TaxTMI 
TaxTMI 
2021 (6) TMI 272
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....ary issue raised by the assessee 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 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....
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....agricultural operations including the agreement if any with the party. In fact, 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 assess....
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....by it for the agricultural operations except a meagre amount of Rs. 38,963/- only in the F.Y. 2015-16 to 2017-18 which is negligible against 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....
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....e claim of deduction to that extent was clearly inadmissible. It has now been admitted that the transaction agreed did not took place. 5. Aggrieved assessee preferred an appeal to the learned CIT (A): 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 ....
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....he supervision was to be done by the appellant, his parents and his real brother Shri Nitin K Patel The farmer was given I/3rd share in the agricultural produce. All the related expenses were to be borne by the farmer. 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 be....
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....rother, the exemption under section 54B of the Act was allowed in their assessment framed under section 143(3) of the Act. The copies of the assessment order are placed on pages 110 to 133 of the paper book. 8.2 The learned AR to support the 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 opera....
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....andhinagar 20.05.2015 Pujan Rajesh Bhai Joshi 7,77,00,000 3 84/2-B 1113 Sq.Mtr Village: Khoraj Dist. Gandhinagar 20.05.2015 Pujan Rajesh Bhai Joshi 33,39,000 4 57/2-A 1619 Sq.Mtr. Village: Khoraj Dist. Gandhinagar 20.05.2015 Pujan Rajesh Bhai Joshi 48,57,000 5 56/1 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. Similar....
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....the benefit of deduction under section 54B of the Act. 10.6 Moving to the other lands where the assessee was having the absolute/part ownership. The details of such land have already been reproduced here in above and the reasons for denying the deduction under section 54B of the Act has already been discussed somewhere in the preceding paragraph. 10.7 One of the reason for denying the deduction under section 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....
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....cial knowledge i.e. from where he has received the credit and once he disclosed the source from which he has received money, he must also establish that so far as his transaction with his creditor is concerned, the same is genuine and his creditor had the creditworthiness to advance the loan which the assessee had received. When the assessee discharges the burden so placed on him, onus then shifts to the Assessing Officer, if the Assessing 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 considerati....
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....e are of the considered view that the claim of the assessee cannot be rejected merely on the ground that the traders have not maintained books of account or have not filed return of income. The assessee in his return of income for the past several years has been disclosing income from agriculture and the Department has been accepting the same without any query. The Land Revenue records clearly indicate that land is under cultivation and Jowar and Soyabean 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 au....
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....to carry out the agricultural operations himself. Rather the provisions states that even the parents of the assessee or family member of HUF may carry out the agricultural operations. In such a situation, the assessee shall be eligible for the deduction. Admittedly, this fact has not been disputed by the authorities below that the father of the assessee has not carried out any agricultural operation on the lands in dispute. Therefore, there is no violation of the 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 ....