TaxTMI 
TaxTMI 
2021 (1) TMI 320
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....ut of cash receipts on sale of agricultural land at Survey Nos^l97/l and 198/1. Since the amount of sales proceeds received towards sale of agricultural land were utilized as per conditions of section exemption u/s 54B of the Act ought to have been allowed when the capital gain is charged to tax.. It be directed to be allowed now. 2. The Id' CIT(Appeals) erred in law and on facts in not appreciating the legal position explained to him that the prime requirement of allowing exemption u/s 54B is regarding the utilization of proceeds of sale of agricultural land in purchase of agricultural land which is done by the appellant and since the said fact is not disputed merely because such utilization was made in earlier year, exemption cannot be denied when all other conditions are otherwise fulfilled It be so held now and exemption to the extent of such utilization of cash receipt taxed as sales consideration. 3. The Id CIT(Appeals) erred in not following the case laws cited and in refusing to allow ground taken before him which he ought to have allowed. 2.1 The assessee vide letter dated 25-11-2020 has raised the additional ground of appeal which is reproduced as under: The la....
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....the case of NTPC Ltd (supra). Similarly, all the facts related to additional ground of appeal are available on record. Hence we admit the additional ground of appeal raised by the assessee and proceed to adjudicate the same. 6. The 1st issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by disallowing the exemption claimed under section 54B of the Act amounting to Rs. 39,36,476/- only. 7. The facts in brief are that the assessee in the present case is an individual and claimed to be engaged in the agricultural activities. The assessee, along with other co-owners, among other lands, was in possession of lands bearing Survey No. 197/1 and 198/1 which were purchased in the year 2003. These lands were used by the assessee for the purpose of agricultural activities. However, the assessee along with other co-owners, has entered into a Banakhat dated 21st August 2007 to sale the impugned land to M/s Savvy Organizer. As per the Banakhat dated 21st August 20017 the assessee was under the obligation to convert such agriculture lands into non-agriculture lands. Accordingly the assessee got converted such land into non-agricultural before the exec....
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....u/s.54B be allowed. Without prejudice to the above, the land transferred by assessee was an "Agricultureal land" At this stage, the following vital events may kindly be appreciated. * On 21.08.07, assessee entered into an ATS with Savvy Organizers for sale of land i.e. "Agricultural land" (Pgs.75-82 @ 76 & 80 of P/B). As per clause 2 of ATS, the land in question was to be converted into "Non-Agricultural land" by the purchaser (Pgs.75-82 @ 79 of P/B);. * On 30.11.08, the land was converted into "Non-Agricultural land" by the purchaser; * On 04.04.09, the final sale deed came to be executed. * As per the "Land revenue records", the land in question was categorized as "Agricultural land" (Pgs.460-481 of P/B). * Assessee has carried out "Agricultural operations" on the land in question upto the "date of conversion" of land into Non-Agricultural land. * Assessee has also declared "Agricultural income" n the return of income filed with the Department. * The above facts were specifically brought to the notice of AO as well as CIT(A) and the same have not been controverted (Pgs.56-57 of P/B). * In view of the aforesaid facts, it becomes clear that the underlying....
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....s a capital assets within the meaning of provisions of section 2(14) of the Act. 12. We have heard the rival contentions of both the parties and perused the materials available on record. The issue in the case on hand relates whether the assessee is eligible for deduction/exemption under section 54B of the Act amounting to Rs. 39,36,476/- on the sale of agricultural land. For this purpose, we find relevant to refer the provisions of section 54B of the Act which reads as under: 54B. (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes (hereinafter referred to as the original asset), and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following provis....
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....t for agricultural purposes; and (ii)the assessee has purchased the land within a period of two years after the sale of the above land for being used for agricultural purposes. There was no dispute regarding condition No. (ii). The dispute was regarding condition No. (i). The exemption is available to the seller of 'a capital asset being land'. It does not restrict the benefit to the agricultural land only. However, the land against which the benefit is sought must have been used by the assessee or his parent for agricultural purposes in the two years immediately preceding the date of sale. From the facts stated by the Assessing Officer himself, it was evident that that condition was clearly fulfilled. It had been observed that Poplar plantation stood on that land till 1988-89. It had also been stated that the fodder grass and vegetables were grown in Kharif season. The khasra girdawari produced by the assessee also showed that agricultural operations on that land were being carried on by the assessee and other co-owners till its sale. Even the records of the Income-tax Department showed that the assessee had declared agricultural income from that land in her returns of the p....
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....viz the questions for claiming the exemption under section 54B of the Act does not have any relevance. 16. However, the learned CIT (A) disregarded the contention of the assessee and confirmed the order of the AO by observing as under: 4.3 I have carefully considered the Assessment order and the submission of the Appeallant. Undisputedly, the agricultural land sold by the Appellant at Village nardipur was not continuously held for two years for being used for agricultureal prupose. The basic condition of granting exemption under section 54B is that the land sold must have been used by the assessee for at least two years prior to the date of transfer for agricultural purposes. The Appellant has purchased land on 19.11.2008 and sold on 11.03.2010. Thus the condition of continued use of land for agriculture is not satisfied. Hence the A.O is right in refusing to grant exemption. This ground is dismissed. 17. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 18. The learned AR before us submitted that the land in question is an agricultural land which is not a capital asset in pursuance to the provisions of section 2(14) of the Act. Accord....
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....y or Nagar Palika having population of more than 10000 but not exceeding 100000/- * 6 Kms in case of nearest Municipality or Nagar Palika having population of more than 1,00,000 but not exceeding 10,00,000/- * 8 Kms in case of nearest Municipality or Nagar Palika having population of more than 10,00,000/- 20.4 We also note that the learned AR has drawn our attention to census report of the village Nardipur of Kalol tehsil of Gandghi Nagar districts where impugned land is situated. The copy of census report placed at page 679 of the paper books. From the report we find that Nardipur village has population of 8 thousand only. From the Google search we find that the Nardipur village is also a gram panchayat and situated 13 km away from sub-district headquarter Kalol and 20 km away from district headquarter Gandhinagar. Therefore in our considered view the impugned land fulfils the criteria of being an agricultural land. Hence the same is outside the purview of capital asset and not liable to tax under the head capital gain. Accordingly we set aside the order of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the issue raised by the assessee vide ....
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....tal asset being in the nature of agricultural land. 25. At the outset we note that the identical issue has been decided by us in the favour of the assessee in IT(SS) No. 150/Ahd/2017 in the case of Shri Baldev F Patel vide paragraph no. 20 of this order. Respectfully following the same we allow the additional ground of appeal of the assessee. 25.1 In the result, the appeal of the assessee is allowed. 26. Coming to IT(SS) No. 121/Ahd/2017 for A.Y. 2009-10 in the case of Shri Baldev F. Patel. The Revenue has raised the following grounds of appeal 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition made on account of Unexplained investment in purchase of land at Rupal of Rs. 56,75,626/-. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition made on account of Unexplained investment in purchase of land at Acher of Rs. 96,18,000/-. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition made on account of Unexplained investment in....
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.... for the investment in the properties as discussed above. 28.3 The AO also found that the assessee in the statement furnished under section 132(4) of the Act has accepted that the amount noted on the incriminating material found during search represent his undisclosed investment. As such the assessee of agreed to disclose such investments in the properties as income in the statement furnished under section 132(4) of the Act. 28.4 Accordingly, the AO treated the amount paid over and above the registered value of the properties declared in the registered documents as unexplained investments and made addition for Rs. 56,75,626/- , Rs. 96,18,000/- and Rs. 1,03,63,387/- to the total income of the assessee. 29. Aggrieved assessee preferred an appeal to the learned CIT (A) who deleted the addition made by the AO by observing as under: 6.2 I have carefully considered the Assessment Order, observations of the Assessing Officer and the contentions of the Appellant. The Appellant has explained that the investment on purchase of various lands by payment of cash came from out of receipt of cash on sale of other land and availability thereof along with other receipts by way of withdralws fo....
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.... in totality and selective or partly use of the evidence is not permissible, as per various judgments of the several judicial authorities. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 6.4 It is also pertinent that during the course of search , no other evidence regarding utilization of said cash for some other purposes were found nor any such cash was physically found. Therefore when the transactions relating to cash receipts | and cash payments are found during the search proceedings, the Assessing Officer was not justified in accepting receipt part and reject the explanation regarding payment part there from. Considering entirety of facts and legal position emerging from the afore said case laws, I am inclined to agree with the submissions of the Appellant that investment in purchase of lands was fully and satisfactorily explained with reference to the cash available as per cash flow statements and hence addition of Rs. 56,75,6267- in respect of investment in purchase of land bearing survey No.1642,1626 paiki and 1699/1 at village Rupal, Gandhinagar and Rs. 96,18,000/- in respect of investment in purchase of land bearing survey no.163/4 at village Acher, ga....
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....amount of Rs.5.50 crores a sum of Rs. 2.75 crores was belonging to the assessee and his son namely Shri Shailesh B. Patel. 33.4 However the AO treated the entire amount of Rs. 2.75 crores received in cash and other amount received through banking channel as the income of the assessee along with his son for the assessment year 2010-11 which was also confirmed by the ld. CIT-A. But the assessee did not subsequently challenge the same before any higher forum. In other words the income determined by the AO of the assessee along with his son for the assessment year 2010-11 has reached to its finality. 33.5 Now the issue arises for our adjudication whether the impugned amount of Rs. 2.75 crores representing unaccounted cash receipt against the sale of property was utilised for the re-investments in the properties situated at villages Rupak, Acher and Nardipur as discussed above. In this regard the assessee contended that investment was made out of the sale proceeds of the properties at Motera village received in cash which was not accounted. In support the assessee made cash flow statement showing receipt and payment of cash against sale and purchase of land. Indeed as per the incrimi....
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....ore related to such transaction which represent his unaccounted income. Further the cash impounded of Rs.20 lakhs is part of the receipt of Rs. 1.05 crores. However, the assessee did not offer the impugned amount as unaccounted income in his income tax return filed under section 153A of the Act. It was contended by the assessee that the property bearing number 114 was agreed to be sold at Rs.1.10 crores as per the Bankhat executed on 26-11-2010. As per the Banakhat the payment to be received on the sale of such properties was in the manner as detailed below: Date Amount Cash/post dated Cheque 03-12-2010 2500000 Chq.no.374963, BOB Vadnagar 15-12-2010 2000000 Chq no.62711, UBOI, Vastrapur 07-01-2011 1500000 Chq no.374964, BOB, Vadnagar 11-01-2011 2500000 Chq no.724944, CBOI, S.M. Road 13-02-2011 2000000 Received in Cash from purchaser 36.2 However, the impugned Banakhat was not executed on account of some dispute and therefore the same got cancelled. Accordingly, the assessee did not get the cheques en-cashed as stated above as well as returned the amount of Rs.20 lakhs which was received in cash. Thus the assessee claimed that he has not offered the sa....
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....as reproduced by the A.O. in the assessment order, clearly prove that the three partners earned the profit on the sale of the land under consideration. The word "Nafo" has been used, which prove that the transaction has been completed. The receipt of Rs. 1,05,00,000- is also mentioned date wise in four installments and all dates of receipt of money falls before the date of search. Looking to these facts, the contention of the appellant that this transaction did not materialize is not acceptable. During the course of search, no evidence was found, which show that this transaction did not materialize. Even after the date of search and till disposal of this appeal by the undersigned, the appellant failed to establish that the amount received was returned through account payee cheque to the opposite party. If the transaction did not materalise, the other party will get back his money but the same has not been done in this case. Therefore, this contention of the appellant is rejected. Keeping in view these facts, the addition made by the A.O. are found justified. The loose paper indicated that the amount of Rs. 1,05,00,0007- was relating to profit of deal in respect of land at Village M....
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....ve heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion note that there was a search conducted at the premises of the assessee wherein a document bearing number Annexure A-3 page no-4 was recovered which was showing the receipt of money on account of sale of the property bearing survey number 114 at Motera which was not offered to tax though admitted in the statement furnished under section 132(4) of the Act. Accordingly the AO treated the same as unaccounted income. Subsequently, the learned CIT (A) confirmed the addition made by the AO in part by observing that the amount mentioned against the name of the assessee stands at Rs.70 Lacs only. 44.1 Now the question arises whether the assessee has sold the impugned property and generated an income of Rs.70 Lacs on sale of such property. Admittedly, the property was standing in the name of the assessee's son during the relevant time which evidences the fact that the title of the property has not been transferred to the buyer. The fact of the ownership of the land is with the son of the assessee can be verified from the document placed on pages 286-290 of the pape....
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....CBDT has discouraged to its officers to make the addition on the basis of the statements and without bringing any tangible materials for any addition/disallowance. The relevant extract of CBDT instructions issued vide F. No. 286/98/2013-IT(Inv.II) dated 18th of December 2014 reads as under:- "Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Boards has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admissi....