ACIT, SONEPAT vs. SH SHER SINGH SHIVRAIN, JHAJJAR

PER A.T. VARKEY, JUDICIAL MEMBER : These cross appeals, at the instance of the assessee and revenue, are directed against the order of the Commissioner of Income-tax

2 ITA No.4216 & 4312/Del/2012 (Appeals), Rohtak dated 28.05.2012 and relate to assessment year 2009-

10.

“1 On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts in deleting the addition of Rs. 2,34,00,993/- out of Rs. 2,81,55,993/- made by AO under head Capital Gains as the assessee failed to file sustainable documentary evidence in respect of investments made in additions as well as details of complete bank accounts during assessment proceedings; the ld. CIT(A) accepted the plea of the assessee without any verification and documentary evidence which is not justified.

2 On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts in directing the AO to consider the LTCG (Long Term Capital Gains) of Rs. 11,75,813/-, which was claimed as exempt u/s 10(38) furnish sustainable documentary evidence in respect of these investments inspite of sufficient opportunities allowed to assessee during assessment as well as remand proceedings.

3 On the facts and in the circumstances of the case, ld. CIT(A) has erred in law and facts in deleting the addition of Rs. 6,40,000/- out of Rs. 15,50,000/- made by AO by treating the agricultural income as income from undisclosed sources as assessee failed to furnish sustainable documentary evidence in respect of the agricultural income during assessment proceedings; the Ld. CIT(A) accepted the plea of the assessee without any verification and documentary evidence which is not justified.”

4312/D/2012 are as under :-

3 ITA No.4216 & 4312/Del/2012 “1 That order of assessment u/s 143(3) of the Act 29.12.2011 is without jurisdiction since the learned Joint Commissioner of Income Tax, who framed the impugned assessment was not empowered or authorized or directed under the provisions of section 120(4)(b) read with section 2(7A) of the Act to exercise the powers or perform the functions of Assessing officer and as such, order of assessment is illegal, invalid and, be quashed as such.

1.1 Without prejudice to the above, even if it is assumed (not admitted) for the same of an argument that the learned Joint Commissioner of Income Tax was empowered under section 124(4)(b) read with section 2(7A) of the Act, then too, order of assessment is without jurisdiction in absence of an order transferring jurisdiction u/s 127 of the Act from the learned Assistant Commissioner of Income Tax, Rohtak Circle, Rohtak to learned Joint Commissioner of Income Tax Rohtak Range, Rohtak

2 That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in upholding an addition of Rs. 45,54,394/- by computing the long term capital gain on sale of agricultural land at Rs. 1,91,54,584/- as against declared long term capital gain of Rs. 1,46,00,190/-. 2.1 That while determining the long term capital gain at Rs. 1,91,54,584/- the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in restricting the cost of improvement/construction on agricultural land in the financial year 2008-09 at Rs. 77,95,000/- as against total expenditure of Rs.1,05,79,000/- on erroneous consideration that expenditure incurred after sale deed is not an eligible expenditure.

2.2 That the learned Commissioner of Income Tax (Appeals) has failed to appreciate that such expenditure had been incurred prior to the sale deed but discharged after the sale deed and hence, the basis adopted by failing to appreciate evidence on record is highly misconceived and therefore, unsustainable.

4 ITA No.4216 & 4312/Del/2012 3 That the learned Commissioner of Income Tax (Appeals) has grossly erred both in law and on facts in upholding an addition of Rs. 2,00,000/- by computing the long term capital gain on sale of residential house at Rs.25,22,188/- as against declared long term capital gain of Rs.23,22,188/-.

3.1 That while determining the long term capital gain at Rs. 25,22,188/- the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in restricting the cost of improvement/construction on residential house in the financial year 2008-09 at Nil as against total expenditure of Rs. 2,00,000/- on repair of the house.

4 That the learned Commissioner of Income Tax (Appeals) has further erred both in law and on facts in not allowing the claim of exemption of Rs. 39,15,450/- u/s 54B of the Act.

4.1 That the finding of the learned Commissioner of Income Tax (Appeals) that “no evidence has been led that agriculture operations were being carried out on the said land” is contrary to facts and evidence on record and has been arrived without granting any opportunity and therefore, unsustainable. 5 That the learned Commissioner of Income Tax (appeals) has erred both in law and on facts in upholding an addition of Rs. 9,10,000/- out of aggregate addition made of Rs. 15,50,000/- representing agricultural income earned by the appellant in the year under consideration.

6 That the learned Commissioner of Income Tax (Appeals) has erred both in law and on facts in upholding the levy of interest u/s 234B of Rs. 30,56,108/- which is not leviable at all on the facts of the instant case.

It is therefore prayed that, it be held that, assessment framed is without jurisdiction and, various additions sustained by the learned Commissioner of Income Tax (Appeals) together with interest may kindly be deleted and, appeal of the appellant be allowed.”

5 ITA No.4216 & 4312/Del/2012 4. During the course of hearing, Ground No. 1 and 1.1 of the Grounds

of Appeal filed by the assessee were not pressed and are therefore,

dismissed.

relate to addition of Rs. 2,81,55,993/- on account of long term capital

gain on sale of 2 residential houses and agricultural land by the appellant

company.

appellant filed return of income declaring capital gain on sale of land and

2 houses at Rs.1,68,44,084/- in the manner as under:

House No. 1392 sold on 28/04/2008 Sale consideration 27,50,000 Less: indexed cost (FY 2003-04) 22,50,000/ 28,28,294 28,28,294 -78,294 463*582 AY 2004-05 Agriculture land sold on 05/11/2008 Sale consideration 4,24,42,000 Less: Indexed Cost (FY 2004-05) 21,05,000/ 25,52,312 480*582 (FY 2005-06) 30,00,000/ 35,13,078 497*582 (FY 2006-07) 33,95,000/ 38,07,110 519*582 (FY 2007-08) 53,20,000/ 56,19,310 551*582 (FY 2008-09) 1,23,50,000/ 1,23,50,000 2,78,41,810 1,46,00,190 582*582 House No. 1402 sold on 18/08/2008 Sale: consideration 35,00,000 Less: Indexed cost (FY 2002-03) 7,51,000/ 447*582 9,77,812 (FY 2008-09) 2,00,000/ 582*582 2,00,000 23,22,188 TOTAL LTCG 1,68,44,084

6 ITA No.4216 & 4312/Del/2012

on sale of the house and agricultural land at Rs. 4,44,07,059/- in the

following manner:

Property Cost Index Cost Sale value Capital Gain H. No. 1392, Sector- 6,00,000/- 600000x582 27,50,000/- 19,95,789/- 6 (purchased in 463 2003-04) = 7,54,211 H. No. 1402, Sector 7,51,000/- 751000x582 35,00,000/- 25,22,188/- – 6 (Purchased in 447 2002-03) =9,77,812/- Agr. Land 21,05,500/- 21,05,500x582 4,24,42,000/- 3,98,89,082/- (Purchased in 2004- 480 05) = 25,52,912 Total 4,44,07,059

Officer to compute long term capital gain at Rs. 4,48,07,059/- was that he

had not taken into account the additions as have been claimed by the

appellant company for each of the assets sold in the instant year. The

details of the additions claimed and denied by the Assessing Officer are

as under:

Property Cost Addition not Assessment allowed year H.No. 1392, Sector-6 (Purchased 6,00,000/- 16,50,000/- 2004-05 in 2003-04) H.No. 1402, Sector-6 (Purchased 7,51,000/- 2,00,000/- 2009-10 in 2002-03) Agricultural land (Purchased in 21,05,500/- 30,00,000/- 2006-07 2004-05) 33,95,000/- 2007-08 53,20,000/- 2008-09 1,23,50,000/- 2009-10

assets sold have duly been reflected in the statement of affairs as on

31.03.2007, 31.3.2008 and 31.3.2009 filed before the Assessing Officer.

7 ITA No.4216 & 4312/Del/2012 It was submitted that the Assessing Officer while calculating the long

term capital gain has denied cost of additions made in the

construction/development of the assets which were duly shown in the

statement of affairs of respective years and was corroborated by the

statement of affairs accepted in the preceding years. It was further stated

that amount was spent on construction of a big residential house and

improvement of agriculture land such as filing, landscaping etc. including

a barbed wire boundary which was constructed on the entire land of 46

kanals and 8 marlas and a pucca water harvesting pool of 90 lacs liters

was also constructed by the appellant which was duly connected with

road and pavements. The appellant furnished photocopies of the said

property in support of the claim of cost of land incurred for development

of the property apart from a valuation report. The assessee filed copy of

bank statement in support of the claim of construction. A remand report

was obtained from the Assessing Officer. On consideration of the above,

CIT(A) allowed the claim of the appellant except to the extent of Rs.

47,55,000/- and as such, both assessee and revenue are in appeal.

submitted that since during the course of assessment proceedings, the

Assessing Officer had directed the assessee to furnish only details of

assets for the year under consideration there was no justification to deny

deduction on account of cost incurred in earlier years which were

8 ITA No.4216 & 4312/Del/2012 otherwise supported by statement of affairs placed on record along with

returns of income for earlier years and thus, denial of investment in

earlier years was wholly untenable. So far as the additions made in the

instant year, it was submitted that complete bank statements were

furnished as would be seen from the replies to the Assessing Officer

dated 15.11.2011 and 19.12.2011 and placed in the Paper Book. A chart

tabulating the claim made vis-à-vis each of the three properties sold in the

instant year was furnished and is extracted hereunder:

Sr. Property Submission of the Assessee No. 1 House No. 1392, Sector-6, Bahadurgarh 1) The learned Assessing Officer disallowed the cost incurred on development of land of Rs. 16,50,000/- in Assessment year 2004-05 through A.Y. Cost Bahadurgarh allowed the cost of purchase of land of Rs. 6 lacs. Thus, he restricted the cost to Rs. 6 lacs as against claim of Rs. 22,50,000/- (Rs. 6,00,000/- + Rs. (Rs.) (Rs.) 04-05 16,50,000 20,74,083 16,50,000/-) ii) In arriving at the above conclusion, he overlooked that the said cost incurred in Assessment year 2004-05 was duly declared in the statement of affairs furnished in earlier year as would be evident from chart hereunder:

Sr. A.Y Amount Pages of Assessment (pages of No. Paper u/s Paper Book Book) i) 2006-07 22,50,000 81 143(3) (83-84) ii) 2007-08 22,50,000 86 143(1) (87) iii) 2008-09 22,50,000 88 143(1) (89)

2) These statement of affairs were also furnished in the course of assessment proceedings by reply dated 19.12.2011 (pages 16-17 of Paper Book). Moreover there were also placed before learned Commissioner of Income Tax (Appeals) vide submission dated 12.3.2012 (page 71 of Paper Book read with page 74 of Paper Book). This has also been accepted by the learned Assessing Officer in remand report dated 11.4.2012 (pages 75-76 of Paper Book)

3) It is thus submitted that once an addition has been shown in a particular year and the return of income for that year has become final, it implies that that the additions shown by the assessee were accepted by the department. Thus there is no requirement of filing the evidences of earlier years. Infact, the learned Assessing Officer has never required the appellant, during assessment proceedings to file such evidences (see page 78 of submission dated 20.04.2012 and page 71 of submission dated 12.3.2012)

9 ITA No.4216 & 4312/Del/2012

4) It is submitted that, the learned Commissioner of Income Tax (Appeals) was justified to accept the investment in H. No. 1392, Sector-6, Bahadurgarh of Rs. 16,50,000/-. The findings of learned Commissioner of Income Tax (appeals) are in para 8.4 at page 9 to be read with para 8.1 at page 6 of his order 2 Agricultural land (measuring 46 kanals) The learned Assessing Officer disallowed the cost incurred on development of alongwith farm house thereon at Gurgaon (A) land of Rs. 2,40,65,000/- in Assessment years 2006-07 to 2009-10 through allowed the cost of purchase of land of Rs. 21,05,500. Thus, he restricted the A.Y. Cost Bahadurgarh cost to Rs. 21,05,500 as against claim of Rs. 2,61,70,500/- (Rs. 21,05,500+30,00,000+33,95,000+53,20,000+1,23,5000) (Rs.) (Rs.) ii) In arriving at the above conclusion, he overlooked that the said cost 06-07 30,00,000 35,13,078 incurred was duly declared in the statement of affairs furnished in earlier years 07-08 33,95,000 38,07,110 as would be evident from chart hereunder: 08-09 53,20,000 56,19,310 Sr. A.Y Amount Pages of Assessment u/s 09-10 1,23,50,000 1,23,50,000 No. Paper (pages of Paper Total 2,40,65,000 2,52,89,498 Book Book) i) 06-07 51,05,000 81 143(3) (21,05,000+ (83-84) 30,00,000) ii) 07-08 85,00,000 86 143(1) (21,05,000+ (87) 30,00,000) 33,95,000) iii) 08-09 1,38,20,000 88 143(1) (21,05,000+ (89) 30,00,000) 33,95,000+ 1,23,50,000) iv) 09-10 2,61,70,000 90 143(3) (1,23,50,000+ 1,38,20,000) 2) These statement of affairs were also furnished in the course of assessment proceedings by reply dated 19.12.2011 (pages 16-17 of Paper Book). Moreover these were also placed before learned Commissioner of Income Tax (Appeals) vide submission dated 12.3.2012 (page 71 of Paper Book read with page 74 of Paper Book). This has also been accepted by the learned Assessing Officer in remand report dated 11.4.2012 (pages 75-76 of Paper Book) 3) The assessee purchased the plot of land for a consideration of Rs. 21,05,000/- on 27.10.2004 (pages 101-110 of Paper Book). It constructed a farmhouse thereon and sold the said property by two separate sale deeds

Sr.No. Date of sale deed Amount Pages of Paper (Rs.) Book i) 14.7.2008 1,05,79,500 91-94 ii) 5.11.2008 3,18,63,000 95-100 Total 4,24,42,500

4) It is submitted the amount of Rs. 1,23,50,000/- in the instant year and Rs. 1,17,15,000/- in earlier years was spent on construction of residential house and improvement on agriculture land such as filling and land scapping etc. A barbed wire boundary was also constructed on the entire land of 46K 8M. A

10 ITA No.4216 & 4312/Del/2012 pakka water harvesting pool was also got constructed by the appellant which was duly connected with road and payments. The capacity of the pool was about 90 lakh liters. The assessee had purchased and developed this piece of land for exclusive use of his residence with best available material used in construction. Even in pool costly stones were used as is evident from the photos produced before learned Commissioner of Income Tax (Appeals) and were also shown before the learned Assessing Officer (page 73 of Paper Book). The amount invested was withdrawn from the banks and the source of the same thus stood explained when it is reflected in the balance sheets i.e. the sources and its applications. As such, no adverse inference could be validly drawn. 5) It is submitted that the construction of the farm house is supported by details of construction (page 80 of Paper Book) and valuation report dated 1.7.2008 valuing the development work including water harvesting pond at Rs. 1,55,27,000/- (pages 111-121 of Paper Book). This fact is specifically stated in the sale deed dated 14.7.2008 (pages 91-94 at pages 92-93 of Paper Book) 6) It is thus submitted that the entire cost ought to be allowed as deduction. 7) The learned Commissioner of Income Tax (Appeals), has restricted the amount invested in the year to Rs. 77.95 lacs out of total sum of Rs. 123.50 lacs on the ground that Rs. 45.55 lacs was paid after 14.7.2008, which is the date of sale deed of farm house. There is no justification to hold so. Once payments made are not disputed by the revenue, which are by account payee cheques and accepted by the learned Commissioner of Income Tax (Appeals) and, bank statements filed in the assessment proceedings (page 8 of CIT(A) order), it is submitted that the sum of Rs. 45.55 lacs not allowed by the learned Commissioner of Income Tax (Appeals) may also kindly be allowed as deduction.

House No. 1402, Sector-6, Bahadurgarh 1) The learned Assessing Officer disallowed the cost incurred on 3 development of land of Rs. 2,00,000/- in Assessment year 2009-10. A.Y. Cost Bahadurgarh (Rs.) (Rs.) ii) In arriving at the above conclusion, he overlooked that the said cost explained through the statement of affairs for Assessment year 2009-10 (page 09-10 2,00,000 2,00,000 90 of Paper Book). The details of investment are at page 80 of Paper Book supported by bank statements placed on record. As such no adverse could validly be drawn. Thus the learned Assessing Officer be directed to allow the investment made of Rs. 2 lacs as would be evident from chart hereunder: Sr. No. A.Y Amount Pages of Paper Book i) 09-10 2,00,000 90

in making the above addition. It was submitted that though it is not

denied that the statement of affairs had been furnished along with return

of income in the preceding assessment years yet such a fact alone cannot

11 ITA No.4216 & 4312/Del/2012 be made a basis to allow deduction to the appellant company while

computing the capital gain in the instant year. It was further submitted

that as regards farm house sold, mere furnishing of photocopies and

references to the sale deed cannot be a ground to allow deduction of the

cost of construction claimed by the appellant company.

record. It is noticed that during the instant year, the appellant sold house

no. 1392, Sector-6, Bahadurgarh and in respect of such an asset, claimed

expenditure incurred on development of land of Rs. 16,50,000/- in

assessment year 2004-05. Further during the instant year, the appellant

had also sold an agricultural land measuring 46 kanal alongwith farm

house at Gurgaon against which it claimed an expenditure incurred on

development of land of Rs. 2,40,65,000/- during the assessment years

2006-07 to 2009-10. The breakup of the said cost incurred and claimed

for the years is as under:

Assessment Year Amount 2006-07 30,00,000/- 2007-08 33,95,000/- 2008-09 53,20,000/- 2009-10 1,23,50,000/-

1402, Sector-6, Bahadurgarh whereby the assessee claimed an

expenditure of Rs. 2,00,000/- incurred during the instant assessment year

which too had been denied by the Assessing Officer. Thus appellant

12 ITA No.4216 & 4312/Del/2012 claimed cost of Rs. 16,50,000/- incurred in assessment year 2004-05 in

respect of house no. 1392, Sector-6, Bahadurgarh and cost of Rs.

33,00,000/-, 33,95,000/- and Rs. 53,20,000/- incurred in the assessment

years 2006-07 to 2008-09 towards agricultural land sold alongwith farm

house at Gurgaon in the instant year. So far as the cost incurred in the

preceding assessment years is concerned, the CIT(A) has allowed the

same by holding vis-à-vis agricultural land as under:

“The agriculture land was purchased in the FY 2004-05 for a consideration of Rs. 21,05,000/-. Thereafter, improvements/ additions to the agriculture land by way of earth filling, barbed wire fencing, construction of water harvesting pool, construction of huge residential house etc. were claimed to have been made during the FY 2005-06, 2006-07, 2007-08 & 2008-09 by investing Rs. 30,00,000/-, Rs. 33,95,000/-, Rs. 53,20,000/- and Rs. 1,23,50,000/- respectively. The investment in the FY 2005-06 has been shown in the balance sheet filed along with return of income and the assessment was complied u/s 143(3) accepting the income returned. The investment in the FY 2006-07 & 2007-08 have been duly reflected in the statement of affairs as on 31.03.3007 & 31.03.2008 filed along with the return of income. These returns of income have been processed u/s 143(1). The declaration in the statement of affairs filed along with return of income regarding the addition/ improvements made in the agriculture land indicates that the assessee has in fact invested these amounts toward the additions to the agriculture land.”

been allowed on the ground that such cost was reflected in the statement

of affairs as on 31.3.2007 and which was accepted in assessment framed

under section 143(3) of the Act. Having considered the rival submissions,

we find that so far as cost incurred in preceding assessment years is

concerned, it is not denied that such cost was duly reflected in the

statement of affairs furnished along with return of income for each of the

preceding assessment years. These returns of income as filed by the

13 ITA No.4216 & 4312/Del/2012 assessee have acquired finality. Neither action under section 147 or

section 263 of the Act has been taken by the revenue to disturb such a

return. In such circumstances, we are in agreement with the conclusion of

the CIT(A) that cost as incurred and reflected in the statement of affairs

furnished in the return of income in the preceding assessment years had to

be allowed as deduction to the appellant and could not be denied while

computing capital gain on sale of the house/agricultural land in the instant

year.

agricultural land at Gurgaon is concerned, it claimed cost of Rs.

1,23,50,000/-. It was stated that such expenditure was incurred for

construction of the farm house and development of the agricultural land.

The break-up of the said expenditure has been noted by the CIT(A) as

under:

“During the year under consideration i.e. FY. 2008-09, an amount of Rs.1,23,50,000/- was claimed to have been spent towards additions to agriculture land. The AR has furnished account of additions made during the year as under:-

Date Particulars Chq. No. Amount (Rs) 04.04.2008 Cash (paid to contractors for 2,50,000/- labour charges) 07.04.2008 Cash (paid for purchase of wood & 1,80,000/- Timber) 11.04.2008 Cash (paid for purchase of rodi, 4,00,000/- cement, creaser etc.) 15.04.2008 Cash (paid for purchase of cement, 2,00,000/- rodi, creaser, sand etc.) 18.04.2008 Cash (paid for purchase of cement, 2,50,000/- rodi, creaser & labour charges)

14 ITA No.4216 & 4312/Del/2012 21.04.2008 Cash (paid for material & labour 1,30,636 charges) 25.04.2008 2,00,000/- 01.05.2008 Self (paid for purchase of cement, 223920 5,00,000/- rodi sand, labour etc.) 01.05.2008 Cash (paid for material & labour 223920 6,50,000/- etc) 05.05.2008 Cash (paid for purchase of cement, 4,25,000/- rodi, cresar etc) 06.05.2008 Cash (paid for purchase of cement, 1,20,000/- rodi, cresar etc) 07.05.2008 Cash (paid for purchase of cement, 1,20,255/- rodi, cresar etc) 09.05.2008 Cash (paid for purchase of cement, 3,25,000/- rodi, cresar etc) 17.5.2008 Cash (paid to contractor) 2,50,000/- 18.05.2008 Cash paid for material) 4,00,000/- 21.05.2008 Self (paid for purchase of cement, 223921 5,00,000/- rodi, sand, labour, etc.) 28.05.2008 2,50,000/- 02.06.2008 Cash (paid for purchase of stone) 4,00,000/- 06.06.2008 Self (To Charbhuja Marble Co.) 223921 1,29,109/- Cash (purchase of material) 1,50,000/- Self (paid for purchase of cement, 223918 4,50,000/- rodi, sand, labour etc.) Cash (paid for purchase of stone) 1,25,000/- Cash (paid for purchase of 1,60,000/- material) 18.06.2008 Self ( purchase of wood , vijay 223927 3,60,000/- kumar A. Son) 22.06.2008 Self (Chabhuja Marble Co.) 223932 3,70,000/- 24.06.2008 Self (paid for purchase of cement, 223925 2,50,000/- rodi,cresar,) Self (paid for purchase of cement, 223926 2,50,000/- rodi,cresar,) 22.07.2008 Self (Ram kisor) 223932 5,00,000/- 12.11.2008 Self( Mahadev stone) 00005774 3,30,000/- 24.11.2008 Joginder Trading co. 258635 4,00,000/- 20.12.2008 Joginder Trading co. 621656 5,25,000/- 20.01.2009 Kumar iron store 621658 2,00,000/- 27.01.2009 Joginder Trading co. 258644 6,00,000/- 29.01.2009 Joginder Trading co. 258645 4,00,000/- Joginder Trading co. 258646 5,00,000/- Joginder Trading co. 258647 5,00,000/- 21.03.2009 Joginder Trading co. 621667 6,00,000 Total 1,23,50,000

15 ITA No.4216 & 4312/Del/2012 16. The CIT(A) has allowed the aforesaid expenditure claimed to the

extent of Rs.77,95,000/- and denied sum of Rs.45,55,000/- by holding as

under:

“This expenditure claimed is evident from entries in the 9 banks accounts maintained by the assessee. 8.3 From the above, it is evident that the assessee has spent substantial amount towards additions to the agriculture land by way of earth filling, construction of water harvesting pool and farm house etc. It is seen that the assessee has sold the farm house for a consideration of Rs. 1,05,79,000/- vide sale deed dated 14.07.2008 and the agriculture land for a consideration of Rs. 3,18,63,000/- vide sale deed dated 5.11.2008. Had the assessee not made any investment for the construction of farms house on the bare agriculture land purchased during FY 2004-05, he would not have been able to sell the farm house by a separate sale deed for a consideration of Rs. 1,05,79,000/-. However, it is seen from the above account that the assessee has claimed payment of Rs. 45,55,000/- even after 14.07.2008 to various concerns towards addition to the farm house, which is not tenable. The addition to the farm house made during the year is therefore restricted to Rs. 77,95,000/-. In view of the above, the action of the AO in taking the addition to the agriculture land at Nil discarding the evidences available on record is unjustified.”

evident from the bank account maintained by the assessee which fact has

not been proved or established by leading any material to be incorrect of

erroneous. It is also not established how sums withdrawn from the bank

have been utilized for any other purpose other than claimed by the

appellant towards land or construction of the farm house. Even

otherwise, it is also noticed that assessee had purchased a plot of land for

consideration of Rs.21,05,000/- on 2710.200 which was sold at aggregate

consideration of Rs. 4,24,42,500/- by way of two sale deeds dated

14.07.200 and 05.11.2008. Both the sale deeds have been placed in the

paper book. It is further seen that the sale deed dated 14.7.2008 was

16 ITA No.4216 & 4312/Del/2012 specifically in respect of sale of farms house including rain water

harvesting systems in the instant year. The appellant has also furnished a

valuation report dated 1.7.2008 valuing the cost incurred for development

work in land/farmhouse at Rs. 1,55,27,000/-. Neither the Assessing

Officer nor the CIT(A) or learned DR has pointed out any defect in the

valuation report furnished by the appellant. In such circumstances, we

feel that the CIT(A) was not justified to restrict deduction to the extent of

Rs.77.95 lacs out of the total sum of Rs. 1,23,50,000/- on the ground that

sum was paid after 14.7.2005 which was the date of sale deed of the farm

house. Thus in our considered opinion the entire cost of deduction of Rs.

1,23,50,000/- be allowed while computing long term capital gain on sale

of the agricultural land/farm house by the appellant.

appellant having been incurred towards repayment of the house of 1402,

Sector-6, Bahadurgarh sold in the instant year. The CIT(A) vis-à-vis the

said sum while holding denial of deduction has held that no evidence has

been brought on record regarding investment of the said land and

therefore, claim of deduction to this extent is disallowed. The appellant

in the course of hearing has only referred to statement of affairs which is

not a sufficient basis to allow the claim of deduction towards cost of

acquisition of the property. There is nothing to support that any

expenditure was incurred towards cost of development of house at plot

17 ITA No.4216 & 4312/Del/2012 no. 1402, Sector-6, Bahadurgarh in the instant year. Having regard to

above, we feel that action of the CIT(A) is in order and claim of the

appellant is therefore, rejected. In the result, the grounds raised by the

appellant are partly allowed and ground raised by the revenue is rejected.

Rs.11,75,813/- which was claimed as exempt under section 10(38) of the

Act and short term capital gain of Rs. 3,09,715/- declared by the appellant

in its return of income. The CIT(A) vis-à-vis aforesaid ground has held as

under:-

“15. I have considered the issue and the submissions made by the AR. The AO asked the assessee to furnish the details to LTCG & STCL on shares along with evidences for the first time on 7.12.2011. in response to this requirement, the assessee vide letter dated 19.12.2011 furnished the details along with copies of D-mat a/c, transaction statements with share brokers and payment of STT along with revised computation statements, which has been confirmed in the remand report of the AO. However, the AO in the assessment order has stated that no details were furnished and therefore made the impugned addition. As submitted by the AR, the evidences furnished are computer generated statements which can be taken as admissible evidence. However, if the AO had any doubt, he should have made necessary enquiries to ascertain the authenticity of the documents filed by the assessee. The transaction statements of the share broker indicate the name of the assessee and to this extent the observation of the AO in the remand report that the name of the assessee has not been mentioned in the documents is incorrect. Since there is no dispute regarding payment of STT, the assessee is eligible for exemption of LTCG u/s 10 (38) of the Act. The AO is directed to consider the LTCG of Rs. 11,75,813/-, which has been claimed as exempt u/s 10(38), and the STCL of Rs. 3,09,715/- as declared in the revised computation, an allow the claim after verification. Accordingly, the ground of appeal are treated as allowed.”

to the file of the Assessing Officer to allow claim after verification of the

evidences furnished by the appellant. In such circumstances, we do not

18 ITA No.4216 & 4312/Del/2012 seek to interfere in the aforesaid conclusion and therefore, ground raised

by the revenue is held to be found not in order and hence rejected.

relates to addition of Rs.15,50,000/- representing agricultural income

declared by the appellant and held to be income from undisclosed

sources. The CIT(A) has noted that during the instant year, the appellant

had declared agricultural income of Rs.15,50,000/- but since the appellant

had not furnished any bills and vouchers in respect of sale of agricultural

produce and in respect of expenses incurred on agricultural operations

therefore the same is added as income from undisclosed sources. He

noted that appellant was owner of 41 acres of land and details of

ownership have been filed before the Assessing Officer. It was contended

by the appellant before CIT(A) that agricultural land produced and sold

was for 2 years non production of sale bills alone could not be a ground

to deny claim of the appellant. In the remand report as obtained, the

Assessing Officer did not dispute ownership of the agricultural land but

however reiterated that in absence of evidence furnished by the appellant,

claim is not maintainable. The CIT(A) however has allowed claim of the

appellant to the tune of Rs. 6,40,000/- and upheld the balance of

Rs. 9,10,000/- for the following reasons:

“20. I have considered the issue and the submissions made by the AR. The ownership of agriculture land by the assessee is not in doubt. The assessee has declared agricultural income of Rs. 3,14,513/- in the AY 2007-08. No agricultural income was shown in the AY 2008-09. Agricultural income for

19 ITA No.4216 & 4312/Del/2012 both the years was declared in the year under consideration at Rs. 15,50,000/-. The claim of agricultural income cannot be denied merely because Form-J was not furnished by the assessee. The contention of the AR that the agricultural income shown by the assessee of Rs. 18,902/- per acre is reasonable considering that I have upheld agricultural income of Rs. 26,000/- per acre by the above mentioned appeal order is misplaced and unacceptable as agricultural income depends on various factors like fertility of land, availability of water etc. Since the assessee himself has shown agricultural income of Rs. 3,14,513/- in the AY 2007-08, I would deem it reasonable to adopt Rs. 3,20,000/- as agricultural income for the AY 2008-09 & 2009-10. Since no agricultural income was declared in the AY 2008-09 on the ground that the agricultural income for both the years, which has been declared in the year under consideration, could be taken as Rs. 6,40,000/-. The addition to the tune of Rs. 9,10,000/- therefore is sustained and the grounds of appeal are partly allowed.”

record, it is undisputed that the appellant has not produced documentary

evidence in support of agricultural income declared by the appellant. It is

further not disputed that the appellant is owner of agricultural land in the

instant year. Further, it is also not disputed that in the preceding

assessment years, agricultural income had been declared of Rs. 3,14,513/-

and having regard to the said position, we find that the finding of the

CIT(A) to accept agricultural income at Rs. 6,00,000/- is in order. The

learned DR has also not been able to show in any manner how such an

acceptance of the claim is excessive. In view of the above position, we

uphold order of the CIT(A) and reject the grounds raised both by assessee

and revenue.

39,15,450/- under section 54B of the Act. The CIT(A) vis-à-vis the said

claim has held as under:

20 ITA No.4216 & 4312/Del/2012 “9.1 I have considered the contention raised by the AR. The benefit of section 54B is only available in case of sale of agriculture land on which agriculture operations were carried out at least 2 years prior to the date of sale. In the present case, no evidence has been led that agriculture operation were being carried out on the said land. Therefore, the benefit on section 54B is not available to the assessee and contention in this regard is dismissed.”

54B of the Act is only available in case of sale of agricultural land on

which agricultural operations were carried out at least two years prior to

the date of sale and since in the present case, no evidence has been led

that the agricultural operations were being carried out on the said land

and therefore, section 54B is not available to the appellant.

given either by the Assessing Officer or CIT(A) to furnish such relevant

evidence and therefore, prayed that the issue may kindly be set aside to

the file of the Assessing Officer for re-adjudication. The learned DR did

not fairly object to such a prayer made by the appellant. We therefore,

feel it appropriate that the issue be restored to the file of Assessing

Officer for reconsideration in accordance with law. Needless to state that

the appellant would be entitled to lead all such evidence to support claim

of exemption under section 54B of the Act and the Assessing Officer

shall pass an order after granting necessary opportunity to the appellant.

In the result, ground is allowed for statistical purposes.

21 ITA No.4216 & 4312/Del/2012 26. Ground 6 raised by assessee relates to levy of interest which is consequential in nature.

Order pronounced in open court on this 12th day of January, 2016.

Sd/- sd/- (PRASHANT MAHARISHI) (A.T.VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 11th day of December, 2015 TS