VIKESH CHATURBHUJ AGRAWAL,NAGPUR vs. ITO-WARD-4(1), NAGPUR

This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)-II, Nagpur [‘the CIT(A)’] dated 07.08.2013 for the assessment year 2008-09.

Briefly, the facts of the case are that the appellant is an individual deriving income under the head “business”. The Return of Income for the assessment year 2008-09 was filed on 27.09.2008 disclosing total income of Rs.63,110/-. Against the said return of Income Tax Officer, Ward-4(1), Nagpur (‘the Assessing Officer.) vide order dated 21.12.2010 passed u/s 143(3) of the Income Tax Act, 1961 (‘the Act’) at a total income of Rs.42,87,099/-. While doing so, the Assessing Officer made addition of Rs.25,33,989/- being the gains made on purchase and sale of agricultural lands by holding that the transactions are in the nature of adventure in trade rejecting the contention of the appellant that the agricultural lands were held as capital asset. The Assessing Officer also made addition of Rs.12,75,000/- being the 50% of share of properties purchased by the assessee, the details of which are as under :- Schedule of the Seller Purchase value Purchase value Assessee’s property as per as per 50% share in purchase deed agreement to cash sale component Khasara No.41, Shri. Nathuji & Rs.31,00,000 Rs.57,00,000 Rs.13,00,000 Mouza Khadka, Mahadeo Tahsil Hingna, Dabharde Nagpur Khasara Shri. Parasram Rs.70,51,000 Rs.82,25,000 Rs.5,87,000 No.43/1, Mouza Akone Khadka, Tahsil Hingna, Nagpur 3. According to the Assessing Officer, the appellant had failed to explain the sources for investments in the above-said properties.

Being aggrieved, an appeal was filed before the ld. CIT(A), who vide impugned order held that the gains arising out of the agricultural lands are not business income, but capital gains since the agricultural lands were situated beyond 8 kilometres from the Municipal Corporation of Nagpur and the lands being agricultural are exempt from tax. As regards, the addition made on account of unexplained investments in respect of purchase of land from one Mr. Akone at Khadka, the ld. CIT(A) confirmed the addition rejecting the contention of the appellant that the land at Khadka was purchased by issuing a bearer cheque to the seller of the land i.e. Shri Akone on 29.11.2007.

Being aggrieved by the decision of the ld. CIT(A) confirming the addition of Rs.12,75,000/-, the assessee is in appeal before us in the present appeal. 6. It is contended before us that the appellant had purchased the land at Khadka by issuing a bearer cheque to the seller of the land i.e. Shri Akone amounting to Rs.1,75,000/- and Rs.10,25,000/-. Thus, it is contended that the source for purchase of land cannot be said to be unexplained.