Income Tax Appellate Tribunal - Hyderabad
Smt. Surjeet Kaur vs Ito on 22 February, 2001
Equivalent citations: (2002)74TTJ(HYD)722
ORDER
Rakesh Kumar Gupta, A.M. The present appeal preferred by the assessee is directed against the order of the Commissioner (Appeals), dated 30-11-1995.
2. Since assessee was deceased, legal heirs were impleaded in pursuance of the letter of the counsel dated 20-12-2000, which was accompanied by an affidavit. Assessee has moved an additional ground vide application dated 30-10-1996, in which assessee has contended that in the event entire agricultural lands and entire sale proceeds are taken to be belonging to appellant alone, then the exemption under section 54F be allowed on the total sum of Rs. 11,48,580 spent, out of the entire sale proceeds on the construction of the residential house and not merely on Rs. 4,85,830. It was contended on behalf of the assessee that this was an alternative ground which may be disposed of in case the main grounds are decided against the assessee.
3. In view of the submission of the learned counsel for the assessee, we would adjudicate on the admission of the additional ground later on, after our decision on the main grounds of appeal, assessee has also moved a petition for admission of additional evidence through which she has sought to adduce evidence to the effect that the publication of 1991 census was made only on 24-1-1993, i.e., after the first day of the relevant previous year. Other evidence were also sought to be produced as additional evidence as copies of pahanies and photographs of the house belonging to the petitioner and evidence for fair market value as on 1-4-1974. These evidences according to the petitioner could not be produced or were produced but were returned by assessing officer. It was argued by learned counsel that these evidences are material for the adjudication of the appeal and evidence regarding publication of census are nothing but matter of public record, to which assessee could not lay her hands during the proceedings conducted earlier. Regarding copies of pahanies which were submitted by learned counsel it is stated that these pahanies were shown to the assessing officer at the time of assessment, but were returned by learned assessing officer and as a matter of abundant caution, copies of these are placed as additional evidence.
4. Learned Senior Departmental Representative objected to the admission of the additional evidence on the ground that when assessee could not produce the certificate regarding publication of census during the course of assessment proceedings, it cannot be admitted as additional evidence. Regarding copies of pahanies, we find that assessing officer has taken cognizance of pahanies produced during the course of assessment proceedings and, therefore, there is nothing to admit the copies thereafter now filed by the assessee along with her application of additional evidence. Certificate regarding publication of census has got material bearing on the issue to be decided by us and which is involved in the present appeal and the same being part of public record, we do not find any basis not to admit it as additional evidence. Regarding photographs of the house and evidence of fair market value of land in question as on 1-4-1974, we decline to admit these evidences as additional evidence as in our opinion, assessee has not been able to show as to what prevented her from not adducing these evidences at the time of assessment. Argument of learned counsel for assessee that these evidences should be admitted as the Tribunal has got very wide powers to call for any evidences under relevant rule of Appellate Tribunal Rules, 1963, could not impress us so as to enable us to admit these evidences, which were not produced by the assessee at the time of assessment and for which assessee has shown no reason for not adducing, before us. The evidence admitted by us shall be discussed and considered at appropriate place while adjudicating on the grounds before us.
5. Though assessee has taken as many as 18 grounds of appeal, yet we find that these grounds can be sub-divided into independent issues, the discussion relating to each of which and our decision thereon are as follows.
6. The first substantive ground taken by assessee is that assessing officer framed assessment without giving adequate opportunity of being heard and by relying upon some enquiry report of the ITI, not confronted to the assessee. It is also the grouse of the assessee that certificate obtained from Kapra Municipality was used against the assessee without making the same available to the assessee.
7. At the time of hearing, learned counsel for the assessee drew our attention to page 2 of the assessment order to show that Income Tax Inspector was deputed by the assessing officer to make enquiries and furnished some report on 27-3-1995, which was never confronted to the assessee. It was further submitted by learned counsel that some certificate was obtained from Kapra Municipality, certifying population of the municipality, which was also not made available to the assessee. It was submitted further by learned counsel that assessment was made on 31-3-1995, meaning thereby that after the alleged enquiry by Inspector on 27-3-1996, assessment was framed 4 days thereafter, thus not giving proper opportunity of hearing. Our attention was drawn to page 38 of the paper book, which is letter dated 27-10-1995, written by assessees CA, who represented the case before learned Commissioner (Appeals) stating that report submitted by Income Tax Inspector and particulars gathered were not confronted to him nor were shown to him and to that extent, contention of assessing officer, contained in the assessment order was factually incorrect. Therefore, learned counsel submitted that materials gathered at the back of the assessee and not confronted should not be considered for the purposes of making, assessment.
8. On the other hand, learned Senior Departmental Representative submitted that opportunities given were adequate and it was a different thing that assessee did not avail those opportunities. Learned Senior Departmental Representative drew our attention to the copies of order-sheet entries filed by him to show that delay if at all was attributable to assessees conduct, and, therefore, blame cannot be fastened at the door of revenue. He further submitted that the order-sheet dated 27-3-1995 was got signed by the assessees counsel, and, therefore, it cannot be said that contents of the report of Inspector were not confronted. It was further argued by learned Departmental Representative that plea of the Inspectors report having not been made available to the assessee was not raised before the learned Commissioner (Appeals) and, therefore, assessee cannot raise this plea before the Tribunal-
9. We have heard rival submissions on this ground and we find that assessment proceedings in this case started on 25-2-1994, as is clear from the copies of order-sheet entries filed by learned Departmental Representative. Letter dated 18-2-1994, was issued to the assessee on 24-2-1994, but what are the contents of this letter were not brought before us and, therefore, we do not know as to what enquiries were initiated by revenue through that letter. Thereafter, there are two order-sheet entries, which show that assessees representative attended and filed letter dated 3-3-1994, and details and the case was adjourned to 31-3-1994. Thereafter, there appears the order-sheet entry on 30-1-1995, which is an internal entry made by assessing officer directing to issue notice under section 143(2). Accordingly, notice was issued for 14-2-1995. But on 14-2-1995, what happened is not borne out from the order-sheet entries. Again on 14-2-1995, a notice was issued fixing the date of hearing for 6-3-1995. Thereafter, there is nothing on record to show as to what happened on that date. Again there is an order for issuing notice under section 143(2) fixing the date of hearing, for 16-3-1995. There is nothing on record to show as to what happened on 16-3-1995. However, there is an order-sheet entry dated 20-3-1995, which records that representative of the assessee was asked to furnish copies of sale deeds in respect of agricultural lands and the details of land sold and the case was adjourned to 23-3-1995. Thereafter, there is an order on 23-3-1995 made by assessing officer to Income Tax Inspector to enquire about certain factual aspects concerning the land sold and file report. On 27-3-1995, enquiry report was submitted by Inspector as per the noting made on the order-sheet entry. On 27-3-1995 only, representative of the assessee appeared and a show-cause notice was issued to him as to why capital gain be not charged to tax. There is no reference to the report received from Income Tax Inspector. Rather, order-sheet entry shows that the show-cause notice was given based on the enquiries caused to be made. The contents of enquiries and other factors such as who conducted the enquiries, were not mentioned in this noting. Thereafter, case was heard on day-to-day basis and finally assessment was framed on 31-3-1995. Therefore, it cannot be said that delay was attributable to the conduct of assessee. In fact report was sought by assessing officer only on 23-3-1995, which was submitted by Inspector on 27-3-1995. We are at a loss to understand as to what prevented the assessing officer not to confront this fact of enquiry made known to the assessee. Rather it was incumbent upon the assessing officer to have supplied a copy of the Inspectors report to the assessee for effective rebuttal, if any, to be advanced by assessee. We do not find that the ITIs report, copy of which has been supplied to us by revenue has got any confidential information. The supply of this copy to assessee would have facilitated the course of justice and would not have hampered as probably taken by assessing officer and by learned Commissioner (Appeals). Similarly, we find that a letter was written to Municipal Commissioner of Kapra calling for information regarding population of the municipality and on other aspects, which was received in the office of the assessing officer on 30-3-1995. Copy of this report received from Kapra municipality has also not been supplied to the assessee even though its contents have been used by the assessing officer in the order. Therefore, assessment was framed on 31-3-1995, under the circumstances above. Therefore, we do not have any hesitation in holding that assessment was made without confronting the material and report gathered on the back of the assessee, which were not confronted to the assessee either. Therefore, we decide this ground in favour of the assessee. Evidentiary value of the material gathered at the back of the assessee as stated above shall be appreciated by us while adjudicating other grounds of appeal.
10. The next ground is regarding the action of assessing officer in not treating the impugned land as agricultural land and consequently computing capital gains on the transfer of such land. Facts of the case are that assessee received Rs. 26,35,955 from sale of 16 acres and 20 guntas of land, which assessee claimed to be agricultural land. Since according to assessee it was not capital asset, she did not show any capital gain liable to be taxed under the Act. However, assessing officer treated the impugned land as non-agricultural land, thus bringing the same within the meaning of capital asset giving rise to levy of capital gains. Learned Commissioner (Appeals) confirmed the finding of assessing officer.
11. On the date of hearing, learned counsel for the assessee vehemently argued that impugned land was agricultural land which were classified as agricultural land in the land revenue records. He further submitted that impugned land was purchased in the year 1968 and since then agricultural income derived from such land were being shown by the assessee and her family members in the income-tax returns submitted to the department and were assessed as such. He drew our attention to per pages 46 and 47 of the paper book to show the agricultural income derived from impugned land. Our attention was also drawn to the copies of pahanies and land revenue receipts filed, to show that impugned land was classified as agricultural land in revenue records and in fact agricultural operations were carried on, on such land. He drew our attention to p 30 of the paper book, which was a letter by assessee to assessing officer to show that impugned land was agricultural land. Therefore, he submitted that when there are direct evidences available in respect of the impugned land, there was no reason to treat such land as non-agricultural. Learned counsel rebutted the arguments of the assessing officer by contending that these lands were sold in 1991 whereas as per assessing officer, Inspector was deputed in 1995 and what Inspector allegedly observed regarding the state of land in 1995 may not be having any bearing upon the correct state of these lands when they were sold in 1991. It was further submitted by learned counsel that as to what enquiries were made by the Inspector, were not made known to assessee and were never confronted with either. Therefore, no cognizance of such report, even if it was existing, be taken against the assessee. It was further submitted by learned counsel that the cases relied upon by learned assessing officer were distinguishable on facts and such distinction has been made by the assessee from pages 24 to 28 of the paper book. He relied upon the gist, of which are placed at per pages 18 to 23 of the paper book.
12. On the other hand learned Senior Departmental Representative vehemently contested the arguments advanced by learned counsel and placed that all the facts relating to the land in question shall have to be seen cumulatively and pahanies and agricultural income shown by assessee alone are not the determinent of the true character of land. He placed reliance on the cases, Sharifa Bibi Mohd. Ibrahim & Ors. v. CIT (1993) 204 ITR 631 (SC) and the case CWT v. Officer I/c (Court of Wards) Paigah (1976) 105 ITR 133 (SC). It was submitted by learned Departmental Representative that agricultural income even if taken as genuine agricultural income, was paltry having regard to the area of agricultural land and such paltry agricultural income is not enough to hold that the land in question was agricultural land, and for this provisions, he relied upon the decision of Rajasthan High Court, Mahaveer Enterprises v. Union India & Ors. (2000) 244 ITR 789 (Raj). He extensively drew our attention to the order of the learned assessing officer and submitted that potentiality to be used, adjacent locality and the price at which land was sold and buyer which has not used land to agricultural purpose, are all factors relevant for determining the land as non-agricultural land and according to learned Departmental Representative all these factors persist in the case of the land impugned. Our attention was drawn to the letter of the assessee dated 26-3-1994, in which assessee has contended that paddy and maize were grown on agricultural land whereas copies of pahanies filed, show that jawar was grown. All these inconsistencies were highlighted by learned Departmental Representative to impress upon that the veracity of revenue records itself is in doubt. He relied upon the cases relied upon by the assessing officer in p 9 of the assessment order and, therefore, he pleaded that the impugned land be held as nonagricultural land.
13. We have heard rival submissions and have gone through the orders passed by the authorities below and the pages of the paper book, to which our attention was drawn. The expression agricultural land has not been defined under the Income Tax Act, therefore, the meaning of this term has to be understood in ordinary parlance. There cannot be any fixed set of criteria which can be applied to determine as to whether the land is agricultural or not. Hosts of factors shall have to be taken into account cumulatively by the court to find out as to whether a land can be treated as agricultural land or not, These tests may be :
(i) acquisition and assessment of land to land revenue;
(ii) whether agricultural operations are carried on;
(iii) intention of the owner; and
(iv) character of the adjoining land.
We find that revenue records classified the impugned land as agricultural land and such land have been used for agricultural operations as is clear from copies of pahanies produced before. Though there is inconsistency between the nature of crop grown on the land and stated by the assessee to assessing officer but that alone is not enough to treat the impugned land as non-agricultural land. Fact remains that pahanies show that Jawar was grown. This is a strong evidence based upon the revenue records maintained by revenue authorities. In the absence of any cogent evidence on record, we cannot entertain the argument of learned Departmental Representative that the revenue records are liable to manoeuvring and in fact were manoeuvred in the instant case. Moreover, this was never the case of the assessing officer. The fact of agricultural income having been shown consistently from 1968 till the year of sale in the income-tax returns, cannot be brushed aside. This evidence is a strong pointer of the fact of the land being used for agricultural purposes and yielding agricultural income shown as such to the Income Tax Department, year after year. It has never been the case of assessing officer that such agricultural income was not the agricultural income nor could it be the case in the absence of any evidence contrary to it. Therefore, we hold that the impugned land which was subject-matter of transfer was agricultural land. Its potential use by the buyer and the buyer being a company cannot alter the character of the land as was obtaining on the date of transfer. Cases relied upon by learned Departmental Representative are distinguishable on facts and do not help the case of the revenue.
14. Next ground relates to the finding recorded by the authorities below that impugned land even if it is treated as agricultural land was comprised in the municipality, the population of which was more than 10,000 as per the preceding census, the date on which it was published was on the first day of the previous year. Case of the assessing officer was that even if impugned land is taken as agricultural land, yet it will constitute capital asset under section 2(14)(iii)(a) because according to assessing officer impugned land was comprised within the jurisdiction of municipality having population of more than 10,000. This finding of assessing officer was confirmed by learned Commissioner (Appeals).
15. On the date of hearing, learned counsel for the assessee submitted that Kapra became municipality in 1987, as per the admission made by the assessing officer whereas impugned land was sold in the year 1991. Therefore, the census of Kapra municipality shall have to be seen as on the first day of the previous year. According to learned counsel, the figure of census in respect of Kapra municipality was published in February, 1993, and, therefore, such census cannot be taken as the basis to determine as to whether population was 10,000 or more as on the first day of the previous year.
16. On the other hand, learned Senior Departmental Representative contended that population of entire municipality shall have to be taken into account and not the population of the village in which the impugned land fell and for this, he relied upon the decision of the Honble Supreme Court, in the case G.M. Omerkhan v. CIT (1992) 196 ITR 269 (SC).
17. We have heard rival submissions and have gone through the orders. It is an admitted case that Kapra became municipality in 1987 and the first census after it became municipality, took place in 1991. Therefore, the position of its population will have to be seen with reference to the census of 1991. As per the evidence produced by assessee, by way of additional evidence, which was in the form of a letter from the relevant authority, figures of census were published on 23-2-1993, meaning thereby, that these were not published before the first day of the previous year involved. Census of Kapra in the year 1991 cannot be taken into account as Kapra was not municipality in 1991 and impugned land was not part of any municipality, let alone of Kapra, in the year 1981. Kapra became municipality in 1987 and, therefore, the figures of census of the year 1991 shall alone be relevant for deciding the issue at hand. But as stated above, figures of census of 1991 were not available on the first day of previous year, therefore, population of Kapra municipality, as per census of 1991 can also not come to the rescue of the revenues stand. Therefore, we hold that impugned land cannot be treated as capital asset under section 2(14)(iii)(a), for the exigibility of capital gain in the year under appeal. Therefore, we have to hold that impugned land was not hit by section 2(14) of the Income Tax Act and cannot be treated as capital asset. Since impugned land was not capital asset, there was no question of any capital gains exigible to tax as a result of transfer thereafter Since we have allowed the main substantive grounds of the assessee, we do not think it proper to adjudicate upon the alternative grounds raised in the appeal memo and admission and merit of additional grounds raised in the application for additional ground.
18. In the result, appeal of the assessee is allowed.