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TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 304
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....re-opening the regular assessment made under section 143(3), after expiry of four years, on mere change of opinion and in violation of the proviso to section 147 of the Act. 2. The authorities below erred in holding that the land sold by the appellant was not an agricultural land. 3. The Assessing officer ought to have seen that alleged conversion of the land into residential area on 1/8/2017 was much after the date of sale of the property by the appellant on 26/7/2007 and therefore he should not have based his assessment on such material. 4. The appellant submits that the land was classified as Nanjai, wet agricultural land before the date of sale and even after the date of sale the land is classified as Nanjai wet agriculture land. in the revenue records and therefore the same has to be treated as agricultural land in the light of the settled law laid down by various Courts. 5. The appellant submits that the land was purchased as agricultural land and sold as such without any conversion and simply because the sale consideration was high the land sold cannot be treated as non-agricultural. 6. The appellant therefore prays that the re-assessment may be cancelled as invali....
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....d. The AO also made enquiries from Tahsildar to find out whether any agricultural activities were carried on in the said land in the relevant survey numbers . The Tahsildar reported to the AO that except for survey number 1395/3B, there was no agricultural activities carried on the said land from 2003-2007. This led AO to come to conclusion that the said land is held by assessee as capital asset and there is no intention to use the said land for agricultural activities. It is pertinent to mention that the assessee has merely shown an income from agricultural activities of Rs. 7000 on the said land admeasuring 4.45 acres earned during the year, in the return of income filed with the Revenue. The AO confronted the assessee with all the evidences but the assessee did not provide any evidences to substantiate that any agricultural activities were carried on the said land. It is pertinent to mention that even during original assessment conducted by AO u/s 143(3), there was no proof provided by assessee as to the agricultural activities being carried on by assessee on the said land. It is also been observed by AO in its reassessment order dated 03.03.2016 passed u/s 143(3) read with Sect....
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....es in survey numbers 1248 and 1249 are classified as "Residential Area-Class I", Thus, the land In the survey Nos. 1248 & 1249 fall under the definition of "Capital Asset" as these lands were not used for agricultural purpose. Hence the assessee is liable to pay tax on Short Term Capital Gain in respect of land sold under survey no. 1248 & 1249. The assessee had earned dividend of Rs. 271,64,615/- and claimed exemption. However, disallowance of expenditure for earning this income as per sec. 14A r.w.Rule 8D viz., 0.5% of Rs. 14,58,42,419/- which works out to Rs. 7,29,212/- was not considered. In view of the above, I have reason to believe that income chargeable to tax has escaped assessment for the asst. year 2008-09 and the case may be reopened u/s. 147." 5.1.1 As mentioned earlier, the case was originally completed under scrutiny i.e. 143(3) of the Act. A perusal of the scrutiny assessment order dt. 30.11.2010 clearly shows that the issue forming the reason for reopening, i.e. nature of the agricultural land at Thaiyur Village, which has been sold by the assessee, claiming the Short Term Capital Gain, has not at all been discussed in this scrutiny Assessment Order. The Asse....
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....gs, was in receipt of information from the Tahsildar, Thiruporur to the effect that no agricultural activities whatsoever were carried out in the impugned lands during 2003 to 2007 and this information, coupled with the fact of classification of the impugned lands as residential, had led to the addition by denial of exemption as agricultural lands, which vindicates and justifies the reopening of the assessment. Thus, based on the ratio of the aforementioned' decisions, and also keeping in view the fact that the Assessing Officer, through further enquiries was in receipt of information regarding non-user of the land for agricultural purposes, leading to denial of claim of exemption, I have no hesitation in upholding the validity of the reopening of the assessment beyond a period of 4 years but within a period of 6 years from the end of the relevant AY. 5.2. On Merits: 5.2.1. Based on the clear-cut findings of the Assessing Officer through enquires with the Tahsildar, Thiruporur and the detailed discussion contained in the Assessment Order, the undisputed fact that emerges is that no agricultural activity whatsoever has been carried out in the impugned lands by the appellan....
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....fied as residential, way back in 2003. The property was sold in 2007. The Registration Department has provided the data on the sale value of land based on Sq.ft. and Sq.mtr. scale and not on acre and hectare scale, which also strengthened the Department's view that the property is not agricultural in nature. Despite the fact that the VAO, Kanathur Reddykuppam has certified that the said land is a dry, rain fed agricultural land, the Hon'ble ITAT, has clearly held that the certificate issued by the VAO cannot supersede the classification given by the Tamilnadu Government. Further that, when the land itself is in a residential area, the question of the assessee applying for conversion or permission for construction does not arise. There is nothing on record to suggest that the assessee had carried on any agricultural operations. Based on these crucial factors, the Hon'ble jurisdictional ITAT has allowed the appeal filed by the Revenue, thereby affirming the stand taken by the Assessing Officer that the lands are not agricultural lands. Reverting to the case of the appellant, it is seen that this decision of the Hon'ble jurisdictional ITAT squarely applies to the f....
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....x the income from Capital Gains from the sale of lands as Short Term Capital Gains, denying the exemption claimed by the appellant is upheld. 5. Aggrieved by appellate order passed by learned CIT(A), the assessee filed second appeal with tribunal. This case was fixed for hearing on 21.11.2019 and the matter was heard. However, it was observed by the Bench that there is no material on record to prove that agricultural operations were carried on by assessee on the said land and other clarifications were also required as per order sheet entry, the appeal was fixed for clarification on 10.02.2020 and the matter was finally heard after seeking clarification , on 11.03.2020. 6. We have heard both the Counsels and have also gone through the material on record as well as cited case laws. We have observed that the assessee has sold a piece of land admeasuring 4.45 acres in Thaiyur Village, Thiruporur Taluk which falls under Chengalpattu District, Tamil Nadu within a short span of buying the same and has earned short term capital gains to the tune of Rs. 9.11 crores . The assessee has sought exemption of the aforesaid short term capital gains earned on said land on the grounds that the lan....
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....sessment proceedings to bring on record evidence to prove that agricultural activities were carried on by him on said land but the assessee did not co-operated in reassessment proceedings. Even before us only bald claim is made that pumpkin and water melon was grown on said land but no evidence is produced to substantiate the same. Even government records also disclose that no agricultural activities were carried on the said land from 2003-2007 except on survey number 1395/3B. It was also pointed out by Revenue audit team that survey number 1248 and 1249 were classified as Residential Area-Class-1' which triggered reopening of the concluded assessment by the AO by invoking provisions of Section 147 of the 1961 Act. At the same time, we have also noted very crucial decision of Hon'ble Madras High Court in the case of M/s.Chemmancherry Estates v. ITO, in TCA Nos.545 & 546 of 2009 on the relevant subject, wherein Hon'ble Madras High Court has adjudicated the manner of classification of agricultural land, wherein it was held as under: "6. TCA.Nos.545 and 546 of 2009 were admitted on 13.7.2009 on the following substantial questions of law : "i. Whether, on the facts and in the circu....
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....land. Apart from all these factors, one another most important factor was that the land would fall within the jurisdiction of the Chennai Metropolitan Development Authority (CMDA). Thus, we need to see what would be the effect of the land falling within the limits of CMDA. Before that, we need to note that the land has been assessed to tax as an urban land. The effect of such assessment also has to be considered. The Tamil Nadu Urban Land (Ceiling and Regulation) Act, 1978 defines the urban land under Section 3(p) as follows: "(p) 'urban land' means- (i) any land situated within the limits of an urban agglomeration and referred to as such in the master plan or (ii) in a case where there is no master plan, or where the master plan does not refer to any land as urban land, any land within the limits of an urban agglomeration but does not include any such land which is mainly used for the purpose of agriculture." 7. In terms of the above definition, any land situated within the limits of an urban agglomeration and referred to as such in the master plan will be an urban land. In case, where there is no master plan, but the land lies within the limits of an urban agglomeration i....
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.... the case of the assessee on account of the facts which were culled out by the Assessing Officer in the process of assessment establishing that the land sold by the assessee was not an agricultural land. The facts in the case of Ashok Kumar Rathi are differently couched and the said decision cannot be applied to the assessee's case. 12. Furthermore, the entire village of Chemmancherry has been notified under the provisions of Tamil Nadu Land Urban Land (Ceiling and Regulation) Act as well as Urban Land Tax Act and the urban land tax is collected. The Assistant Commissioner of Urban Land is the jurisdictional officer in terms of notification issued by the Government of Tamil Nadu. Thus, the assessee has not made out any ground to interfere with the factual finding and we hold that there is no substantial question of law arising for consideration. *** *** *** 23. TCA.Nos.545 and 546 of 2009 : These appeals are filed by the assessee challenging the common order dated 28.11.2008, by which, the Tribunal confirmed the order of levy of penalty. We have already extracted the substantial questions of law, which were admitted. We have heard Mr.M.P.Senthilkumar, learned counse....
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....urpose nor there is any farm house. Further, it is not a stop gap arrangement to continue the agricultural operations in future. The CMDA and local bodies permission has been sought through developers to convert the land into house plots. Not even single rupee has been earned for years together by way of agricultural production. The land has been plotted and roads laid before the sale, the land very well situate in a developed area where industries and colleges have come up and land is sold on cent basis, which is normally the case in the sale of house sites only. The purchaser is a housing cooperative society purchasing land for promotion of plots for house construction. On local enquiry, it was found that house sites have been booked/sold out before 06.11.2002 itself the date of which, VAO gave a certificate mentioned earlier. All these factors got to show that it is a non agricultural land and also situated in urban developed area and therefore, it is only a capital asset." 27. By order dated 12.7.2019, in TCA.Nos.181 and 183 of 2009, we affirmed the said finding and held that the land is a non agricultural land. In such circumstances, it has to be seen as to whether there i....
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....ficer to make adjustments, if any and proceed further to recover the balance amounts and if not, it is well open to the Assessing Officer to proceed to recover the penalty imposed. In nutshell, the Hon'ble Madras High Court in the above judgment has held that the entire land which falls within the jurisdiction of CMDA shall be non-agricultural land unless it is shown that the land is used mainly for agricultural activities. Para 8 of judgment is relevant: "Admittedly, the land has been notified to fall within the jurisdiction of the CMDA. The provisions of Development Control Rules, which is applied by CMDA, would stand attracted to all lands, which are within the urban agglomeration. Thus by virtue of the notification, the Government of Tamil Nadu has included the area in which the subject lands are situated to be part of an urban agglomeration. Therefore, the assessee, if he seeks to plead that it is not an urban land, the onus is on the assessee that the land was mainly used for the purpose of agriculture" The assessee has merely shown agricultural income of Rs. 7000 on 4.45 acres of land which was sold by assessee during the year under consideration. The Tahsildar has also ....