TaxTMI 
TaxTMI 
2017 (11) TMI 1206
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....e exemption claimed by the assessee under section 54B of the Act amounting to Rs. 1,18,85,470/-. 2. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in holding that the land sold by the assessee was cultivated land prior to sale, without appreciating the fact that the assessee has not produced any cogent evidence in support of such claim. 3. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in holding that the assessee was entitled for exemption u/s.54B of the Act on investment in land at Gut No.73 without appreciating the fact that the assessee has not proved with documentary evidence that the said land was owned by him. 4. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in allowing the exemption claimed under section 54F of the Act without appreciating the fact that the assessee has not fulfilled the condition laid down u/s.54F of the Act. 5. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of Rs. 3,13,642/- made on account of income from undisclosed sources. 6. On the facts and in the circumstances of the ca....
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....ating the correct Survey Number and the revised area of the said land. Therefore, considering both the deeds, there is no dispute on the ownership of land and the land in Survey No.75/1 is owned by the assessee and his wife w.e.f. 06-06- 2000. The total purchase cost of the land works out to Rs. 61,78,470/-. Assessee and his wife has 50% share each in the said land. The said land of 10 Acres 28 Guntas was sold through a development agreement to Shri Ravindra Khinvasara of M/s. Khinvasara Investments for a sum of Rs. 3,75,50,000/-. The land is said to be within Municipal limits of Aurangabad. In this transaction, the assessees earned long term capital gains. The said gains were invested by the assessees in purchase of agricultural lands such as purchase of lands at Gut No.73, Gut No.257 and Gut No.304 involving 3 different sellers. 4. During the assessment proceedings, AO noticed certain discrepancies with regard to use of the said land of 10 Acres 28 Guntas being used for agricultural purposes by the assessees/the parents in the years specified in the section 54B of the Act. According to the said provisions, the said lands should have been used for Agricultural purposes for a pe....
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....on 131 of the Act from the Talati's office. AO noticed that the said land was described as "Barren" land in the said Extracts. Further, the owner of the land is mentioned as Shri Kuldeep Singh. The relevant table extracted from para 6.1 of the assessment order is given as under: (a)The assessee has purchased the land on 11-05-2000 as per deed No.3380 for Rs. 31.50,000/-. The 7/12 extract collected for F.Y. 2004-05 is in the name of Shri Kuldeepsingh Dhody and the status of land is shown as "PADIT", i.e. Barron and not cultivated. The 7/12 original extracts collected show following position : Financial Year Person cultivating Land Area under cultivation Whether or not cultivated 2003-04 Kuldeepsingh Pad Not cultivated 2004-05 Kuldeepsingh Pad Not cultivated 2005-06 Self Pad Not cultivated Source : original 7/12 extract from Revenue Records. 8. In response to the above discrepancy, in the absence of any Agricultural usage of the land in the A.Ys. 2004-05 and 2005-06, i.e. two assessment years preceding to the assessment year under consideration, the assessees filed a letter enclosing a revised 7/12 extract which dem....
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....product of an afterthought. Therefore, he relied heavily on the original 7/12 extract. In Nutshell, the case of the AO is that the original 7/12 extract mentioned about the barrenness of the land constitutes the real and credible one. The revised one constitutes a manipulated one or an afterthought. AO was under the impression that assessee manipulated the Revenue officials and created the evidence in his favour. 11. Considering the abovementioned two types of 7/12 extracts, i.e. one obtained by AO and (2) the revised one submitted by the Assessee, AO proceeded to gather any other evidence if any. Therefore, AO sent her Income-tax Inspector for spot Inspection or enquiry. Inspector obtained a statement from Shri V.B. Gaikwad, who is landlord of neighbouring land. Shri V.B. Gaikwad gave a statement stating that there were no agricultural activities in the said land for the past 10 years. However, AO did not bother to put the said evidence to the assessee for his comments or to put Shri V.B. Gaikwad for cross-examination by Shri Govardhan S. Pawar. Eventually, AO invoked the judgment of Hon'ble Supreme Court in the case of Mc Dowell & Company Ltd. Vs. CIT reported in 154 ITR 148 f....
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....ness of the ownership, the possession of the land, correctness of the payments etc., AO summoned the Shri Sudhakar B. Gore, who eventually appeared and confirmed the receipt of the said consideration. Assessees also filed an affidavit of Shri Sudhakar B. Gore confirming the receipt of the consideration of Rs. 1.50 crores as well as the fact of possession of the land with Shri Sudhakar B Gore and ruled out the claim of Shri Mohan Puranpatre on the lands. AO did not accept the above assertions of the assessees as well as Shri Sudhakar B. Gore and rejected the affidavits filed by them by stating that the same constitutes an arrangement. Otherwise, AO did not have any incriminating evidence against them. Eventually, the AO summed up saying that the capital gains earned by the assessee on sale of the lands are not invested in agricultural land as the transfer of land at Gut No.73 is not registered in the Office of the Sub-Registrar and the land is no in possession of the assessee. Thus, he concludes against the assessees on the applicability of the provisions of section 54B of the Act. B. Gut No.257 : 14. Similarly, regarding the investment of gains in the transaction of the purch....
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....se expenses at Rs. 11,62,980/- (indexed cost) as claimed Rs.52,79,682/- Long Term Capital Gains Rs.3,29,60,318/- Less : Exemption allowable u/s.54B and 54F Nil Taxable Long Term Capital Gains Rs.3,29,60,318/- 50% Capital Gains related to the assessee Rs.1,64,80,159/- Rounded to Rs.1,64,80,160/- AO determined the total income of Shri Govardhan S. Pawar at Rs. 1,64,80,160/-. IV. Claim of Agricultural income : 18. We shall now take the dispute relating to the extent of an allowable Agricultural income to the assessee in this year. In the assessment proceedings, the AO noticed that assessee owns huge agricultural land holdings and claimed the Agricultural income of Rs. 9.5 lakhs for the year under consideration. AO verified the agricultural receipts and also examined the agricultural produce as per the discussion given in Para Nos. 11 and 12 of his order and held that the said claim of agricultural income of Rs. 9.5 lakhs is on higher side. He quantified the total sales of agricultural produce at Rs. 5,95,144/-. He gave benefit of reduction of 25% of the above sale proceeds towards agricultural expenditure and the allowable agricultural income ....
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....ted during the said years. Therefore, Shri Kuldeep Singh who cultivated during the said years, and infact, the land remained 'Barren' and nothing is cultivated as per the records. 23. When the Bench asked the Ld. DR how Shri Kuldeep Singh can be the cultivator of the land when no crop is cultivated and how Shri Kuldeep Singh, the previous owner of the land can constitute cultivator in the absence of any lease deed between the landlord and Shri Kuldeep Singh, in response, the Ld. DR merely relied on the 'original extract'. Referring to the 'revised extract', Ld. DR for the Revenue submitted that Shri Kuldeep Singh continues to be the cultivator even in the revised 7/12 extract. Only change is with regard to the crops grown in the A.Yrs. 2002-03, 2003-04, 2004-05 and 2005-06. The crops grown in the said land includes Bajra, Maize and Toor. Further, relying heavily on the statement of Shri. V.B. Gaikwad, who is the owner of a neighbouring land of S.No.75/1, Ld. DR submitted that no crops were grown in the said land for the past 10 years and the assessees never used the said land for agricultural purposes. To sum up, the case of the Ld. DR is that the order of the AO should be susta....
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....of the said land is with the assessee, he never leased out the land to Shri Kuldeep Singh and he actually cultivated the dry crops on the said land during the relevant years under consideration. Assessee was neither privy of the revenue documents nor is aware of the details mentioned in the revenue records especially in the 7/12 extracts. As per Ld. AR, the 7/12 extracts obtained by the AO at the back of the assessee suggest the fact that it suffers from various discrepancies. One such discrepancy relates to the name of the owner of said lands, i.e. previous owner's name is mentioned as owner at the relevant point of time on the said extracts. It shows the fact that 7/12 extracts relied upon by the AO is not perfect in all respect. Having come to know of the discrepancy of ownership and crops, the assessee dutifully filed an application for rectification of the said mistakes in the records of revenue qua 7/12 extracts. He pleaded that revenue authorities has the powers on par with the powers to AO vide the provisions of sections 153, 263 and 264 of the Income Tax Act. Exercising the same, the revised 7/12 extracts was issued by the Revenue authorities, i.e. Talati, Mandal Office Ad....
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.... earned by the assessee in the F.Yrs. 2003-04 and 2004-05 is out of his Agricultural activities on the land at Survey No.75/1. Ld. AR relied on the Agricultural income disclosed in the returns of income for the relevant A.Yrs. 2004-05 and 2005-06. In support, he brought our attention to the disclosed particulars of agricultural income out of the said land as shown in the 'computation of income' appended to the returns of income for the relevant assessment years. 29. Considering the above narrated summarised form of the arguments, it is the prayer of the Ld. Counsel for the assessee that the said land located at Gut No.75/1 which is sold by the assessee to Shri R.C. Khinvasara, constitutes an agricultural land used by the assessee during the relevant years specified in the provisions of section 54B of the I.T. Act, 1961. The fact of growing the dry crops, i.e. Maize, Bajra etc. are the facts as supported by the revised 7/12 extracts. 30. Further, relying to the DR's argument that the land at S.No.75/1 is used for real estate purpose, Ld. AR submitted that the end use of the land by the subsequent buyers for non agricultural purposes will have no adverse impact on the assessee'....
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....e assessee also reasoned that the AO failed to enforce the attendance of Shri Sudhakar B. Gore and Shri Shrichand Harichand Rathod for cross verifying the facts of the affidavits. Further, on the issue of not giving the benefit of cross examination with Shri V.B. Gaikwad, Ld. Counsel for the assessee relied on various decisions such as Krishanchand challaram 125 ITR 713 (SC) on the issue of nonadmissibility of evidence which is not confronted to the assessee. 33. Finally, it is the summary of the Ld. Counsel for the assessee that the order of the CIT(A) is fair and reasonable and it should not be disturbed so far as the use of the land for agricultural purposes by the assessee for the years under consideration. Contents of Para Nos. 6 to 6.2 are relevant and the same are extracted as under : "6. I have carefully considered the facts of the case and the rival contentions. To sum up the first five contentions made by the A.O. as stated above, in a nutshell the A.O. has questioned the evidentiary value of the revised 7/12 extracts submitted by the appellant by raising procedural discrepancies in the legal process to rectify them. The A.O has questioned the reason for the T....
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....ar to reconsider his stand of 8 years and for what purpose? Or "how is it humanly possible for a lay man to remember certain specific crops were grown on the said land that too when such land and income arising therefrom does not belong to the lay man?" would go directly to question the laws made by the constitution. Thus, the appellant in this case has done nothing wrong by following the procedure laid down in the laws formed in this regard to obtain the said documents. In view of the above facts, the corrected 7/12 extracts would rightly serve as an evidence in determining the use of the said land. 6.2 As regards the statement recorded by the Inspector of a person residing at an area nearby the location of the land in consideration, the decision relied on by the appellant delivered by the Hon'ble Delhi High Court in Jindal Vegetable case squarely applied to the case of the appellant." Original Income-Tax returns - Claim of Agricultural income in A.Yrs. 2004-05 and 2005-06 34. Further, referring to the claim of agricultural activity in the A.Ys. 2004-05 and 2005-06, Ld. Counsel for the assessee brought our attention to page 478 of the paper book and copy of Form 2D ....
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....refore, the ownership of the property is undisputed and the Assessee along with his wife are the owners of it. Of course, the entries in the revenue's records, which shows Shri Kuldeep Singh as owner or cultivator, created unnecessary suspicion in the mind of the AO, who took an adverse view in the matter and against the assessees. These observations demonstrate, how poorly and casually, the revenue's records are maintained by the revenue's authorities of the State Government. Otherwise, we perused the title deeds of land at S.No.75/1 and the correction deed and found the name of the assessees appeared in the title deeds. Therefore, the ownership of the lands vests with assessee and his wife only. B. Whether assessees are the cultivators : The said lands did not have the history of the wet lands as per records. They are known for dry crops only. Revenue's records evidences the same. It is the claim of the assessee before us that certain dry crops were grown in the said lands by themselves till the lands were eventually sold in 2006 to Khinvasara/Kasliwals. AO did not accept this claim in view of the recorded entries on 7/12 extracts, which depict Shri Kuldeep Singh as the cultiv....
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....ecords, continues to be shown by the Revenue authorities as the cultivator erroneously even after he sold the lands to the assessees. Otherwise, it is not possible that Shri Kuldeepsingh cultivated the land of the assessee legally. Thus, from this point of view, the said records of the revenue are not fool-proof so far as the 7/12 extracts of lands at S.No. 75/1, are concerned. Therefore, it is not possible that the Assessees are not the cultivators at the relevant point of time and, therefore, Shri Kuldeep Singh is the cultivator in the said lands. Hence, we dismiss the conclusions drawn by the AO on this issue and agree with the CIT(A) on this issue. As such, there was action u/s.132 of the Act on the assessees and it did not result in any incriminating material against the assessees on this claim u/s.54B of the Act. C. Whether there was agricultural activity on the said land in the 2 A.Ys prior to the date of transfer of lands in 2006: The original 7/12 extract gathered by the AO indicate 'barrenness' of the lands at S.No.75/1 and therefore, according to AO, the assessees would not have grown crops in A.Yrs 2004-05 and 2005-06. However, assessees filed revised 7/12 extract, w....
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.... in the regular returns and availability of evidences in support of sale of the transactions of Agricultural produce, we find that the Assessee filed the returns of income u/s 139(1) of the Act before the due date specified in the state and the contents of the pages 478 to 489 of the Paper Book are relevant. Details relating to the date of filing, Acknowledgment Numbers were already mentioned in the preceding paragraphs of this order. The said original returns and the appended computation of income for A.Yrs 2004-05 and 2005-06 clearly indicate the fact of reporting of the Agricultural income. 37. Relevant extracts from the said documents (at page 478 to 489 of the Paper Book) A.Ys 2004-05 and 2005-06 are inserted as under: Extracts from Original the I.T. Returns filed u/s.139 of the Act for the A.Y's 2004-05 and 2005-06: A] Extract from the Original Return of Income (page 478 to 489 of the Paper Book) for the A.Y 2004-05. (Shri Pawar Govardhan Shamrao) "1. Name : PAWAR GOVARDHAN SHAMRAO 2. Father's Name : SHAMRAO PAWAR 3. Address : PLOT NO.3. BANJARA COLONY, ....
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....p; 11. Assessment Yr : 2004-2005 13. Details of Bank account (for refund cases) 12. Return : Original 24. AGRICULTURAL INCOME Rs. 979450" 24. Add : Agricultural Income (For Rate Purposes) Rs. 979450 " D] Extract from the Original Return of Income (page 485 to 486 of the Paper Book) filed u/s.139 of the Act for the A.Y 2005-06. (Mrs.Anita Govardhan Pawar) "1. Name : Mrs. ANITA GOVARDHAN PAWAR : 2. Father's Name : 3. Address : PLOT NO.3. BANJARA COLONY, AURANGABAD- Phone : 4. Permanent A/c No. : AKTPP0531C 5. Birth Date : 15/10/1969 6. Status : Individual (01) 7. Resident 8. Ward : 2(2) 9. Sex : Female 10. Income for the prev. year 1.4.2004-31.3.2005 11. Assessment Yr : 2005-2006 13. Details of Bank account (for refund cases) ....
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....hat the above evidences by way of the Returns of Income filed u/s.139 of the Act and the orders of CIT(A) for A.Ys 2004-05 and 2005-06, support the claims of the Assessee that the Assessee used the lands and earned Agricultural income in the relevant A.Ys. 40. Further, we find Shri Ajay Modi, Ld.DR fairly submitted that the Revenue accepted the orders of the AO in the regular assessment as well as the orders of CIT(A) for both years relatable to the reassessments u/s.143(3) r.w.s. 153A of the Act. Thus, the claim agricultural income for both A.Yrs 2004-05 and 2005-06 has reached the finality and it is in favour of the Assessees. Hence, we are of the view that the Assessee used the lands at S.No.75/1 for Agricultural purpose and Agricultural income out of Gut No.75/1 too out of sale of the Agriculture produce of the dry crops grown by them. 41. To sum up, the assessees claims, that they are the owners, cultivators and earned Agricultural Income, are acceptable. We affirm the order of the CIT(A) on this. D. Whether assessees purchased any other agricultural lands as per section 54B of the Act : This issue relates to the condition of 'purchase of any other agricultural land' ....
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....ecisions pointed out in submission in respect of deduction claimed for purchase of land at Gut No.73" B] Extract from CIT(A) Page 29; Para 9.2 reg. Gut No.257. "9.2 I have carefully considered the facts of the case and the rival contentions. The issue to be decided to determine the allowability of deduction u/s 54B in respect of land at Gut No.257 is as under - In view of the above facts and discussion, I am of the considered view that the appellant is eligible for deduction u/s 54B in respect of land at Gut No.257 in respect of consideration paid amounting to Rs. 33,66,000/- in which the appellant's share is 25%. The stamp duty & Registry Expenses are Rs. 1,34,640/-. The A.O. is accordingly directed to allow deduction u/s 54B at Rs. 8,75,160/- to the appellant in respect of land at Gut No.257." 43. CIT(A) analysed the investment of gains in the new assets/lands and also the legal precedents to come to the conclusion that the investments in the said Guts, constitutes "purchase of any other land for being used for Agricultural Purpose." In the present appeals, the Revenue has a grievance against the order of the CIT(A) only with regard to the Gut No.73 ....
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....However, CIT(A) allowed the claim of the assessee as per his discussion in page 10 of his order. Before us, the AR relied on the respective orders of the AO or the CIT(A) as the case may be. On hearing the parties, we find the adjudication of this issue becomes a necessity only when the relief under the provisions relating to section 54B of the Act, is denied. 47. Therefore, considering the relief granted by us for the detailed reasons given in the paragraphs above, we are of the opinion that the adjudication this ground constitute an academic exercise only. Therefore, we proceed to dismiss the same as an academic. Accordingly, Ground No.4 of the Revenue is dismissed as academic. 48. Ground Nos.5 and 6 of Revenue in the case of Shri Govardhan S. Pawar and Ground Nos. 4 and 5 of Revenue in the case of Smt. Anita G. Pawar relates to the extent of Agricultural income allowable to the assessees. 49. Briefly stated relevant facts from the file of Shri Govardhan Shamrao Pawar includes that an amount of Rs. 9.5 lakhs is claimed as an Agricultural Income out of his land holding. As discussed in the preceding paragraphs of this order, AO estimated the Agricultural Income and expend....
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....ICULTURAL INCOME Rs. 923250" 12. The claim of agricultural income on the strength of following a receipt had been put forth. Sr.no. Bill No/.Receipt No Dt.of sale To whom sold item Item Sold. Amount of sale 01. 1520 26-12-2005 Tirupati Traders, Nagpur Onion Rs. 1,510-71 02. 492 05-12-2005 Hussain & Co - Rs. 5,907-50 03. 434/. 06-01-2006 Kewalram & Sons Ngpur Onion Rs. 30,494-52 04. 5732 Kapse & Sons,A'bad -- Rs. 224-00 05. -do- 23-08-2005 Kapse & Sons A'bad -- Rs. 5,581-00 06. -- 04-10-2005 Rambhau K.Perka r Adrak Rs. 2,715-00 07. -- 27-09-2005 ----do---- Adrak Rs. 6,130-00 08. -- 07-10-2005 ----do---- Adrak Rs. 1630-00 09. -- 23-09-2005 ----do---- Adrak Rs. 8,010-00 10. 023/8-82 03-01-2006 Market Committee Tuwar Rs. 10,998-81 11. 069/4-30 05-01-2006 ---do--- Tuwar Rs. 5,180-81 12. 049/5-03 02-01-2006 ---do--- Wheet/ Tuwar Rs. 8,193-50 13. 0....