TaxTMI 
TaxTMI 
TaxTMI 
2021 (6) TMI 272
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....IT (A) erred in confirming the order of the AO by denying the exemption claimed under section 54B of the Act for an amount of Rs. 4,77,58,546/- only. 4. The facts in brief are that the assessee in the present case is an individual and non-resident Indian. He is based in USA. The assessee along with his father and brother owns certain lands. The assessee along with them has sold these lands in the year under consideration for an amount of Rs. 16,98,96,300/- only. The share of the assessee in such sale consideration stands at Rs. 7,24,68,300/- only. The assessee on the sale of such lands declared long-term capital gain amounting to Rs. 7,14,83,153/- only. The assessee against such long-term capital gain has claimed the exemption under section 54B of the Act amounting to Rs. 6,64,83,153/- on the purchase of another lands for the purpose of agricultural operations. 4.1 As per the assessee, the lands sold were used for the agricultural operations. In fact, the assessee along with co-owners during F.Y. 2013-14 and 2014-15 has let out such lands for the purpose of cultivation to a 3rd party (farmer) with the understanding that one third of the agricultural production shall be retained ....
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.... the identity of the 3rd party carrying out agricultural operations was to be established to justify that there were agricultural operations on the lands in dispute. ii. Further there was no irrigation facility including the borewell available on the sites where the lands in dispute were situated. Accordingly the AO was of the view that no prudent farmer will take such land on lease for the agricultural operations and incur the expenses on cultivation in consideration of 1/3rd produce only. iii. Likewise, the assessee has shown a meagre income of Rs. 13,203/- in the year under consideration when assessee himself carried out agricultural operation which transpired that 3rd party income would be of very negligible value. iv. The contention of the assessee for the FY 2013-14 and 2014-15 that the agricultural produce received by him along with the co-owners were used for home consumption is just to avoid to file the documentary evidence. However, there was not any 3rd party engaged in the agricultural operations in the year under consideration which implies that the assessee along with the co-owners has carried out the agricultural activity. Thus the assessee must have incurred....
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....t the investment made by the assessee. The AO also found that the sale deed entered by the assessee for the purchase of new land clearly specifies that lands purchased by the assessee were not capable of carrying out the agricultural operations. 4.8 Equally, the assessee has not brought any evidence that he has incurred expenses such as digging the bore well etc for making such land fit for agricultural operations. Similarly, no expense shown in the year under consideration. Thus the 2nd condition specified under section 54B of the Act that the assessee shall make the investment of capital gain on transfer of land by acquiring a new land to be used for agricultural operations, has not been fulfilled by the assessee. 4.9 The AO also find that the every assessee is a different assessee and independent to each other. As such the assessments are framed based on the materials available on record but the assessee failed to provide enough material to satisfy the conditions provided under section 54B of the Act. Thus the contention of the assessee that the claim under section 54B the Act was admitted by the revenue in the assessment framed for the co-owners does not have any binding forc....
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.... 5.1 The assessee before the learned CIT(A) again reiterated that the cultivation on land in dispute was carried out by the third party on contract basis and all the expenses in relation to the cultivation was born by such third party. The assessee further submitted that the details of the third party was not furnished to the AO because the same was not asked for by the AO during the assessment proceedings. Accordingly the assessee furnished the detail of the third party namely Shri Hemrajbhai R Rabari along copy of confirmation from him. The assessee also submitted that the finding of the AO that no prudent farmer will carry out cultivation for 1/3rd of agricultural produce is baseless. As such Shri Hemrajbhai R Rabari was carrying cultivation on lands belonging to others also. Further the extract of 7/12 form was showing agricultural activities carried out on the land in dispute in the last two previous years which constitute a strong piece of evidence. The assessee claimed that noting in form 7/12 are done by land revenue authority. For this purpose land authority visit to area and make noting based on the crops being cultivated on specific lands. The extract 7/12 is a Governm....
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.... Further more in respect of agricultural income not shown in earlier years, it is submitted by the appellant that the agricultural produce was not sold in the market but consumed in the family, friends and relatives and also by the servants and since, no agricultural produce sold in the market, no corresponding agricultural income was shown in the ITR. 5.12 The response of the appellant is no doubt, very smart and is meant to circumvent any occasion for/requirement of producing any type of documentary evidences. The appellant has produced the affidavit of the person who has deposed to have carried out agricultural activities on the land sold and that as per 7/12 extract the land was used for cultivation. In this regard in view of various judgments relied upon by the AO and also narrated above, it has to be held that all these by themselves do not establish the claim of the appellant because the affidavit of the share cropper remains a self serving evidence because he also has not given the evidences and the expenses incurred by him for carrying out the agricultural activity on that land. Even the appellant's brother residing in India is a professional (advocate) and the famil....
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.... contention of the assessee that there were agricultural operations carried out on the lands in dispute has also filed the screenshot of Google Maps which are placed on pages 107 to 109 of the paper book. 8.3 It was also contended that the report of the inspector of income tax cannot be relied upon as he visited on 7 December 2018 after almost 3.5 years from the date of transfer of the land. 8.4 The learned AR further contended that the assessee has been showing agricultural income on the new lands purchased by him. For this purpose, the learned AR drew attention on the income tax return filed by the assessee in the subsequent year which are placed on pages 16 to 24 of the details filed on 27th April 2021. These details were filed on the request of the ITAT. 9. On the other hand, the learned DR contended that the forms 7/12 cannot be treated as a conclusive evidence to hold that the assessee was carrying out the agricultural operations. Furthermore, the form 7/12 has not been issued in the name of the assessee. 9.1 It was also contended by the learned DR that the Google Maps does not have any authenticity until and unless it is approved by some government agency. 9.2 There was....
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.... 3642 Sq.Mtr. Village: Khoraj Dist. Gandhinagar 20.05.2015 Pujan Rajesh Bhai Joshi 78,30,300 6 56/2+84/2-A 8798 Sq.Mtr. Village: Khoraj Dist. Gandhinagar 20.05.2015 Pujan Rajesh Bhai Joshi 2,63,94,000 TOTAL 16,98,96,300 Share of assessee 7,24,68,300 10.2 Before we test whether the conditions specified under section 54B of the Act in case of assessee have been satisfied, it is pertinent to note that the land bearing survey No. 83 was jointly owned by the assessee. The co-owners were the father and the brother of the assessee namely Shri Kanubhai Patel and Shri Nitinbhai Kanubhai Patel. The assessee against the sale of such jointly owned land bearing survey No. 83 has purchased another agricultural land jointly. Similarly Shri Kanubhai Patel and Shri Nitin Kanubhai Patel claimed deduction under section 54B of the Act on the sale of such land. Their return were selected for limited scrutiny for the purpose of examining the correctness of capital gain declared and claimed of deduction against such capital gain. The extract of notice under section 143(2) of the Act in case of Shr....
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....n 54B of the Act was that the assessee has not furnished any detail of third party who was carrying out the agricultural operations on the lands belonging to the assessee on sub-letting basis. In this regard we find that the assessee has furnished the affidavit of the person being Shri Hemrajbhai R. Rabari who carried out the agricultural operations on the lands on sharing basis. It was the contention of the assessee before the learned CIT (A) that the AO during the assessment proceedings did not require the details of such person therefore the same was not furnished. The contention of the assessee before the learned CIT (A) reads as under: The learned AO has not asked the name and address of the farmer with whom the sale agricultural activity was being carried out. If the same would have been asked by the learned AO, the undersigned appellant would have given the name and address of such farmer. However, for the sake of convenience, the undersigned appellant is giving the name and address of the farmer as under. 10.8 However, the learned CIT (A) rejected the contention of the assessee by observing that the assessee failed to file the corroborative evidences such as the expens....
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....ng Officer assessee the said loan as the income of the assessee from undisclosed source he has to prove either by direct evidence or indirect/ circumstantial evidence that the money which the assessee received from the creditor actually belong to and was owned by the assessee himself. [Para 18] 11. We also find that the assessee has furnished form 7/12 along with form 8 with respect to all the lands which are in dispute. The details of the same are placed on pages 41 to 106 of the paper book. However, the revenue did not believe on these details on the reasoning that these have been maintained in mechanical manner. As such the crop produced on the lands in dispute have been shown in these forms since the year 1998-99 to the year under consideration without any change and further for next 3 year though no agricultural activity was claim by the purchaser of the land. Accordingly it was inferred by the revenue that such forms cannot be relied upon to draw an inference that assessee was engaged in the agricultural operations. 11.1 Let us understand what is form 7/12 and form 8 is. In this connection we note that, the 7/12 extract is an extract from the land register maintained by the....
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....ean crops were grown. The Land Revenue records are maintained by the Govt. Department. There is an element of credibility in the records maintained by the Govt. agencies. 11.3 Once the assessee has discharged his onus based on the primary documents as discussed above, the secondary information such as no availability of the details of the expenditures incurred for cultivation and declaration of low agriculture income cannot be of any assistance to the revenue. Likewise, the assessee has furnished the details of the agricultural produce on the lands in dispute which is available on pages 6 & 7 of the assessment order. The reasonableness on the quantity of agricultural produce per acre shown by the assessee were not doubted by the authorities below. 11.4 It is also pertinent to note that what is the precondition under section 54B of the Act for claiming the deduction is that prior to the sale of the land, it should be used for agricultural operations for 2 years from the date of transfer. In the case on hand these lands have been sold by the assessee in the beginning of the year under consideration i.e. 20th May 2015. In other words, the lands in dispute should have been used minim....
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....e provisions of law. 11.7 Going further, the report furnished by the inspector of income tax cannot be relied upon as it was furnished dated 17 December 2018 whereas the case before us pertains to the F.Y. 2015-16 and the land was transferred dated 25th May 2015. The report was furnished after almost 3½ years from the date of transfer of land. There can be a lot of changes in the land and in the surrounding area subsequent to the sale of land by the assessee, but to our mind such change cannot be used to draw an inference against the assessee. Furthermore, the photographs attached by the inspector of income tax cannot be used to draw any adverse inference against the assessee for denying the benefit extended under section 54B of the Act as they were taken in the subsequent period. 11.8 Coming to the sale deed wherein it was mentioned that the land in dispute was not capable for agricultural operations. The relevant extract of the sale deed is as under: 6.4 During the course of the assessment proceedings, the assessee was asked to furnish the English translation of the sale deeds. On examination, it is seen that the assessee being seller has himself admitted that no agr....