1982 (7) TMI 116 - AT - Income Tax

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Admission of fresh evidence by the Commissioner (Appeals) without satisfying the conditions of Rule 46A.
3. The decision on the merits regarding the liability of capital gains tax on the sale of agricultural land.
4. Competency of the appeal to the Commissioner (Appeals) given that the ITO accepted the return filed by the assessee.

Issue-wise Detailed Analysis:

1. Condonation of Delay in Filing the Appeal:
The primary issue revolved around whether the delay in filing the appeal by the assessee could be condoned. The assessee filed the appeal almost five years after the assessment order, citing a news item in the Economic Times reporting a Bombay High Court decision which stated that capital gains from the sale of agricultural land used for agricultural purposes were not liable to tax. The Commissioner (Appeals) condoned the delay, finding sufficient cause for the delay both up to the publication of the judgment and thereafter. However, the Tribunal found no justification for condoning such an inordinate delay, emphasizing that periods of limitation are provided to prevent the unsettling of settled matters and that the assessee failed to explain every day of the default adequately. The Tribunal thus held that the Commissioner (Appeals) erred in condoning the delay.

2. Admission of Fresh Evidence by the Commissioner (Appeals) Without Satisfying Conditions of Rule 46A:
The departmental counsel objected to the admission of fresh evidence by the Commissioner (Appeals) without adhering to Rule 46A provisions. The Tribunal noted that while the Commissioner (Appeals) did not admit any extra evidence, there was insufficient material to conclude that the lands in question were agricultural and used for agricultural purposes as required by the Bombay High Court decision. The Tribunal thus found that the Commissioner (Appeals) had no materials to hold that the lands satisfied the conditions for exemption from capital gains tax.

3. Decision on the Merits Regarding the Liability of Capital Gains Tax:
The assessee argued that the capital gains from the sale of agricultural land were not taxable based on the Bombay High Court decision. However, the departmental counsel contended that capital gains from any source are assessable to income-tax unless specifically exempted. The Tribunal did not delve deeply into this issue, given their findings on the condonation of delay and the admission of fresh evidence. The Tribunal noted that the Commissioner (Appeals) erred in deciding the case on merits without sufficient evidence.

4. Competency of the Appeal to the Commissioner (Appeals):
The department argued that the appeal to the Commissioner (Appeals) was incompetent because the assessee was not aggrieved by the original assessment order, as the return filed was accepted by the ITO. The Tribunal acknowledged that an appeal lies only when the appellant is aggrieved. They emphasized that the decision of a High Court does not necessarily create a new cause of action for an appeal, particularly when the decision is not from the Supreme Court. The Tribunal found that the Commissioner (Appeals) should not have admitted the appeal on this ground alone.

Conclusion:
The Tribunal allowed the departmental appeal, holding that the Commissioner (Appeals) erred in condoning the delay, admitting the appeal, and deciding it on merits in the assessee's favor. The Tribunal canceled the order of the Commissioner (Appeals) and did not find it necessary to address the applicability of the Bombay High Court decision on the merits of the case.