2021 (9) TMI 34 - AT - Income Tax

Tribunal upholds decision on land classification, dismisses rectification application

The Tribunal dismissed the Miscellaneous Application seeking rectification under section 254(2) of the Income Tax Act, 1961, as it found no apparent ... Rectification u/s 254 - nature of land whether agricultural land or not - Addition in respect of distance of land from the nearest municipality which constitutes mistake apparent on record which can be rectified u/s.254(2) - HELD THAT:- After hearing both sides set aside appeal to the file of the AO to ascertain fact with regard to nature of land when it was sold. This means, while deciding the issue the AO has to consider distance of land from nearest municipality, which is crucial to decide whether particular land is agricultural land or urban land which comes within the definition of capital asset as defined u/s.2(14) of the Income Tax Act, 1961 - to ascertain nature of land whether agricultural land or not primary document is to be chitta or addangal. Once there is a clear direction from the Tribunal to the Assessing Officer to ascertain nature of land which covers all the aspects including verification of chitta /addangal and to ascertain distance from nearest municipality. Since both the aspects are covered in the direction of the Tribunal, we are of the considered view that there is no error in the findings recorded by the Tribunal which can be rectified u/s.254(2) - Miscellaneous application filed by the assessee is dismissed. Issues:1. Rectification of mistake apparent on record under section 254(2) of the Income Tax Act, 1961.Analysis:The appellant filed a Miscellaneous Application against the Tribunal's order in ITA No. 2989/Chny/2019 for the assessment year 2012-13, claiming mistakes in the order regarding the facts of the case and arguments presented. The appellant argued that there was an error in determining the distance of the land from the nearest municipality, which is crucial in classifying the land as agricultural or urban for tax purposes. The learned D.R contended that the Tribunal's order was appropriate as it set aside the appeal for reconsideration based on additional evidence provided by the appellant. The Tribunal noted that the Assessing Officer needed to determine the nature of the land, particularly its distance from the nearest municipality, to establish whether it qualified as a capital asset under section 2(14) of the Income Tax Act, 1961. The Tribunal directed the Assessing Officer to verify primary documents like chitta or addangal to ascertain the nature of the land accurately. Given the comprehensive direction provided by the Tribunal, including verification of all relevant aspects, the Tribunal found no error in its decision that warranted rectification under section 254(2) of the Act.The Tribunal concluded that the appellant failed to demonstrate a mistake apparent on record that could be rectified under section 254(2) of the Income Tax Act, 1961. The direction given by the Tribunal to the Assessing Officer to determine the nature of the land, including verifying primary documents and establishing the distance from the nearest municipality, was considered thorough and covered all necessary aspects. Therefore, the Tribunal dismissed the Miscellaneous Application filed by the appellant, upholding its original order from March 10, 2021, and emphasizing the importance of accurately determining the nature of the land for tax assessment purposes.The judgment was pronounced in an open court on August 27, 2021, with Shri Mahavir Singh, Vice-President, and Shri G.Manjunatha, Accountant Member presiding over the case. Mr. Siddharth Nagarajan represented the Appellant, while Mr. G. Johnson appeared for the Respondent during the proceedings.