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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
Before: Shri Sanjay Arora & Ms. Kavitha Rajagopal
Appellant by: Shri Sanjit Kumar Das, CIT-DR Respondent by: Ms. Divya Ravindran, Advocate Date of Hearing: 12.02.2024 Date of Pronouncement: 03.05.2024 O R D E R Per: Sanjay Arora, AM This is an Appeal by the Revenue directed against the Order dated 30.11.2012 by the Commissioner of Income Tax (Appeals), Income Tax Department [CIT(A)], allowing the assessee’s appeal contesting it’s assessment under section 143(3) of the Income Tax Act, 1961 (the Act) dated 30.12.2017 for Assessment Year (AY) 2015-16.
The facts of the case in brief are that the assessee returning agricultural income at Rs.360.64 lakhs, besides total income of Rs.39.31 lakhs, the same was selected for being subject to the verification procedure under the Act, to examine, inter alia, agricultural income. The said income, as it transpired, was in fact the assessee’s share (i.e., corresponding to 38.35 ares) in the ‘long-term capital gain’ on the sale of 54.10 ares of land jointly owned by the assessee with his daughter, for Rs.376.41 lakhs,on 16.02.2015. The assessee, in the assessment proceedings, contended the distance of 1 | P a g e (AY : 2015-16) ITO v. Babu Chandrathil George the subject land from the local limits of the Angamally Municipality to be more than 2 kms, and which had formed the basis of his regarding it as ‘agricultural land’. The assessee, however, did not furnish any evidence in support of his claim. The Assessing Officer (AO), caused an independent verification to find it at 1.8 kms, so that the land sold was a capital asset, as defined u/s. 2(14)(iii) of the Act, reproduced as under: Definitions.
2. In this Act, unless the context otherwise requires,— (1) – (13): …………… (14) "capital asset" means— (a) property of any kind held by an assessee, whether or not connected with his business or profession; (b) …. (c) but does not include— (i) ….. (ii) (iii) agricultural land in India, not being land situate— (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or (b) in any area within the distance, measured aerially,— (I) not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or (II) not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or (III) not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten lakh. Explanation.—For the purposes of this sub-clause, "population" means the population according to the last preceding census of which the relevant figures have been published before the first day of the previous year; 2 | P a g e
(AY : 2015-16) ITO v. Babu Chandrathil George In appeal, the assessee filed evidence from Kerala State Remote Sensing Environment Centre (KSREC), an accredited agency, showing the distance under reference at less than 2 kms., admitting which, his appeal was allowed, so that, aggrieved, the Revenue is in appeal before us.
Before us, the Revenue’s stand, apart from on merits, was qua admission of additional evidence in first appeal by the ld. CIT(A), exhibiting a distance of 2.87 kms. and 3.02 kms. from two different points on the subject land as mapped, i.e., more than 2 kms from the limits of the Angamally Municipality, on the basis of which relief stands allowed to him, alleging the same to be in contravention of r. 46A of the Income Tax Rules, 1962 (the Rules). On merits, Sh. Das, the ld. CIT-DR, would adduce evidence exhibiting the said distance to be less than 2 kms. Ms. Ravindran, the ld. counsel for the assessee, would advert to the evidence to the contrary (PB pgs. 43-46), arguing that the same being from an independent agency (KSREC), it ought to be preferred.
We have heard the parties, and perused the material on record. 4.1 We shall address the aspect of admission of additional evidence first. Without doubt, the ld. CIT(A) has not issued any finding qua r. 46A and, therefore, his order is, qua admission of additional evidence, de hors r. 46A, which is mandatory. A perusal of the order-sheet entries recorded in assessment proceedings, placed at pages 13 to 17 of the Revenue’s paper-book (DPB), however, reveal that the assessee was confronted with the Inspector’s report determining the distance of 1.8 kmsby the AO only on 29.12.2017, i.e., a day prior to the issue of the assessment order. How could, then, one may ask, it be said that the assessee was allowed adequate opportunity to furnish evidence, admission of which is being called into question? No doubt, the assessee furnished no evidence in support of his claim before him, but the fact of the matter is that the assessment is based on materials, to examine and rebut which no opportunity was allowed to the assessee. The claim of violation of r. 46A(1), valid in 3 | P a g e
(AY : 2015-16) ITO v. Babu Chandrathil George principle, does not under the circumstances survive; there being clearly a denial of natural justice in framing the assessment. The admission of additional evidence by the ld. CIT(A), whose powers are co-terminus with the assessing authority, is thus valid, and the Revenue’s case qua violation of r. 46A to no consequence.
4.2 On merits, however, we, however, find the adjudication by the ld. CIT(A) as seriously wanting. He prefers the evidence relied upon by the assessee without the assessee in any manner rebutting the evidence being relied upon by the Revenue, which is also based on the satellite mapping from a common platform “Google Maps”, i.e., using the same satellite technology. Toward this the ld. CIT-DR would draw our attention to the screen-shot exhibiting the distance of ‘Noah Sky Suites’, a building located at a distance of 154 mtrs. from the aassesee’s land, from the local limits of the Municipality, at 1.37 km. (DPB pgs. 28, 35, 38). The distance between two points, he explained, can be worked out only where it is a built-up property, and which explains the reference to the said building. The assessee’s stand is that KSREC being an authentic source, it’s finding/s ought to be, regarding it as an expert opinion, preferred over that by the AO, and which is in principle unexceptional. The moot question, however, is if the aerial distance between two physical points on the surface of earth is a matter of opinion or of fact. This distance could only be a single result, so that only one of the two (or more) measurements is correct. That is, the difference between the two measurements, i.e., by the assessee and the Revenue, in the instant case, besides calling for one to be circumspect in the matter, has to be necessarily explained and reconciled. Not bearing this in mind, and addressing it, is the fundamental flaw in the approach of the ld. CIT(A). He also fails to observe that no contemporaneous evidence exhibiting the distance, despite being repeatedly called for, was provided during the assessment proceedings, so that the assessee’s case before the AO was unproved. How could the AO be faulted with? The ld. CIT-DR was in fact at pains to explain us the assessee’s recalcitrant attitude
(AY : 2015-16) ITO v. Babu Chandrathil George before him, not furnishing the relevant information/material for months, to no rebuttal by Ms. Ravindran. It is, after all, only on the basis of some material that the assessee, obliged by law to prove his return and the claims preferred thereby, would have made his claim of distance being over 2 kms? The only material furnished by the assessee, however, is dated 20.06.2018 (DPB pgs. 20, 21), i.e., in the appellate proceedings, and which, therefore, if anything, proves that the assessee did not have any material at the time of filing the return in respect of the distance under reference. Be that as it may, the ld. CIT(A) having rightly admitted the additional evidence, the matter is to be determined, and in a judicial manner. We emphasize this for another reason as well. The local limits of a Municipality are subject to change over time, and it is that obtaining as on 16.02.2015, i.e., the transfer date, that alone is relevant. Any exercise in this respect must therefore be preceded by a declaration from the competent authority to the effect that there has been no change therein, and that the measurement of distance is on the basis of local limits as on 16.02.2015. The distance measurement provided by the assessee before the ld. CIT(A) is with reference to the Nedumbassery Village. The ld. CIT-DR, however, brings to our notice that the said Village is as per the map not on the edge of the local limits of the Municipality, as claimed by the assessee, but inside it. How can this, he would posit, be? The land mass stretching over an area, and the limits of the Municipality being not being linear, the distance would have to be worked from multiple points as even if one distance falls within the limit of 2 km., it would oust the assessee’s case.
4.3 An outright simple and straightforward matter has been, due to non-adducing any evidence, much less credible, by the assessee before the AO, and on the basis of which exemption had been claimed, stands complicated. Distance measured w.r.t. the longitude and latitude coordinates of the subject land, as well as the extant local limits of the Angamally Municipality, would only be regarded as valid. And which we think should, given the technology available, a simple matter of feeding both the (AY : 2015-16) ITO v. Babu Chandrathil George set of coordinates in the relevant software, admitting of no more than a single reading. Yes, even as observed by the Bench during hearing, two issues need to be addressed here, on both of which orders of the Revenue authorities are silent. One; as the distance would vary with reference to different points on the boundary of the land, as well as the local limits of the Municipality, the question would be as to which distance is to be therefore adopted. Each of the distances is valid, even as for the purpose of s. 2(14)(iii), it is the shortest that shall have to be taken into account. Two, the land area may itself be spread over distance, leading to the question as to which part of the land is to be reckoned for computing the distance. If the land is contiguous, as appears to be the case, and the share of the assessee and his daughter therein are not demarcated, it shall, as observed earlier, be on the basis of the boundary that the distance shall be taken into account. Where, though unlikely, the subject land is not contiguous, but segregated, each part would have to be reckoned separately, so that it may well be that a part of it is found agricultural, and a part not.
4.4 With these observations, we, even as stated at the conclusion of the hearing, setting aside the impugned order and vacating the findings by the ld. CIT(A), remand the matter back to the AO for the purpose. The AO shall, after hearing the assessee in the matter, forward the coordinates of the said land, identified by survey numbers, as well as of the local limits of the Municipality as on 16.02.2015, to KSREC, which shall report thereto, based on which he shall decide the matter. The burden to provide the primary information is on the assessee, which though the AO has the right to verify, and be satisfied with. Where not, he shall, state his reasons for the same, i.e., for not agreeing with that advanced by the assessee, forward both the set of coordinates, along with reasons, to KSREC, seeking it’s opinion in the matter, and shall decide on the basis of it’s report, unless of course the AO effectively rebuts it with an expert opinion, duly confronting the assessee therewith. As afore-noted, the matter warrants and, in fact, admits of a precise measurement, and the scope for an (AY : 2015-16) ITO v. Babu Chandrathil George ‘opinion’ in the matter is extremely limited. The AO’s right to take a different view, which though cannot, inasmuch as he is to abide by law, be excluded, is to, for it to be judicially sustainable, be reasoned and supported by credible evidence.
4.5 We decide accordingly.