2023 (11) TMI 539 - AT - Income Tax

ITAT upholds section 147 reopening and section 50C addition after rejecting distance-based exemption claim for property sales

Smt. Krishna Devi W/o Tek Ram Tyagi Versus ITO Ward-1 (3) Ghaziabad

Smt. Krishna Devi W/o Tek Ram Tyagi Versus ITO Ward-1 (3) Ghaziabad - TMI Issues Involved:1. Jurisdiction under Section 147/148 of the Income Tax Act.2. Classification of sold agricultural land as capital assets under Section 2(14) of the Income Tax Act.3. Validity of Nagar Nigam certificate and reliance on Google Maps.4. Consideration of CBDT Circular No. 17/2015.5. Consideration of Gram Pradhan Morti Village certificate.6. Legality of treating exempted capital gain on sale of agricultural land as taxable.7. Overall validity of the assessment order and jurisdiction.Summary:Issue 1: Jurisdiction under Section 147/148 of the Income Tax ActThe Assessee contended that the reassessment order was passed without issuing and serving the mandatory notice under Section 148, thus making the assumption of jurisdiction under Section 147 invalid. However, the Tribunal found that the Revenue had received AIR information about the sale of immovable properties and had issued verification letters to the Assessee, who did not comply. The case was reopened under Section 147, and the assessment was completed ex-parte under Section 144 due to non-cooperation by the Assessee.Issue 2: Classification of sold agricultural land as capital assets under Section 2(14) of the Income Tax ActThe Assessee argued that the agricultural land sold was not capital assets under Section 2(14), and thus, the capital gain should be exempt. The Tribunal noted that the land was within the notified area of the Municipal Corporation of Loni, Ghaziabad, falling under the definition of capital assets. The Tribunal upheld the CIT(A)'s decision that the land was within 8 kilometers of the municipal limits, making it a capital asset.Issue 3: Validity of Nagar Nigam certificate and reliance on Google MapsThe Assessee presented a certificate from Ghaziabad Municipal Corporation dated 22/06/2008, claiming the land was beyond 8 kilometers from the municipal limits. The CIT(A) relied on a Google map from 2017, showing the distance as less than 8 kilometers. The Tribunal found that the distance between the property and the municipal limits would not change over time and upheld the CIT(A)'s reliance on the Google map and other corroborative evidence.Issue 4: Consideration of CBDT Circular No. 17/2015The Assessee argued that the distance should be measured based on the shortest road distance as per CBDT Circular No. 17/2015. The Tribunal noted that the distance measured with the help of the Google map and other evidence showed the land was within the 8-kilometer limit, thus falling under the definition of capital assets.Issue 5: Consideration of Gram Pradhan Morti Village certificateThe Assessee submitted a certificate from the Gram Pradhan Morti Village stating the land was not within the Ghaziabad Nagar Nigam limits. The Tribunal found that the Remand Report and other evidence indicated the land was within 2.5-3 kilometers of the municipal limits, thus dismissing the Assessee's claim.Issue 6: Legality of treating exempted capital gain on sale of agricultural land as taxableThe Tribunal upheld the CIT(A)'s decision to treat the capital gain as taxable, as the land was classified as a capital asset under Section 2(14). The Tribunal also noted that the co-owner's assessment did not mention or adjudicate the issue of exemption, and even if it did, it would not affect the present case's findings.Issue 7: Overall validity of the assessment order and jurisdictionThe Tribunal found no error or infirmity in the CIT(A)'s order upholding the assessment and directed the AO to recompute the capital gain by reducing the cost of acquisition from the total sale consideration. The Assessee's appeal was dismissed.Conclusion:The Tribunal dismissed the Assessee's appeal, upholding the CIT(A)'s order and the classification of the sold land as a capital asset, thereby making the capital gain taxable. The Tribunal also validated the jurisdiction under Section 147/148 and the reliance on Google Maps and other evidence over the Nagar Nigam and Gram Pradhan certificates.