2017 (4) TMI 626 - AT - Income Tax

Short term capital gain on sale of land - nature of land - distance of more than 8 kilometers from the municipal area - Held that - We noticed that the sold land was situated at village Jani Vankad Nani Daman. We have further noticed that Jani Vankad and Nani Vankad were not the same village and both the villages were distinct from each other belonging to greater area called Nani Daman. We have also noticed that the certificate produced before the assessing officer by the asssessee from the Daman Municipal Corporation stating that above referred agriculture land situated in village Jani Vankad was at distance of more than 8 kilometers from the municipal area of Daman Municipal Council and population of village Jani vankad was less than 10, 000 persons. We find that these facts and evidences were not disproved by the assessing officer and the Ld.CIT(A) made his decision on the basis that the assessing officer made analysis on the basis of information mainly pertaining to the the Sarpanch of Bhimpore Group Gram Panchayat Bhimpore Nani Daman stating that Jani Vankad was a revenue Village and the Moti Vankad and Nani Vankad was a villages under the said Saja(revenue circle) We find that Sarpanch of Bhimpore Group Gram Panchayat Bhimpore Nani Daman has not stated that jani Vankad and Nani Vankad were the same village but they stated that Jani Vankad was a revenue village and the Moti Vankad and Nani Vankad was a villages under the said Saja (revenue circle). In view of the above mentioned facts and findings we considered that the assessing officer has not substantiated his findings with concrete evidences and made his decision on the basis of conclusion arrived on observation basis and failed to disprove the facts and evidences furnished by the assessee. Therefore we find that the decision of the ld. CIT(A) is not justified to sustain the addition made by the assessing officer. - Decided in favour of assessee

Summary

Issues:
1. Reopening of assessment and notice u/s.148 of the I.T. Act, 1961
2. Addition of short term capital gain on sale of land
3. Addition of alleged unexplained cash deposits in bank account

Analysis:
1. The assessee's appeal for A.Y. 2008-09 challenged the CIT(A)'s order confirming the assessing officer's actions in reopening the assessment and issuing notice u/s.148 of the Income Tax Act, 1961. The Tribunal dismissed ground nos. 1 & 3 as not pressed and focused on adjudicating ground no. 2, which pertained to the addition of short term capital gain on the sale of land.

2. The assessing officer initiated the reopening proceedings based on a deed of rectification, claiming that the sale consideration of the land attracts capital gain. The assessing officer observed that the land was sold within 36 months from the date of purchase, making it subject to short term capital gain tax. The assessing officer relied on a notification specifying areas exempt from capital gains tax, which did not include the land in question. Consequently, an addition of ?13,81,090/- was made as short term capital gain on the sale of the land.

3. The CIT(A) upheld the assessing officer's decision, stating that the land was within the Daman Municipal limits and did not qualify for the capital gains exemption. Despite the appellant's arguments, including documents and evidence, the CIT(A) found that the land was not exempted from capital gains and upheld the addition. The Sarpanch's statement further supported the finding that the land was within the municipal limits.

4. Upon appeal before the Tribunal, it was argued that the land was situated outside the 8 kilometers from Daman Municipal council and had a population of less than 10,000 people, making it eligible for the exemption. The Tribunal noted that Jani Vankad and Nani Vankad were distinct villages and that the assessing officer's analysis lacked concrete evidence to disprove the appellant's claims. As the assessing officer failed to substantiate findings with concrete evidence, the Tribunal allowed the appeal, concluding that the addition made by the assessing officer was not justified.

5. Ultimately, the Tribunal allowed the appeal of the assessee, emphasizing the lack of concrete evidence to support the assessing officer's decision regarding the short term capital gain on the sale of the land. The decision was pronounced in the open court on 20-03-2017.