AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 320
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....B in respect of purchase of agricultural land made out 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 th....
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....can be raised at any stage in pursuance to the judgment of the Hon'ble Supreme Court in 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 l....
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.... Bhagwanbhai Revabhai Prajapati-154 ITD 710 (Ahd.); Thus, the very foundation of AO, based on which exemption u/s.54B was denied, is unjustified. On this short count, exemption 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" ....
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....er section 54B or denial thereof would not arise at all. • In view of the above, exemption u/s 54B of the Act cannot be denied. 11. On the other hand, the learned DR vehemently supported the order of the authorities below by reiterating the findings in the respective orders and further contended that the matter should be setaside to the AO for verification whether the impugned land is 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 undiv....
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.... in case of CIT vs. Smt. Savita Rani reported in 270 ITR 40 wherein it was held as under: "From a plain reading of section 54B, it is clear that to claim the benefit of this provision, the following conditions are required to be satisfied : (i)the capital gains arise from the transfer of land, which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee or his parent 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 obse....
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....e preferred an appeal to the learned CIT (A). 15.1 The assessee before the learned CIT (A) contended that the impugned land was in use for the agricultural operations before the purchase which is still continuing. Accordingly the assessee contended that the land in dispute is not a capital asset being an agricultural land in pursuance to the provisions of sections 2(14) of the Act. Consequently, the question of charging the capital gain on such income does not arise viz a 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 ....
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....es for our consideration whether the impugned land was agricultural land and therefore the same is not capital asset within the provisions of section 2(14) of the Act in the given facts and circumstances. To hold an agricultural land outside the purview of capital asset, the following conditions needs to be satisfied: 1. The land should be Out of the Municipality or Nagar Palika having population of more than 10 thousand. 2. The land should be aerially out of: • 2 Kms in case of nearest Municipality 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.....
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..... 23. 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. 12 of this order. Respectfully following the same we allow the ground of appeal of the assessee. 24. The 2nd issue raised by the assessee vide ground no-2 and additional ground raised vide letter dated 25-11-2010 is that the learned CIT (A) erred in confirming the order of the AO by denying the exemption claimed under section 54B of the Act, though the property in question does not fall under purview of capital 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 c....
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.... to tax in the return filed under section 153A of the Act for A.Ys 2007-08 to 2010-11. In other words the cash payment made over and above registered value against purchase of above mentioned properties was financed from the receipt against Motera village land which has already suffered tax. Thus the assessee is not required to show any additional income for cash payment as discussed above. 28.2 However, the AO disagreed with the contention of the assessee by observing that there was no direct evidence brought on record suggesting that the assessee has utilised the cash received against the sale of the property bearing number 197/1 and 198/1 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 i....
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.... cash credited has been found explained with the help of the entry mentioned in the loose papers seized during the course of search or the withdrawal from the bank account which is reflected in the regular return of income. Similarly, the investments made in cash for purchase of three lands are fully explained from the cash balance available with the appellant. In such situation, where the receipts of cash have been taxed in the hands appellant, the addition of the investments made from the same receipts is amounting to double taxation, which is not permissible under the IT. Act. The evidences found during the course of search & seizure procedure should be considered 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....
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....ay as per page no.36 19.07.06 2100000 1900000 200000 06.09.06 3900000 3900000 0 06.09.06 4000000 0 4000000 09.10 33.2 Accordingly the assessee accepted such unaccounted receipt by offering the same to tax in the income tax return over a period of 3 assessment years as detailed below : Particulars AY 2007-08 AY 2008-09 AY 2010-11 Total Nature of receipts Cash Cash Cheques Cash + chq Share in sale consideration BF Patel 17,162,090 817,280 16,128,750 34,108,120 Less: Amount received for unsold 199/2 5,605,170 - - 5,605,170 Sale Consideration of 197/1 & 198/1 (A) 11,556,920 817,280 16,128,750 28,502,950 33.3 Out of the total 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 c....
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....n confirming the addition made by the AO for Rs.70 Lacs out of the total addition made for Rs. 1.05 crores. 36. Briefly stated facts are that there search and seizure operation under section 132 of the Act conducted at the premises of the assessee dated 27-04-2011. As a result of such search a document, being incriminating in nature, Marked Annexure A3 page number 4 was found. As per this document the assessee has received an amount of Rs. 1.05 crore against sale of land bearing survey number 114 located at Motera. Besides this, there was a sum of Rs.20 lakhs in cash also found during the search. 36.1 On confrontation, the assessee in the statement furnished under section 132(4) of the Act admitted to have sold a property being navi sarat land at motera and receiprt of Rs. 1.05 Crore 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 cro....
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....f land and disclosed as unaccounted income. 37. Aggrieved assessee preferred an appeal to the learned CIT (A). 38. The assessee before the learned CIT (A) reiterated that the property in question has not been transferred to the party as it stands in the name of his son, the owner of the property. Accordingly, once the property has not been transferred, the question of booking the income with respect to such property does not arise. 39. However, the learned CIT (A) disregarded the contention of the assessee and confirmed the order of the AO in part by observing as under: Having carefully considered the observations of the AO and the Appellant's submission, it is found that the addition has been made on the basis of statement recorded during the course of search and the documents found. The loose paper found & seized during the course of search and 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 ....
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....on the Judgment of Hon'ble Gujarat High Court in the case of Glass Lines Equipment Co. Ltd. vs. CIT reported in 253 ITR 454. 42. On the other hand the learned DR submitted that there was the incriminating document reflecting the entries for the sale of the properties which shows the income generated thereon. 42.1 The learned DR further contended that whether the land in question stands in the name of the owner or not is subject matter of verification. Therefore the same can be restored back to the file of the AO for fresh verification. 43. The learned AR in his rejoinder submitted that the AO had the access to all the bank accounts of the assessee but he did not verify the fact that whether the cheques for the sale of the property was received by the assessee. As such the assessee has not received any money through the cheques as the deal got cancelled. 44. We have 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 a....
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.... of the land through cheque but the same were never presented to the bank for the reason that the deal got cancelled. In this regard, none of the authorities below has verified the bank statement of the assessee despite having the access to such bank accounts. In the absence of any adverse finding from the side of the authorities below, it seems that these cheques were never en-cashed by the assessee. 44.4 It is also pertinent to note that the authorities below were having the necessary details of the buyers of the property in dispute, but none of them have verified from them by issuing any notice under section 133(6)/131 of the Act. Indeed, there were recovered incriminating document showing the amount of Rs.1.05 crores but that does not become the income of the assessee until and unless it is corroborated based on the documentary evidence. 44.5 Here it is pertinent to note that the 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:- ....