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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI GEORGE MATHAN, & SHRI A. MOHAN ALANKAMONY
आदेश / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER:
the Order of the Commissioner of Income Tax (Appeals)-15, Chennai, in dated 29.08.2017 for the AY 2007-08.
Mr. Sailendra Mammidi, CIT represented on behalf of the Revenue and Mr.R.Sivaraman, Adv, represented on behalf of the assessee.
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In the assessee’s appeal, the assessee has raised the following grounds:
1. The Order of the Commissioner of Income Tax (Appeals)-15 (‘CIT(A)’) dated 29.08.2017 for the Assessment year 2007-08 is contrary to the facts and circumstances of the case and is opposed to the principles of equity, natural justice and fair play.
2. The Learned CIT(A) failed to appreciate that the present re-assessment order u/s.143(3) r.w.s 147 of the Income Tax Act, 1961 (‘Act’) passed by the Respondent is clearly exceeding jurisdiction and without any merit.
3. The Learned CIT(A) failed to appreciate that the re-assessment proceedings have been initiated beyond a period of four years from the end of the relevant assessment year 2007-08 without any “tangible material” being found by the Respondent.
4. The Learned CIT(A) failed to note that there was any ‘failure to disclose’ on the part of the Appellant during the course of the re-assessment proceedings before the Respondent and the absence of any clear finding by the Assessing Officer to that regard.
The Learned CIT(A) failed to appreciate that the present re-assessment proceedings were finalized vide re-assessment order dated 30.03.2015 without any speaking order to the effect of disposing the objections raised by the Appellant.
6. The Learned CIT(A) erred in holding that the Appellant had not produced any substantial proof of sale of agricultural land in terms of agricultural activities performed on the land thereby denying the Appellant his claim for exemption as under Section 2(14) of the Act.
7. The Learned CIT(A) erred in confirming the Petitioner’s agricultural land as to be under the purview of a ‘capital asset without considering the fact that the said land was situated away the municipal limits as prescribed u/s.2(14) of the Act and therefore not liable to be taxed as ‘capital gains’ u/s.45 of the Act.
8. The Learned CIT(A) ought to have considered the detailed submissions, evidences placed on record as well as several representations made by the Appellant with regard to establishing the fact that agricultural activities were continuously carried out by the Appellant for several years as well as the details of the agricultural land including Patta, Chitta and Adangal were duly produced before the Revenue authorities.
9. The Learned CIT(A) has failed to consider the alternate ground raised by the Appellant with regard to Section 54F of the Act and passed his order dated 29.08.2017 without considering the same.
On the strength of the abovementioned grounds and such other grounds that may be submitted before or at the time of hearing of the Appeal, the Hon’ble ITAT may be pleased to set aside the order of the CIT-(A) dated 29.08.2017 and thus render justice.
IT was submitted by the Ld.AR that the assessee is an individual who is doing business of running of a nursery under the name and style of Soundariya Nursery from 1995. The assessee had received certain funds on family partition which he had used for purchase of certain agricultural
ITA No.2510/Mds/2017 :- 3 -: lands at Pudupakkam, Kancheepuram District, in 1995. The assessee had during the relevant AY sold the said agricultural lands where he was doing the Nursery operations for a consideration of Rs.14.90 Cr. to M/s.Shreyas Investments whose main business was construction of buildings. It was a submission that the said land which was sold by the assessee was beyond 8 KMs limit from the nearest Municipality and the Land Revenue and the Land Records showed the said land as agricultural land. The Ld.AR drew our attention to Page No.146 to 151 to show that the taxes in respect of the said land was paid as Kist and the land shown in the Revenue records as agricultural land. It was a submission that the assessee had originally filed its return of income on 31.10.2007 and had claimed the sale proceeds in respect of the said land as agricultural income not liable for capital gains. The return filed by the assessee has been scrutinized and assessment u/s.143(3) completed on 29.12.2009 accepting the return filed. It was a submission that Notice u/s.148 came to be issued on 06.02.2014 to treat the sale consideration in respect of the agricultural land sold as liable to capital gains. It was a submission that the assessee had filed his objections and the re-assessment came to be completed on 30.03.2015 denying the assessee the benefit of agricultural income in respect of the agricultural land sold. It was a submission that after the sale of the said agricultural land, the assessee had invested the sale consideration in another agricultural land and also purchased a residential house in the name of the assessee’s wife. It was a submission that the agricultural land sold was to the extent of 7.00 acres in Pudupakkam
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Village. It was a further submission that in the course of the original assessment dated 29.12.2009, the AO had also deputed his Inspector to verify the details of the agricultural income claimed before accepting the return filed. It was a submission that the assessee may be granted the benefit of the claim of agricultural income in respect of the agricultural land sold by the assessee.
5. In reply, the Ld.DR vehemently supported the order of the AO and the Ld.CIT(A). It was a submission that Ld.CIT(A) had specifically recorded that the assessee was unable to prove the sale of agricultural produce as also the original books of accounts related to the agricultural activity. It was a submission that the Inspector’s report was an unsigned Report and consequently the same could not be regarded as a valid Inspector’s Report. It was a submission that the order of the AO and the Ld.CIT(A) was liable to be sustained.
We have considered the rival submissions. The land in question which has been sold admittedly has been shown as agricultural land as per the Chitta & Adangal. The distance from the nearest Municipality has also been shown to be beyond 8 KMs. The land Revenue records also clearly shows that the land specified is agricultural land. In fact, there is an Inspector’s Report referred to in the Assessment Order dated 29.12.2009 wherein it is mentioned that the Inspector has verified the place and has also contacted with the Village Administrative Office and the President of ITA No.2510/Mds/2017 :- 5 -:
Pudupakkam Village. The copy of the unsigned Inspector’s Report has also been placed before us by the Revenue. A perusal of the order of the Ld.CIT(A) shows that he has rejected the said Inspector’s Report on the ground that the same is unsigned. The signing or un-signing of Inspector’s Report is not within the control of the assessee. The fact that such Report was available in the assessment records and the same has also been referred to in the scrutiny assessment proceedings completed on 29.12.2009 clearly shows that agricultural operations were also carried on the said land and is a valid document. Further, the assessee’s case as to whether the running of Nursery was agricultural or not had been considered by the Hon’ble Jurisdictional High Court of Madras and running of the Nursery has been held to be agricultural operation. A perusal of the Assessment Order also shows that the AO has recognized that the assessee was running a Nursery under the name and style of Soundariya Nursery. A perusal of the provisions of Sec.2(1A) as also Sec.2(14)(iii) shows that agricultural land is not liable to be treated as a capital asset subject to the condition that the land is situated in an area where the Municipality has a population of less than 10,000 or at a distance of more than 8 KMs from Municipality or cantonment which has a population of more than 10 lakhs.
In the present case, admittedly, the land sold by the assessee is situate beyond 8 KMs limit, the land Revenue is collected in the form of Kist in respect of the agricultural land, the land Revenue records shows
ITA No.2510/Mds/2017 :- 6 -: the land as agricultural land. Thus, all the conditions required for holding the land as agricultural land stands complied. This being so, we are of the view that the land sold by the assessee being an agricultural land and consequently the same cannot be treated as a capital asset, the sale of which gives rise to capital gains.
In the result, in Ground Nos.6 to 8 of the assessee’s appeal stands allowed. Ground No.1 is general in nature. In Ground Nos.2 to 5 & Ground No.9 are raised by the assessee against the re-opening of the assessment.
As we have already allowed the assessee’s appeal on merits, we are not going into the technical issues of the re-opening of the assessment.
In the result, the appeal filed by the assessee is partly allowed.
Order pronounced in the Open Court on November 22, 2017, at Chennai.