2014 (10) TMI 775 - AT - Income Tax

Admission of additional evidence Held that - There was no infirmity in the order of CIT(A) in admitting the additional evidence - Revenue has not raised any ground challenging the additional ground admitted by CIT(A) - After an additional ground is admitted generally the additional evidence can be admitted by CIT(A) while exercising his appellate powers - Additional evidence application is supported by valid application and reasons which are elaborately mentioned by CIT(A) in his order - AO s objections on admission have been properly considered thus an adequate opportunity of hearing in terms of rule 46A was provided Decided against revenue. Applicability of section 54B Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases - Held that - Following the decision in Shri Ramesh Narhari Jakhad vs. ITO 1992 (2) TMI 178 - ITAT PUNE in case of sale and repurchase of agricultural land sec 54B requires two years period - Further for the claim of exemption u/s 54B, it is not necessary that the land should have been used for agricultural purposes for full two years immediately preceding the date of transfer and that it is sufficient if it was so used in the whole of the preceding year and for some days in the year earlier to preceding year thus, the exemption u/s 54B is available to the assessee. Land used by assessee or not Held that - The objection that land was not used by assessee himself is proved by the assessee from the fact that agricultural income has been accepted by the department - Besides in additional evidence a certificate to this effect has been furnished by the assessee - assessee used the land for himself in earlier years. Part purchase of land in the name of name lender Held that - Assessee can purchase a new asset or part thereof in the name of his wife - For this there are sufficient justifications like stamp duty rebate, social, security for ladies, as long as the funds are invested by the assessee, exemption cannot be denied thus, the order of the CIT(A) is upheld Decided against revenue.

Summary

Issues Involved:
1. Admission of additional evidence under Rule 46A of Income Tax Rules.
2. Entitlement to exemption under Section 54B of the Income Tax Act, 1961.
3. Deletion of addition on account of low household withdrawals.

Issue-wise Detailed Analysis:

1. Admission of Additional Evidence under Rule 46A:
The Revenue contended that the CIT(A) erred in entertaining additional evidence under Rule 46A despite multiple opportunities given to the assessee to produce the evidence. The CIT(A) admitted the additional evidence based on the assessee's application, which was forwarded to the AO for objections and comments. The AO submitted a remand report, and the CIT(A) considered the objections before admitting the evidence. The Tribunal found no infirmity in the CIT(A)'s decision to admit the additional evidence, noting that the Revenue had not raised any ground challenging the additional ground admitted by the CIT(A), and the AO's objections were properly considered.

2. Entitlement to Exemption under Section 54B:
The Revenue argued that the CIT(A) erred in allowing exemption under Section 54B, claiming the asset sold was a short-term capital asset and not used for agricultural purposes for the requisite period. The CIT(A) found that the assessee satisfied the conditions under Section 54B, which requires the land to be a capital asset used for agricultural purposes in the two years immediately preceding the transfer. The CIT(A) noted that the land was used for agricultural purposes, evidenced by the declaration of agricultural income and Girdawari records. The Tribunal upheld the CIT(A)'s findings, citing the Pune Tribunal's decision in Shri Ramesh Narhari Jakhad vs. ITO, which held that the land need not be used for the full two years but should be used in the preceding year and some days in the earlier year. The Tribunal also accepted the assessee's explanation for purchasing part of the new land in the name of his wife, noting that the funds were provided by the assessee.

3. Deletion of Addition on Account of Low Household Withdrawals:
The Revenue challenged the deletion of an addition of Rs. 60,000 made by the AO on account of low household withdrawals. The CIT(A) allowed the assessee's claim, noting that the AO's objections were adequately addressed. The Tribunal found no merit in the Revenue's ground, upholding the CIT(A)'s decision.

Conclusion:
The Tribunal dismissed both the assessee's and the Revenue's appeals. The assessee's appeal was dismissed as not pressed, and the Revenue's appeal was dismissed on the grounds that the CIT(A) properly admitted additional evidence, the assessee was entitled to exemption under Section 54B, and the deletion of the addition for low household withdrawals was justified. The Tribunal upheld the CIT(A)'s order in its entirety.