2019 (1) TMI 654 - HC - Income Tax

Benefit of exemption u/s 54B denied - Held that - There were conspicuous gaps and loopholes in the case set-up by the appellant-assessee, which has been disbelieved by the Tribunal after in depth appraisal of conspectus of facts and material. Inspector s report had not only reflected on the land in 2011, but on the spot inquiries to ascertain whether the land was being used for agricultural purposes prior to sale of land in December, 2008. Pertinently, the assessee had purchased the said land on 11th November, 2006 for a substantial amount of ₹ 58.90 lakhs. The land is located in Ghaziabad district, which is approximate and adjoins Delhi and falls within the National Capital Territory of Delhi. It was sold after 3 years in December, 2008 to a builder and real-estate developer for ₹ 6.51 crores. Relevant evidence and material have been considered, evaluated and appreciated by the Tribunal, which has given reasonable and cogent reasons for the findings on facts. This is not the case where the Tribunal s order is perverse in the sense that no reasonable person would, in the relevant field, have not have arrived at the final finding and conclusion as drawn and under challenge. The test and parameter whether an order or judgment is perverse are rather strict. Even if we were to form a different opinion on evidence, we would not categorize the impugned order as a perverse order. The appeal has no merit and is accordingly dismissed.

Summary

Issues Involved:
1. Denial of exemption under Section 54B of the Income Tax Act, 1961.
2. Use of the land for agricultural purposes.
3. Reliance on Khasra Girdwari and the statement of Amar Pal Singh.
4. Evaluation of evidence and findings by the Tribunal.

Detailed Analysis:

Denial of Exemption under Section 54B:
The appellant-assessee contested the Tribunal's decision to deny the benefit of exemption under Section 54B of the Income Tax Act, 1961, arguing that the findings were perverse and contrary to the facts on record. Section 54B requires that the land should be used for agricultural purposes by the individual, their parents, or Hindu Undivided Family during the two years immediately preceding the date of transfer.

Use of the Land for Agricultural Purposes:
The appellant-assessee had to prove that the land in Ghaziabad sold to a real estate developer was used for agricultural purposes during the two years before its sale in December 2008. The Tribunal found that the appellant-assessee did not undertake agricultural activities himself and did not incur any related expenses. The land was allegedly given on batai (sharecropping) to Amar Pal Singh.

Reliance on Khasra Girdwari and the Statement of Amar Pal Singh:
The appellant-assessee presented the Khasra Girdwari for the Fasli year 1415, indicating that fodder and jawar chara were grown on the land. However, the Tribunal disbelieved these records, noting that the appellant-assessee did not personally engage in agricultural activities. Amar Pal Singh's statement was scrutinized, revealing inconsistencies and lack of credibility. He could not provide specific details about the land and admitted to not owning agricultural land, primarily earning through property dealings.

Evaluation of Evidence and Findings by the Tribunal:
The Tribunal analyzed the facts and evidence, including the statement of Amar Pal Singh and the Khasra Girdwari. It found significant contradictions and gaps in the appellant-assessee's claims. The Inspector's report, which included on-the-spot inquiries, indicated no agricultural activities on the land before its sale. The appellant-assessee's claims of agricultural income were also inconsistent with the evidence provided.

The Tribunal concluded that the appellant-assessee failed to meet the conditions required under Section 54B of the Act. The findings were based on a thorough evaluation of the facts and material evidence, and the Tribunal provided cogent reasons for its decision.

Conclusion:
The High Court upheld the Tribunal's decision, stating that the conclusions were based on a reasonable and thorough appraisal of the facts. The order was not perverse, and the appeal lacked merit, leading to its dismissal.