2023 (2) TMI 349 - AT - Income Tax

Deduction u/s 54B - claim denied as impugned land was not used for agricultural purpose - part of the paper book that land is marked as पडत, it means it was not used for agricultural purposes - HELD THAT - As per The Maharashtra Land Revenue Record of Rights and Registers (Preparation and Maintenance) Rules, 1971, the Talathi Visits the field and then makes entries of the crops grown. In the case under consideration, the talathi has entered the land as पडत . The records maintained by talathi are authentic. The assessee has also filed copy of letter issued by the purchaser of the land, however, it is a letter issued by the person who have transactions with the assessee. The said self- professing letter does not have any evidentiary value in the presence of Land Revenue Record maintained by talathi. However, the said letter does not establish that the impugned land was used for agricultural purpose by the assessee or his family members. Hon ble Supreme Court in the case of Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar Company 2018 (7) TMI 1826 - SUPREME COURT held that the exemption provisions shall be interpreted strictly. The section 54B gives deduction to the assessee which is a kind of exemption provision and therefore such provisions has to be interpreted strictly. Since the land at Survey No.60/3, Village Mashrool, District Nashik was not used for agricultural purposes in the preceding two years from the date of sale, the assessee is not eligible for claim of deduction under section 54B of the Act. Accordingly, the Ground raised by assessee are dismissed.

Issues Involved:

1. Validity of the ex-parte order passed by the CIT(A).
2. Justification for confirming the denial of deduction under section 54B of the Income Tax Act.
3. Validity of the assessment order passed under section 143(3) and confirmed by the CIT(A) considering the subsequent acceptance of returned income under section 147.

Detailed Analysis:

Issue 1: Validity of the ex-parte order passed by the CIT(A)

The assessee contended that the ex-parte order passed by the CIT(A) should be vacated and the appeal restored. However, it was observed that the CIT(A) had provided multiple opportunities to the assessee on various dates, including 21/01/2021, 25/05/2022, 07/07/2022, 22/07/2022, and 04/08/2022. The CIT(A) passed the order considering the statement of facts filed by the assessee, indicating that sufficient opportunity was given. Therefore, the Tribunal dismissed this ground, affirming that the ex-parte order was justified.

Issue 2: Justification for confirming the denial of deduction under section 54B of the Income Tax Act

The primary contention was whether the land sold by the assessee qualified for deduction under section 54B, which requires the land to be used for agricultural purposes in the preceding two years before the sale. The assessee claimed to have grown tomatoes and other vegetables on the land, supported by receipts from the Nashik Agricultural Marketing Committee. However, the Assessing Officer (AO) and the CIT(A) found that the 7/12 extract of the land, verified by the Talathi and the Government of Maharashtra website, showed the land as 'Padit' (uncultivated) for the financial years 2011-12, 2012-13, and 2013-14.

The Tribunal upheld this finding, emphasizing that the land revenue records maintained by the Talathi, which are considered authentic under the Maharashtra Land Revenue Record of Rights and Registers (Preparation and Maintenance) Rules, 1971, indicated no agricultural activity. The Tribunal also cited the Supreme Court's ruling in Commissioner of Customs (Import), Mumbai Vs. Dilip Kumar & Company, which mandates strict interpretation of exemption provisions. Since the land was not used for agricultural purposes in the required period, the assessee was not eligible for the deduction under section 54B. Thus, this ground was dismissed.

Issue 3: Validity of the assessment order passed under section 143(3) and confirmed by the CIT(A) considering the subsequent acceptance of returned income under section 147

The assessee argued that the assessment order under section 143(3) should be canceled as the returned income was subsequently accepted in an assessment order under section 147. However, the Tribunal did not find merit in this argument, as the primary issue of eligibility for deduction under section 54B was already decided against the assessee. The Tribunal did not provide a separate detailed analysis for this ground but dismissed it along with the other grounds.

Conclusion:

The Tribunal dismissed the appeal of the assessee, upholding the CIT(A)'s order and the AO's findings. The ex-parte order was deemed justified, the denial of deduction under section 54B was confirmed due to the land not being used for agricultural purposes, and the assessment order under section 143(3) was upheld despite the subsequent acceptance of returned income under section 147. The judgment was pronounced in the open court on 8th February 2023.

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