2019 (2) TMI 353 - AT - Income Tax

Tribunal emphasizes fair assessment in Section 54B case, stresses factual verification for agricultural land use

The Tribunal remanded the case back to the Assessing Officer for further examination and compliance with directions provided, emphasizing the importance ... Disallowance of deduction u/s.54B - Admission of additional evidence - Held that:- Additional evidences have been placed which needs to be verified by the Revenue Authorities. Furthermore, in the totality of facts and circumstances, the matter demands detailed factual verification and enquiry regarding the nature of land and whether it was being used for agricultural purpose throughout, most particularly with regard to specified conditions laid down u/s.54B of the Act. The twin conditions of the Section 54B which requires to be examined are: i) That the land which was sold was used for agricultural purpose in the two years immediately preceding the date on which the sale took place. ii) That the assessee has, within a period of two years after that date i.e. when the sale was completed, purchased any other land for agricultural purpose. We set aside the order of the Ld. CIT(Appeals) and remand the matter back to the file of the Assessing Officer to comply with our directions as herein above stated and thereafter, shall adjudicate the matter after providing reasonable opportunity of hearing to the assessee - Appeal of the assessee is allowed for statistical purposes. Issues:1. Disallowance of deduction claimed under section 54B of the Income Tax Act, 1961.2. Nature of the land sold by the assessee - Agricultural or Urban.3. Compliance with principles of natural justice by the Assessing Officer.4. Verification of agricultural activities on the land sold.5. Additional evidences submitted by the assessee.6. Interpretation and application of Section 54B conditions.Issue 1: Disallowance of deduction under section 54B:The assessee claimed a deduction under section 54B of the Income Tax Act, 1961, for investing the capital gain amount in agricultural land. The Assessing Officer denied the deduction, adding the claimed amount to the assessee's total income. The dispute arose from whether the land in question met the criteria of being agricultural land, as required by the Act.Issue 2: Nature of the land sold:The Assessing Officer contended that the land sold by the assessee was urban land, not agricultural land, based on the 7/12 extract which indicated it was barren and not used for agricultural purposes. The assessee argued that the land was indeed agricultural, as stated in the sale deed, but failed to provide substantial evidence to support this claim.Issue 3: Compliance with principles of natural justice:The assessee raised concerns about the Assessing Officer not following the principles of natural justice and not allowing sufficient opportunity to substantiate the claim. The contention was that the decision was based solely on the 7/12 extract without physical verification.Issue 4: Verification of agricultural activities:The Assessing Officer highlighted the lack of evidence regarding agricultural activities on the land sold. The assessee's argument was that even if not all land was used for agriculture, it should still be considered agricultural land. However, no concrete evidence was presented to support this claim.Issue 5: Additional evidences submitted:During the appeal, the assessee submitted additional evidence, including a certificate from a government-registered agricultural valuer and photographs of the land. The request was made to justify the presence of mango, coconut trees, and vegetable crops on the sold land.Issue 6: Interpretation of Section 54B conditions:The Tribunal emphasized the need for detailed factual verification regarding the land's agricultural use as per the conditions of Section 54B. The case was remanded back to the Assessing Officer for further examination and compliance with the directions provided, ensuring a fair opportunity for the assessee to present their case.This judgment addressed various key issues, including the disallowance of deduction under section 54B, the nature of the land sold, compliance with principles of natural justice, verification of agricultural activities, submission of additional evidences, and the interpretation of Section 54B conditions. The Tribunal emphasized the importance of factual verification and remanded the case for further assessment, highlighting the need for a comprehensive examination of the land's agricultural use and adherence to statutory requirements.