2015 (7) TMI 200 - AT - Income Tax

Long term capital gain on sale of land - agricultural land in terms of section 2(14) - Held that - The land sold by all the brothers situated in village- Sanjhaia, Tehsil- Sanganer, district- Jaipur. In case of assessee s brother namely Shri Ram Sahay Sharma in A.Y. 2007-08 by the ITO ward 7(2), Jaipur order dated 25/03/2013 had not made any addition on account of long term capital gain. Further the ld CIT(A) as well as this Bench also allowed the appeal in case of Smt. Kamla Devi Sharma (2015 (7) TMI 195 - ITAT JAIPUR), who also sold her land at Sanjharia village to M/s Vatika Ltd. on 16/05/2006 and held that the agricultural land sold by the assessee is not capital assets as envisaged U/s 2(14) of the Act as same was sold to Vatika Ltd. within a short span of time. The other case laws relied by the assessee is also squarely applicable. Therefore, we hold that the land sold by all the assessees are agricultural land and beyond 8 KMs from the municipal limits. Accordingly, we allow this ground of all the appeals. Disallowance of relief U/s 54B and 54F - Held that - As we have decided the land sold by these assessees as not capital assets as envisaged in Section 2(14) of the Act, we need not to express our views on these deductions as these deductions is based on capital assets envisaged in Section 2(14) of the Act. Penalty U/s 271(1)(c) - Held that - Assessing Officer imposed penalty U/s 271(1)(c) of the Act, which has been confirmed by the ld CIT(A) in all the cases but as decided above, the land sold is not capital assets as envisaged in Section 2(14) of the Act and held agricultural land, which is not come under the purview of taxable income. No concealment of particulars of income or furnished inaccurate particulars of income is there. Therefore, we delete the penalty in all the cases. Thus, we allow the appeals in all the cases. - Decided in favour of assessee.

Summary

Issues Involved:
1. Addition on account of long-term capital gain on the sale of land.
2. Relief under Sections 54B and 54F of the Income Tax Act, 1961.
3. Penalty under Section 271(1)(c) of the Income Tax Act, 1961.
4. Condonation of delay in filing appeals.

Detailed Analysis:

1. Addition on Account of Long-Term Capital Gain on Sale of Land:
The central issue was whether the land sold by the assessees was an agricultural land as per Section 2(14) of the Income Tax Act, 1961, and thus exempt from capital gains tax. The Assessing Officer (AO) determined that the land was within 8 km of the municipal limits of Jaipur Nagar Nigam and Bagru town, thus classifying it as a capital asset under Section 2(14). The AO calculated the long-term capital gain at Rs. 81,75,583/- for each assessee. The CIT(A) upheld the AO's decision, confirming that the land was within the municipal limits based on a scaled map. The Tribunal, however, noted that similar land sold by another individual in the same village was previously ruled as agricultural land and not a capital asset. Thus, it concluded that the land sold by the assessees was agricultural and outside the 8 km limit, overturning the AO's and CIT(A)'s findings.

2. Relief Under Sections 54B and 54F of the Income Tax Act, 1961:
The AO allowed partial relief under Sections 54B and 54F, granting exemptions totaling Rs. 12,94,999/- for each assessee. However, since the Tribunal ruled that the land was agricultural and not a capital asset, the question of deductions under Sections 54B and 54F became moot. Therefore, the Tribunal did not express further views on these deductions.

3. Penalty Under Section 271(1)(c) of the Income Tax Act, 1961:
The AO had imposed penalties under Section 271(1)(c) for concealment of income or furnishing inaccurate particulars, which the CIT(A) upheld. Given the Tribunal's finding that the land was agricultural and not a capital asset, it ruled that there was no concealment or furnishing of inaccurate particulars. Consequently, the penalties were deleted.

4. Condonation of Delay in Filing Appeals:
The appeals were filed with a delay of 921 days. The assessees, being illiterate agriculturists, claimed they were unaware of their tax liabilities and the legal repercussions. The Tribunal, citing principles of substantial justice, condoned the delay, emphasizing that denying the appeals would result in a miscarriage of justice. It referenced several legal precedents, including Collector, Land Acquisition Vs. Mst. Katji, which supports a liberal interpretation of "sufficient cause" for delays to advance substantial justice.

Conclusion:
The Tribunal allowed the appeals, ruling that the land sold by the assessees was agricultural and not a capital asset under Section 2(14) of the Income Tax Act, 1961. Consequently, the additions on account of long-term capital gains were deleted, and the penalties under Section 271(1)(c) were also removed. The delay in filing the appeals was condoned in the interest of substantial justice.