ITO, CHENNAI vs. ARUNACHALAM NACHAMMAI, CHENNAI

आदेश / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER:

ITA No.198/Mds/2016. :- 2 -:

The Revenue has raised the following grounds:- 2.

‘’2.2 The CIT(A) ought to have appreciated that Explanation 2 to Sec 147 squarely applied to the facts of the case, in as much as it is not in dispute that excess relief had been given to the assessee in the original assessment proceedings, by treating the impugned land as an agricultural one. 2.3 The CIT(A) failed to note that the Hon'ble High Court in the case of JCIT v Kalanithi Maran (366 ITR 453) appreciated the wide powers available to the Assessing Officer in the matter of reopening, thus, sufficiently distinguishing the Hon'ble Apex Court's decision in the case of CIT vs. M/s. Kelvinator India Ltd (320 ITR 561). 3.1 The CIT(A) erred in deleting the capital gains charged on the land, on the ground that the impugned land is agricultural in nature. 3.2 The CIT(A) ought to have noted that after the reopening was quashed by the CIT(A), there was no order subsisting for the CIT(A) to adjudicate the merits of the addition made in the assessment order. 3.3 The CIT(A) failed to appreciate that the Hon'ble Madras High Court in the case of Rajam Chettiar Maha Sivarathri Ara Kattalai vs Special Commissioner and Commissioner of Agricultural Income tax (241 ITR 794) had laid down the ratio that once an order is quashed, nothing remains thereafter for adjudication. 3.4 The CIT(A) ought to have seen that the categorisation of the land by a Government Department cannot be simply brushed aside. 3.5 The CIT(A) ought to have seen that the decisions relied upon were in the context to stamp duty and have no relevance to the impugned issue’’.

ITA No.198/Mds/2016. :- 3 -: of �3,500/- and assessment was completed u/s.143(3) of the Act on 03.06.2008 with assessed income at �1,31,434/-. The ld. Assessing Officer having reason to believe that income has escapement assessment and issued notice u/s.148 of the Act. In compliance to notice, the assessee filed letter stating that the return filed earlier be treated in response to notice u/s.148 of the Act. Further, ld. Assessing Officer issued notices u/s.143(2) and 142(1) of the Act and the ld. Authorised Representative of assessee appeared from time to time and filed details. Further, the ld. Authorised Representative filed letter dated 05.02.2014 objecting to the reopening of assessment with judicial decisions and also submitted that the agricultural land is not within the town limits, Kiste is paid on agricultural land and actual cultivation has been proved with Chitta and Adangal and supported the usage of land for agricultural purpose with electricity consumption for drawing water and applicability of guideline value. The ld. Assessing Officer referred to the findings of the earlier assessments and found that the assessee has sold one acre and 17.5 cents of land situated at Kelambakkam for �51,18,300/-and claimed exemption as sale of agricultural land. As per the Registrar, Thiruporur, it has been classified as residence, hence, it is a capital asset and no exemption of agricultural land is available to the assessee and the entire sale transaction is subject to tax. The ld. Assessing Officer dealt on the ITA No.198/Mds/2016. :- 4 -: background and objections of reassessment and supporting documents of agricultural land consisting of Chitta, Adingal receipt and small farmers free electricity for irrigation of land and agricultural income.

The ld. Authorised Representative to substantiate that it is an agricultural land submitted certificate issued by the Village Administrative Officer (VAO) stating that the population of 2001 census is 5167 and the land is 8kms away from Municipal Corporation and assessee has purchased agricultural land on 28.06.1983 and sold on 29.08.2005 and held the land for more than 22 years and produced patta issued by the Deputy Tahasildar, Chengalpet as Punjai land. The assessee has carried on agricultural operations and offered agricultural income and falls with the definition of Sec. 2(14) of the Act. But the registration department has changed the classification from agricultural to residence and the procedural of classification is based on the nature of dry and wet land. The ld. Assessing Officer considered the submissions on re-opening of assessment and rejected the same. On merits, the ld. Assessing Officer to defended the stand of the Revenue has referred to the Registration Department guideline value being residential area and relied on the decision of Tribunal in the case of Pallavaram Gothandaram vs. DCIT in dated 17.10.2012 and the guideline value certificate of Registration Department mentioned as residential land.

ITA No.198/Mds/2016. :- 5 -:

With these observations rejected the claim of the assessee as agricultural land and taxed the sale consideration under capital gains and worked out long term capital gains. Against the order, the assessee filed an appeal before Commissioner of Income Tax (Appeals).

In the appellate proceedings, the ld Authorised 4.

Representative has raised grounds on these assessment proceeding u/sec. 147 and addition by the ld Assessing Officer on treating the agricultural land as residential land and calculated capital gains. The ld. Authorised Representative argued the grounds and referred the findings of the ld. Assessing Officer which are against the law. The ld. Authorised Representative submitted that objections were filed before ld. Assessing Officer in reopening and relied on the judicial decisions.

The ld. Assessing Officer relied on the decision of Som Dutt Builders Private Limited vs. DCIT (ITAT, Kol) 98 ITD 78, where it was held that ‘’change of opinion comes to the rescue of assessee only when Assessing Officer has taken one of permissible views at the time of original proceedings. A wrong application of law cannot be held as permissible view and that can always be changed for appreciating law- reopening valid’’. The ld. Commissioner of Income Tax (Appeals) verified the assessment records called for and the ld. Assessing Officer found that the assessee has filed return of income on 29.09.2006 and ITA No.198/Mds/2016. :- 6 -: disclosed sale of land �51,18,300/- and claimed exemption u/s.2(14)(iii) of the Act and also supported his grounds with evidence in respect of ownership of agricultural land, patta, KISTe certificates from village Panchayat President and the ld. Assessing Officer has called for information u/s133(6) of the Act and issued letter to the Chairman, Kelambakkam Ooratchi and Chairman Thiruporur Panchayat Union and also considered the written submissions of the assessee and deputed Inspector to conduct enquiry of the land with local Panchayat and the Inspector has filed report dated 02.06.2008 and also another letter dated 03.06.2008 received from Chairman, Kelambakkam Panchayat Officer explaining that the population of Municipality is 5163 as per 2001 census and distance of the impugned land is 10 kms and the ld. Assessing Officer has relied in his order.

The ld. Commissioner of Income Tax (Appeals) verified the records of sale and found that the ld. Assessing Officer has not called for any details of original proceedings u/s.143(3) of the Act were the land issue was already taken into consideration and while passing the order and the same cannot be re-considered which tantamount to change of opinion and the assessment cannot be reopened on mere change of opinion and relied on the Hon’ble Apex Court decision in the case of CIT vs. Kelvinator of India Limited 320 ITR 561 were the ld. Assessing Officer has power to reassess but not to review and also ITA No.198/Mds/2016. :- 7 -: supported with another Apex Court Decisions in the case of ACIT, Mumbai and Others vs. ICICI Securities Primary Dealership Limited 348 ITR 299. The assessment cannot be reopened for change of opinion and considered the re-assessment are not valid observed at para 8.1 & 8.2 of his order as under:-.

‘’8.1 In the present case, in the original assessment proceedings, after taking into account all the facts and circumstances, conducting necessary enquiry, obtaining additional details from the appellant, the Assessing Officer has taken a considered view to accept the exemption claimed. It is not a case which comes within the ambit of the judicial pronouncement mentioned by the Assessing Officer on para 3.5.1.2 of the impugned order. 8.2 On the basis of the discussions as above, and also respectfully following the ratio laid down by the Hon'ble Supreme Court in CIT vs Kelvinator of India Limited (320 ITR 561), I hold that the reassessment proceedings in this case are nothing but a change of opinion, a review of the matter that has already been duly considered and decided. As such, the reassessment proceeding are not valid. The appellant's appeal on this ground succeeds’’.

Further, the ld. Commissioner of Income Tax (Appeals) has dealt on the last ground of denial of claim by the ld. Assessing Officer by treating the agricultural land u/sec. 2(14)(iii) of the Act and allowed the ground on the basis of evidence of usage of land for agricultural purpose and patta, chitta, adangal and deleted the addition and allowed the ground of the assessee. Aggrieved by the CIT (A)order, the Revenue has assailed an appeal before Tribunal.

ITA No.198/Mds/2016. :- 8 -:

Further the guideline value cannot be brushed aside and the decisions relied in respect to stamp duty valuation cannot be ignored and pleaded for setting aside the Commissioner of Income Tax (Appeals) order.

Income Tax (Appeals) has deleted the addition treating as agricultural land. On the first ground, the Revenue has argued that in the original assessment the ld. Assessing Officer has not referred to the findings which the ld. Assessing Officer u/sec.147 of the Act has considered.

Preceding ld. Assessing Officer has not verified the sale consideration and therefore notice u/s. 148 of the Act was issued and re-assessment proceedings are completed treating the land as non agricultural land.

But prime facie, the ld. Authorised Representative referred to the paper book filed were objections are filed against the reasons recorded by the ld. Assessing Officer and to support their claim the ld. Assessing Officer in original assessment u/s.143(3) of the Act has dealt with application of mind and passed the order and also relied on Hon’ble Apex Court decision of GKN Drive Shafts (India) Ltd vs. ITO & Others 259 ITR 19. The ld. Assessing Officer passed the order for reopening of assessment proceedings based on the judicial decisions. Now, the question arises whether re-assessment proceedings are based on change of opinion or with external information. The ld. Commissioner of Income Tax (Appeals) has dealt on the provisions of re-assessment proceedings and also the submissions, objections raised by the ld. Authorised Representative. Prime facie issue involves on the first ground whether land falls within the definition of agricultural land u/s.2(14)(iii) of the Act and supporting ownership and cultivation

ITA No.198/Mds/2016. :- 10 -: details. The ld. Commissioner of Income Tax (Appeals) considered the findings of the ld. Assessing Officer and submissions of the ld. Authorised Representative alongwith documentary evidence and assessment record found that the ld. Assessing Officer in the original assessment has verified the said disputed details and passed order and now due to change of opinion, the ld. Assessing Officer has issued notice u/sec. 148 of the Act and passed reassessment order. The ld. Authorised Representative to substantiate their claim that the land is a agricultural land filed paper book with computation of income, income tax return and sale deed and the property purchased dated on 28.06.1983 referred as agricultural land at page 12 of sale deed.

Similarly, when the sale deed was executed on 29.08.2005 at page 11 reference is made to agricultural land and same was registered. The ld. Authorised Representative also demonstrated with supporting copy of patta, chitta, Kiste and certificate from Panchayat President.

Considering the apparent facts, we feel that the ld. Commissioner of Income Tax (Appeals) has rightly considered the submissions, assessment records and judicial decisions relied and Revenue could not get any fresh information to state that re-assessment proceedings are valid, we agree with the observations of the ld. Commissioner of Income Tax (Appeals) on the aspects of re-assessment proceedings cannot be ITA No.198/Mds/2016. :- 11 -: initiated on mere change of opinion. Further, it is to be noted that sole reason for reopening of assessment due to Re-classification of impugned land property. However, there is no material to suggest, the date on which it was re-classified by the State Revenue authorities. It is also pertainent to mention that no allegation on any failure on part of the assessee in respect of true and full disclosure of materials of facts and we confirm the order of quashing of re-assessment by the ld. Commissioner of Income Tax (Appeals). Since, the re-assessment order itself is quashed in our opinion, the ld. Commissioner of Income Tax (Appeals) adjudicating on merit on additions is not proper ground. The appeal of the Revenue is partly allowed.

In the result, the appeal of the Revenue is partly allowed. 8.

Order pronounced on Friday, the 24th day of June, 2016, at Chennai.