were controverted by the assessee before us. Hence, we do not deem it fit to interfere with the said order of the ld CIT(A).
When the last notice was sought to be issued to the assessee it was informed by the postal authorities that the assessee had passed away. The legal heirs had not come forward to implead themselves in person to persecute this appeal on behalf of the assessee. Hence, we deem it fit to dismiss this appeal of the assessee in view of the aforesaid findings with a liberty given to the legal heirs to implead themselves and file another appeal, if they so desire.
In the result, the appeal of the assessee is dismissed.
Order pronounced in the open court on 08/04/2024.