MUKESH KUMAR JAJORIYA,JAIPUR, RAJASTHAN vs. ITO WD 2(3), JPR, JAIPUR, RAJASTHAN

4. Disallowance of Deduction u/s 54B-Rs.90,67,650/-: The Id. CIT(A) erred in law as well as on the facts of the case in not allowing the deduction u/s 54B for Rs.90,67,650/-, It is emphasized that the appellant has made actual investments in the purchase of agricultural land, supported by evidence. There is no valid reason for the AO/CIT(A) to disbelieve the authenticity of the assessee's investment. Therefore, it is prayed that the deduction u/s 54B be allowed.

“1. The impugned order passed on dated 28.12.2019 is bad in law, void and without jurisdiction, as the same is not in conformity with CBDT Circular No. 19/2019 dated 14- 08-2019. Hence, the impugned assessment framed u/s 147/144 of the Act dated 28.12.2019 is liable to be quashed. " "2. The impugned order passed on dated 28.12.2019 is bad in law, void and without jurisdiction, as the same is passed without issuing the mandatory notice u/s 143(2) of the act. Hence, the impugned assessment framed u/s 147/144 of the Act dated 28.12.2019 is liable to be quashed."

Sh. Mukesh Kumar Jajoriya vs.ITO Assessee received his share of Rs. 1,17,15,000/- (1/5th of total consideration). The assessee was asked to furnish documentary evidence in respect of deduction claimed by him for the A.Y. 2012-13 by issuing notice u/s 133(6) of the I.T. Act, 1961. However, the assessee has not complied with the same. Thus, the taxability on the above transaction could not be ascertained by the ld. AO.

Consequently, notice u/s 147 of the Act was issued on 29.03.2019 after obtaining necessary approval from the competent authority and served upon the assessee through post and online.

Thereafter, notices u/s 142(1) of the Act were issued from time to time to the assessee for furnishing information. In compliance to notice u/s 148 of the Act, assessee filed his ITR on 13.11.2019 declaring total income of Rs. 2,04,220/-. However, the ITR filed was not verified hence notice u/s 143(2) of the IT Act, 1961 could not be generated from the system.

Further, in response to notice u/s 142(1) of the Act, assessee furnished submission along with copy of sale / purchase deed. It is pertinent to mention here that enquiry has been conducted by the ld. AO from the Tehsildar, Banipark, Jaipur to verify that that the In response, information was received by the ld. AO that the land in question is within 8KM of municipal limits of Jaipur. On examination of details furnished by the assessee it was seen by the ld. AO that the assessee has shown his share on sale of above properties for Rs. 1,17,15,000/- and cost of acquisition was claimed at Rs. 4,21,122/-. In this way total capital gain computed at Rs 1,12,93,878/-.

The assessee claimed deduction u/s 54B of the Act, of Rs. 90,67,650/- and deduction u/s 54F of Rs. 20,60,000/-. As regards the cost of acquisition, the assessee furnished copy of valuation report from registered valuer. Thus, while allowing the claim details were examined and no adverse inference was drawn in respect of deduction u/s 54F of the Act. As it is seen from the submission furnished be the assessee that the deduction u/s 54B of the Act has been claimed for Rs. 90,67,650/-. The assessee shown to have purchased the following properties on which deduction was claimed:-

S. No. Land purchased on Purchase amount The assessee has furnished copies of the purchase deed in respect of properties mentioned at Sr. No 1 & 2 above in table. However, the assessee failed to furnish the copy of purchase deed in respect of property mentioned at Sr. No. 3 for Rs. 62,50,000/-. Hence, the assessee failed to discharge the onus laid upon him to furnish the true and correct evidence in support of his claim. Thus, the amount of Rs. 62,50,000/- being the deduction claimed u/s 54B of the Act, was not considered.

3.1 The ld. AO noted that the assessee purchased new asset, land in the name of her wife Smt. Geeta Devi of Rs. 18,72,450/-. The assessee cited decision of Mahadev Balai Vs ITO (2018) 402 ITR 117 (Raj)(HC). The reference made by the assessee was carefully examined and not found squarely applicable in the case of the assessee as held by the ld. AO.

A careful reading of the provisions of section 54B lay down the conditions which are required to be satisfied. Section 54B of Sh. Mukesh Kumar Jajoriya vs.ITO the Act nowhere suggests that the legislature intended to advance the benefit of the said section to an assessee who purchased the agriculture land even in the name of a third person. The term "assessee" is qualified by the expression "purchased any other land for being used for agriculture purposes", which necessarily means that the new asset which is purchased must be in the name of assessee himself for seeking deduction under said section. The purchase of agriculture land by the assessee in her wife’s name, cannot be held eligible for exemption under section 54B of the Act. Hence, deduction claimed by the assessee for property purchased was not considered.

3.2 The ld. AO noted that the assessee has not furnished any evidence viz a viz khasra girdawari etc whether the land was used for agriculture purposes or not. Thus, it is not proved that agriculture operations had been carried out on the land purchased on 28.05.2012 for Rs. 9,45,200/- was also disallowed. Further, it is also seen from the record that the assessee has not furnished any evidence whether the land sold and purchased was used for the agriculture operation which is the basic condition for claim of deduction u/s 54B of the Act. Based on that discussion ld. AO

“7. Grounds 2 & 3 are related to the addition of LTCG of Rs. 90,67,650/- by denying deduction u/s. 54B of the Act, and since the facts pertaining to both the grounds are interrelated, same are taken up together for adjudication. 7.1 During the course of re-assessment proceedings, it was observed that the assessee's father, Shri Chotu Ram sold two immovable properties on 20.10.2011 situated at village Bindayka, Jaipur for a sales consideration of Rs. 4,40,00,000/- and Rs. 1,45,75,000/- respectively. The assessee received Rs. 1,17,15,000/- being 1/5th of the sales consideration as his share and computed Long Term Capital Gain of Rs. 11293880/-. After claiming deduction u/s. 54B of the I.T. Act of Rs. 90,67,650/-, on account of investments in three different pieces of land; and deduction u/s. 54F of the I.T. Act of Rs. 20,60,000/-; Rs. 166,230 /- was offered as taxable LTCG. The AO however only allowed the deduction of Rs. 20,60,000/- claimed u/s 54F of the Act, on the basis of the documents submitted by the appellant. 7.2 The assessee has shown to have purchased the following properties on which deduction u/s. 54B to the tune of Rs. 90,67,650/- was claimed: S. No. Land purchased on Purchase amount 1. 28.05.2012 9,45,200/- 2. 16.04.2012 18,74,450/- The deduction claimed u/s 54B of the Act was denied by the AO for the primary reason that the appellant failed to substantiate that the land sold by the appellant was used for agricultural purposes or that the land acquired thereafter was being used for agriculture purposes. Thus the basic condition laid down in the section 548 of the Income Tax Act 961 was not fulfilled by the appellant. 7.3 The AO further noticed that out of the three pieces of land purchased by the appellant he failed to furnish the copy of purchase deed in respect of property mentioned at serial number 3 and further the land mentioned at serial number 2 was in fact purchased in the name of the appellant's wife, Smt. Geeta Devi. 7.4 As against the AO's action, the appellant vide his Grounds of appeal as well as his submissions dated 2/11/23, has put forth the following contentions. 1. that the land sold, hence forth referred to as the original asset was an agricultural land, not falling under the definition of capital asset, and hence any gain on its sale was exempt from taxation

2. Since the money for investment in land at sr. no. 2 was provided by him, he should be eligible for deduction even if the land was purchased in the name of his wife

3. The land sold and purchased were used for agricultural purposes. Each of his submissions are dealt with in the following paras. 7.5 In support of his contention that the Original asset was not a capital asset within the meaning of Section 2(14), being beyond 8 km from the municipal limit, the appellant, in its response filed on 04.11.2023, submitted as under:- "1.2 it is submitted that S2(14)(ii)(b) would indicate that if an agriculture land is situated beyond 8 Km from the local limit of any municipal or cantonment area. whose population is more than 10 lakhs, then that would not fall within the ambit of the definition "capital assets". This demarcation of the geographical Sh. Mukesh Kumar Jajoriya vs.ITO situation of the land is to be seen from the boundary notified by the CBDT in its gazette notification. The CBDT has notified the boundary from where it is to be measured via notification no. 9447 dated 06.01.1994 thereafter, it has not been revised and from that boundary limit, the geographical situation of the mainland was beyond 8 Km. 1.3 The distance of 8 Km for treating agricultural land as a capital asset is to be seen with reference to the municipal limit existing on the date of the notification published in the Official Gazette and not the municipal limit existing on the date of sale. However, the AO made the addition on account of long term capital gain on the basis of information and a registered deed dated 20.10.2011, which shows the sale of agricultural land at Village Bindayka, Mundiyaramsar, Jaipur despite the fact that the land was situated outside the municipal limit and hence does not fall in the definition of capital assets as per the provisions of Sec. 2(14) (iii) of the IT Act, 1961, and as per the CBDT Notification No. 9447 dated January 6, 1994" 7.6 The appellant also cited various case laws, notably CIT vs Satya Dev Sharma (2017) 251 Taxman 31(Raj), wherein it was held that: "Capital gains- Agricultural land-Scope and application of CBDT notification No. 9447 dated 6th Jan, 1994 under s. 2(14)(ii) (b) Tribunal was justified in law in holding that agriculture land sold by the assessee is not a capital asset under s 2(14)(iii) (b) as it was situated beyond 8Kms, from the municipal limits on the date of issue of Notification No. 9447 dated 6th Jan., 1994 despite the fact that the land was undisputedly situated within 8 kms from the municipal limit on the date of sale 7.7 The case laws filed by the appellant are considered and the undersigned is also conscious of the fact that the issue, that the distance of 8 kms from the municipality limits is to be reckoned with date of issue of Notification No. 9447 dated 6/01/1994 and not on the date of sale, is settled by the Hon'ble Jurisdictional High Court. However, in the case of ITO vs Kheti Lal Sharma in ITA No. 103/JP/2012. on which reliance is placed by the appellant to assert that the matter is a covered matter, there is an undisputed submission made by the assessee in case of Kheti Lal Sharma, that his land was situated beyond 16 km from the limits of Jaipur Municipality on Ajmer Sh. Mukesh Kumar Jajoriya vs.ITO Road. The relevant part of the decision is reproduced hereunder for ready reference": “………..It is submitted that as on the date of this notification dated 6th Jan., 1994, the municipal limit of Jaipur on Ajmer Road on which the assessee land is situated is upto the ESI Hospital. The assessee's land is 16 km. away from the ESI Hospital This fact is not in dispute. Hence, the land sold by the assessee not a capital asset u/s 2(14) and therefore on sale of such asset, no capital gain would rise……….” Emphsis Supplied] 7.8 However, in the present case, no irrefutable supporting document is produced by the appellant, Shri Mukesh Kumar Jajoriya, to establish that the original asset was situated beyond 8 km of the then municipal limits of Jaipur as on the date of the Notification under reference. 7.9 The appellant has submitted a screen shot of google map showing the distance between Bindayaka and ESIC Model Hospital as supporting document and has also relied on the decision of the Hon'ble ITAT, Jaipur in the case of Smt. Rebu Agarwal vs ACIT (2017) 88 taxmann.com 872 (Jpr Trib.) to contend that the Google map is a proof of evidence. However, on perusal of the decision relied upon by him. it is observed that the facts of the case are very different, In the case ofRebu Agrawal, the Google map was just one of the various other documents submitted by her to rebut the contention of the Id.AO that there was construction over the plot at the time of sale of the plot by the seller and to prove the claim of the assessee that the plot was vacant land at the time of purchase. 7.10 It may not be out of place to mention that the present appeal was filed on 24/01/2020 and the submissions were made by the appellant only on 02/11/2023, that is to say after a little less than 4 years period and yet the appellant did not make any efforts to get any certified report or statement from the municipal authorities to the effect that the original asset was situated outside the 8 km radius of Jaipur Municipality on the date of the CBDT Notification under reference. 7.11 In view of the above, the appellant has failed to satisfactorily substantiate his contention that the original asset does not fall under the definition of capital asset. Thus, Ground No. 3 raised by the Appellant is hereby treated as Dismissed.

Sh. Mukesh Kumar Jajoriya vs.ITO 8. For deciding whether the AO was correct in denying exemption u/s 548 of the Act, it may be noted that section 54B lays down the following conditions:

1. 1. The transferred capital asset must be land 2. The assessee transferring land must be an individual or HUF 3. In the two years immediately preceding the date of transfer, the land was used by the assess being an individual All his parents were by HUF for agricultural purposes.

4. Within a period of two years after the date of transfer of the asset, the assessee should have purchased any other land for being used for agricultural purposes.

5. Where the capital gain is not utilized in the purchase of the new land before furnishing the ROI it should be deposited in an account under the capital gains account scheme before the due date for furnishing the ROI and proof of such deposits should be furnished along with the return. 8.1 In the appellant's case, since the original asset, being land, has been held to be a capital asset, the first condition stands fulfilled. The ownership of the land being held with an individual is also not disputed by the AO. 8.2 The AO has however mentioned that the assessee has not furnished any evidence to substantiate that the land sold and purchased was used for the agricultural operations, which is the basic condition for claim of deduction u/s 54 B of the Act. 8.3 In his submissions filed on 04.11.2023, the appellant stated as under: “The land sold should be used for agricultural purpose for at least two years: In the present case the land sold and purchased by the assessee is Barani Land which is meant for the agricultural area that depends on rainfall for cultivation. Thus, the land sold and purchased is used for agricultural purpose for at least two years. It is clearly mentioned in the registered sale deed that the land sold and purchased are Barani and is an agricultural land and even the revenue records shows as agriculture land Sh. Mukesh Kumar Jajoriya vs.ITO The Khasra Girdawari (copy enclosed) of the said land clearly shows that the crops grown in Kharif season such as paddy and fodder grass and some fruit plantation since long which clearly indicated that the land in question was an agricultural land and as recorded in the revenue and the assessee has been paying the land revenue of the said land from time to time." Though the appellant mentions that the copy of Khasra Girdawari was enclosed by him, no such enclosure was found uploaded along with his submissions. The screen shot of the acknowledgement of the response uploaded is placed below, which shows that no such document was uploaded by him.”

5. As the assessee did not receive any favors from the appeal so filed before ld. CIT(A). The present appeal is filed against the said order of the ld. CIT(A) before this tribunal on the grounds as reiterated in para 2.1 & 2.2 above. To the support the contention raised the ld. AR of the assessee filed the following case laws:-

S. No. Particulars Page No.

Sh. Mukesh Kumar Jajoriya vs.ITO 6. During hearing of the appeal, the ld. AR of the assessee referring to page 7 in para 7.10 of the order of the ld. CIT(A) wherein it is categorically evident that the assessee submitted all the relevant evidence to support the contention for deduction so claimed. The ld. CIT(A) has not considered the submission of the assessee merely the same was filed after 3 and half year passed time after filling the appeal by the assessee but in fact the same was filed before the appeal finally decided. The issue of the fact that the land is taxed in the hands of the mother of the assessee has also not been discussed or decided. Therefore, this being the facts which are required to be adjudicated and in the interest of justice the ld. AR of the assessee prayed to considered while dealing with the appeal so filed. The ld. AR for the assessee prayed that the matter be remanded back to the file of the Assessing Officer to decide all the issues that are raised.

As is also evident that the order of the assessment in fact passed u/s 144 of the Act and the contention raised by the assessee needs to be appreciated based on the evidence placed on record by the assessee before the ld. CIT(A).

Considering that peculiar aspect of the matter we deem it fit to remand the matter to the file of the ld. AO who will considered the factual aspect of the matter as raised by the assessee after due verification of the facts and charge the correct income in hands of the assessee after affording due opportunity to the assessee. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the ld. AO.

Order pronounced in the open Court on 29/08/2024.