TaxTMI 
TaxTMI 
2023 (9) TMI 1782
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....d. The Ld. AO has disputed the claim of the assessee and brought the sale consideration to tax. The Ld. AO has also alleged that the assessee has sold the land at a price much above the registered / stamp duty value. The Ld. CIT(A) has confirmed the assessment against which the assessee is in further appeal before us. The impugned order has been passed by learned Commissioner of Income Tax (Appeals)-19, Chennai [CIT(A)] on 27-09-2019 in the matter of an assessment framed by learned Assessing Officer (AO) u/s 143(3) r.w.s. 153A of the Act on 30-12-2016. The elaborate facts of the case and the circumstances in which the assessee had acquired the parcels of land have already been enumerated by us in our order for AY 2006-07. 2. The Registry has noted delay of 35 days in the appeal, the condonation of which has been sought by Ld. AR on the strength of an affidavit of the assessee. It has been submitted that the delay has accrued due to adverse medical conditions being faced by the assessee. The Ld. CIT-DR has opposed the condonation of delay. However, keeping in view the period of delay and the contents of the affidavit, we condone the delay and admit the appeal for adjudication on ....
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....urse of search proceedings, the assessee could not produce any evidence in connection with agricultural operations. Neither assessee nor his brother Shri Arulvelu (who is stated to have carried out agricultural operations) could produce evidence to establish carrying out of agricultural operations on the said land. Reliance was placed, inter-alia, on the decision of Hon'ble Apex Court in the case of CIT vs. Raja Benoy Kumar Sahas Roy (32 ITR 466) to support the conclusion that the land was not used for agricultural operations. 4.4 However, the assessee relied on the decision of Hon'ble High Court of Madras in the case of Shakuntala Vedachalam (369 ITR 558) wherein it was held that since the assessee produced a copy of Adangal and the letter from Tehsildar which showed that the land was agricultural in nature, the same has to be accepted as agricultural income. As per Adangal records, the land was classified as agricultural land and therefore, the exemption could not be denied to the assessee. It was further held by Hon'ble Court that the manner in which adjacent lands were used by the owner would not be a ground to come to a conclusion that the assessee's land wa....
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.... where the impugned land was situated was well known for textile products. A large number of textile industries were coming up in Erode district and there was good scope of development of readymade garment sector which is backed by adequate infrastructure in the form of transport and communication. Considering all these factors as well as considering the factual matrix of AY 2006-07, Ld. AO held that the transaction was in the nature of an adventure in the nature of trade and therefore, aforesaid income was to be assessed as 'Business Income'. 4.6 Finally, the claim of exemption of Long-Term Capital Gain was rejected and profit on sale of land was brough to tax as business income. The agricultural income of Rs.4.25 Lacs as reflected by the assessee was also brought to tax u/s 68. While computing the business income, Ld. AO also alleged that actual sale consideration was Rs. 1003.62 Lacs as against Rs. 132.96 Lacs declared by the assessee before registration authority. 4.7 The assessee was directed to substantiate the cash deposit of Rs.4.45 Lacs in the Laxmi Vilas Bank Account. In the absence of any explanation forthcoming from the assessee, in this regard, the said d....
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....under: - 6. Grounds of Decision: 6.1. I have gone through the Assessment order, the grounds of appeal and the written submission made in this regard. The main point of contention of the appellant is the claim of sale of agricultural land that the assessing officer has not agreed to. The A.O. has rejected the claim of sale of agricultural land and also the claim of the appellant of the same being exempted from income tax. The A.O. in his assessment order has brought out various facts and figures to show that the claim of the appellant of agricultural land is not correct. The A.O has relied on the classification of the land under question which is stated to be a barren land where agricultural produce cannot be done. It is for this reason that the said tract of land was selected for industrial purposes which can be reinforced by the fact that SIPCOT (the arm of TN govt. for promoting small industries) had acquired some land adjacent to the land in question. The A.O also refers to the 'revenue records summoned and inspected during the assessment proceedings and also the statement recorded of Shri. M Duraisamy, Village Administrative Officer. These enquires conformed that it w....
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....s a "agricultural land" IV. The assessee ever conducted any agricultural activity on the said land. V. In order to verify the genuineness of the receipts filed by the assessee vide letter dated 26.08.2016, which the assessee had submitted in support of its claim towards sale of "agricultural produce", notices u/s.133(6) were issued to the "alleged purchasers" of the agricultural produce. The said notices were returned unserved by postal authorities. Further, the total amount of the agricultural produce which has been submitted by the assessee to be sold. to these two individuals was amounting to Rs. 140000/- where as the agricultural income claimed by the assessee in its return of income is Rs. 425140/-. The above aspect was brought to the notice of the assessee vide letter dated 04.11.2016, with the directive to the assessee to furnish an explanation/clarification failing which the assessee was informed that the said claim of agricultural income would be rejected. The assessee has not submitted any reply to the said notice dated 04.11.2016 im this regard as under: VI. Hence, it is very clear from the preceding paras that the assessee has failed to filed ....
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....om undisclosed sources and hence the same is being added back to the total income u/s. 68 of the income tax Act, 1961 penalty proceedings u/s. 271AA is initiated for furnishing of inaccurate particulars of income. XI. The assessee has failed to substantiate its claim with regards to "sale of agricultural produce", and its agricultural income, as has been established by the revenue in the subsequent paras. In view of the above, facts and circumstances of the case, it is humbly submitted that, with due respect and regards to the judgment cited by the assessee of the jurisdictional Hon'ble High Court, (Cited supra) the case law in the case of Mrs.Sakunthala Vedachalam is not squarely applicable in the case under consideration. XII. Accordingly the claim of exemption of Long Term Capital Gains of the sale of land at village Palayam is hereby rejected and the profit on sale of land I brought to tax under the head 'Income from Business'. Penalty u/s. 271AA on this issue is being initiated separately. [Unquote] 6.3. The A.O. has fairly rebutted the claim made by the appellant and I also see no reason to interfere with the conclusion arrived ....
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....hs. Previously, the assessee has not held any agricultural land and thus no agricultural income has been reflected by the assessee in the past. The assessee has reflected agricultural income of Rs.4.25 Lacs in this year which has been rejected by Ld. AO. The land has also been held as capital asset and brought to tax as business income. The same is on the ground that the land was not an agricultural land and no agricultural operations have been carried out by the assessee on the aforesaid land. The same was in the background of the fact that the area where the land was situated had commercial potential and the intention was to reap the benefit of the same by way of adventure in the nature of trade. The intention was not to hold the land as agricultural land. Further, the assessee had not carried out any agricultural operations on the land. In the written submissions, Ld. CIT-DR has highlighted all these points as narrated by Ld. AO in the assessment order. Accordingly, Ld. CIT-DR has pleaded for confirmation of assessment as framed by Ld. AO. 7. However, the case of the assessee rest on the fact that the land had always been classified as agricultural land in revenue record. The....
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....jal" wet land. The assessee has furnished agricultural Income Receipts dated 10-11-2006 & 10-08-2006 in support of agricultural produce. The Ploughing Expense Receipts has also been placed on record. All these documents supports the case of the assessee. However, the lower authorities has not placed on record any contrary document to rebut the same rather they have gone on the prime reasoning that the area where the impugned land was situated, had commercial potential and the land was acquired only as a part of real estate business to reap the benefits of commercialization. However, the fact that the land was classified as agricultural land in the revenue record remain uncontroverted before us though the assessee may not be successful in establishing that the whole parcel of land was put to agricultural activities during the year. However, the said fact, in our considered opinion, would not jeopardize the claim of the assessee and would not alter the character of land as an agricultural land. Upon perusal of all these documents, it could be concluded that the assessee has fairly established that the land was agricultural land and had duly discharged the onus as casted upon him, in ....
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....e useful to extract from those decisions some of the major factors which were considered as having a bearing on the determination of the question. Those factors are: (1) Whether the land was classified in the revenue records as agricultural and whether it was subject to the payment of land revenue? (2) Whether the land was actually or ordinarily used for agricultural purposes at or about the relevant time? (3) Whether such user of the land was for a long period or whether it was of a temporary character or by way of a stop-gap arrangement? (4) Whether the income derived from the agricultural operations carried on in the land bore any rational proportion to the investment made in purchasing the land? (5) Whether, the permission under s. 65 of the Bombay Land Revenue Code was obtained for the non-agricultural use of the land? If so, when and, by whom (the vendor or the vendee)? Whether such permission was in respect of the whole or a portion of the land? If the permission was in respect of a portion of the land and if it was obtained in the past, what was the nature of the user of the said portion of the land on the material date? ....
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.... of land revenue has to be considered for grant of exemption. 14. Thus it is evident from the above, which clearly states that any one of the above factors can be present in a case to qualify for the benefit of classification as agricultural lands. In this case, the assessee have qualified under clause 11(1) since as per the adangal records, these lands were classified as agricultural lands and the assessee have also paid revenue kist, namely, revenue payment. Therefore, the Tribunal has misconstrued the judgment of the Gujarat High Court (supra) that all conditions laid down in paragraph 11 should be satisfied, which is not a correct interpretation. 15. To get exemption, the assessee has to satisfy the conditions laid down in Section 2(14) of the Income Tax Act, which reads as follows: '2(14) "capital asset" means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include- (i) any stock-in-trade, consumable stores or raw materials held for the purposes of his business or profession; (ii) personal effects, that is to say, movable property (including wearing apparel and furniture, but ....
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....adjacent lands are used by the owner therein is not a ground for the Tribunal to come to a conclusion that the assessees' lands are not agricultural in nature. The reason given by the Tribunal that the adjacent lands have been divided into plots for sale would not mean that the lands sold by the assessee were for the purpose of development of plots. Also the reasoning given by the Tribunal "No agriculturists would have purchased the land sold by the assessee for pursuing any agricultural activity" is based on mere conjectures and surmises. 18. The plea of the learned standing counsel appearing for the Revenue that there was no agricultural operations prior to the date of sale is of no avail as the definition under Section 2(14) of the Income Tax Act has the answer to such a plea raised. Further more, it is also on record that the lands are agricultural lands classified as dry lands, for which kist has been paid. 19. The view of the assessee is fortified by the decision reported in Raja Benoy Kumar Sahas Roy (supra), wherein, it is held as follows: "There was authority for the proposition that the expression "agricultural land" mentioned in Entry 21 of List II of ....
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....and as a business venture. The assessee has not undertaken any substantial improvement on the land or done fragmentation thereof which would indicate that the intention of the assessee was to carry on the business of sale and purchase of land. Therefore, this conclusion cannot be upheld. 13. Finally considering the facts and circumstances of the case, the Ld. AO is directed to delete the impugned addition of Rs.656.03 Lacs as well as the addition of Rs.4.25 Lacs. The corresponding grounds raised by the assessee stand allowed. 14. So far as the remaining addition of Rs.4.45 Lacs representing cash deposit as well as another addition of Rs.512.62 Lacs representing peak credit in bank accounts, is concerned, we find that the impugned additions have been made since the assessee has failed to substantiate the same. The Ld. AR has submitted that the credits in the bank accounts are fully explainable and therefore, the additions u/s 68 could not be sustained. The Ld. AR has submitted that all the deposits have been made from proceeds received from sale of land and professional income. The Ld. AR made another legal submission that the addition of Rs.4.45 Lacs was not made in the first....