Income Tax Appellate Tribunal - Panji
Acit, Aurangabad vs Smt Anita G Pawar, Aurangabad on 11 October, 2017
आयकर अपीलीय अिधकरण, पुणे ायपीठ "बी
बी"
बी पुणे म
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "B", PUNE
ी डी.
डी क णाकरा राव , लेखा सद य
एवं ी िवकास अव थी,
अव थी याियक सद य के सम
BEFORE SHRI D.KARUNAKARA RAO, AM
AND SHRI VIKAS AWASTHY, JM
आयकर अपील सं. / ITA No.1780/PUN/2012
िनधा रण वष / Assessment Year : 2006-07
ACIT, Central Circle,
Aurangabad .... अपीलाथ /Appellant
Vs.
Shri Govardhan S. Pawar,
13-14, Sahyadri Hills,
Shivaji Nagar, Garkheda Area,
Aurangabad
PAN : ABFPP0880K .... यथ / Respondent
आयकर अपील सं. / ITA No.1784/PUN/2012
िनधा रण वष / Assessment Year : 2006-07
ACIT, Central Circle,
Aurangabad .... अपीलाथ /Appellant
Vs.
Smt. Anita Govardhan Pawar,
13-14, Sahyadri Hills,
Shivaji Nagar, Garkheda Area,
Aurangabad
PAN : AKTPP0531C .... यथ / Respondent
अपीलाथ क ओर से / Appellants by : Shri Hari Krishan
थ की ओरसे / Respondent by : Shri Ajay Modi
सुनवाई क तारीख/ घोषणा क तारीख /
Date of Hearing :04.09.2017 Date of Pronouncement: 11.10.2017
आदेश/ORDER
PER D. KARUNAKARA RAO, AM :
These are the 2 appeals filed by the Revenue relating to two different assessees for the common Assessment Year 2006-07. They are against the orders of CIT(A), Aurangabad commonly dated 11-06-2012. The lead case belongs to Shri 2 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar Govardhan S. Pawar and other one being the case of Smt. Anita G. pawar, the wife of Shri Govardhan S. Pawar. In principle, the grounds raised by the Revenue are identical. The facts, relating to the sale and purchase transactions are also common. Therefore, for the sake of facts, we proceed to extract the grounds raised in connection with Shri Govardhan S. Pawar for reference and the same reads as under :
"1. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in allowing the exemption claimed by the assessee under section 54B of the Act amounting to Rs.1,18,85,470/-.
2. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in holding that the land sold by the assessee was cultivated land prior to sale, without appreciating the fact that the assessee has not produced any cogent evidence in support of such claim.
3. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in holding that the assessee was entitled for exemption u/s.54B of the Act on investment in land at Gut No.73 without appreciating the fact that the assessee has not proved with documentary evidence that the said land was owned by him.
4. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in allowing the exemption claimed under section 54F of the Act without appreciating the fact that the assessee has not fulfilled the condition laid down u/s.54F of the Act.
5. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of Rs.3,13,642/- made on account of income from undisclosed sources.
6. On the facts and in the circumstances of the case, the Ld.CIT(A) failed to appreciate that the assessee has not produced any evidence regarding the claim of agricultural income, thus failing to discharge the onus as per the settled position of law."
2. The general facts pertaining to Shri Govardhan S. Pawar includes that the assessee is a Civil Contractor and also engaged in plying the goods carriages. During the year under consideration, the assessee reported earnings of long term capital gains on sale of lands at Gut No.75/1 and also Agricultural income. Assessee filed the return of income declaring total income of Rs. 1.34 crores and Agricultural income of Rs.9.5 lakhs. Regarding the said long term capital gains, assessee reported Nil income in view of the claim of exemption u/s.54B/54F of the I.T. Act. During the assessment proceedings, the AO noticed that the said claim of 3 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar exemption is not proper in so far as non-fulfilment of the conditions specified in sections 54B and 54F of the Act. In short, the AO is of the opinion that the land in question was not used by the assessee or his parents as specified in section 54B of the Act. AO considered the sale value as per section 50C @ Rs.3,82,60,000/-. Accordingly, the AO reworked the long term capital gains and determined assessee's 50% share at Rs.1,64,80,160/-. Further, the AO also disturbed the claim of Agricultural income and reworked the agricultural income of the assessee on estimation basis. On this account, AO made addition of Rs.5,03,642/- out of the original claim of Rs.9.5 lakhs in the return of income. The total assessed income is determined at Rs.1,75,70,410/- against the returned total income of Rs.1.34 lakhs. We shall now take up the facts relevant to the claim of exemption u/s.54B/54F of the Act.
3. Facts pertaining to the specific claim of deduction u/s.54B of the Act on the long term capital gains include that the assessee and his wife purchased from Shri Kuldeep Singh the said land on 06-06-2000 admeasuring 10 Acres and 20 Guntas at Survey No.75/1. In the title deed, 75/2 was mentioned wrongly instead of 75/1. Further, there was another mistake with reference to the actual area of land. On actual measurement, assessee arrived the land area at 10 Acres 28 Guntas and not 10 Acres 20 Guntas as appeared in the title deed. Therefore, the original title deed was corrected by way of rectified Correction Deed on 26-04-2005 incorporating the correct Survey Number and the revised area of the said land. Therefore, considering both the deeds, there is no dispute on the ownership of land and the land in Survey No.75/1 is owned by the assessee and his wife w.e.f. 06-06- 2000. The total purchase cost of the land works out to Rs.61,78,470/-. Assessee and his wife has 50% share each in the said land. The said land of 10 Acres 28 Guntas was sold through a development agreement to Shri Ravindra Khinvasara of 4 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar M/s. Khinvasara Investments for a sum of Rs.3,75,50,000/-. The land is said to be within Municipal limits of Aurangabad. In this transaction, the assessees earned long term capital gains. The said gains were invested by the assessees in purchase of agricultural lands such as purchase of lands at Gut No.73, Gut No.257 and Gut No.304 involving 3 different sellers.
4. During the assessment proceedings, AO noticed certain discrepancies with regard to use of the said land of 10 Acres 28 Guntas being used for agricultural purposes by the assessees/the parents in the years specified in the section 54B of the Act. According to the said provisions, the said lands should have been used for Agricultural purposes for a period of 2 years before the transfer of the land. Eventually, relying on the entries relating to crops grown appeared in 7/12 extracts, procured by the AO relating to the said lands, AO came to the conclusion that the said land, being barren was not used for agricultural purposes either by the assessee or by his parents during the said years. Subsequently, AO procured a revised 7/12 extract. In the process, AO rejected the revised 7/12 extracts filed by the assessee. It shows the contrary fact of growing of dry crops in the said 2 years. Further, regarding the purchase of "any other land for being used for agricultural purposes", AO held that the said purchases are not eligible for deduction as the lands were never registered formally in the name of the assessee. Assessees did not file the registered title deeds. Therefore, AO proceeded to deny the claim of exemption of capital gains u/s.54B of the Act in respect of both the assessees - Shri Govardhan S. Pawar and Smt. Anita G. Pawar.
5. Further, the assessees made an alternate claim of exemption u/s.54F of the Act by way of filing a letter during the assessment proceedings in respect of the investments in the residential house. The AO denied the said alternate claim of exemption too of such reinvestment in the house. Further, AO is of the view, such 5 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar claims can only be made by way of filing the revised return of income. At the end of the assessment proceedings, the AO proceeded to tax the sum of Rs.1,64,80,160/-, being 50% share of Shri Govardhan S. Pawar in the said property. Same is the decision in respect of other 50% share of his wife.
6. We shall now take up the fact pertaining to each of the major allegations by the AO in the succeeding paragraphs.
I. AO's allegation of non-use of land at S.No.75/1 for Agricultural purposes by the assessees in the two Assessment Years :
7. During the assessment proceedings, in connection with the allegation of non usage of land for agricultural purposes by the assessee or his parents, the assessee made various submissions, furnished the copies of the return of income for A.Yrs. 2004-05 and 2005-06 and furnished the receipts demonstrating the earning of Agricultural income from the said lands. Disbelieving the same, AO procured the copy of "7, 7A & 12 extracts" - (hereinafter called 'Extract') of the said land at S.No.75/1 by invoking the provisions of section 131 of the Act from the Talati's office. AO noticed that the said land was described as "Barren" land in the said Extracts. Further, the owner of the land is mentioned as Shri Kuldeep Singh. The relevant table extracted from para 6.1 of the assessment order is given as under:
(a)The assessee has purchased the land on 11-05-2000 as per deed No.3380 for Rs.31.50,000/-. The 7/12 extract collected for F.Y. 2004-05 is in the name of Shri Kuldeepsingh Dhody and the status of land is shown as "PADIT", i.e. Barron and not cultivated. The 7/12 original extracts collected show following position :
Financial Year Person Area under Whether or not
cultivating cultivation cultivated
Land
2003-04 Kuldeepsingh Pad Not cultivated
2004-05 Kuldeepsingh Pad Not cultivated
2005-06 Self Pad Not cultivated
Source : original 7/12 extract from Revenue Records.6
ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar
8. In response to the above discrepancy, in the absence of any Agricultural usage of the land in the A.Ys. 2004-05 and 2005-06, i.e. two assessment years preceding to the assessment year under consideration, the assessees filed a letter enclosing a revised 7/12 extract which demonstrates the contrary facts of usage of the land for agricultural purposes from the A.Yrs. 2001-02 to 2004-05 (relevant to A.Ys. 2002-03 to 2005-06). Lands were shown 'barren' land in F.Y. 2005-06 as the assessees sold lands in May, 2005. Relevant table is extracted here as under
(page 60 of the paper book) :
Financial Year Name of Cultivator Area of Mixed crop Area of Individual crop from Mix Vide Order No.2008/Jama2/KV/459 dated 19-04-08 passed by Hon'ble Tahsildar, Aurangabad 2001-02 Kuldeepsingh Bajari-2.00 Toor-1.50 Jaisingh 2002-03 Kuldeepsingh Bajari-1.50 Barren Land Jaisingh 2003-04 Kuldeepsingh Maize-3.00 Toor-1.00 Jaisingh 2004-05 Kuldeepsingh Bajari -2.00 Maize-2.00 Jaisingh 2005-06 Self Barren Land Barren Land 2006-07 Self Barren Land Barren Land 2007-08 Self Barren Land Barren Land
9. On hearing about the crucial discrepancies, i.e. ownership, name of the cultivator and details of crops, the assessees applied for rectification of mistakes by making an application of rectification to the Revenue authorities. Eventually, Tahsildar/Talati visited the site and drew the Panchanama. Eventually, Talati issued a revised "7, 7A & 12 extract". The contents of the revised extract is already extracted in para above. The said revised extracts of the said land was granted to Shri Govardhan S. Pawar as per the order of Tahsildar Order No.2008- 5/jama/ka/vi/359 dated 19-04-2008. In this regard, Assessee furnished relevant incidental correspondence with the Revenue authorities that finally led to the issue of revised extract.
7
ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar
10. To cross-verify the contents of the said revised extract, the AO issued summons to the Talati/the Municipal Adhikari and their statements were recorded eventually. They confirmed the fact of issue of revised extract. However, the AO is critical of the said revised extract. To specifying the other irregularities, the AO noted while issuing the revised extracts, proper procedure was not followed as specified in section 175 of the relevant Act. Referring to the procedure followed by the Talati/Mandal Adhikari, AO mentioned that one of the Panchas was a minor at the relevant point of time, i.e. A.Y. 2001-02. AO wanted these Panchas to be produced for examination. Eventually, the AO held that the said revised extracts constitutes a product of an afterthought. Therefore, he relied heavily on the original 7/12 extract. In Nutshell, the case of the AO is that the original 7/12 extract mentioned about the barrenness of the land constitutes the real and credible one. The revised one constitutes a manipulated one or an afterthought. AO was under the impression that assessee manipulated the Revenue officials and created the evidence in his favour.
11. Considering the abovementioned two types of 7/12 extracts, i.e. one obtained by AO and (2) the revised one submitted by the Assessee, AO proceeded to gather any other evidence if any. Therefore, AO sent her Income-tax Inspector for spot Inspection or enquiry. Inspector obtained a statement from Shri V.B. Gaikwad, who is landlord of neighbouring land. Shri V.B. Gaikwad gave a statement stating that there were no agricultural activities in the said land for the past 10 years. However, AO did not bother to put the said evidence to the assessee for his comments or to put Shri V.B. Gaikwad for cross-examination by Shri Govardhan S. Pawar. Eventually, AO invoked the judgment of Hon'ble Supreme Court in the case of Mc Dowell & Company Ltd. Vs. CIT reported in 154 ITR 148 for the proposition that the transaction under consideration constitutes a 8 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar colourable device and the assessee never interested to pay taxes on the capital gains earned by the assessee on sale of the lands at S.No.75/1. Accordingly, AO held that the conditions specified in section 54B of the Act with regard to the usage of land by the assessee or his parents for agricultural purposes, is not satisfied. Therefore, AO held that the assessee is not entitled for deduction u/s.54B of the Act. Assessee's alternate claim of deduction u/s.54F of the Act was also rejected for want of proper evidence.
II. AOs allegation with reference to purchase of 'any other lands for Agricultural use using the Capital gains - Gut Nos. 73, 257 and 304.
12. Further, the section 54B of the Act provides for the condition of purchase of any other land for Agricultural purpose for claim of deduction. The AO denied the benefits of said provisions of section 54B of the Act in respect of the gains earned by the assessee from the other point of view of appropriation of the said gains in purchase of the new assets. In this regard, AO examined the reinvestment of the said capital gains and held that all is not well with the purchase transactions of the same. Assessee failed to file the Registered title deeds. Out of the different parcels of land purchased by the assessee by investing the said capital gains, AO zeroed down of 3 such parcels of land located at Gut No.73, Gut No.257 and Gut No.304 for deeper investigation. AO held that there three lands do not qualify the claim of deduction. Details are discussed as under.
A. Gut No.73 :
13. We shall now take up the facts relating to each of these 3 parcels of land. Regarding the land located at Gut No.73, it is mentioned that the said land was purchased by the assessee from Shri Sudhakar B. Gore against the consideration of around Rs.1.50 crores. On the date of agreement, assessee paid Rs. 10 lakhs by way of cash and Rs.1 lakh by way of cheque. AO disputed the said 9 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar transaction and held that the said land is not eventually registered in the sub- registrar office. According to AO, the said land is not transferable land as the same constitutes an "Inami land (Rewarded land)". He also mentioned that the dispute on the ownership of the land in view of the fact that there is some litigation by one Shri Mohan Puranpatre. To verify the genuineness of the ownership, the possession of the land, correctness of the payments etc., AO summoned the Shri Sudhakar B. Gore, who eventually appeared and confirmed the receipt of the said consideration. Assessees also filed an affidavit of Shri Sudhakar B. Gore confirming the receipt of the consideration of Rs.1.50 crores as well as the fact of possession of the land with Shri Sudhakar B Gore and ruled out the claim of Shri Mohan Puranpatre on the lands. AO did not accept the above assertions of the assessees as well as Shri Sudhakar B. Gore and rejected the affidavits filed by them by stating that the same constitutes an arrangement. Otherwise, AO did not have any incriminating evidence against them. Eventually, the AO summed up saying that the capital gains earned by the assessee on sale of the lands are not invested in agricultural land as the transfer of land at Gut No.73 is not registered in the Office of the Sub-Registrar and the land is no in possession of the assessee. Thus, he concludes against the assessees on the applicability of the provisions of section 54B of the Act.
B. Gut No.257 :
14. Similarly, regarding the investment of gains in the transaction of the purchase of the Gut No.257, the case of the assessee is that the assessee purchased the said land from Shri Shrichand Harichand Rathod and others for a sum of Rs.56,10,000/- and a sum of Rs.42.5 lakhs was already paid. Assessees also furnished affidavits of Shri Shrichand Harichand Rathod and assessee confirming the fact of possession of the land, fact of payment of consideration etc. 10 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar However, the AO took an adverse view on this transaction too considering the fact that the said land was not registered in the Office of Sub-Registrar. AO denied the benefit of section 54B of the Act in respect of this Gut too.
C. Gut No.304 :
15. Similar is the case with regard to Gut No.304, which was purchased by the assessee in October, 2006 for a sum of Rs.1.15 crores. On considering the fact that the assessee failed to furnish the registered title deeds of the said transaction, AO denied the benefit of said section u/s.54B of the Act. III. Alternate claim u/s.54F of the Act :
16. We shall now take up the assessee's alternate claim of exemption u/s.54F of the Act. During the assessment proceedings, assessee filed a letter making an alternate claim of asking for the grant of deduction u/s.54F of the Act relating to capital gain transfer of certain "capital assets not to be charged in case of investment in residential house". In support of reinvestment of gains amounting to Rs.55,42,310/- in the residential house, assessee filed a certificate of an Architect-cum-Engineers singed by Shri G.H.Yadkikar certifying that an amount was spent in construction of a residential house on the said land. However, notwithstanding the fact of existence of the house on the lands, on finding that the assessee failed to furnish documentary evidences in support of the said construction of residential house, AO took adverse view and dismissed the said alternate claim of exemption u/s.54F of the Act too. However, it is the case of the AO that such claims can only be made by filing the revised returns of income.
17. At the end, AO denied the assessee's claim of exemption u/s.54B as well as u/s.54F of the Act in respect of the capital gains earned by the assessee. Thus, the AO proceeded to tax the capital gains of the assessees share of 50% as under : 11
ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar Sale value taken as per section 50C Rs.3,82,40,000/-
Less : Purchase value Rs.36,75,000/- as on 06-06- Rs.52,79,682/-
2000 plus other purchase expenses at
Rs.11,62,980/- (indexed cost) as claimed
Long Term Capital Gains Rs.3,29,60,318/-
Less : Exemption allowable u/s.54B and 54F Nil
Taxable Long Term Capital Gains Rs.3,29,60,318/-
50% Capital Gains related to the assessee Rs.1,64,80,159/-
Rounded to Rs.1,64,80,160/-
AO determined the total income of Shri Govardhan S. Pawar at Rs.1,64,80,160/-.
IV. Claim of Agricultural income :
18. We shall now take the dispute relating to the extent of an allowable Agricultural income to the assessee in this year. In the assessment proceedings, the AO noticed that assessee owns huge agricultural land holdings and claimed the Agricultural income of Rs.9.5 lakhs for the year under consideration. AO verified the agricultural receipts and also examined the agricultural produce as per the discussion given in Para Nos. 11 and 12 of his order and held that the said claim of agricultural income of Rs.9.5 lakhs is on higher side. He quantified the total sales of agricultural produce at Rs.5,95,144/-. He gave benefit of reduction of 25% of the above sale proceeds towards agricultural expenditure and the allowable agricultural income of the year is determined at Rs.4,46,358/-. AO added balance sum of Rs.5,03,642/- as 'income from other sources'. In the process, AO ignored the fact that the assessee made similar claims in the past assessment years and the same was allowed in favour of the assessee.
19. Eventually, the assessment is completed by the AO at Rs.1,75,80,410/- against the returned income of Rs.1,34,000/-. Aggrieved with the above order of the AO, the assessee filed an appeal before the CIT(A), Aurangabad. 12
ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar Before the First Appellate Proceedings :
20. Assessee made various submissions on the issue of (1) use of land by assessee for Agricultural purpose in 2 years prior to sale, (2) appropriation of gains on purchase of Gut Nos. 7, 257 and 304 and finally (3) on the correctness of Agricultural income of Rs.9.5 lakhs. Eventually, the CIT(A) allowed fully the claim of exemption u/s.54B of the Act and partly allowed the appeal of the assessee on the issue of Agricultural income. On this issue, the assessee got relief of Rs.3,13,642/-. The contents of Para No.11 of CIT(A) is relevant. Before the ITAT :
21. Aggrieved with the said order of the CIT(A), the Revenue filed the present appeals in both the cases of Shri Govardhan S. Pawar and Smt. Anita G. Pawar. There are no cross appeals/cross objections filed by the assessees.
22. Before us, Ld. Departmental Representative for the Revenue narrated the above referred facts and submitted that the assessee failed in not paying taxes on the capital gains earned by the assessee in respect of sale of land at S.No.75/1. Justifying the AO's order in all respect, Ld. DR for the Revenue submitted that land purchased by the assessee in the year 2000 were never used for agricultural purposes. Referring to the original 7/12 extract, which was obtained by the AO during the assessment proceedings invoking the provisions of section 131 of the Act, Ld. DR submitted that the assessee is undisputedly the owner of the land. Referring to the 'portion of Gov. Namuna No.7A' (page 59 of the paper book), Ld. DR submitted that Shri Kuldeep Singh is the cultivator of the land during the F.Yrs. 2003-04 and 2004-05. Assessee is the cultivator in the F.Y. 2005-06. Further, bringing our attention to Gov. Namuna No.12, Ld. DR submitted that during the F.Yrs. 2003-04 to 2005-06, the agricultural land was remained 'Barren' and no crops were cultivated during the said years. Therefore, Shri Kuldeep Singh who cultivated 13 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar during the said years, and infact, the land remained 'Barren' and nothing is cultivated as per the records.
23. When the Bench asked the Ld. DR how Shri Kuldeep Singh can be the cultivator of the land when no crop is cultivated and how Shri Kuldeep Singh, the previous owner of the land can constitute cultivator in the absence of any lease deed between the landlord and Shri Kuldeep Singh, in response, the Ld. DR merely relied on the 'original extract'. Referring to the 'revised extract', Ld. DR for the Revenue submitted that Shri Kuldeep Singh continues to be the cultivator even in the revised 7/12 extract. Only change is with regard to the crops grown in the A.Yrs. 2002-03, 2003-04, 2004-05 and 2005-06. The crops grown in the said land includes Bajra, Maize and Toor. Further, relying heavily on the statement of Shri. V.B. Gaikwad, who is the owner of a neighbouring land of S.No.75/1, Ld. DR submitted that no crops were grown in the said land for the past 10 years and the assessees never used the said land for agricultural purposes. To sum up, the case of the Ld. DR is that the order of the AO should be sustained reversing the finding of the CIT(A) on this issue of use of the said land by the assessee for agricultural purposes in the immediate two A.Yrs. 2004-05 and 2005-06.
24. Further, on the aspect of use of capital gains for purchasing the any other land parcels including the ones at Gut Nos. 257 and 304, Ld. DR relied heavily on the order of the AO. AO held in his order that Gut No.73 constitutes an "Inami Land" which is not transferable and the assessee failed to furnish the proof that the said lands were duly registered in the office of the Sub-Registrar and failed to file copies of the Title/Registration deeds. Refuting the CIT(A)'s conclusion, Ld. DR argued that the claim of assessee should not be allowed on the basis of payment of consideration and the Act of registration constitutes the deciding factor and what matters is the possession of the land by the assessee. Relying on the statement of 14 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar Shri Mohan Puranpatre, Ld. DR stated that the Gut No.73 is a non-transferable land and the assessee is not in possession of the same.
25. Referring to the relief granted by the CIT(A) in respect of the alternate claim made by the assessee invoking the provisions of section 54F of the Act, it is the claim of the AO that the assessee failed to discharge the onus in furnishing the evidence in support of the assessee's claim of investment of capital gains in the residential house. Furnishing merely a certificate from Architect-cum-Engineer is not adequate. According to the Ld. DR, the CIT(A) erred in accepting the same as an evidence and thereby granting the deduction and the same is unsustainable in law.
26. Referring to the part relief granted by the CIT(A) in respect of claim of the agricultural income, Ld. DR claims that the CIT(A) has erred in granting further relief merely based on the estimation.
27. Per contra, Shri Hari Krishan, Ld. AR for the assessee essentially relied on the order of the CIT(A) and the written submissions made by him before the CIT(A). Referring to his argumentative submissions vide his letter dated 03-11- 2009, Ld. AR listed out various arguments. The major ones include that the land situated at Gut No.75/1 was used for agricultural purposes during two years prior to the date of transfer of the said land to Shri Ravindra C. Khinvasara. According to him, the assessees are the owners of the said land since 2000. The possession of the said land is with the assessee, he never leased out the land to Shri Kuldeep Singh and he actually cultivated the dry crops on the said land during the relevant years under consideration. Assessee was neither privy of the revenue documents nor is aware of the details mentioned in the revenue records especially in the 7/12 extracts. As per Ld. AR, the 7/12 extracts obtained by the AO at the back of the assessee suggest the fact that it suffers from various discrepancies. One such 15 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar discrepancy relates to the name of the owner of said lands, i.e. previous owner's name is mentioned as owner at the relevant point of time on the said extracts. It shows the fact that 7/12 extracts relied upon by the AO is not perfect in all respect. Having come to know of the discrepancy of ownership and crops, the assessee dutifully filed an application for rectification of the said mistakes in the records of revenue qua 7/12 extracts. He pleaded that revenue authorities has the powers on par with the powers to AO vide the provisions of sections 153, 263 and 264 of the Income Tax Act. Exercising the same, the revised 7/12 extracts was issued by the Revenue authorities, i.e. Talati, Mandal Office Adhikari, Dy. Collector, Collector etc., are involved in this process. AO noticed mistakes in this revised 7/12 extracts too with reference to the details of the cultivator. Previous land owner is shown as cultivator. Ld. AR questioned how it is possible? In any case, the 7/12 extracts, pre and post rectification, issued by the revenue authorities are imperfect in one form or other and the revised one is also issued after due process of Rules and the Law in force. In any case, the assessee has no role to play in the process of issuance of the said extracts. Further, the procedure of drawing 'panchanamas' is also in the best knowledge of the revenue authorities and the assessee is not the privy to the same. In any case, according to the Assessee, the income-tax authorities are not justified in questioning the assessee regarding the deficiencies in the said 7/12 extracts as well as the procedures of Panchanama etc. Rather, as per Ld. AR, the AO should take up the issue with the revenue authorities. AO cannot use such reasoning for denying the benefits of section 54B of the Act. In fact, AO summoned the Talati/Mandal Adhikari etc. u/s.131 of the Act. They confirmed the bonafide of the revised extract, the ownership, assessee as a cultivator and also crop details as appeared on revised 7/12 extracts. This is for these reasons the assessee requested for confirming the order of the CIT(A) and reject the conclusions of the AO and Ld. DR for the Revenue.
16
ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar
28. If the income-tax authorities are not satisfied with the statements of Talati and Mandal Adhikari, the officer should have taken the proceedings forwarded to the District Collector and other senior officers etc., in the same line of duty. As per the assessee, without doing the same, terminating the proceedings prematurely and penalising the assessee, as done by the AO, in the assessee's case, is unsustainable in law. The facts mentioned as per the revised 7/12 extracts confirm the basic fact that the said land belongs to the assessee under consideration and was under cultivation during the two years prior to the date of sale of the said land at Gut No.75/1. Appearance of the name of Shri Kuldeep Singh (the earlier landlord) constitutes a mistake. Neither the Revenue authorities nor the AO has done anything to correct the said patent mistake. Therefore, as per the Ld. AR for the assessee, the Agricultural income earned by the assessee in the F.Yrs. 2003-04 and 2004-05 is out of his Agricultural activities on the land at Survey No.75/1. Ld. AR relied on the Agricultural income disclosed in the returns of income for the relevant A.Yrs. 2004-05 and 2005-06. In support, he brought our attention to the disclosed particulars of agricultural income out of the said land as shown in the 'computation of income' appended to the returns of income for the relevant assessment years.
29. Considering the above narrated summarised form of the arguments, it is the prayer of the Ld. Counsel for the assessee that the said land located at Gut No.75/1 which is sold by the assessee to Shri R.C. Khinvasara, constitutes an agricultural land used by the assessee during the relevant years specified in the provisions of section 54B of the I.T. Act, 1961. The fact of growing the dry crops, i.e. Maize, Bajra etc. are the facts as supported by the revised 7/12 extracts.
30. Further, relying to the DR's argument that the land at S.No.75/1 is used for real estate purpose, Ld. AR submitted that the end use of the land by the 17 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar subsequent buyers for non agricultural purposes will have no adverse impact on the assessee's claim of deduction u/s.54B of the Act. What is relevant is the nature of land at the relevant point of time and not otherwise. This is for the reason that the section 54B specifies that, before the sale of the land, the land should be an agricultural land used by the assessee or his parents and whatever happens after the transaction of sale is not a relevant factor for deciding the nature of the land. The fact of CIT(A) calling for a remand report on the above said submissions wherein the AO relied on the judgment of Hon'ble Gujarat High Court in the case of CIT Vs. Siddharth J. Desai reported in 139 ITR 628 which considered the 13 points as determined by the Supreme Court is discussed in his order before holding that the said land was used for Agricultural purposes. The assessee distinguished the said judgment and filed a counter comments in this regard before the AO vide his letter dated 27-03-2013.
31. Regarding the purchase of land and appropriating of the capital gains in Gut Nos. 73, 257 and 304, Ld. Counsel for the assessee submitted that there is no sustainable dispute about payment of Rs. 1.5 crores to Shri Sudhakar B. Gore. The payment includes cheque payment partly and balance in cash. Regarding the purchase of Gut No.257, the fact of payment of Rs.4.5 lakhs to Shri Shrichand Harichand Rathod out of the total consideration of Rs.56,10,000/- is also undisputed. The affidavits given by Shri Sudhakar B. Gore and Shri Shrichand Harichand Rathod support the same. Thirdly, the payment of Rs.1.50 crores in connection with Gut No. 304 is also undisputed.
32. Relying on various decisions relating to the requirement of registration qua the payment of consideration, Ld. Counsel for the assessee relied on jurisdictional High Court in the case of CIT Vs. Dr. Laxmichand Narpal Nagda 211 ITR 804 as well as the judgment of Delhi High Court in the case of Balraj 241 ITR 22 (Del). 18
ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar Further, he also relied on the Tribunal decisions in the case of Chamanlal Thakurdas 39 ITR 159 (Ahd.). T.Shivekumar 158 ITD 329 (Bang). According to these decisions, registration of property in the name of the assessee is not a pre- condition because of the word 'purchase' as used in section 54B of the Act, a beneficial provisions, is not used in a sense of legal transfer and therefore, the legal title within the stipulated period is not a condition precedent. Ld. Counsel for the assessee also reasoned that the AO failed to enforce the attendance of Shri Sudhakar B. Gore and Shri Shrichand Harichand Rathod for cross verifying the facts of the affidavits. Further, on the issue of not giving the benefit of cross examination with Shri V.B. Gaikwad, Ld. Counsel for the assessee relied on various decisions such as Krishanchand challaram 125 ITR 713 (SC) on the issue of non- admissibility of evidence which is not confronted to the assessee.
33. Finally, it is the summary of the Ld. Counsel for the assessee that the order of the CIT(A) is fair and reasonable and it should not be disturbed so far as the use of the land for agricultural purposes by the assessee for the years under consideration. Contents of Para Nos. 6 to 6.2 are relevant and the same are extracted as under :
"6. I have carefully considered the facts of the case and the rival contentions. To sum up the first five contentions made by the A.O. as stated above, in a nutshell the A.O. has questioned the evidentiary value of the revised 7/12 extracts submitted by the appellant by raising procedural discrepancies in the legal process to rectify them. The A.O has questioned the reason for the Tahasildar to reconsider the 7/12 extracts after a lapse of 8 years, further questioning the credibility of the panchas. Also, the A.O has asked as to how is it possible for a lay man i.e the pancha (witness) to recall whether a certain land was cultivated eight years ago. Stating the above reasons, the A.O. has stated the same to be an afterthought attempt to convert the false into truth.
6.1 In this regard, the explanation given by the appellant is duly considered. The appellant has stated that the said land was not under cultivation before purchase of the same by the appellant. Subsequent to the purchase by the appellant similar entries were continued by the revenue authorities by mistake in the subsequent years without verifying the actual facts. However, the mistake went unnoticed by the appellant as he was not in need of the 7/12 extracts. The mistake was noticed by the appellant only when the appellant was confronted with the 7/12 extracts directly obtained by the A.O. Therefore, he made the necessary application with the 19 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar revenue authorities to rectify the said mistake. On perusal of the records it has been noticed that in the original 7/12 extracts collected by the A.O. the name of the owner is stated to be Kuldeepsingh i.e the previous owner of the said land. This clearly goes to explain that the said 7/12 extracts obtained by the A.O. were not updated. Thus, the A.O. has wrongly made the assessment placing reliance on the 7/12 extracts which were not updated. Further, it is important to note that when the A.O. is doubtful about the credibility of revised 7/12 extracts produced by the appellant he could have only confirmed whether the same are genuine or fake from the 'Tahasildar' who directed the rectification. It is in no case the jurisdiction of the Ld. A.O. to check whether proper procedures have been followed by the Land Revenue Authorities while issuing the said documents and he cannot proceed to judge the genuineness and correctness of the procedures followed therein. It may be noted that in every legislature there is a provision for rectification of order already passed and similarly, even the Revenue Act contains express provisions for correction of mistakes in its records. Also, it is a normal practice to rectify the original orders in the revenue department. Therefore the question raised by the A.O. such as "what made the Tahasildar to reconsider his stand of 8 years and for what purpose? Or "how is it humanly possible for a lay man to remember certain specific crops were grown on the said land that too when such land and income arising therefrom does not belong to the lay man?" would go directly to question the laws made by the constitution. Thus, the appellant in this case has done nothing wrong by following the procedure laid down in the laws formed in this regard to obtain the said documents. In view of the above facts, the corrected 7/12 extracts would rightly serve as an evidence in determining the use of the said land.
6.2 As regards the statement recorded by the Inspector of a person residing at an area nearby the location of the land in consideration, the decision relied on by the appellant delivered by the Hon'ble Delhi High Court in Jindal Vegetable case squarely applied to the case of the appellant."
Original Income-Tax returns - Claim of Agricultural income in A.Yrs. 2004-05 and 2005-06
34. Further, referring to the claim of agricultural activity in the A.Ys. 2004-05 and 2005-06, Ld. Counsel for the assessee brought our attention to page 478 of the paper book and copy of Form 2D for the A.Y. 2004-05 and submitted that the assessee filed the return of income u/s.139(1) of the Act on 22-02-2006 with ITO, Ward-2(2), Aurangabad vide Acknowledgement No. 0221011573. Referring to Item No.24 relating to agricultural income (for rate purposes), Ld. Counsel submitted that an amount of Rs.9,14,450/- was claimed as agricultural income earned out of the agricultural lands held by him which includes 10 Acres 28 Guntas at S.No.75/1. Similar claim is evident from the return of income for the A.Y. 2005-06 also. Bringing our attention to Item No.24 of the return relating to Agricultural income for the year, Ld. Counsel submitted that an amount of Rs.10,87,750/- was claimed as 20 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar agricultural income (page 480 and 481 are relevant). The claims of the assessees were accepted by the Revenue and therefore it cannot be said that the assessee has not earned any agricultural income or the said lands were not put to use by the assessee for agricultural activities during the said A.Yrs. 2004-05 and 2005-06. Similar claims were made in the case of his wife Mrs. Anita G. Pawar for the said assessment years and the said claims were duly accepted by the Revenue without any disturbance. Further, the assessee also relied on various evidences gathered by the Department during the subsequent 132 operation on the assessee. It is the claim of AR that the said evidences include evidences of payment of consideration of Shri Sudhakar B. Gore.
DECISIONS OF THE TRIBUNAL :
35. We have so far narrated the general facts of the case, facts relating to the various aspects of the assessees, claim of deduction of deduction u/s.54B of the Act, an alternate claim u/s.54F of the Act, and finally, the allowability of claims of agricultural income. We have also dealt with various arguments and case laws relied by both the parties on these issues. We shall take up each of these issues in the succeeding paragraphs. To start with, the major issue of claims of deduction u/s.54B of the Act involves various aspects and the same are taken up as under :
A. Whether assessees are the owners : Assessees purchased the land at Survey no 75/1 in the year 2000 along with his wife with 50% share in it. Shri Kuldeep Singh was the previous owner of these lands. In the year 2006, Assessee and his wife sold the said land which gave rise to the impugned capital gains. These are undisputed facts. Therefore, the ownership of the property is undisputed and the Assessee along with his wife are the owners of it. Of course, the entries in the revenue's records, which shows Shri Kuldeep Singh as owner or cultivator, created unnecessary suspicion in the mind of the AO, who took an adverse view in the 21 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar matter and against the assessees. These observations demonstrate, how poorly and casually, the revenue's records are maintained by the revenue's authorities of the State Government. Otherwise, we perused the title deeds of land at S.No.75/1 and the correction deed and found the name of the assessees appeared in the title deeds. Therefore, the ownership of the lands vests with assessee and his wife only.
B. Whether assessees are the cultivators : The said lands did not have the history of the wet lands as per records. They are known for dry crops only.
Revenue's records evidences the same. It is the claim of the assessee before us that certain dry crops were grown in the said lands by themselves till the lands were eventually sold in 2006 to Khinvasara/Kasliwals. AO did not accept this claim in view of the recorded entries on 7/12 extracts, which depict Shri Kuldeep Singh as the cultivator. How it is possible? It has never been the case of the Assessee that the said lands were leased out to Shri Kuldeep Singh, the previous landlord, and, in that case, there is possibility that Shri Kuldeep Singh can be the cultivator of lands at S.No.75/1. We are unable to understand how Shri Kuldeep Singh can be the cultivator when he is neither a lessee nor the owner of the land. Otherwise, the previous owner cannot be the cultivator after he sells the lands to the assessees.
Therefore, the revenue records, which contains his name as the cultivator, has to be erroneous. On this aspect, on the said entries in the extracts, the explanation of the Assessee is that the revised 7/12 extracts merely contains the rectification done in the 12 portion (details of crops) of the said extract and not in the 7 or 7A portions of the 7/12 extracts. In any case, as argued by the Ld. AR, the assessee has no role in maintenance of those revenue's records. Further, As per Ld. AR for Assessees, the previous landlord cannot be the cultivator of lands at S.No.75/1 when the said land was conclusively purchased by the assessees in year 2000 and the 22 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar assessee has been possession of the lands since the year 2000. As per Ld. AR, the Assessees never leased the said lands to Shri Kuldeep Singh for growing crops. According to the Ld. AR, it was the assessees who grew dry crops in those lands and used the same for agricultural purposes during the A.Ys 2004-05 and 2005-06. The fact of earning Agricultural Income and declaring the same in the Return of Income by both the wife and husband were evidenced and the copies are placed in the paper book. In any case, it is not the case of Revenue that the AO is possession of any direct credible incriminating evidence to demonstrate that the Shri Kuldeep Singh is the cultivator apart from the said controversial 7/12 extracts. We have already discussed that the 7/12 extracts are the creation of Revenue Officers/Talati etc., and the assessees have no role in maintenance of the records. Considering the fact lands at S.No. 75/1 is the possession of the Assessee since the year 2000 along with the undisputed fact that the assessees never leased the lands to Shri Kuldeep Singh, we are of the opinion that all is not well with records maintained by the MRO/Talati etc., It is likely that the Shri Kuldeep Singh, being the previous owner-cum-cultivator on records, continues to be shown by the Revenue authorities as the cultivator erroneously even after he sold the lands to the assessees. Otherwise, it is not possible that Shri Kuldeepsingh cultivated the land of the assessee legally. Thus, from this point of view, the said records of the revenue are not fool-proof so far as the 7/12 extracts of lands at S.No. 75/1, are concerned. Therefore, it is not possible that the Assessees are not the cultivators at the relevant point of time and, therefore, Shri Kuldeep Singh is the cultivator in the said lands. Hence, we dismiss the conclusions drawn by the AO on this issue and agree with the CIT(A) on this issue. As such, there was action u/s.132 of the Act on the assessees and it did not result in any incriminating material against the assessees on this claim u/s.54B of the Act.
C. Whether there was agricultural activity on the said land in the 2 A.Ys prior to the date of transfer of lands in 2006: The original 7/12 extract gathered by the AO indicate 'barrenness' of the lands at S.No.75/1 and therefore, according to AO, the assessees would not have grown crops in A.Yrs 2004-05 and 2005-06. However, assessees filed revised 7/12 extract, which were issued by the revenue authorities after incorporating corrections and on complying with the due 23 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar process of rules relating to rectification. This revised one indicates growing of dry crops such as Maize, Bajra etc., in the AYs 2004-05 and 2005-06. Of course, the revenue picks up holes in the said 7/12 extracts too by stating that there are some problems with the process of drawing panchanama, panchas etc. Considering detailed written submissions given by the Ld.AR before us read with the judicial pronouncements on this aspect, in our view, the AO has exceeded his jurisdiction in suspecting the 'revised extract' which has the basis of the records maintained by the State Govt. It is on record that AO failed to continue to investigate the matter by taking it up with the District Collector to bring the issue to the logical conclusion.
Therefore, while rejecting the claim of assessees, the reliance of the AO entirely on the said 7/12 extracts, which suffer from patent imperfections. In our view, the AO has unfairly denied the benefits of deduction u/s 54B of the Act and the same is not sustainable. Further, it is the case of the assessees, that both assessees filed their returns of income u/s.139 of the Act declaring the Agricultural Income in both the assessment years and the AOs accepted the said claims of the assessees.
However, the claim of the assessee regarding earning of Agricultural income from the Gut No.75/1 was the subject matter of litigation before the CIT(A) in connection with the reassessments made u/s.143(3) read with section 153A of the Act. Details are discussed as under.
36. There was action u/s.132 of the Act on the assessee at later years. Further, we find that the Agricultural income from Gut no 75/1 was also subject matter of the investigation by the AO's during the reassessment proceedings u/s.143(3) r.w.s. 153A of the Act. In these returns too, assessee made a claim of Agricultural Income. However, the AO disallowed the claim of exemption in respect of lands at Gut No.75/1. In the First Appellate proceedings, the CIT(A) gave clear cut direction in his order regarding the Agricultural income from Gut.No. 75/1 in particular and in favour of allowing the claim of Agricultural lands are the said agricultural lands for 24 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar A.Ys 2004-05 and 2005-06. Regarding the aforementioned reporting of agricultural income in AYs 2004-05 and 2005-06 in the regular returns and availability of evidences in support of sale of the transactions of Agricultural produce, we find that the Assessee filed the returns of income u/s 139(1) of the Act before the due date specified in the state and the contents of the pages 478 to 489 of the Paper Book are relevant. Details relating to the date of filing, Acknowledgment Numbers were already mentioned in the preceding paragraphs of this order. The said original returns and the appended computation of income for A.Yrs 2004-05 and 2005-06 clearly indicate the fact of reporting of the Agricultural income.
37. Relevant extracts from the said documents (at page 478 to 489 of the Paper Book) A.Ys 2004-05 and 2005-06 are inserted as under:
Extracts from Original the I.T. Returns filed u/s.139 of the Act for the A.Y's 2004-05 and 2005-06:
A] Extract from the Original Return of Income (page 478 to 489 of the Paper Book) for the A.Y 2004-05. (Shri Pawar Govardhan Shamrao) "1. Name : PAWAR GOVARDHAN SHAMRAO
2. Father's Name : SHAMRAO PAWAR
3. Address : PLOT NO.3.
BANJARA COLONY, AURANGABAD- Phone :_
4. Permanent A/c No. : ABFPP0880K 5. Birth Date : 26/07/1964
6. Status : Individual (01) 7. Resident
8. Ward : 2(2) 9. Sex : Male
10. Income for the prev.year 1.4.2003-31.3.20054 11. Assessment Yr : 2004-2005
13. Details of Bank account (for refund cases) 12. Return : Original ...................
............................
...................................
24. AGRICULTURAL INCOME Rs.914450 "
B] Extract from the Original Return of Income (page 480 to 481 of the Paper Book) filed u/s.139 of the Act for the A.Y 2005-06. (Shri Pawar Govardhan Shamrao) "1. Name : PAWAR GOVARDHAN SHAMRAO
2. Father's Name : SHAMRAO PAWAR
3. Address : PLOT NO.3.
BANJARA COLONY, AURANGABAD- Phone :
4. Permanent A/c No. : ABFPP0880K 5. Birth Date : 26/07/1964
6. Status : Individual (01) 7. Resident
8. Ward : 2(2) 9. Sex : Male
10. Income for the prev.year 1.4.2004-31.3.2005 11. Assessment Yr : 2005-2006
13. Details of Bank account (for refund cases) 12. Return : Original 25 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar ...................
............................
...................................
24. AGRICULTURAL INCOME Rs.1087750 "
C] Extract from the Original Return of Income (page 483 to 484 of the Paper Book) filed u/s.139 of the Act for the A.Y 2004-05. (Mrs.Anita Govardhan Pawar)
1. Name : Mrs. ANITA GOVARDHAN PAWAR
2. Father's Name :
3. Address : PLOT NO.3.
BANJARA COLONY, AURANGABAD- Phone :
4. Permanent A/c No. : AKTPP0531C_ 5. Birth Date : 15/10/1969
6. Status : Individual (01) 7. Resident
8. Ward : 2(2) 9. Sex : Female
10. Income for the prev.year 1.4.2003-31.3.2004 11. Assessment Yr : 2004-2005
13. Details of Bank account (for refund cases) 12. Return : Original ...................
............................
...................................
24. Add : Agricultural Income (For Rate Purposes) Rs.979450 "
D] Extract from the Original Return of Income (page 485 to 486 of the Paper Book) filed u/s.139 of the Act for the A.Y 2005-06. (Mrs.Anita Govardhan Pawar)
1. Name : MRS.ANITA GOVARDHAN PAWAR
2. Father's Name :
3. Address : PLOT NO.3.
BANJARA COLONY, AURANGABAD- Phone :
4. Permanent A/c No. : AKTPP0531C 5. Birth Date : 15/10/1969
6. Status : Individual (01) 7. Resident
8. Ward : 2(2) 9. Sex : Female
10. Income for the prev.year 1.4.2004-31.3.2005 11. Assessment Yr : 2005-2006
13. Details of Bank account (for refund cases) 12. Return : Original ...................
............................
...................................
24. Add : Agricultural Income (For Rate Purposes) Rs.923250 "
38. We have extracted the relevant item No. 24 relating to Agricultural income in the Return of Income filed originally u/s.139 of the Act for the A.Yrs 2004-05 and 2005-06 i.e. 2 years prior to the date of transfer of lands. Now, we shall proceed to extract the relevant paragraph from the orders of the CIT(A) which contains the final finding on the issues of Agricultural Income with special reference Gut No.75/1. These orders have genesis in the reassessment orders of AO u/s.143(3) r.w.s. 153A of the Act. In these orders, for both the years, CIT(A) held that the 26 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar Gut No.75/1 was used by assessee for Agricultural purpose and assessee earned Agricultural income. This finding has attained finality technically as there are no appeals by the Revenue due to low tax effect. Relevant extracts are typed as follows :
Extract from the order of the CIT(A) (Page 10) for the A.Y. 2004-05 dated: 11/06/2012 :
"6.5.3 ...............................
In view of the above facts, I am of the considered view that the A.O. is not justified in holding that the said land was not used for agricultural purpose for the preceding two years.
6.5.4 Hence, the contention of the A.O. that the agricultural income is to be calculated only in respect of Gat. No.256 & 276 is incorrect and hence the agricultural income in respect of Gat no 75/1 is also to be considered. Extract from the order of the CIT(A) (Page 9 & 10) for the A.Y. 2005-06 dated: 11/06/2012 :
6.5.3 ................................
However, the case in hand relates to allowability of exemption u/s 54B. Hence, the case relied on by the Hon'ble A.O. is clearly on distinguishable grounds. In view of the above facts, I am of the considered view that the A.O. is not justified in holding that the said land was not used for agricultural purpose for the preceding two years. 6.5.4 Hence, the contention of the A.O. that the agricultural income is to be calculated only in respect of Gut No.256 & 276 is incorrect and hence the agricultural income in respect of Gut No.75/1 is also to considered."
39. Ld.AR submitted that the above evidences by way of the Returns of Income filed u/s.139 of the Act and the orders of CIT(A) for A.Ys 2004-05 and 2005-06, support the claims of the Assessee that the Assessee used the lands and earned Agricultural income in the relevant A.Ys.
40. Further, we find Shri Ajay Modi, Ld.DR fairly submitted that the Revenue accepted the orders of the AO in the regular assessment as well as the orders of CIT(A) for both years relatable to the reassessments u/s.143(3) r.w.s. 153A of the Act. Thus, the claim agricultural income for both A.Yrs 2004-05 and 2005-06 has reached the finality and it is in favour of the Assessees. Hence, we are of the view that the Assessee used the lands at S.No.75/1 for Agricultural purpose and 27 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar Agricultural income out of Gut No.75/1 too out of sale of the Agriculture produce of the dry crops grown by them.
41. To sum up, the assessees claims, that they are the owners, cultivators and earned Agricultural Income, are acceptable. We affirm the order of the CIT(A) on this.
D. Whether assessees purchased any other agricultural lands as per section 54B of the Act : This issue relates to the condition of 'purchase of any other agricultural land' within a period of two years after the date of transfer of lands, as specified in the provisions of section 54B of the Act. On this issue, the dispute between the parties revolves around the act of 'registration of Gut Numbers 73, 257 and 304' in the Sub Registrar office and furnishing of the title deeds to AO. The case of the Revenue is that, in the absence of such Registration of the assets and the title deeds, the claim of purchase of the said lands, is incomplete and therefore, the claim of purchase of lands is not allowable. In turn, the assessee is not entitled to the deduction u/s.54B of the Act. Per contra, the case of the Assessee is different. When the substantial payment purchase consideration is made to the seller and when the Assessees are in possession of the said purchased lands, the same satisfies the legal needs of purchase transactions. In this regard, Assessee relied on the case laws and the reasoning given by the CIT(A) in his order. For the sake of completeness, we proceed to extract the same here as under:
A] Regarding Gut No.73, finding of the CIT(A) reads as under: (Page 27; Para 8.3.4) " ........................ It is also settled law that beneficial provisions granting deduction/exemption to the appellant to be construed liberally. This proposition of law is supported by following decisions.
(i) Bajaj Tempo Vs. CIT(1992) 196 ITR 188 (SC)
(ii) CIT Vs. Sultan & Sons Rice Mills (2005) 272 ITR 181 (All) 28 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar
(iii) CIT Vs. N.P.Mathew & Ors (2006) 280 ITR 44 (Ker)
(iv) P.R.Prabhakar Vs. CIT (2006) 284 ITR 548 (SC)
(v) CIT Vs. Strawboard Manufacturing Co.Ltd. (1989) 177 ITR 431 In view of the above facts and discussion, I am of the considered view that the appellant is eligible for deduction u/s 54B in respect of amount paid towards purchase of land at Gut No.73. The share of the appellant in payment of Rs.1,54,75,000/- is 50%. The A.O. is, therefore, directed to allow deduction of Rs.77,37,500/- u/s 54B in respect of land at Gut No.73."
42. Further, we find the contents of Para 7 on Page 29 of the order of First Appellate Authority is relevant and the same is extracted here as under:
"(7) ........................ The beneficial provisions are to be construed liberally. In support of this proposition the appellant has relied on the various decisions pointed out in submission in respect of deduction claimed for purchase of land at Gut No.73"
B] Extract from CIT(A) Page 29; Para 9.2 reg. Gut No.257.
"9.2 I have carefully considered the facts of the case and the rival contentions. The issue to be decided to determine the allowability of deduction u/s 54B in respect of land at Gut No.257 is as under -
In view of the above facts and discussion, I am of the considered view that the appellant is eligible for deduction u/s 54B in respect of land at Gut No.257 in respect of consideration paid amounting to Rs.33,66,000/- in which the appellant's share is 25%. The stamp duty & Registry Expenses are Rs.1,34,640/-. The A.O. is accordingly directed to allow deduction u/s 54B at Rs.8,75,160/- to the appellant in respect of land at Gut No.257."
43. CIT(A) analysed the investment of gains in the new assets/lands and also the legal precedents to come to the conclusion that the investments in the said Guts, constitutes "purchase of any other land for being used for Agricultural Purpose." In the present appeals, the Revenue has a grievance against the order of the CIT(A) only with regard to the Gut No.73 and not the other Gut Nos. 257 and
304. 29 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar
44. Therefore, focusing on the purchase of Gut No.73, it is the legal requirement that the assessee must purchase the Gut No.73. Both assessees, with 50% share, paid the total consideration of Rs.1,54,75,000/- and obtained the possession of the land at Gut No.73. From the legal point of view, the assessees purchased the said lands. Act of registration and the furnishing of title deeds is a matter of documentation and it is matter of time. Therefore, the assessee should be held as purchased the land at Gut No.73 for the purpose of section 54B of the Act. On this reasoning, Ld.CIT(A) allowed the arguments of the assessees. We agree with the same.
45. From the discussion given above, it is requirement of the law of section 54B of the Act that the Assessees should have utilized the gains for purchase of any other lands for being used for agricultural purposes. On all these conditions, the CIT(A) examined and held that the assessees met all the conditions legally. In our view, the order of CIT(A) constitutes a possible view and the same constitutes a fair and reasonable order and therefore we affirm the same. Accordingly, the Ground Nos. 1 to 3 raised by the Revenue in cases of both the Assessees are dismissed.
46. For the detailed discussion and the analysis of the fact, we find that the assessees have complied with the conditions specified in the section 54B of the Act, we are of the opinion that the assessees are entitled to claim of deduction u/s.54B of the Act.
E. Allowability of alternate claim u/s.54F of the Act: Section 54F of the Act relates to "Capital Gains on this transfer of certain Current Assets not to be changed in case of investment in the Residential House." Assessees raised this ground as an alternative ground for the first time before the AO. Assessee claimed investing Rs.55,42,310/- of the gain in a residential house and claimed deduction u/s.54F of the Act. The claim is made as an alternative ground to claim u/s.54B of the Act. 30
ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar However, AO dismissed the same on the ground of Assessee's failure to discharge onus with respect to furnishing of evidences in support of investment of gains in construction of the residential house. Assessee filed a certificate from Architect only. During the assessment proceedings, AO rejected the said certificate of the Architect cum builder of the said house. However, CIT(A) allowed the claim of the assessee as per his discussion in page 10 of his order. Before us, the AR relied on the respective orders of the AO or the CIT(A) as the case may be. On hearing the parties, we find the adjudication of this issue becomes a necessity only when the relief under the provisions relating to section 54B of the Act, is denied.
47. Therefore, considering the relief granted by us for the detailed reasons given in the paragraphs above, we are of the opinion that the adjudication this ground constitute an academic exercise only. Therefore, we proceed to dismiss the same as an academic. Accordingly, Ground No.4 of the Revenue is dismissed as academic.
48. Ground Nos.5 and 6 of Revenue in the case of Shri Govardhan S. Pawar and Ground Nos. 4 and 5 of Revenue in the case of Smt. Anita G. Pawar relates to the extent of Agricultural income allowable to the assessees.
49. Briefly stated relevant facts from the file of Shri Govardhan Shamrao Pawar includes that an amount of Rs.9.5 lakhs is claimed as an Agricultural Income out of his land holding. As discussed in the preceding paragraphs of this order, AO estimated the Agricultural Income and expenditure in case of Shri Govardhan Shamrao Pawar before allowing the Net Agricultural Income of Rs.4,46,358/- out of total claim of Rs.9.50 lakhs. However, in the first appellate proceedings, the CIT(A) held that the disallowance of 20% of Rs.9.56 lakhs in the case of Shri Govardhan Shamrao Pawar and 20% of 8.5 lakhs in case of Smt. Anita Govardhan Pawar meet the ends of justice. Thus, he allowed the 80% of the claim as an allowable 31 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar Agricultural Income in both the cases. Thus, the Revenue is aggrieved and raised the said grounds before us.
50. Before us, Ld.DR relied heavily on the neat and the systematic calculations and the estimations of the AO in both the cases. Per contra, the Ld.AR relied on the order of the CIT(A).
51. We heard both the parties and perused the documents/order placed before involving both the assessees on this issue of extent of Agricultural income. For adjudicating the correctness of the extent of Agricultural income, we find the need of extracting the facts and reasoning given by the CIT(A) in their order :
52. To start with, relevant para 11 of the assessment order contains the facts. For the sake of completeness, the said paragraphs are extracted as under:
"11. Income from Agricultural activity:-
The assessee for the year under consideration has shown Agricultural income at Rs.9,50,000/-. In this connection, it is to point out that alongwith the return of income, no supportings were enclosed in respect of agricultural income. During the course of proceedings, the 7/12 extracts and receipts had been furnished. The details are tabulated as under:
Sr.No Gut No. Owner of land Area, Crops cultivated
(H-R)
1 289. i. Govardhan S.Pawar 0.66 Not cultivated
ii. Tinku Govardhan Pawar
2 246 i. Abhijit Govardhan Pawar m/g 1.70 Bajari
Anitha. Pawar
ii. Akash Govardhan Pawar M/g
anith & G.S.Pawar
3 236 Govardhan S.Pawar 2.53 1.60 Cotton
1.00 Bajri
4 288 Tinku 0.66 Bajri
m/G.G.S.Pawar
5 256 Govardhan S.Pawar 3.2 2.00 Bajri,
1.25 Wheat
6 251 Govardhan S.Pawar 1.63 0.6 Tuwar,
Anita G.Pawar 1.03 Makka
7 253 Govardhan S.Pawar 1.67 Bajri
Anita G.Pawar
8 255 Govardhan S.Pawar 4.2 2.0 Bajri, 2.0
Anita G.Pawar Jawar, 0.2
Tuwar
9 199 Govardhan S.Pawar 7.00A Not cultivated
32
ITA Nos.1780 & 1784/PUN/2012
Shri Govardhan S. Pawar &
Smt. Anita G. Pawar
12. The claim of agricultural income on the strength of following a receipt had been put forth.
Sr.n Bill Dt.of sale To whom sold item Item Amount of
o. No/.Receipt Sold. sale
No
01. 1520 26-12-2005 Tirupati Traders, Onion Rs. 1,510-71
Nagpur
02. 492 05-12-2005 Hussain & Co - Rs. 5,907-50
03. 434/. 06-01-2006 Kewalram & Sons Onion Rs. 30,494-52
Ngpur
04. 5732 Kapse & Sons,A'bad -- Rs. 224-00
05. -do- 23-08-2005 Kapse & Sons A'bad -- Rs. 5,581-00
06. -- 04-10-2005 Rambhau K.Perka r Adrak Rs. 2,715-00
07. -- 27-09-2005 ----do---- Adrak Rs. 6,130-00
08. -- 07-10-2005 ----do---- Adrak Rs. 1630-00
09. -- 23-09-2005 ----do---- Adrak Rs. 8,010-00
10. 023/8-82 03-01-2006 Market Committee Tuwar Rs. 10,998-81
11. 069/4-30 05-01-2006 ---do--- Tuwar Rs. 5,180-81
12. 049/5-03 02-01-2006 ---do--- Wheet/ Rs. 8,193-50
Tuwar
13. 098/7-98 02-01-2006 ---do--- Tuwar Rs. 10,346-64
14. 011/44-03 19-02-2006 ---do--- Tuwar Rs. 1,23,094-08
15. 862/043 01-02-2006 R.RajendraKumar Bajri Rs. 95,589-95
Basha & Sons
16. 986/042 19-12-2005 ---do--- Makka Rs. 57,431-42
17. 862/039 08-05-2005 ---do--- Jawari 72,261-05
18. 896/043 23-12-2005 ---do--- Matki/ 22,575-84
Udid
19. 628/60 04-04-2006 ---do--- Tuwar 1,27,269-01
Total amount of Sale 5,95,143-84
As the assessee had produced agricultural sale receipts worth Rs.5,95,143/-, the gross agricultural income is being adopted to that extent. The expenditure required to earn such agricultural income is being estimated @ 25% of the gross receipts. Subject to the above, the claim of agricultural income is being computed as under:
Gross agricultural receipts filed as calculated above Rs. 5,95,143/-
Less: Deduction for expenses @ 25% Rs. 1,48,785/-
------------------
Net Agricultural income Rs.4,46,358/-
------------------ "
The AO relied on the details of the specific lands and also on the receipts of sale of Agricultural produce before arriving at the said sum of Rs.4,46,358/-.
53. Further, during the First Appellate Proceedings, the CIT(A) held the need of giving part relief to the assessee giving the reasoning in his operational paragraph 33 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar No. 11.3 of the CIT(A) order in the case of Shri Govardhan Shamrao Pawar. For the sake of completeness the same is extracted as under :
"11.3 I have carefully considered the facts of the case and the rival contentions. On perusal of the same, it has been observed that the appellant has claimed turnover of Rs.14,01,212/- in respect of agricultural produce whereas the A.O. has considered the turnover only to the extent of sale receipts produced of Rs.5,95,143/- completely ignoring the sales made in the open market. It has been observed that as per the common trade practice, it is not practicable to obtain sale receipts in respect of all agricultural transactions. While estimating the turnover, the A.O. has not considered the land holding evidenced by the 7/12 extracts filed. The A.O. has pointed out that the appellant has himself admitted that agricultural income of the family is Rs.15 lacs p.a. In this respect, it has been noticed that agricultural income declared by the appellant and his spouse is Rs.9,50,000/- and Rs.8,50,0008/- respectively aggregating to Rs.18,00,000/-. Hence, considering the above facts and in order to meet the ends of justice, the agricultural income of the appellant to the extent of Rs.1,90,000/- i.e. 20% of agricultural income declared, is treated as income from other sources. The appellant gets relief of Rs.3,13,642/-. Thus, Ground No.2 is partly allowed."
54. From the above extracts, it is evident, the AO examined the Gut wise details and also the Agricultural Income on the strength of the receipts available with the AO. He, accordingly arrived at a scientific output of Rs.4,46,358/- as net Agricultural Income out of his exercise and the balance of (Rs.9,05,000/- - Rs.4,46,358/-) is added as income of the assessee.
55. On the other hand, the CIT(A) applied flat rate of 20% in both case of Shri Govardhan S. Pawar and Smt. Anita G. Pawar without having any basis. He summarily disallowed only a sum of rupees i.e. 20% of the 9.5 lakhs in the case of Shri Govardhan Shamrao Pawar and i.e. 20% of the 8.5 lakhs in the case Smt. Anita Govardhan Pawar. In our view, the order of the AO is more analytical and credible on this issue and it has a basis of documents in the form of agricultural receipts. Therefore, we are of the view that the orders of the AO in both the cases on this issue is fair and reasonable. To that extent, the orders of the CIT(A) stand reversed on this issue of Agricultural income for the reasons given above. Accordingly, Ground Nos. 5 and 6 of Revenue in the case of Shri Govardhan 34 ITA Nos.1780 & 1784/PUN/2012 Shri Govardhan S. Pawar & Smt. Anita G. Pawar Shamrao Pawar and Ground Nos. 4 and 5 of Revenue in the case of Mrs.Anita Govardhan Pawar stands partly allowed.
56. In the result, both the appeals of Revenue for two different Assessees are partly allowed.
Order pronounced in the open court on this 11th day of October, 2017.
Sd/- Sd/-
(VIKAS AWASTHY) (D. KARUNAKARA RAO)
याियक सद य /JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER
पुणे Pune;
दनांक Dated : 11th October, 2017.
सतीश
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. The CIT(A), Aurangabad
4. CIT, Aurangabad
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, "B Bench"
Pune;
6. गाड फाईल / Guard file.
आदेशानुसार BY ORDER स
/ ,
स यािपत ित//True Copy//
//True Copy// Senior Private Secretary
आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune