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

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ITA 408/NAG/2013Status: DisposedITAT Nagpur04 August 2023AY 2008-09Bench: SHRI INTURI RAMA RAO (Accountant Member), SHRI S. S. VISWANETHRA RAVI (Judicial Member)5 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee failed to provide evidence to controvert the Assessing Officer's findings regarding the payment for land purchase. Therefore, the addition of unexplained investment was upheld.

What were the facts?

The assessee purchased agricultural lands and made gains on their sale. The Assessing Officer treated these gains as business income, and also added a portion of the purchase price of other lands as unexplained investment. The CIT(A) held that gains on agricultural lands were capital gains and exempt, but confirmed the addition for unexplained investment.

What were the issues?

Whether the gains on sale of agricultural lands are capital gains or business income, and whether the investment in land was adequately explained.

Which sections of the Income-tax Act were involved?

Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR – VIRTUAL COURT

Before: SHRI INTURI RAMA RAO & SHRI S. S. VISWANETHRA RAVI

For Appellant: Shri Nilesh Sindhwani
For Respondent: Smt. Rashmi Mathur
Hearing: 18.07.2023Pronounced: 04.08.2023

ORDER

PER INTURI RAMA RAO, AM:

1.

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.

2.

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.

4.

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.

5.

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.

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