MEKA KASI VISESWARUDU,VIZIANAGARAM vs. THE INCOME TAX OFFICER, WARD-1, , VIZIANAGARAM

1. This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)]-1, Visakhapatnam vide I.T.A.No.0178/2015-16/CIT(A)-1/VSP/2020-21 dated 18.08.2020, arising out of assessment order passed u/s 143(3) of the Income Tax Act, 1961 (in short ‘Act’) dated 30.03.2015 for the Assessment Year (A.Y.) 2012-13. Meka Kasi Visweswarudu, Vizianagaram

Brief facts of the case are that the assessee, an individual, filed his return of income on 31.03.2014, admitting total income at Rs.2,48,000/- after claiming Chapter VIA deductions of Rs.1,00,000/-. The case was selected for scrutiny under CASS to examine the cash deposits and capital gains. Accordingly, notice u/s 143(2) dated 05.09.2014 was issued and served on the assessee. The assessee had sold agricultural land at Dwarapudi near Vizianagaram to Sai Balaji Happy Homes for Rs.1,42,08,000/-, which he acquired for Rs.17,31,290/- on 06.01.2007. As the said land is considered by the assessee as an agricultural land which is situated at more than 8 km from Vizianagaram, the assessee has not considered sale of the same in his income tax returns. During the course of assessment proceedings, the Assessing Officer(AO) observed that the said land is hardly 1KM from the municipal limits. However, the AO noted that the assessee voluntarily agreed to pay tax on capital gains. The AO completed the scrutiny on 30.03.2015 and brought to tax the long term capital gains of Rs.1,15,89,382/-. The AO passed the assessment order u/s 143(3) and raised a demand of Rs.36,93,090/-.

Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and the Ld.CIT(A) partly allowed the appeal of the assessee.

Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal :

The learned Commissioner (Appeals) is not justified in dismissing the ground raised

Without prejudice to the ground for relief made, the Appellant prays honourable members of Tribunal to set aside the disputed issue for fresh consideration by the assessing officer, who has not properly examined the issue and who has not given adequate opportunity to the Appellant,even by furnishing a copy of the certificate obtained from the Commissioner, Vizianagaram Municipality.

For these and grounds that may be urged at the time of hearing, the appellant prays for necessary relief.

At the outset, the only contention of the Ld.AR is that the disputed land in S.No.82/1 to 82/3 in Dwarapudi Village does not fall in the municipal limits of Vizianagaram. The Ld.AR further contended that disputed appeal relates to Asst. year 2012-13 to which Notification No. 9447 dated 6/1/1994 would be applicable, since the amendment brought to Sec.2(14)(iii) requires the department to measure the distance from Muncipal limits, prospectively from 1/4/2014 only. The certificate of Meka Kasi Visweswarudu, Vizianagaram Tehsildar, Vizianagaram dated 27.05.2010 which confirmed that the lands are agricultural lands was not considered by the AO. The Ld.AR further submitted that since the lands are agricultural lands and agricultural income is disclosed in the returns, they are not liable to capital gains tax. The Ld.AR further submitted that the assessee is not given opportunity of being heard before the AO to verify and bring facts on record. He, therefore, pleaded to set aside the order passed by the Ld.CIT(A) and afford an opportunity of being heard before the AO to substantiate his claim.

Per contra, Ld.DR relied on the order of the Ld.CIT(A), pleaded to uphold the same and dismiss the appeal of assessee.

We have heard both the parties and perused the material placed on record. The only issued involved in the instant case is to ascertain whether the land sold by the assessee is within municipal limits of Vizianagaram or not. The assessee had sold the disputed land at Dwarapudi near Vzianagaram to Sai Balaji Happy Homes for Rs.1,42,08,000/-, which he acquired for Rs.17,31,290/- on 06.01.2007. Taking our attention to the certificate obtained from Tahsildar, Vizianagaram as filed in page No.14 of the paper book, the Ld.AR submitted that the disputed land is situated more than 8 Kms from Meka Kasi Visweswarudu, Vizianagaram Vizianagaram Municipal limits, whereas, the endorsement given by the Commissioner, Vizianagaram Municipality as filed in page No.32 of the paper book shows that the Dwarapudi village, which is located in surrounding of Vizianagaram Municipality is not included during the merger of surrounding villages. As per the Ld.AO, the disputed land is not an agricultural land as it is within the municipal limits and held that the assessee is laible to pay capital gains tax of Rs.36,93,090/-. In view of the foregoing facts and circumstances of the case, since there is ambiguity in the certificates issued by both the revenue as well as the municipal authorities, we remit the matter back to the file of the AO to re-ascertain whether the land is within 8 kilometers of the municipal limits or not and pass appropriate orders accordingly.

In the result, appeal of the assessee is allowed for statistical purpose.