SHRI KISHORBHAI GIJUBHAI,,SURAT vs. THE INCOME TAX OFFICER, WARD-2(1)(2),, SURAT

This group of twelves (12) appeal(s), are part of Hazira Land Acquisition cases, all relates to penalty levied under section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).

At the outset, Learned Counsel for the assessee submitted that all the appeals filed by the assessee are barred by limitations. All the assessees have moved separate petitions for condonation of delay. Each assessee filed separate affidavits for condonation of delay. We have examined the number of delay in each appeal. We have gone through affidavits filed by each assessee. We have gone through the chart (appeal-wise delay) filed by the assessee, which is reproduced below:

We are of the view that provisions of law have to be adhered strictly and that one cannot be allowed to act in leisure and make a mockery of enacted law, because law and provisions are laid down to benefit both sides of litigation. Be that as it may, we have to do justice and the Hon’ble Supreme Court in the case of Collector, Land Acquisition vs Mst. Katiji and others , reported in 167 ITR 471, (1988 SC 897) (7) has observed as follows: “4. When substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred for the other side cannot claim to have vested right in injustice being done because of a non- deliberate delay.” When we weigh these two aspects then the side of justice becomes heavier and casts a duty on us to deliver justice. The reasons given in the each affidavit for condonation of delay were convincing and these reasons would constitute reasonable and sufficient cause for the delay in filing these appeals. We, therefore, condone the delay in all the appeals and admit all the appeals for hearing.

Ms. Ukti Shah, learned authorised representative (AR) of the assessee appeared. We have heard the submissions of learned authorised representative of the assessee(s) and the learned departmental representative for the revenue and have gone through the orders of the lower authorities. The ld AR of the assessee submits that in all quantum assessment appeals of the Hazira land appeals/ cases either the additions has been deleted or in some cases the additions on accounts of capital gain for the receipt against the pucca structure has been sustained only on estimation basis. The penalty in lead case of Ambaben J. Patel has also been deleted. Thus, the grounds of appeal

On further appeal before Tribunal, the Tribunal held that addition of capital gain on account of transfer of land/ acquisition of land is not taxable as the said land / impugned land is not ‘capital asset’ as defined under section 2(14)(iii)(a) of the Act. The land transferred by individual assessee(s) does not falls in the Municipal Area. Hazira Notified area is not a Municipal area or deemed municipal area, therefore, the receipt/ gain on transfer of land is not taxable under Income tax Act. Further, the assessees on their alternative pleas were also held eligible for exemption under section 10(37) of the Act as the land was compulsorily acquired by Government of Gujarat by completing statutory formalities under Land Acquisition Act, 1882. The land was used for agriculture purpose for two years prior to its acquisition. And the assessee(s) fulfilled all the requisite condition for seeking exemption under section 10(37) of the Act. The other addition made under the head “capital gains” against the cost of pucca structure, the assessee’s were allowed 60% as cost of acquisition or cost of improvement, against the relief of 50% as allowed by Ld. CIT(A). Further, in some cases, the agricultural income offered by assessee(s) was treated as “income from other sources” has been held as “income from agricultural activities”. Thus, in quantum appeals all the assessees were granted substantial relief in deleting major part of additions and only part of capital gains only on account of cost of improvement on pucca structure was partly upheld on estimation basis. Therefore, all substantial additions were either deleted or upheld only on estimation basis. In our considered view no penalty under section 271(1)(c) of the Act is leviable on all the assessees. In the result, the grounds of appeal raised by the assessee(s) are allowed.