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Income Tax Appellate Tribunal, PUNE BENCHES “B” :: PUNE
Before: SHRI SATBEER SINGH GODARA & DR.DIPAK P. RIPOTE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
In this case Revenue has filed the appeal against the order of ld.Commissioner of Income-tax(Appeal)[NFAC] u/sec.250 of the C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane Income Tax Act, dated 30.08.2023 for the A.Y.2013-14. The Revenue has raised the following grounds of appeal : “i) Whether on the facts and in the circumstances of case, the Ld.CIT(A), NFAC was justified in directing the AO to delete the addition of Rs. 2,74,53,736/, ignoring the applicability of the Hon’ble Supreme Court decision in the case of Smt. Sarifabibi Mohamed Ibrahim & Others 204 ITR 63i(SC), the agricultural land sold for non- agricultural purpose cannot be exempt for capital gain tax. ii) Whether on the facts and in the circumstances of the case, the Ld. CIT(A) was justified in ignoring the fact that the addition made by AO on the basis of credible evidence against the assessee available on recored. iii) The appellant prays that the order of the Ld. CIT(A) may please be cancelled and the order of Assessing office may please be restored. iv) The appellant prays to adduce such further evidence to substantiate his case. v) The appellant prays leave to add, alter, clarify, amend and or withdraw any grounds of appeal as and when the occasion demands.”
2. Assessee has filed Cross Objection appeal in C.O.No.10/PUN/2024. Brief facts of the case :
3. In this case the Income Tax Officer(ITO), Ward-2(3), Nashik had observed that during the assessment, Mr.Ashok S.Sonawane for A.Y.2013-14 which was completed u/sec.143(3) accepting the returned income and by allowing deduction u/sec.54B of the Act. However, on perusal of the records, the ITO observed that C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane Mr.Ashok S.Sonawane had sold the land in violation of Section 63 of Bombay Land Revenue Code by selling the land to a person who intended to use for Non-agricultural use. Ms.Smita Ashok Sonawane is wife of Mr.Ashok S.Sonawane and has 50% share in the impugned sale of land. Therefore, case of Smt.Smita Ashok Sonawane was reopened by issuing notice u/sec.148 on 19.11.2018. However, assessee Smt.Smita Ashok Sonawane filed Return of Income on 17.11.2018 for A.Y.2013-14. During the assessment proceedings, the ld.AR of the assessee filed a written submission along with copy of certificate issued by Tahsildar dated 23.12.2015, 7/12 extract of land sold, copy of Agreement for Sale. During the assessment proceedings, assessee claimed that the impugned land is agricultural land and it is at a distance of 09 kms from LENAD KHURD and at a distance of 12kms from SHAHAPUR Municipality Limits. Therefore, assessee claimed it is not a capital asset, hence, no capital gain arises. Assessee also submitted that at the time of sale the land was agricultural land and till date it is an agricultural land, assessee submitted that even the purchasers have not converted the land into non-agricultural. Assessing Officer(AO) held that the impugned land was a capital C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane asset as the purchaser had purchased with an intention of development, and purchaser is not an agriculturalist. Accordingly, AO assessed the income at Rs.2,79,28,470/-. Aggrieved by the assessment order, assessee filed appeal before the ld.CIT(A). The ld.CIT(A) had also called-for a remand report from the Assessing Officer which is discussed in the order. Ld.CIT(A) held as under : “10.3 During the course of appellate proceedings, it is observed from the case records that JCIT, Range-2, Nashik had asked the AO to take pro Revenue stand by stating that the directions given by the Addl. CIT, Range-2, Nashik u/s 144A of the Act in the case of the appellant for the AY 2014-15 were not particular year and not binding for different year. Thus, this contention of the JCIT, Range-2, Nashik is totally incorrect as the facts of the case and issue to be decided for AY 2014-15 were identical with the facts and issue to be decided in AY 2013-14. It is settled law laid down by Hon'ble Supreme Court in the case of Radha Somani Satsang Vs. CIT (1992) 193 ITR 321 (SC) that unless there is deviation pointed out, the department should not change the view taken on similar facts in earlier years assessments. Therefore, the view taken by the AO while assessing income for AY 2014-15 in the assessment order dated 05.12.2016 is required to be consistently followed in the order dated 19.12.2019 for AY 2013-14. 10.5 For what has been outliened above and for the reasons stated above, it is held that on the pertaining facts and circumstances of the case, the appellant has sold agricultural land which is situated in rural area and is situated more than 08 kms away from municipal limits and hence as per provisions of section 2(14) of the Act, the said impugned land is not capital asset and accordingly no capital gain on sale of agricultural land is chargeable to tax. For the very same, reasons, the AO has, thus fallen into error by treating the stamp value of the impugned land as stamp value of non-agricultural land and thereby adding the adding the difference between the stamp value and set forth value under the head ‘Short Term Capital Gain’ while assessing the case under consideration u/s 143(3) rws 147 of the Act. The action of the AO is, therefore, disapproved of the AO is, thus, directed to delete the said addition. Consequently, the Ground Nos.4 to 6 raised by the appellant are allowed.”
C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane 4. Aggrieved by the order of ld.CIT(A), the Revenue filed appeal and assessee filed Cross Objection Appeal before this Tribunal.
5. At the time of hearing, none appeared on behalf of the assessee. The ld.AR has filed a paper book containing 75 pages.
5.1 Since this is the fifth(5th) hearing, we decided to proceed ex- parte.
The ld.Departmental Representative(ld.DR) for the Revenue relied on the order of Assessing Officer.
Findings & Analysis : 7. We have heard ld.DR for the Revenue and perused the records. We are first considering the Revenue’s appeal in .
7.1 In this case, ld.CIT(A) in para 10.2 has observed that for A.Y.2014-15 in the case of the assessee, Additional Commissioner of Income Tax, Range-2, Nashik had issued direction u/sec.144A of the Act with reference to the same issue that the land sold was agricultural land and hence not a capital asset. We have perused C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane copy of the direction issued u/sec.144A by the Additional Commissioner of Income Tax, Range-2, Nashik for A.Y.2014-15. The said directions reproduced here as under: “01. Vide the letter under reference dated 07/11/2016, the ITO Wd 2(1), Nashik has sought instructions/ directions to be issued to him u/ s. 144A in respect of the ongoing scrutiny assessment proceedings before him for A.Y. 2014-15. The AO has referred the case for issue of directions in view of his observations which are reproduced below. 'The case of Shri Somnath Ashok Sonawane, was selected for scrutiny assessment for the A.Y. 2013-14 on the reason "Large deduction claimed u/s 54B, 54C, 54D, 54G, 54GA" and the assessment was finalized after accepting the said claim. Further, the Revenue Audit raised objection regarding the said claim and stated that as per section 63 of the Bombay Tenancy & Agricultural Land Act, 1948, no sale of agricultural land is valid in favors of person who is not an agriculturist. He further stated that the Hon'ble Supreme court of India in the case of SmtSarifabibi Mohmed Ibrahim & Others 204ITR 631(SC) has also held that the agricultural land sold for non-agricultural purpose cannot be exempt for capital gain tax. Therefore, the said claim should have been rejected and accordingly, Short-term capital gain should have been calculated during the assessment proceedings for the A. V. 2013- 14 as per the Revenue Audit. Since, the case of Smt. Smita Ashok Sonawane is based on similar issue, your kind direction is solicited u/s 144A of the IT Act, 1961 for finalization of scrutiny assessment for the A.Y. 2014-15 in the above case. The case record ofShri Ashok Somnath Sonawane for the A.Y. 2013-14 in one volume and Smita Ashok Sonowane for the A. Y. 20U-15 in one volume are being submitted with this letter for your kind perusal and necessary direction. The scrutiny assessment in the case ofSmita Ashok Sonavane far the AY 2014-15 Is getting time barred on31.12.2016.’ 02. On receipt of the reference from the ITO Wd 2(1), Nashik a8 mentioned in para 01 above, the assessee was called upon to attend personally or through her Authorized Representative on 17/11/2016. Explanation was sought on the issues raised by the ITO Wd 2(1), C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane Nashik in the pending assessment proceedings for A.Y 2014-15, which has been reproduced in para 01 above.
On the said date, Shri Suhas A. Vadulekar, CA from M/s. Anand Bang &Associates, CAs duly authorised attended and the case was heard. Written submissions were filed on the said date and on 23/11/2016 and the issues involved were discussed at length. During the proceedings, the Authorized Representative of the assessee, in addition to the written submissions, has submitted copies of the certificate issued by the Tehsildar, Shahapur dated 12/07/2016, 7/12 extracts of the land sold, MO A of the purchaser Prospective Estate and Realty Logical Solutions Pvt. Ltd, copy of Google Map indicating location of the impugned land, population data of Shahapur town etc. 03.1 It was submitted by the Authorized Representative of the assessee that the impugned land is agricultural land situated at Mauje. Shirgaon Taluka: Shahapur, District: Thane, in Gat nos. 263,264,280,284 and 290 admg 1-H-36R. It is submitted that the assessee vide a registered sale agreement deed dated 22/07/2013(registered with the Sub-Registrar Shahapur District: Thane on 14/10/2013), has sold the agricultural land as above to Prospective Estate and Realty Logical Solutions Pvt. Ltd., Mumbai. The consideration for the sale is Rs. 40,00,000/- (value for the purpose of stamp duty is Rs. 1,61,68,000/ -). It was also submitted that the population of Shahapur town (Municipality) is 11,623 as per the latest census (2011) and the agricultural land sold is at a distance of 09 kms. from Shahapur Town (Municipality) . Hence, it is submitted that in view of the amended provisions of section 2(14)(iii)(b)(I), the land is not a capital asset the transfer of which can be considered for taxation under the headCapital Gains. 04 The Authorized Representative of the assessee contended that the impugned land is an agricultural land at the time of sale and even till date and is not used/ converted for any non-agricultural purposes. It is further contended that sale for the purpose of prospective non-agricultural use does not alter the character of the land. The fact that the land in question was purchased by a developer cannot be a determining factor for treating the land to be converted for any purposes. In support of the above, the Authorized Representative of the assessee relied upon various judicial pronouncements in his written submissions filed on 17/11/2016.
The case of the assessee was also discussed at length in the context of the decision of the Hon'ble Supreme Court in the case of SmtSarifabibi Mohammad Ibrahim and Ors. 204ITR 631 (SC) in which it has been held that agricultural land sold for non- C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane agricultural purpose cannot be exempted from capital gain tax. Further, the case was also discussed in the context of Section 63 of the Bombay Tenancy and Agricultural Land Act, 1948, as per which no sale of agricultural land is valid in favourof a person who is not an agriculturist. 05.1 On the above issues, the Authorized Representative of the assessee submitted that the facts of the present case are totally different from the facts emerging from thedecision of the Hon'ble Supreme Court in the case of Smt. Sarifabibi Mohammad Ibrahim and Ors. (supra). Further, in respect of the provisions of section 63 of the Bombay Tenancy and Agricultural Land Act, 1948, it is submitted by the Authorized Representative of the assessee that these provisions have no relevance to the issue of taxation on the transfer of land from an agriculturist to a person who is not an agriculturist. Directions: 06. The submissions made during the proceedings were examined in the context of the reference made by the AO and the case records. It is clearly seen that the facts as emerging from the decision of the Hon'ble Supreme Court in the case of Smt. Sarifabibi Mohammad Ibrahim and Ors. (supra) are not in consonance from the case of the assessee. The facts emerging from both the cases are presented below: Facts as in the case of Smt. Facts as in the assessee's case Sarifabibi Mohammad Ibrahim and Ors The land in question was situated The land in question is situated in village within the Municipal limits of Shirgaon Taluka: Shahapur District: Surat Municipality and was Thane and is at a distance of 09 kms. situated at a distance of 01 kms. from Shahapur Municipality. from Surat railway station.
Part of the land was converted for No part of the land was converted for non- agricultural purposes on non-agricultural use before or after 28/03/1958 and the land sold was the sale, even as on date the land is also converted for non- agricultural in nature and no agricultural purposes after the application for conversion into non- sale deed. agricultural use is made.
Application for provision u/s 63 of the No application for permission u/s 63 of Bombay Tenancy and Agricultural the Bombay Tenancy and Land Act, 1948, was made before Agricultural Land Act, 1948, was the execution of the same deed in made. May, 1969 C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane Construction activities were started by No construction is started or done till the purchasers within 03 days of date and the land continues to be the execution of the sale deed. agricultural land.
It was established in the court that the No facts are on record to establish non- assessee had no intention to bring agricultural use by the assessee, as the land under cultivation after yet. 1965-66.
06.1 As regards the application of section 63 of the Bombay Tenancy and Agricultural Land Act, 1948, it is clear that the provisions relating to sale of agricultural land by an agriculturist to a person who is not an agriculturist has no relevance to the issue of taxation on the transfer of such land.
The reference u/s 144A dated 07/11/2016 is accordingly disposed off with directions to the AO that as the land transferred by the assesses is not a capital asset within the meaning of section 2(14)(iii)(b)(I) if the I.T. Act, 1961, the transfer will not be assessable to Capital Gain Tax.” 7.2 Ld.CIT(A) relied on the said directions of Additional Commissioner of Income Tax, Range-2, Nashik for A.Y.2014-15 in the case of the assessee and held that Department needs to follow the view taken by the AO in the assessee’s case for A.Y.2014-15 in A.Y.2013-14 also.
7.2.1 The ld.CIT(A) also held that the land sold was situated in rural area at a distance of more than 8 kms from Municipal Limits, hence as per section 2(14) of the Act, it was not a capital asset and hence, no capital gain on sale of agricultural land.
C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane 7.3 In this case, Revenue has not brought on record any new facts. In the case of assessee for A.Y.2014-15, returned income has been accepted vide order dated 05.12.2016, based on the direction issued by Additional Commissioner of Income Tax, Range-2, Nashik for A.Y.2014-15. In these facts and circumstances of the case, we agree with the ld.CIT(A) that Revenue cannot change the stand in the case of the assessee for A.Y.2013-14 when the issue involved is identical. Therefore, we uphold the order of ld.CIT(A).
7.4 Even otherwise, the ld.CIT(A) has given a finding that impugned land is at a distance more than 08 kms from Municipal Limits. We have perused the copy of the registered Agreement for Sale dated 24.10.2012 which is at page no.40 to 51 of the paper book. It is mentioned in the said agreement for sale, that the impugned land is agricultural land and purchaser is an agriculturalist. We have also perused the certificate issued by Tahsildar, Shahafur dated 12.07.2016 which is at page no.65 of the paper book. It is categorically mentioned in the said certificate that impugned land is an agricultural land and it is being used as agricultural land. It is also mentioned in the certificate that the C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane land is at a distance of approximately 09 kms away from Shahapur Headquarters. The relevant part of the certificate is scanned and reproduced here as under:
C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane 7.5 Thus, the Tahsildar certified that the impugned land is agricultural land and at distance of more than 08 kms. The Revenue has not brought on record any evidence to rebut the findings of Tahsildar.
7.5.1 Section 2(14) is reproduced as under: (14) "capital asset" means property42 of any kind held by an assessee, whether or not connected with his business or profession, but does not include— (i) any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession ; (ii)…………….. 45[(iii) agricultural land46 in India, not being land situate— (a) in any area which is comprised within the jurisdiction of a municipality46 (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 population46 of not less than ten thousand 46a[according to the last preceding census of which the relevant figures have been published before the first day of the previous year] ; or (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette47;] 7.6 Therefore, in these facts and circumstances of the case, we agree with ld.CIT(A) that impugned land is not a capital asset as defined u/sec.2(14) of the Act. Hence, no capital gain arises. Accordingly, grounds of appeal raised by the Revenue are dismissed.
C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane 7.7 In this case the Revenue in Ground Number 1 has relied on the decision of the Hon’ble Supreme Court in the case of Smt. Sarifabibi Mohmed Ibrahim Vs. CIT [1993] 204 ITR 631 (SC). The facts pertaining to the assessee are as under : In the case of the Assessee the Land was an agricultural Land as per Revenue Record. The land is agricultural land even on 12.07.2016 i.e.much after the sale as per the certificate issued by Tahsildar in which Tahsildar has categorically stated that till today land is used for the purpose of agriculture. The Land has not been converted into Non-Agricultural Land even after the Sale. The Land is situated beyond 8 kms from the Municipal Limits. Agricultural operations were continuously performed on the impugned land till date of sale. Consideration paid as per rate applicable for Agricultural land in the area. No construction carried out on the impugned land even after the sale. The only objection of the revenue was that the impugned land has been sold to Prospective Estate and Reality Logical solutions Pvt Ltd. However, as per the Agreement to Sale the buyer is an Agricultural company. 7.8 When we analyse all these facts of the case, respectfully following the Hon’ble Supreme Court decision(supra), we hold that the impugned land was an agricultural land.
Accordingly, the Ground Number 1 raised by the Revenue is dismissed.
C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane 9. For all the reasons discussed above, Ground No.2, 3, 4 and 5 are dismissed. Accordingly, Revenue’s appeal is dismissed.
Cross Objection No.10/PUN/2024 (Assessee) : 10. In the Cross Objection appeal, assessee has raised a ground that reasons recorded for reopening were not provided to the assessee. The Assessing Officer(AO) in the remand report dated 07.01.2022 submitted to ld.CIT(A) admitted that reasons were not provided to the assessee, though the assessee vide letter dated 25.06.2019 had requested the Assessing Officer to provide copy of the reasons recorded.
10.1 Thus, it is an admitted position that reasons recorded for reopening were not provided to the assessee. Revenue has not brought on record any document to rebut the findings of the remand report.
It is also observed from the assessment order that there was an Audit Objection.
However, since we have dismissed Revenue’s appeal, the ground raised in this Cross Objection appeal by assessee need not C.O.No.10/PUN/2024 [A] & Smita Ashok Sonawane be adjudicated as it becomes academic in nature. Hence, Cross Objection appeal is not adjudicated.
In the result, Cross Objection appeal of the assessee is dismissed, as not adjudicated. Order pronounced in the open Court on 31st July, 2024.