SMT. MADHU AJMERA,INDORE vs. THE ADDL.CIT R-2, INDORE

PER BENCH

The above-captioned appeals have been filed by the

assessee-appellants against different orders of the learned CIT(A)-I,

Indore, both dated 25.3.2013 in First Appeal Nos. IT-768/11-12/38

and IT-768/11-12/39 for the assessment year 2009-10.

under :-

“1. That impugned order passed by the ld. Learned CIT(A) is

bad in law as well as on the facts. It is based on incorrect

interpretation of law and the facts have also been

incorrectly construed.

in law, the ld. CIT(A) erred in confirming the action of the

ld. A.O. in assessing the long term capital gain of Rs.

48,60,503/- on sale of agriculture land situated in rural

area and specified in section 2(14)(iii) of the Income Tax

Act without appreciating the facts of the case and

submission made before him.

3. That on the facts and in the circumstances of the case and

in law, the ld. A.O. and CIT(A) erred in not relying on the

certificate of Gram Panchayat and Patwari filed during the

course of assessment proceedings inter alia stating that

land sold by the appellant is more than 8 kolometers from

the Municipal Limited.

in law, the ld. CIT(A) erred in not accepting the arguments

of the appellant that the SDO was examined by the ld.

A.O. behind the back of the appellant without allowing a

reasonable opportunity to rebut his statement.

in law, the ld. A.O. erred in not putting required question

before the SDO which are necessary for deciding the issue

viz. how the distance is measured i.e. by motor/pagdandi

or airly and how at first occasion he measured the

distance at 3 kilometers and later on it became 6.8

kilometers etc.”

50% shareholder of land bearing survey no. 906/13 and 906/17 in 3

village Kailod Karta which was sold for a sum of Rs.1 crore during

the year under consideration. The assessee claimed 50% share of

the sale consideration of the said land as exempt being agricultural

land. However, the Assessing Officer did not allow the exemption

and assessed the income under the head ‘long term capital gain’

after allowing indexed cost of acquisition at Rs.1,29,966/-. The

Assessing Officer held that the land under consideration was not

agricultural land within the meaning of section 2(14)(iii) of the Act.

In this connection, the Assessing Officer required the SDO, Rural,

Indore, to submit his report as regards the distance between the

land, in question, and the municipal limits of Indore. The SDO vide

letter dated 17.10.2011 informed that the land under consideration

was within 3 kms of municipal limits of Indore. However, the

assessee produced copies of certificate given by Patwari, Halka No.

12, village Kailod Kartal stating that the said land was located at

more than 8 kms away from municipal limits of Indore. The

assessee also produced a letter from Village Sarpanch of village

Kailod Kartal to the effect that the land fell 8 kms away from

municipal limits. The Assessing Officer treated the certificate of the

SDO as correct. Accordingly, the surplus arising on sale of the land 4

was brought to tax as capital gains by the Assessing Officer. On

appeal, the learned CIT(A) confirmed the action of the Assessing

Officer against which the assessee-appellants are in appeal before

the Tribunal.

representative (AR) as well as the learned Senior Departmental

Representative (DR) placed their concurrence that ground nos. 4

and 5 of the assessee’s appeals may kindly be heard firstly.

has grossly erred in not accepting the contention of the appellant

that the SDO was examined by the Assessing Officer at the back of

the appellant without allowing the assessee a reasonable

opportunity to rebut his statement by way of cross-examination and

by producing other supportive documentary evidence in favour of

the assessee. The learned AR further contended that the Assessing

Officer was not correct in not putting the required question before

the SDO which was relevant and necessary for deciding the issue

viz. how the distance of the land sold was measured from the

boundary of Nagar Nigam, Indore. The learned AR vehemently

submitted that the authorities below ignored this fact that on the 5 first occasion the SDO issued letter stating that the land is 3 kms

away from the boundary of Nagar Nigam, Indore, and secondly

during the statements recorded by the Assessing Officer, he stated

that the distance is 6.8 kms. Therefore, his statement cannot be

relied upon for making the disallowance. The learned AR further

pointed out that during the assessment proceedings when the

assessee was informed about the statement of the SDO then

immediately the assessee placed his objection to the statements

which were not properly adjudicated by the Assessing Officer and

the opportunity of cross-examining the SDO was also not given to

the appellant.

the authorities below submitted that the assessee never asked for

cross-examination of the SDO and his written objections to the

statement and the evidence filed by the SDO were dismissed by the

Assessing Officer after due consideration of total facts and

circumstances of the case. Therefore, there is no violation of

principles of natural justice by the Assessing Officer. The learned

DR strenuously contended that the assessee never asked for cross- 6 examination of the SDO neither before the Assessing Officer nor

before the learned CIT(A). Therefore, this plea cannot be agitated at

this belated stage before the Tribunal.

learned AR submitted that the assessee by way of written letter

dated 14.11.2011 (assessee’s paper book pages 38-39) the assessee

placed his detailed objections to the statement and evidence filed by

the SDO and also requested the Assessing Officer to kindly confirm

the fact in the light of the certificates issued by Tehsildar, Sarpanch

and Patwari filed by the assessee on the assessment record but the

Assessing Officer did not properly consider the objections of the

assessee. The learned AR further submitted that by way of written

objections to the statement of the SDO, the assessee placed his

contrary stand and the Assessing Officer was duty bound to allow

the assessee an opportunity of cross-examining the SDO and thus

there was clear violation of principles of natural justice and, hence,

the statement of the SDO along with the evidence filed by him

during the statement cannot be relied upon being self-

contradictory. 7

the view that when the Assessing Officer wants to make the

addition or disallowance on the basis of any evidence or statement

then he is duty bound to confront the material to the assessee and

after allowing due opportunity of hearing, such evidence or

statement can be relied upon for making any disallowance or

addition. Be that as it may, in the present case, undisputedly the

Assessing Officer recorded the statement of the SDO and he also

placed documentary evidence in support of his statement and the

assessee also placed his objections to the admissibility and

reliability of the statement of the SDO as well as the statement filed

by him, but the Assessing Officer without allowing opportunity to

rebut the same to the assessee, proceeded to make disallowance

and consequent addition which is not a proper and justified

approach. At this juncture, we may point out that during the

arguments before us, the learned DR fairly submitted that the

department has no objection if the assessee is allowed an

opportunity to cross-examine the SDO if it is found necessary in the

interest of justice. In view of the above situation, we are of the view 8 that the revenue authorities are empowered to inquire and verify

the facts placed before them by the assessee by way of calling any

evidence or recording statement of any relevant person or authority

but such material cannot be used against the assessee without

confronting the same to him. We are, therefore, of the considered

opinion that in the present case, despite written objections dated

14.11.2011 of the assessee, the Assessing Officer, without allowing

the assessee to rebut or to cross-examine the SDO, proceeded to

make disallowance and consequent addition which is not a proper

and justified approach and in this situation we may safely presume

that the assessment order has been framed by violating the

principles of natural justice and thus the same cannot be held as

sustainable in law.

conclusion that the assessee should be given an opportunity to

cross-examine the SDO. Therefore, the case is restored to the file of

the Assessing Officer with the direction that he shall allow the

assessee to crss-examine the SDO concerned and thereafter shall

adjudicate the issue afresh without being prejudiced from the 9 earlier assessment and the first appellate order. Needless to say

that the assessee shall be given an opportunity of being heard on

the issue. Accordingly, ground nos. 4 and 5 are allowed and the

matter is restored to the file of the Assessing Officer with the

directions as noted above.

Assessing Officer for fresh adjudication, therefore, ground nos. 1 to

3 have become infructuous and the same are not being adjudicated

upon.

agreed that the facts and circumstances in this case are exactly

similar and identical with the facts and circumstances obtaining in

the case of Smt. Madhu Ajmera (supra). Therefore, our conclusion

arrived at in the case of Smt. Madhu Ajmera (supra) shall apply to

this appeal also and, therefore, we restore this appeal to the

Assessing Officer for fresh adjudication along with the case of Smt.

Madhu Ajmera with similar directions.

purposes. 10

The order has been pronounced in open Court on 29th March,

2017.

Sd/- sd/- लेखा सद�य �या�यक सद�य (O.P.Meena) (C.M. Garg) Accountant Member Judicial Member

March 29th , 2017 Dn/