TaxTMI 
TaxTMI 
2018 (10) TMI 247
X X X X Extracts X X X X
X X X X Extracts X X X X
....of real estate. He owned various agricultural lands and was gaining agricultural income during the financial year preceding the relevant assessment year 2008-09. The petitioner and one Anoop Bora jointly purchased 13.91 acres of agricultural land from the Official Liquidator, Madras High Court on 11.05.2005 by public auction. They also purchased another extent of agricultural land measuring 13.14 acres during the same year. In 2006-07, they purchased further extent of 3.88 acres in the same village. Thus, the total extent of land held by them was 30.93 acres. Out of the said extent, they transferred 19.14 acres of land to two individuals on 21.08.2006. During the financial year relevant to assessment year 2008-09, they sold the remaining 11.29 acres to another individual on 30.05.2007. The lands in question are located in Sirunganallur, Unnamali Village and Kuzhipanthandalam village. The Encumbrance Certificate for all these lands evidences clearly that they are agricultural lands. The chitta, patta and the A-Register records for the relevant period would also show that there were crops during the year of sale and thus, they are only agricultural lands. Section 2(14) of the Income ....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., wherein it is stated as follows: The return of the income filed by the petitioner was processed under Section 143(1) of the Act. Subsequently, the case was reopened on account of materials gathered during a survey under section 133A in the case of one Meena Sakariya and Narendra Sakariya on 24.03.2010. It was gathered during the said survey that the petitioner was engaged in real estate activity through coordinated transactions of aggregating and selling the lands. Further perusal of the return revealed that the capital gain on the sale of the said lands was claimed as exempted amounting to Rs. 5,37,19,960/-. Hence, it was concluded in the findings of the survey that the business income of the above said sum on account of sale of land be taxed as per the provisions of the Income Tax Act. Accordingly, after reopening the assessment under Section 147, the assessment order was passed. The petitioner is not entitled to question the reopening. The Assessing Officer had no chance to form an opinion at the initial stage and hence, the concept of change of opinion does not apply in the instant case. The assessment in the case of the said Anoop Bora was completed under Section 14....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assing the scrutiny assessment under Section 143(3). The assessment of the said Anoop Bora was never reopened. Hence, it should be construed that the Revenue has accepted the character of the land as agricultural. d) Entries in Government records such as patta, chitta, Aregister, Encumbrance Certificate reflect the land as an agricultural land, where agricultural activities were carried on in the said assessment year. The Government records ought to be taken as primary evidence of the character of the land. e) The General Power of Attorney referred to by the respondents was entered into in subsequent assessment years and hence, it cannot be brought to tax in the assessment year 2008-09. The terms of the General Power of Attorney cannot be taken as proof of land, not being an agricultural land, since as on the date of transfer, the said land in the hands of the petitioner was an agricultural land. Intention of the purchaser of the property to use the land for nonagricultural purpose cannot be a determinative factor to treat the same as agricultural land in the hands of the assessee. In this connection, (2018) 96 taxmann.com (164) (Guj), PCIT vs He....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l would also amount to availing the appeal remedy, even though it was stated that the reason for withdrawal is to avail revision under Section 264. d) The order passed under Section 264(1) is not prejudicial to the interest of the petitioner. Therefore, the writ petition is not maintainable. Non availability of further appeal remedy against the order made under Section 264(1) would not compel the High Court to issue the writs. Factual aspects cannot be interfered with under Article 226 of the Constitution of India. Assessee had failed to prove beyond the reasonable doubt whether agricultural operations were being carried out just before the date of sale. Confirmation receipts provided by the lessees do not contain their identity proof and addresses. Therefore, those documents are of no evidential value. As per the original assessment order, the petitioner sale proceeds are taxed as income from the business activity but the first respondent treated the lands in question as non agricultural in nature and therefore, the capital assets in the hands of the assessee liable to capital gains tax. The first respondent found that the subject matter lands are not ag....
X X X X Extracts X X X X
X X X X Extracts X X X X
....before the said Appellate Authority to withdraw the said appeal to pursue the revision petition before the Commissioner of Income Tax under Section 264 of the said Act. The Appellate Authority, by his order dated 16.09.2016, dismissed the appeal as withdrawn in view of the request made by the petitioner through their letter dated 09.09.2016. The relevant paragraphs 3, 4 and 5 of the above said order dated 16.09.2016 of the Appellate Authority read as follows: "3. The Income-tax Non-Statutory form-51 (in short, ITNS-51) was sent to the AO for confirmation. In the absence of a response from the AO, it is presumed that facts stated in Form 35 are borne on records and that the AO does not wish to be present at the hearing. The appeal was fixed for hearing by issuance of ITNS-37. In response to the notice, the appellant filed a letter on 09.09.2016 requesting to withdraw its appeal for the AY 2008-09 and submitted the reasons for withdrawal as under: "I refer to the above mentioned subject and the appeal filed u/s 264A(1)(a) of the Income-tax Act, 1961. Your assessee has preferred to file a revision petition before the Commissioner of Income-tax u/s 264 of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....First Respondent/Revisional Authority, impugned in this writ petition, does not indicate anywhere that the revision was rejected on the ground of its maintainability. On the other hand, the Revisional Authority had proceeded to decide the revision on merits and ultimately, rejected the same by observing that the assessee had failed to prove beyond reasonable doubt whether the agricultural operations were being carried out just before the date of sale. Thus, the Revisional Authority, after rejecting the revision, directed the Assessing Officer to treat the subject matter lands in question as non agricultural in nature and therefore, captial assets in the hands of the assessee exigible to captial gain tax. 15. The said order of the first respondent, impugned in this writ petition, is not put to challenge by the Revenue questioning on its maintainability. On the other hand, the said order is being challenged in this writ petition only by the assessee. It is also to be noted at this juncture that the Revenue has neither opposed the withdrawal of the appeal before the Commissioner of Income Tax (Appeals) nor challenged the said order of the Appellate Authority, dismissing the appeal ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isional Authority, it cannot be said that the right conferred by the Act is fully exercised or exhausted. I am in full agreement with the view taken in the above case. For better understanding, the relevant portion of the order is extracted as hereunder: " The question that arises is when can an order be said to be the subject of an appeal? According to Mr.Palkhivala, as already stated, the order becomes the subject of an appeal only when the merits of the order appealed against are dealt with by the appellate authority. While, on the other hand, according to Mr.Joshi, the order appealed against is the subject of an appeal when a competent appeal against that order is filed in which a decision could be given by the appellate authority. We find it difficult to accept Mr.Joshi's contention. One of the shades of meaning of the word "subject" given is "that of which anything is said or of which the discourse treats". Understanding clause (b) in this sense it can only be said that where anything is said in the appellate order of the order appealed against, relating to the merits of the order, it can be said to be subject of an appeal, and this app....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tally different. In this case, the Appellate Authority had allowed the application for withdrawal and dismissed the appeal as withdrawn, in view of the reasons stated by the petitioner for withdrawal viz., for pursuing the revision before the first respondent. Therefore, I do not think that the above decision is helping the respondents in any manner. 20. (1967) 66 ITR 443 (SC), Commissioner of Income-tax vs. Rai Bahadur Hardutroy Motilal Chamaria, is relied on by the learned counsel for the respondents to contend that the Assessee, having once filed an appeal cannot withdraw it. But in this case, the Appellate Authority had permitted the writ petitioner/appellant to withdraw the appeal so as to pursue his remedy before the first respondent by way of revision under Section 264. Neither the said order of the Appellate Authority nor the order of the first respondent in entertaining and deciding the revision on merits was put to challenge by the Revenue. Therefore, the above contention of the Revenue cannot be sustained. Consequently, the above decision of the Apex Court is also factually distinguishable. 21. At this juncture, it is useful to note the observations made by the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he present writ is maintainable against the order of the first respondent and if the answer is in affirmative, whether the order of the first respondent is sustainable on merits. 24. It is contended by the learned counsel for the respondents that the order passed under Section 264, since not being an order prejudicial to the assessee, he is not entitled to challenge the same before this Court. He invited this Court's attention to Section 264(1) of the said Act, stipulating that the Principal Commissioner or Commissioner may pass such order, not being an order prejudicial to the assessee, as he thinks fit. I am not convinced on the above objection raised by the Revenue. No doubt, Explanation 1 to Sub Section (7) of Section 264 contemplates that an order by the Principal Commissioner or Commissioner declining to interfere shall, for the purpose of Section 264, be deemed not to be an order prejudicial to the assessee. But that does not mean that even though the Authority under Section 264 rejected the revision, thereby declining to interfere with the order put to challenge in revision, the aggrieved assessee cannot have any further remedy at all against the said order made unde....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate the name and survey number of the lessee who acquired the land for cultivation purposes is not filled in a proper manner. As per the official records no such name of the lessees have been provided. Thereafter, the confirmation receipts provided by these lessees do not contain their identity proofs and addresses. Such confirmatory certificates are of no evidential value as the persons who have signed are not verifiable. The assessee has simply furnished self serving certificates prepared at his convenience. Thus, the assessee has failed to prove beyond reasonable doubt whether the agricultural operations were being carried out just before the date of sale. Coming to the second aspect, the common clause in the two agreements furnished by the assessee are reproduced as under: 1.WHEREAS my attorney is authorised by us by this deed of irrevocable General Power of Attorney to convey and sell and to alienate and to create charge on the entire property to be converted by the attorney herein as house sites mentioned in the schedule hereunder to the third persons as its discretion and decision. On this aspect, the case of the assessee is on all fours with respe....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case, which the first respondent has totally failed to refer and consider. It is the case of the petitioner that the lands in question were purchased by the petitioner and another person by Anoop Bora as joint owners. There is no dispute to the fact that at the hands of the said joint owner viz., Anoop Bora, the subject matter lands were treated as agricultural lands by the very same income tax Department, while making the order of assessment for the relevant period. The petitioner has specifically raised that issue in his application filed under section 264. Even though such issue was raised by the petitioner, the first respondent has not at all traversed to the same and answered the said issue, while rejecting the application. 30. No doubt, it is true that the learned counsel for the respondents sought to contend that the Assessing Officer of Anoop Bora passed the assessment order without considering the findings of the survey report along with impounded material from the premises of two other individuals. However, the fact remains that the said order of assessment passed in respect of the said Anoop Bora, being the joint owner of the subject matter land, by treating the same....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ime, at the hands of the vendor, alone should be taken into consideration and that the intention of the purchaser as to how he is going to treat the property after such purchase, cannot be a determinative factor to decide such character. Even otherwise, the above clause in the Power of Attorney relied on by the first respondent clearly indicates that the Power of Attorney is going to convert the entire property as house sites. Therefore, it is evident that at the relevant point of time, the character of the lands at the hands of the assessee cannot be construed as house sites, since such conversion was intended to take place in future. Therefore, the first respondent ought to have gone by the other relevant revenue records and supportive confirmation certificates to arrive at a conclusion with regard to the nature of the land. At this juncture, the Division Bench decision of the Gujarat High Court reported in (2018) 96 Taxmann.com 164 (Gujarat), Principal Commissioner of Income Tax vs Heenaben Bhadresh Mehta, is relevant to be quoted, wherein at paragraph No.9, it is observed as follows: "9. As observed herein above, the land was sold as an agricultural land and in fact, w....