TaxTMI 
TaxTMI 
2016 (4) TMI 80
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..../s. Godavari Townships (P) Limited, Visakhapatnam on 11.8.2008 u/s 133A of the Income Tax Act, 1961 (hereinafter called as 'the Act'), during which the fact of sale of land by the above assessees came to the notice of the department. As the assessee has derived Capital Gain from the sale of above property and did not file his return of income for the year under consideration, a notice u/s 142(1) of the Act was issued to the assessee on 19.9.2008 calling for return of income for the assessment year 2007-08. Since the assessee did not comply with the notice, summons u/s 131 of the Act were issued to the assessee on 22.9.2008 to record a sworn statement. The assessee appeared before the A.O. on 7.10.2008 and a sworn statement was recorded from the assessee. Thereafter, a show cause notice was issued on 10.2.2009 by calling upon assessee that why assessment should not be completed ex-parte u/s 144 of the Act. In response to the notice issued by the A.O., assessee has filed a return of income for the assessment year 2007-08 on 23.3.2009, admitting the entire sale proceeds on sale of 7.65 acres of land at Palacherla village of Rs. 97,92,000/- besides an agricultural income of Rs.....
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....ent by calculating the capital gains. 5. On being aggrieved, the assessee carried the matter in appeal before the CIT(A). 6. Before Ld. CIT(A), it was submitted that subsequent to the GO Ms No.159MA, another GO was issued i.e. GO Ms no.389 dated 29.8.2001 by Government of Andhra Pradesh excluded Palacherla village along with some other villages from Rajahmundry municipal corporation and submitted that the Palacherla village does not come within the purview of Rajahmundry Municipal Corporation. Therefore, section 2(14)(iii)(a) of the Act has no application. The Ld. CIT(A) by considering the GO issued by the Government of Andhra Pradesh i.e. GO Ms No.389 dated 29.8.2001 has held that clause (a) of section 2(14)(iii) of the Act is not applicable to the present case. The above finding of the CIT(A) is accepted by the department. 7. So far as clause (b) of section 2(14)(iii) of the Act is concerned, the CIT(A) has observed that to ascertain the distance, A.O. got enquiries done through the Income Tax Inspector and it is reported by the Inspector that the said land is at 7.7 kms. from Rajahmundry Municipal Corporation limits by an approach road which is normally an acceptable road.....
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....am Road (via) Velugubanda of Palacherla village where survey no.158, 159 & 160 of Palacherla village are located is 9.00 kms. (Nine kilometers only)" and hence, the Ld. Counsel submitted that the certificate issued by the R&B has to be given more weightage rather than the enquiry conducted by the A.O. He further submitted that in the second enquiry conducted by the Inspector of Income Tax by travelling on four wheeler, the Inspector has stated that "We travelled alongside the approach road of the lay-out to some extent", therefore, it is not clear that the vehicle has reached up to the assessee's land or not. Therefore, it has been certified that the meter reading is 7.7 kms. Under these circumstances, benefit of doubt should go in favour of the assessee. 11. On the other hand, the Ld. D.R. has submitted that as per the enquiry conducted by the Inspector, it is within 8 kms. of municipal limits and therefore it is a capital asset within the meaning of section 2(14) of the Act. Accordingly, gain arising from sale of the land is a taxable income. It is strongly supported by the orders of the authorities below. 12. We have heard both the parties, perused the materials available ....
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....icle i.e. four wheeler and they measured the distance as 7.7 kms. from the municipal corporation limits. The relevant portion of the enquiry report is reproduced as under: "We have taken the office vehicle and started measuring the speedometer from the end point of Rajahmundry municipal limit i.e., from Lalacheruvu intersecting junction of highway and reached the agricultural lands. Upto the entry point of the lay out gate, the distance measured 6.2 kms, from where we proceeded further to reach the agricultural lands of the assessees. We travelled alongside the approach road of the lay out to some extent. Even then, the speedometer did not exceed 8 kms. The speedometer accurately and unerringly shown 7.7 kilometeres distance from the end of the municipal corporation limits of Rajahmundry. It is submitted that we preferred to measure the distance by road approach by acceptable route and acceptable mode of transportation." 16. We have gone through the above enquiry report of the Inspector of Income Tax. We find that from the report, it appears that they have travelled from the end point of Rajahmundry Municipal Limit i.e. from Lalacheruvu intersecting junction of highway ....