TMI Blog2018 (10) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... eads to an irrebutable conclusion that, under such circumstances, a remedy under Article 226 of the Constitution of India is always available to the aggrieved party to challenge the order made under Section 264. Thus reject the above objection made by the Revenue on the maintainability of the writ petition. It is further contended that the very revision itself was not maintainable before the first respondent and consequently, the order passed by the first respondent cannot be challenged by way of the present writ petition. I have already pointed out that the very issue against the maintainability of the revision before the first respondent, having not been raised by the Revenue before the first respondent, the same cannot be raised now before this Court as first time. Nature of land - whether the lands in question are agricultural or non agricultural lands? - Held that:- he first respondent, first of all, has not discussed the above aspect in detail except extracting the particular clause in his order and thereafter, to decide only by saying that the case of the assessee is rejected. As rightly pointed out by the learned counsel for the petitioner, the character of the proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer to treat the lands in question as non-agricultural in nature and therefore, as capital assets, in the hands of the assessee, exigible to capital gain tax. 3.The following are the facts and circumstances, as projected by the petitioner, which have lead to filing of the present writ petition: The petitioner is an individual engaged in the business of real estate. He owned various agricultural lands and was gaining agricultural income during the financial year preceding the relevant assessment year 2008-09. The petitioner and one Anoop Bora jointly purchased 13.91 acres of agricultural land from the Official Liquidator, Madras High Court on 11.05.2005 by public auction. They also purchased another extent of agricultural land measuring 13.14 acres during the same year. In 2006-07, they purchased further extent of 3.88 acres in the same village. Thus, the total extent of land held by them was 30.93 acres. Out of the said extent, they transferred 19.14 acres of land to two individuals on 21.08.2006. During the financial year relevant to assessment year 2008-09, they sold the remaining 11.29 acres to another individual on 30.05.2007. The lands in question are located in S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .03.2017. A rectification petition filed under Section 154 also came to be rejected on 17.01.2018 on the reason that the grounds raised in the rectification petition are debatable. As no further appeal remedy is provided as against the order passed under Section 264, the present writ petition is filed before this Court. 4. The respondents filed a counter affidavit, wherein it is stated as follows: The return of the income filed by the petitioner was processed under Section 143(1) of the Act. Subsequently, the case was reopened on account of materials gathered during a survey under section 133A in the case of one Meena Sakariya and Narendra Sakariya on 24.03.2010. It was gathered during the said survey that the petitioner was engaged in real estate activity through coordinated transactions of aggregating and selling the lands. Further perusal of the return revealed that the capital gain on the sale of the said lands was claimed as exempted amounting to ₹ 5,37,19,960/-. Hence, it was concluded in the findings of the survey that the business income of the above said sum on account of sale of land be taxed as per the provisions of the Income Tax Act. Accordingly, after reop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed. In this connection, 249 ITR 219 (SC), Union of India vs Kaumudini Narayan Dalal is relied on. When the department procured the alleged fresh materials on 24.03.2010 i.e.,9 months on completion of assessment of the coowner viz., Anoop Bora, it cannot claim that the said materials were not in possession of the Assessing Officer of Anoop Bora, while passing the scrutiny assessment under Section 143(3). The assessment of the said Anoop Bora was never reopened. Hence, it should be construed that the Revenue has accepted the character of the land as agricultural. d) Entries in Government records such as patta, chitta, Aregister, Encumbrance Certificate reflect the land as an agricultural land, where agricultural activities were carried on in the said assessment year. The Government records ought to be taken as primary evidence of the character of the land. e) The General Power of Attorney referred to by the respondents was entered into in subsequent assessment years and hence, it cannot be brought to tax in the assessment year 2008-09. The terms of the General Power of Attorney cannot be taken as proof of land, not being an agricultural land, since as on the date of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer of the petitioner and Anoop Bora are different. c) The Principal Commissioner of Income Tax has no jurisdiction under Section 264 to revise the assessment, once the assessee availed the appeal remedy. Once such appeal is filed, no provision in the statute permitting for withdrawal of the same. Withdrawal of appeal would also amount to availing the appeal remedy, even though it was stated that the reason for withdrawal is to avail revision under Section 264. d) The order passed under Section 264(1) is not prejudicial to the interest of the petitioner. Therefore, the writ petition is not maintainable. Non availability of further appeal remedy against the order made under Section 264(1) would not compel the High Court to issue the writs. Factual aspects cannot be interfered with under Article 226 of the Constitution of India. Assessee had failed to prove beyond the reasonable doubt whether agricultural operations were being carried out just before the date of sale. Confirmation receipts provided by the lessees do not contain their identity proof and addresses. Therefore, those documents are of no evidential value. As per the original assessment order, the peti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt point of time and therefore, the sale proceeds of those lands are not taxable. 10. It is seen that as against the said order of assessment dated 30.03.2015, the petitioner had filed an appeal before the Commissioner of Income Tax (Appeals) on 04.01.2016. However, the petitioner made a request in writing on 09.09.2016 before the said Appellate Authority to withdraw the said appeal to pursue the revision petition before the Commissioner of Income Tax under Section 264 of the said Act. The Appellate Authority, by his order dated 16.09.2016, dismissed the appeal as withdrawn in view of the request made by the petitioner through their letter dated 09.09.2016. The relevant paragraphs 3, 4 and 5 of the above said order dated 16.09.2016 of the Appellate Authority read as follows: 3. The Income-tax Non-Statutory form-51 (in short, ITNS-51) was sent to the AO for confirmation. In the absence of a response from the AO, it is presumed that facts stated in Form 35 are borne on records and that the AO does not wish to be present at the hearing. The appeal was fixed for hearing by issuance of ITNS-37. In response to the notice, the appellant filed a letter on 09.09.2016 requesting to w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o for pursuing the revision and once such memo was accepted and the appeal was dismissed as withdrawn based on such memo, it cannot be said that the petitioner has availed the appellate remedy so as to draw the bar stipulated under 264(4) against the petitioner. 14. Perusal of the order passed by the First Respondent/Revisional Authority, impugned in this writ petition, does not indicate anywhere that the revision was rejected on the ground of its maintainability. On the other hand, the Revisional Authority had proceeded to decide the revision on merits and ultimately, rejected the same by observing that the assessee had failed to prove beyond reasonable doubt whether the agricultural operations were being carried out just before the date of sale. Thus, the Revisional Authority, after rejecting the revision, directed the Assessing Officer to treat the subject matter lands in question as non agricultural in nature and therefore, captial assets in the hands of the assessee exigible to captial gain tax. 15. The said order of the first respondent, impugned in this writ petition, is not put to challenge by the Revenue questioning on its maintainability. On the other hand, the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Bench of the Bombay High Court in a case reported in 50 ITR 578 (Bombay), Jagmohandas Gokaldas vs Commissioner of Wealth Tax, wherein it is observed that unless the question as to the validity of the complaint looked into or scrutinized by the Authorities concerned viz., the Appellate Authority or the Revisional Authority, it cannot be said that the right conferred by the Act is fully exercised or exhausted. I am in full agreement with the view taken in the above case. For better understanding, the relevant portion of the order is extracted as hereunder: The question that arises is when can an order be said to be the subject of an appeal? According to Mr.Palkhivala, as already stated, the order becomes the subject of an appeal only when the merits of the order appealed against are dealt with by the appellate authority. While, on the other hand, according to Mr.Joshi, the order appealed against is the subject of an appeal when a competent appeal against that order is filed in which a decision could be given by the appellate authority. We find it difficult to accept Mr.Joshi's contention. One of the shades of meaning of the word subject given is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who in turn, thereafter proceeded to decide the appeal on merits. Therefore, the Allahabad High Court found that the revision before the Revisional Authority under Section 264, in that case, was barred by virtue of Sub Section (4) of Section 264. The facts and circumstances of the present case are totally different. In this case, the Appellate Authority had allowed the application for withdrawal and dismissed the appeal as withdrawn, in view of the reasons stated by the petitioner for withdrawal viz., for pursuing the revision before the first respondent. Therefore, I do not think that the above decision is helping the respondents in any manner. 20. (1967) 66 ITR 443 (SC), Commissioner of Income-tax vs. Rai Bahadur Hardutroy Motilal Chamaria, is relied on by the learned counsel for the respondents to contend that the Assessee, having once filed an appeal cannot withdraw it. But in this case, the Appellate Authority had permitted the writ petitioner/appellant to withdraw the appeal so as to pursue his remedy before the first respondent by way of revision under Section 264. Neither the said order of the Appellate Authority nor the order of the first respondent in entertaini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al grounds. So long as no decision has been given on the merits or even on the question of limitation by the Tribunal, the case cannot, in my judgment, be said to have formed the subject matter of an appeal to the Tribunal. 23. Therefore, the next question arises for consideration is as to whether the present writ is maintainable against the order of the first respondent and if the answer is in affirmative, whether the order of the first respondent is sustainable on merits. 24. It is contended by the learned counsel for the respondents that the order passed under Section 264, since not being an order prejudicial to the assessee, he is not entitled to challenge the same before this Court. He invited this Court's attention to Section 264(1) of the said Act, stipulating that the Principal Commissioner or Commissioner may pass such order, not being an order prejudicial to the assessee, as he thinks fit. I am not convinced on the above objection raised by the Revenue. No doubt, Explanation 1 to Sub Section (7) of Section 264 contemplates that an order by the Principal Commissioner or Commissioner declining to interfere shall, for the purpose of Section 264, be deemed not to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court in Meccane Industries Ltd. (supra) which is in the nature of binding precedent in the territory of Tamil Nadu and Pondicherry. Coming to the first aspect, the evidence provided by the assessee cannot be accepted as the column in official records where the assessee has to state the name and survey number of the lessee who acquired the land for cultivation purposes is not filled in a proper manner. As per the official records no such name of the lessees have been provided. Thereafter, the confirmation receipts provided by these lessees do not contain their identity proofs and addresses. Such confirmatory certificates are of no evidential value as the persons who have signed are not verifiable. The assessee has simply furnished self serving certificates prepared at his convenience. Thus, the assessee has failed to prove beyond reasonable doubt whether the agricultural operations were being carried out just before the date of sale. Coming to the second aspect, the common clause in the two agreements furnished by the assessee are reproduced as under: 1.WHEREAS my attorney is authorised by us by this deed of irrevocable General Power of Attorney to convey and sell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and probed further. Without doing so, the first respondent has chosen to reject those confirmation certificates also, in a casual manner, which in my considered view, is not proper. 29. Apart from the above aspects, one more material factor has to be taken note of in this case, which the first respondent has totally failed to refer and consider. It is the case of the petitioner that the lands in question were purchased by the petitioner and another person by Anoop Bora as joint owners. There is no dispute to the fact that at the hands of the said joint owner viz., Anoop Bora, the subject matter lands were treated as agricultural lands by the very same income tax Department, while making the order of assessment for the relevant period. The petitioner has specifically raised that issue in his application filed under section 264. Even though such issue was raised by the petitioner, the first respondent has not at all traversed to the same and answered the said issue, while rejecting the application. 30. No doubt, it is true that the learned counsel for the respondents sought to contend that the Assessing Officer of Anoop Bora passed the assessment order without considering the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e above aspect in detail except extracting the particular clause in his order and thereafter, to decide only by saying that the case of the assessee is rejected. As rightly pointed out by the learned counsel for the petitioner, the character of the property, at the relevant point of time, at the hands of the vendor, alone should be taken into consideration and that the intention of the purchaser as to how he is going to treat the property after such purchase, cannot be a determinative factor to decide such character. Even otherwise, the above clause in the Power of Attorney relied on by the first respondent clearly indicates that the Power of Attorney is going to convert the entire property as house sites. Therefore, it is evident that at the relevant point of time, the character of the lands at the hands of the assessee cannot be construed as house sites, since such conversion was intended to take place in future. Therefore, the first respondent ought to have gone by the other relevant revenue records and supportive confirmation certificates to arrive at a conclusion with regard to the nature of the land. At this juncture, the Division Bench decision of the Gujarat High Court repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to remit the matter for fresh consideration of the first respondent, no view on the above said issue at this stage is expressed. 35. Though the petitioner in this writ petition has contended that the reopening of the assessment under Section 147 was beyond four years without there being any averment that the petitioner had not fully and truly disclosed the material facts, perusal of the revision petition filed under Section 264 dated 25.02.2016 and a written submission filed in the said revision dated 12.09.2016 do not indicate that the petitioner has raised the above contention before the first respondent/revisional authority. The order passed by the first respondent, impugned in this writ petition, also does not deal with such issue. In any event, as this Court has chosen to remit the matter back to the first respondent, it is open to the petitioner to raise such contention as well before the first respondent by way of additional grounds and if any such ground is made, it is for the first respondent to consider the same and pass orders on such objection as well on merits and in accordance with law. Therefore, the case laws referred to by both parties in respect of the above s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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