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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI VIJAY PAL RAO & SHRI B.M. BIYANI
This appeal by the assessee is directed against the order dated 21.3.2023 passed by the Ld. CIT(A), NFAC, Delhi for the A.Y. 2011-12. There is a delay of 24 days in filing the present appeal. The assessee has filed an application for condonation of delay which is supported by an affidavit of the assessee. We have heard the Ld. AR as well as Ld. DR on condonation of delay and carefully perused the reasons explained by the 2 Bharat Singh Chawda of 2023 assessee for the delay of 24 days in filing the present appeal enumerated in the application for condonation of delay. Assessee has explained that he is a farmer and therefore, he was not well-versed with the system of communication by the Tax Department through online & e-mail. The assessee has also stated that he is 65 years old and an illiterate person and therefore, he was not aware of such mode of communication by the Income Tax Department. Thus, the assessee submitted that due to lack of knowledge about the impugned order sent through e-mail, the assessee could not take steps in time for filing the present appeal. Only when the assessee received an SMS regarding the impugned order, he has consulted with his Counsel for taking the necessary steps and thereafter presented this appeal. The Ld. DR has not objected to the condonation of delay of 24 days and left the same to the wisdom of the Bench.
Having considered the reasons explained by the assessee as discussed above, we are satisfied that the assessee is having reasonable cause for delay of 24 days in filing the present appeal. Accordingly, in the facts & circumstances of the case and in the interest of justice, we condone the delay in filing the present appeal.
The assessee has filed the concise grounds of the appeal as under:
3 Bharat Singh Chawda of 2023
“On the facts and in the circumstances of the case: -
1. 1. The Ld. AO was not justified in passing the order, which is bad- in-law, void ab-initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled.
2. The Ld. CIT(A) was not justified in confirming the order, which is bad-in-law, void ab-initio, barred by limitation, illegal, contrary to the facts and circumstances of the case, liable to be annulled.
3. The Ld. CIT(A) was not justified I confirming the addition of Rs.77,50,000/- on account of alleged on-money.”
The assessee is an individual and stated to be a farmer. The AO has issued notice u/s 148 of the IT Act on 21.3.2018 based on the report on STR information received from DDIT Investigation, Indore regarding sale of property by the assessee along with his daughter and receiving on-money of Rs.1,55,00,000/- [ 50% share of assessee at Rs.77,50,000].
In response to the notice u/s 148, the assessee filed return of income on 20.11.2018 declaring total income of Rs.89,120/-. Assessee also filed reply and submitted that he has sold an agricultural land for Rs.57,46,500/- which is located in Gram Shukrawasa, Dewas. The assessee claimed that the said land is located outside the Municipal limit and as per sec. 2(14), the said property is excluded from the definition of capital asset and not liable to tax. The assessee also filed a copy of sale deed for sale of agricultural land. The AO did not accept reply of the AO and made addition of Rs.77,50,000/-.
4 Bharat Singh Chawda of 2023
The assessee challenged the action of the AO before the Ld. CIT(A) and reiterated its stand that the agricultural land sold by the assessee is exempt from tax and further, the allegations of the AO for reopening the assessment are contrary to the record and facts as the assessee has not sold any property alleged by the AO. The assessee also challenged the reopening of assessment before the Ld. CIT(A). The Ld. CIT(A) confirmed the action of the AO and sustained the addition in question.
Before the Tribunal, the Ld. Counsel for the assessee submitted that the assessee has explained before the AO that agricultural land sold by the assessee for Rs. 57,46,500/- is exempt from capital asset as per sec. 2(14) of the Act. He has further submitted that the AO has alleged as
per report of the Investigation Wing that the assessee and his daughter sold agricultural land to one Shri Laxminarayan Jaganath Choudhary whereas the assessee has sold the land in question on his own and not in the joint names and the particulars of sale deed as well as name of the purchaser was also produced before the AO and therefore, the assessee sold land to one Shri Deepak Choudhary, son of Shri Laxminarayan Jaganath Choudhary. He has also referred to the details of land sold by the assessee bearing survey no. 5 & 6 situated at Gram Shukrawasa, Dewas whereas the AO received report of the DDIT in respect of land bearing survey no. 224, 246, 247, 248, 249, 262, 270, 272/2 and 278.
5 Bharat Singh Chawda of 2023 The date of sale deed alleged by the AO is 11.1.2011 whereas the assessee has sold vide sale deed dated 13.3.2011. Therefore, the Ld. AR submitted that when the assessee denied having sold any land alleged by the AO then the addition made by the AO is not sustainable. Further, the Ld. AR submitted that the AO has not made any addition on account of capital gain and accepted that the land sold by the assessee is exempt u/s 2(14) of the Act. Therefore, the addition made by the AO on account of on-money is highly arbitrary and unjustified. Ld. Counsel for the assessee also submitted that when the alleged transaction of land by the assessee along with his daughter is not factually correct then the reopening of assessment based on incorrect information and unrelated transaction is also not valid and liable to be quashed. He has referred to the sale deed dated 13.3.2011 placed at page nos.10 to 20 of the paper book and submitted that only transaction done by the assessee is the sale of agricultural land duly explained before the AO. The Ld. AR also referred to the affidavit of the assessee dated 23.11.2018 filed before the AO and submitted that the assessee has solemnly stated on oath all the correct facts about the sale of agricultural land which was not considered by the AO while passing assessment order. The Ld. AR has referred to the application filed by the assessee for supply of reasons recorded by the AO. However, till date, the AO has not supplied the same. He has 6 Bharat Singh Chawda of 2023 also referred to the application filed by the assessee to the DDIT for seeking copy of the report sent to AO as well as copy of statement, if any, recorded by the DDIT alleging the receipt of on-money by the assessee.
But, it has not been supplied to the assessee. Therefore, the Ld. AR submitted that in absence of any contrary material brought on record by the AO, the facts explained by the assessee with supporting evidence of sale deed cannot be ignored.
On the other hand, Ld. Sr. DR has relied upon the orders of the authorities below and submitted that the AO received report of the DDIT, Indore disclosing the receipt of on-money by the assessee of Rs.77,50,000/- for transfer of land along with his daughter.
We have heard rival submissions and considered the material available on record. The AO has reopened the assessment by narrating reasons in the assessment order as under: -
“The case was reopened on the basis the report on STR information has received from DDIT(inv), Indore. According to information, Shri Laxminarayan Jaganath Choudhary has purchased a property in F.Y. 2010-11 relevant to A.Y. 2011-12 from the assessee and his daughter Kumari Anchal Rajpur. Both resident of Vill-Patari, Tehsil & Distt. Dewas. In this transaction, the seller have received on money amounting to Rs.1,55,00,000/- in which Shri Bharat Kumar S/o Shri Chandrashekhar Singh Rajpur, is having 50% of share has received Rs.77,50,000/-. The on money amount is above and over to the sale deed and not offered for taxation & concealed the income.”
7 Bharat Singh Chawda of 2023 The AO proposed to assess the income of the assessee on account of on- money receipt for transfer of land along with his daughter. The AO has recorded that as per the information received from DDIT, Shri Laxminarayan Jaganath Choudhary has purchased a property from the assessee and his daughter in which, the sellers have received on-money of Rs.1,55,00,000/-and the assessee’s 50% share is Rs.77,50,000/-. In reply to notice u/s 148 of the Act, the assessee filed return of income and also explained that since the income was below the taxable limit therefore, no return of income was filed u/s 139(1) of the Act. The assessee also explained in the reply that he sold the land for Rs.57,46,000/- vide sale deed 13.3.2011. The agricultural land is located outside the municipal limit and therefore, is excluded from the ambit of capital asset u/s 2(14) of the Act. The assessee has also given the details of land in the sale deed measuring 9.15 hectare, survey no. 5 & 6 situated at Gram Shukravasa, Tehsil and Jila Dewas which are given in assessment order as under: -
S.No. Detail of Date of Amount as Amount Difference Remarks Land execution per as per of sale agreement registered deed
1 Lasudia 11.1.2011 1,90,84,500 35,84,500 1,55,00,000 The Survey (4771125*4) property No.224, is 8 Bharat Singh Chawda of 2023
246, 247, inherited 248, 249, and both 262, 270, have 272/2, 278 equal shares.
The alleged transaction of transfer of land by the assessee and his daughter and receipt of on-money pertains to a different property bearing Survey Nos. 224, 246, 247, 248, 249, 262, 270, 272/2 and 278 whereas the assessee sold land bearing Survey Nos.5 & 6. Even the sale deeds were executed and registered on different dates and therefore, there is no similarity in the land sold by the assessee and the land alleged by the AO. Once the assessee denied alleged transaction and produced the correct facts of the transfer of land along with the sale deed then the AO ought to have either accepted the explanation of the assessee or to bring some contrary material on record to controvert the explanation and evidence produced by the assessee. The AO has not given any reasoning for not accepting the explanation & evidence of the assessee but simply made an addition by referring to the report of the DDIT (Investigation), Indore. Even there is no supporting evidence either recorded by the AO or brought on record to substantiate allegations as made in the report of the DDIT. It is pertinent to note that the AO has not made any addition on account of any capital gain on the transaction of transfer of land and therefore, he has accepted that the land sold by the assessee as well as the alleged land as per DDIT report are agricultural lands and outside the ambit of capital asset. Once the capital gain arising from transfer of agricultural land is falling in exclusion clause of sec. 2(14) of the Act then no addition can be made on account of sale consideration of said land whether in cheque or cash. It is a matter of serious concern that all
9 Bharat Singh Chawda of 2023 these facts were explained and brought on record by the assessee before the AO as well as the Ld. CIT(A) but even the Ld. CIT(A) has confirmed the order of the AO by ignoring the relevant facts and record produced by the assessee.
Accordingly, in view of the facts and circumstances as discussed above, the addition made by the AO based on the report of the DDIT, Investigation, Indore is apparently contrary to the facts and record produced by the assessee as well as highly arbitrary and unjustified and therefore, the same is deleted. Since we have deleted addition made by the AO on merits, we do not propose to go into the legal issue raised by the assessee.
In result, the appeal of the assessee is allowed.
Order pronounced in the open court on 31.01.2024.