2012 (3) TMI 454 - AT - Income Tax

Tribunal remands assessment, emphasizes fair hearing, importance of evidence consideration

Dr. R. Rangarajan Versus The ACIT, Chennai

The Tribunal allowed the appeal, remanding the matter for a fresh assessment, emphasizing the need for proper consideration of all documents and granting ... Whether the land transferred by the assessee is not agricultural land and thereby holding that it is a capital asset the transfer of which gives rise to taxable capital gains? - Held that:- The evidences filed by the assessee such as, certificate from VAO, Morai Village, certifying that the land sold was agricultural land, certificate from General Manager, Metropolitan Transport Corporation (Chennai) Ltd certifying that Morai Village is situated 10 kms away from Avadi, Rough sketch of the available approach road to the land sold, by the Deputy Surveyor, Ambattur Taluk, to impress upon that the land sold was situated more than 8 kms from the Avadi Taluk, were not considered by the Assessing Officer as no reasons for not accepting these evidences have been given by him in the assessment order. Further, no reasons have been given by the Assessing Officer as to why the Inspector’s report should be relied upon and the certificates filed by the assessee should be ignored. During the course of hearing, the ld. A.R of the assessee has also submitted that he had no objection if the matter was restored back to the file of the Assessing Officer for considering the evidences filed by the assessee afresh. We find force in the submissions of the ld. A.R of the assessee. We, therefore, set aside the orders of the lower authorities and remand the matter back to the file of the Assessing Officer for readjudicating the issue afresh. Appeal filed by the assessee is allowed for statistical purposes. Issues:The only issue involved in this appeal is whether the land transferred by the assessee is agricultural land and thus not a capital asset, or if it is a capital asset giving rise to taxable capital gains.Analysis:The assessee sold agricultural land measuring 11.96 acres and admitted the capital gain in the return. However, a search was conducted leading to scrutiny of the return. The assessee later filed a revised return, withdrawing the capital gain, claiming the land was not a capital asset as it was situated more than 8 kms from a notified area. The Assessing Officer accepted the revised return but still held the capital gain as taxable based on an Inspector's report stating the land was barren. The assessee provided certificates from local officials and evidence of agricultural use, which the Assessing Officer did not consider adequately. The Tribunal observed that the Assessing Officer did not provide reasons for disregarding the assessee's evidence and relying solely on the Inspector's report. The Tribunal remanded the matter back to the Assessing Officer for a fresh assessment, emphasizing proper consideration of all documents and granting the assessee a fair hearing.The Tribunal noted that the Assessing Officer treated the land as a capital asset due to its location beyond 8 kms from the Avadi Municipality, its reported barrenness, and the transfer to a Trust for educational purposes. However, the Tribunal found that the ld.CIT(A) confirmed this without addressing the evidences provided by the assessee, such as certificates certifying the land as agricultural and its distance from Avadi. The Tribunal observed that the ld.CIT/DR did not counter the submissions made by the assessee's representative. As the Assessing Officer did not justify rejecting the assessee's evidence or explaining reliance on the Inspector's report, the Tribunal allowed the appeal, setting aside the lower authorities' orders and remanding the matter for a fresh assessment.Therefore, the Tribunal allowed the appeal for statistical purposes, emphasizing the need for a fair reassessment considering all evidence and providing the assessee with a proper opportunity to present their case.