1985 (12) TMI 120 - AT - Income Tax

Summary

Issues:
1. Validity of protective assessment order by ITO.
2. Exemption under section 54B not allowed.
3. Sale of agricultural land subject to capital gains tax.

Detailed Analysis:

1. The appeal was filed against the order of the AAC who upheld the ITO's decision of making a protective assessment regarding the sale of agricultural land by the assessee to his brother-in-law. The ITO considered the transaction non-genuine and made the protective assessment. The appellant argued that the Revenue failed to prove the sale as benami and that the ITO did not make a substantive assessment. The appellant also claimed exemption under section 54B citing relevant case laws and Bombay High Court's decision regarding the sale of agricultural land not being subject to capital gains tax.

2. The Tribunal noted that the burden of proof lies on the Department to establish that the sale is benami, which they failed to do so in this case. The ITO's decision was based on suspicion and doubts without concrete evidence to prove benami transaction. The Tribunal found that the sale was genuine as per the registered sale deed and the consideration was received by the seller. The Department could not prove that the consideration came from the assessee. Citing the Bombay High Court's decision and previous Tribunal rulings, the Tribunal held that the sale of agricultural land is not subject to capital gains tax, further supporting the appellant's case for exemption under section 54B.

3. Consequently, the Tribunal allowed ground No. 1 of the appeal, stating that the sale of agricultural land is not subject to capital gains tax. Ground No. 2 was deemed infructuous in light of the findings. The Tribunal rejected the appellant's counsel's decision to not press ground Nos. 3 and 4, leading to a partial allowance of the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, highlighting the failure of the Department to prove the sale as benami and establishing that the sale of agricultural land is not subject to capital gains tax, thereby allowing the appeal partly.