2022 (5) TMI 1173 - AT - Income Tax

Tribunal overturns CIT's order under Section 263, finds land agricultural.

M/s Ishwar Dewllings Pvt. Ltd. Versus Pr. Commissioner of Income Tax-I Kanpur.

The Tribunal allowed the assessee's appeal, quashing the order passed by the Pr. CIT under section 263. It held that the assessment order by the AO was ... Revision u/s 263 - assessee had sold an agricultural land on which it had earned capital gain which was exempt as having been earned on an agricultural land - As per CIT agricultural land was not being used for agricultural purposes - HELD THAT:- In the present case there is no denying of the fact that in the Revenue records the land has been classified as agricultural land. The evidence of agricultural activities being carried out on such land was filed with the Assessing Officer. The copy of Jamabandi and Khasra Khatauni was filed with the Assessing Officer - The copy of Khasra/Girdwari and crop inspection book was filed before the Assessing Officer which was again filed before Pr. CIT,where from 2012-13 to 2017-18, Sarson has been mentioned to have been cultivated. The evidence of the land being situated at an ariel distance of 10 Kms., was also filed with the AO vide letter dated nil wherein the details of location, details of land as downloaded from web along with details of population as per census 2011 was submitted. The contents of such letter has already been reproduced in our order vide para 4.1. Therefore, keeping in view these documents and evidences the Assessing Officer took a plausible view and held such land to be agricultural land. The order passed by learned Pr. CIT is not justified. The order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of the Revenue nor the Assessing Officer has assumed wrong facts while arriving at the conclusion. In view of the above, the order passed by learned Pr. CIT u/s 263 is quashed. - Decided in favour of assessee. Issues Involved:1. Legality and validity of the order passed under section 263 of the Income-tax Act, 1961.2. Whether the land sold by the assessee qualifies as agricultural land.3. Whether the assessment order passed by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue.Detailed Analysis:1. Legality and Validity of the Order Passed Under Section 263:The appellant contended that the order passed by the learned Pr. CIT under section 263 of the Income-tax Act, 1961, was illegal, invalid, and not sustainable. The appellant argued that the assessment order under section 143(3) dated 21 September 2017 was passed by the Assessing Officer (AO) after extensive inquiry and was neither erroneous nor prejudicial to the interest of the Revenue. The appellant also submitted that the learned CIT ignored relevant evidence and material on record, such as certificates from the Tehsildar and copies of Jamabandi and Girdavari, which clearly showed that the land was used for agricultural purposes.2. Whether the Land Sold by the Assessee Qualifies as Agricultural Land:The appellant argued that the land sold was agricultural land, and the capital gain earned from its sale was exempt. The appellant provided various documentary evidences, including a certificate from the Tehsildar, copies of Khasra, Jamabandi, Khatauni, and a crop inspection report by the Lekhpal, to demonstrate that the land was used for agricultural purposes. The appellant also submitted Google Maps showing the aerial distance of the land from the municipal limits, which was more than six kilometers, thereby qualifying it as agricultural land under section 2(14) of the Act.3. Whether the Assessment Order Passed by the Assessing Officer Was Erroneous and Prejudicial to the Interest of the Revenue:The appellant argued that the AO had twice verified the facts regarding the nature of the land and concluded that it was agricultural land, exempt from capital gains tax. The AO had issued a notice under section 154 of the Act for rectification, which was subsequently dropped after considering the appellant's explanations and documents. The appellant contended that the Pr. CIT's order under section 263 was not justified, as the AO had already carried out extensive verification and concluded that the land was agricultural land.Tribunal's Findings:1. Observations on the Pr. CIT's Order:The Tribunal found that the Pr. CIT's order was based on incorrect interpretations and irrelevant considerations. The Pr. CIT had wrongly inferred from a line in the sale deed that the land was not used for agricultural purposes. The Tribunal noted that the line in the sale deed merely indicated that the land had not been given to any person for cultivation through an oral contract.2. Evidence of Agricultural Activities:The Tribunal observed that the appellant had provided sufficient evidence, including the Khasra Girdwari, which showed that agricultural activities were carried out on the land. The Tribunal also noted that the classification of land in revenue records as agricultural land was good prima facie evidence of its nature.3. Legal Precedents:The Tribunal referred to several legal precedents, including the Supreme Court's decision in CWT vs. Officer-in-Charge (Court of Wards) and various High Court decisions, which supported the appellant's claim that the land was agricultural land. The Tribunal emphasized that the future use of the land for non-agricultural purposes did not affect its classification as agricultural land at the time of sale.4. Conclusion:The Tribunal concluded that the AO had taken a plausible view based on the evidence provided and that the assessment order was neither erroneous nor prejudicial to the interest of the Revenue. The Tribunal quashed the Pr. CIT's order under section 263 and allowed the appellant's appeal.Judgment:The appeal of the assessee was allowed, and the order passed by the Pr. CIT under section 263 was quashed. The Tribunal held that the assessment order passed by the AO was neither erroneous nor prejudicial to the interest of the Revenue.(Order pronounced in the open court on 17/05/2022)