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TMI Blog2017 (11) TMI 1206X X X X Extracts X X X X X X X X Extracts X X X X ..... and his wife only. Whether assessees are the cultivators? - We have already discussed that the 7/12 extracts are the creation of Revenue Officers/Talati etc., and the assessees have no role in maintenance of the records. Considering the fact lands at S.No. 75/1 is the possession of the Assessee since the year 2000 along with the undisputed fact that the assessees never leased the lands to Shri Kuldeep Singh, we are of the opinion that all is not well with records maintained by the MRO/Talati etc., It is likely that the Shri Kuldeep Singh, being the previous owner-cum-cultivator on records, continues to be shown by the Revenue authorities as the cultivator erroneously even after he sold the lands to the assessees. Otherwise, it is not possible that Shri Kuldeepsingh cultivated the land of the assessee legally. Thus, from this point of view, the said records of the revenue are not fool-proof so far as the 7/12 extracts of lands at S.No. 75/1, are concerned. Therefore, it is not possible that the Assessees are not the cultivators at the relevant point of time and, therefore, Shri Kuldeep Singh is the cultivator in the said lands. Hence, we dismiss the conclusions drawn by the AO on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) examined and held that the assessees met all the conditions legally. In our view, the order of CIT(A) constitutes a possible view and the same constitutes a fair and reasonable order and therefore we affirm the same.- Decided against revenue Allowability of alternate claim u/s.54F - The claim is made as an alternative ground to claim u/s.54B of the Act. However, AO dismissed the same on the ground of Assessee’s failure to discharge onus with respect to furnishing of evidences in support of investment of gains in construction of the residential house. Assessee filed a certificate from Architect only. During the assessment proceedings, AO rejected the said certificate of the Architect cum builder of the said house. However, CIT(A) allowed the claim of the assessee as per his discussion in page 10 of his order. Before us, the AR relied on the respective orders of the AO or the CIT(A) as the case may be. On hearing the parties, we find the adjudication of this issue becomes a necessity only when the relief under the provisions relating to section 54B of the Act, is denied. Therefore, considering the relief granted by us for the detailed reasons given in the paragraphs abo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee was entitled for exemption u/s.54B of the Act on investment in land at Gut No.73 without appreciating the fact that the assessee has not proved with documentary evidence that the said land was owned by him. 4. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in allowing the exemption claimed under section 54F of the Act without appreciating the fact that the assessee has not fulfilled the condition laid down u/s.54F of the Act. 5. On the facts and in the circumstances of the case, the Ld.CIT(A) has erred in deleting the addition of ₹ 3,13,642/- made on account of income from undisclosed sources. 6. On the facts and in the circumstances of the case, the Ld.CIT(A) failed to appreciate that the assessee has not produced any evidence regarding the claim of agricultural income, thus failing to discharge the onus as per the settled position of law. 2. The general facts pertaining to Shri Govardhan S. Pawar includes that the assessee is a Civil Contractor and also engaged in plying the goods carriages. During the year under consideration, the assessee reported earnings of long term capital gains on sale of lands at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eement to Shri Ravindra Khinvasara of M/s. Khinvasara Investments for a sum of ₹ 3,75,50,000/-. The land is said to be within Municipal limits of Aurangabad. In this transaction, the assessees earned long term capital gains. The said gains were invested by the assessees in purchase of agricultural lands such as purchase of lands at Gut No.73, Gut No.257 and Gut No.304 involving 3 different sellers. 4. During the assessment proceedings , AO noticed certain discrepancies with regard to use of the said land of 10 Acres 28 Guntas being used for agricultural purposes by the assessees/the parents in the years specified in the section 54B of the Act. According to the said provisions, the said lands should have been used for Agricultural purposes for a period of 2 years before the transfer of the land. Eventually, relying on the entries relating to crops grown appeared in 7/12 extracts, procured by the AO relating to the said lands, AO came to the conclusion that the said land, being barren was not used for agricultural purposes either by the assessee or by his parents during the said years. Subsequently, AO procured a revised 7/12 extract. In the process, AO rejected the revised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 is in the name of Shri Kuldeepsingh Dhody and the status of land is shown as PADIT , i.e. Barron and not cultivated. The 7/12 original extracts collected show following position : Financial Year Person cultivating Land Area under cultivation Whether or not cultivated 2003-04 Kuldeepsingh Pad Not cultivated 2004-05 Kuldeepsingh Pad Not cultivated 2005-06 Self Pad Not cultivated Source : original 7/12 extract from Revenue Records. 8. In response to the above discrepancy, in the absence of any Agricultural usage of the land in the A.Ys. 2004-05 and 2005-06, i.e. two assessment years preceding to the assessment year under consideration, the assessees filed a letter enclosing a revised 7/12 extract which demonstrates the contrary facts of usage of the land for agricultural purposes from the A.Yrs. 2001-02 to 2004-05 (relevant to A.Ys. 2002-03 to 2005-06). Lands were shown barren lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, proper procedure was not followed as specified in section 175 of the relevant Act. Referring to the procedure followed by the Talati/Mandal Adhikari, AO mentioned that one of the Panchas was a minor at the relevant point of time, i.e. A.Y. 2001-02. AO wanted these Panchas to be produced for examination. Eventually, the AO held that the said revised extracts constitutes a product of an afterthought. Therefore, he relied heavily on the original 7/12 extract. In Nutshell, the case of the AO is that the original 7/12 extract mentioned about the barrenness of the land constitutes the real and credible one. The revised one constitutes a manipulated one or an afterthought. AO was under the impression that assessee manipulated the Revenue officials and created the evidence in his favour. 11. Considering the abovementioned two types of 7/12 extracts, i.e. one obtained by AO and (2) the revised one submitted by the Assessee, AO proceeded to gather any other evidence if any. Therefore, AO sent her Income-tax Inspector for spot Inspection or enquiry. Inspector obtained a statement from Shri V.B. Gaikwad, who is landlord of neighbouring land. Shri V.B. Gaikwad gave a statement stating tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O disputed the said transaction and held that the said land is not eventually registered in the subregistrar office. According to AO, the said land is not transferable land as the same constitutes an Inami land (Rewarded land) . He also mentioned that the dispute on the ownership of the land in view of the fact that there is some litigation by one Shri Mohan Puranpatre. To verify the genuineness of the ownership, the possession of the land, correctness of the payments etc., AO summoned the Shri Sudhakar B. Gore, who eventually appeared and confirmed the receipt of the said consideration. Assessees also filed an affidavit of Shri Sudhakar B. Gore confirming the receipt of the consideration of ₹ 1.50 crores as well as the fact of possession of the land with Shri Sudhakar B Gore and ruled out the claim of Shri Mohan Puranpatre on the lands. AO did not accept the above assertions of the assessees as well as Shri Sudhakar B. Gore and rejected the affidavits filed by them by stating that the same constitutes an arrangement. Otherwise, AO did not have any incriminating evidence against them. Eventually, the AO summed up saying that the capital gains earned by the assessee on sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made by filing the revised returns of income. 17. At the end, AO denied the assessee s claim of exemption u/s.54B as well as u/s.54F of the Act in respect of the capital gains earned by the assessee. Thus, the AO proceeded to tax the capital gains of the assessees share of 50% as under : Sale value taken as per section 50C Rs.3,82,40,000/- Less : Purchase value ₹ 36,75,000/- as on 06-06- 2000 plus other purchase expenses at ₹ 11,62,980/- (indexed cost) as claimed Rs.52,79,682/- Long Term Capital Gains Rs.3,29,60,318/- Less : Exemption allowable u/s.54B and 54F Nil Taxable Long Term Capital Gains Rs.3,29,60,318/- 50% Capital Gains related to the assessee Rs.1,64,80,159/- Rounded to Rs.1,64,80,160/- AO determined the total income of Shri Govardhan S. Pawar at ₹ 1,64,80,160/-. IV. Claim of Agricultural income : 18. We shall now take the dispute relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that land purchased by the assessee in the year 2000 were never used for agricultural purposes. Referring to the original 7/12 extract, which was obtained by the AO during the assessment proceedings invoking the provisions of section 131 of the Act, Ld. DR submitted that the assessee is undisputedly the owner of the land. Referring to the portion of Gov. Namuna No.7A (page 59 of the paper book), Ld. DR submitted that Shri Kuldeep Singh is the cultivator of the land during the F.Yrs. 2003-04 and 2004-05. Assessee is the cultivator in the F.Y. 2005-06. Further, bringing our attention to Gov. Namuna No.12, Ld. DR submitted that during the F.Yrs. 2003-04 to 2005-06, the agricultural land was remained Barren and no crops were cultivated during the said years. Therefore, Shri Kuldeep Singh who cultivated during the said years, and infact, the land remained Barren and nothing is cultivated as per the records. 23. When the Bench asked the Ld. DR how Shri Kuldeep Singh can be the cultivator of the land when no crop is cultivated and how Shri Kuldeep Singh, the previous owner of the land can constitute cultivator in the absence of any lease deed between the landlord and Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the part relief granted by the CIT(A) in respect of claim of the agricultural income, Ld. DR claims that the CIT(A) has erred in granting further relief merely based on the estimation. 27. Per contra, Shri Hari Krishan, Ld. AR for the assessee essentially relied on the order of the CIT(A) and the written submissions made by him before the CIT(A). Referring to his argumentative submissions vide his letter dated 03-11- 2009, Ld. AR listed out various arguments. The major ones include that the land situated at Gut No.75/1 was used for agricultural purposes during two years prior to the date of transfer of the said land to Shri Ravindra C. Khinvasara. According to him, the assessees are the owners of the said land since 2000. The possession of the said land is with the assessee, he never leased out the land to Shri Kuldeep Singh and he actually cultivated the dry crops on the said land during the relevant years under consideration. Assessee was neither privy of the revenue documents nor is aware of the details mentioned in the revenue records especially in the 7/12 extracts. As per Ld. AR, the 7/12 extracts obtained by the AO at the back of the assessee suggest the fact that it su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollector and other senior officers etc., in the same line of duty. As per the assessee, without doing the same, terminating the proceedings prematurely and penalising the assessee, as done by the AO, in the assessee s case, is unsustainable in law. The facts mentioned as per the revised 7/12 extracts confirm the basic fact that the said land belongs to the assessee under consideration and was under cultivation during the two years prior to the date of sale of the said land at Gut No.75/1. Appearance of the name of Shri Kuldeep Singh (the earlier landlord) constitutes a mistake. Neither the Revenue authorities nor the AO has done anything to correct the said patent mistake. Therefore, as per the Ld. AR for the assessee, the Agricultural income earned by the assessee in the F.Yrs. 2003-04 and 2004-05 is out of his Agricultural activities on the land at Survey No.75/1. Ld. AR relied on the Agricultural income disclosed in the returns of income for the relevant A.Yrs. 2004-05 and 2005-06. In support, he brought our attention to the disclosed particulars of agricultural income out of the said land as shown in the computation of income appended to the returns of income for the relevant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to the requirement of registration qua the payment of consideration, Ld. Counsel for the assessee relied on jurisdictional High Court in the case of CIT Vs. Dr. Laxmichand Narpal Nagda 211 ITR 804 as well as the judgment of Delhi High Court in the case of Balraj 241 ITR 22 (Del). Further, he also relied on the Tribunal decisions in the case of Chamanlal Thakurdas 39 ITR 159 (Ahd.). T.Shivekumar 158 ITD 329 (Bang). According to these decisions, registration of property in the name of the assessee is not a precondition because of the word purchase as used in section 54B of the Act, a beneficial provisions, is not used in a sense of legal transfer and therefore, the legal title within the stipulated period is not a condition precedent. Ld. Counsel for the assessee also reasoned that the AO failed to enforce the attendance of Shri Sudhakar B. Gore and Shri Shrichand Harichand Rathod for cross verifying the facts of the affidavits. Further, on the issue of not giving the benefit of cross examination with Shri V.B. Gaikwad, Ld. Counsel for the assessee relied on various decisions such as Krishanchand challaram 125 ITR 713 (SC) on the issue of nonadmissibility of evidence which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he could have only confirmed whether the same are genuine or fake from the Tahasildar who directed the rectification. It is in no case the jurisdiction of the Ld. A.O. to check whether proper procedures have been followed by the Land Revenue Authorities while issuing the said documents and he cannot proceed to judge the genuineness and correctness of the procedures followed therein. It may be noted that in every legislature there is a provision for rectification of order already passed and similarly, even the Revenue Act contains express provisions for correction of mistakes in its records. Also, it is a normal practice to rectify the original orders in the revenue department. Therefore the question raised by the A.O. such as what made the Tahasildar to reconsider his stand of 8 years and for what purpose? Or how is it humanly possible for a lay man to remember certain specific crops were grown on the said land that too when such land and income arising therefrom does not belong to the lay man? would go directly to question the laws made by the constitution. Thus, the appellant in this case has done nothing wrong by following the procedure laid down in the laws formed in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction u/s.54B of the Act, an alternate claim u/s.54F of the Act, and finally, the allowability of claims of agricultural income. We have also dealt with various arguments and case laws relied by both the parties on these issues. We shall take up each of these issues in the succeeding paragraphs. To start with, the major issue of claims of deduction u/s.54B of the Act involves various aspects and the same are taken up as under : A. Whether assessees are the owners : Assessees purchased the land at Survey no 75/1 in the year 2000 along with his wife with 50% share in it. Shri Kuldeep Singh was the previous owner of these lands. In the year 2006, Assessee and his wife sold the said land which gave rise to the impugned capital gains. These are undisputed facts. Therefore, the ownership of the property is undisputed and the Assessee along with his wife are the owners of it. Of course, the entries in the revenue s records, which shows Shri Kuldeep Singh as owner or cultivator, created unnecessary suspicion in the mind of the AO, who took an adverse view in the matter and against the assessees. These observations demonstrate, how poorly and casually, the revenue s records are main ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed in the paper book. In any case, it is not the case of Revenue that the AO is possession of any direct credible incriminating evidence to demonstrate that the Shri Kuldeep Singh is the cultivator apart from the said controversial 7/12 extracts. We have already discussed that the 7/12 extracts are the creation of Revenue Officers/Talati etc., and the assessees have no role in maintenance of the records. Considering the fact lands at S.No. 75/1 is the possession of the Assessee since the year 2000 along with the undisputed fact that the assessees never leased the lands to Shri Kuldeep Singh, we are of the opinion that all is not well with records maintained by the MRO/Talati etc., It is likely that the Shri Kuldeep Singh, being the previous owner-cum-cultivator on records, continues to be shown by the Revenue authorities as the cultivator erroneously even after he sold the lands to the assessees. Otherwise, it is not possible that Shri Kuldeepsingh cultivated the land of the assessee legally. Thus, from this point of view, the said records of the revenue are not fool-proof so far as the 7/12 extracts of lands at S.No. 75/1, are concerned. Therefore, it is not possible that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. 36. There was action u/s.132 of the Act on the assessee at later years. Further, we find that the Agricultural income from Gut no 75/1 was also subject matter of the investigation by the AO s during the reassessment proceedings u/s.143(3) r.w.s. 153A of the Act. In these returns too, assessee made a claim of Agricultural Income. However, the AO disallowed the claim of exemption in respect of lands at Gut No.75/1. In the First Appellate proceedings, the CIT(A) gave clear cut direction in his order regarding the Agricultural income from Gut.No. 75/1 in particular and in favour of allowing the claim of Agricultural lands are the said agricultural lands for A.Ys 2004-05 and 2005-06. Regarding the aforementioned reporting of agricultural income in AYs 2004-05 and 2005-06 in the regular returns and availability of evidences in support of sale of the transactions of Agricultural produce, we find that the Assessee filed the returns of income u/s 139(1) of the Act before the due date specified in the state and the contents of the pages 478 to 489 of the Paper Book are relevant. Details relating to the date of filing, Acknowledgment Numbers were already mentioned in the preceding para ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Govardhan Shamrao) 1. Name : PAWAR GOVARDHAN SHAMRAO 2. Father's Name : SHAMRAO PAWAR 3. Address : PLOT NO.3. BANJARA COLONY, AURANGABAD- Phone : 4. Permanent A/c No. : ABFPP0880K 5. Birth Date : 26/07/1964 6. Status : Individual (01) 7. Resident 8. Ward : 2(2) 9. Sex : Male 10. Income for the prev. year 1.4.2004-31.3.2005 11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 979450 D] Extract from the Original Return of Income (page 485 to 486 of the Paper Book) filed u/s.139 of the Act for the A.Y 2005-06. (Mrs.Anita Govardhan Pawar) 1. Name : Mrs. ANITA GOVARDHAN PAWAR : 2. Father's Name : 3. Address : PLOT NO.3. BANJARA COLONY, AURANGABAD- Phone : 4. Permanent A/c No. : AKTPP0531C 5. Birth Date : 15/10/1969 6. Status : Individual (01) 7. Resident 8. Ward : 2(2) 9. Sex : Female ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n view of the above facts, I am of the considered view that the A.O. is not justified in holding that the said land was not used for agricultural purpose for the preceding two years. 6.5.4 Hence, the contention of the A.O. that the agricultural income is to be calculated only in respect of Gut No.256 276 is incorrect and hence the agricultural income in respect of Gut No.75/1 is also to considered. 39. Ld.AR submitted that the above evidences by way of the Returns of Income filed u/s.139 of the Act and the orders of CIT(A) for A.Ys 2004-05 and 2005-06, support the claims of the Assessee that the Assessee used the lands and earned Agricultural income in the relevant A.Ys. 40. Further, we find Shri Ajay Modi, Ld.DR fairly submitted that the Revenue accepted the orders of the AO in the regular assessment as well as the orders of CIT(A) for both years relatable to the reassessments u/s.143(3) r.w.s. 153A of the Act. Thus, the claim agricultural income for both A.Yrs 2004-05 and 2005-06 has reached the finality and it is in favour of the Assessees. Hence, we are of the view that the Assessee used the lands at S.No.75/1 for Agricultural purpose and Agricultural income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed to allow deduction of ₹ 77,37,500/- u/s 54B in respect of land at Gut No.73. 42. Further, we find the contents of Para 7 on Page 29 of the order of First Appellate Authority is relevant and the same is extracted here as under: ( 7) The beneficial provisions are to be construed liberally. In support of this proposition the appellant has relied on the various decisions pointed out in submission in respect of deduction claimed for purchase of land at Gut No.73 B] Extract from CIT(A) Page 29; Para 9.2 reg. Gut No.257. 9.2 I have carefully considered the facts of the case and the rival contentions. The issue to be decided to determine the allowability of deduction u/s 54B in respect of land at Gut No.257 is as under In view of the above facts and discussion, I am of the considered view that the appellant is eligible for deduction u/s 54B in respect of land at Gut No.257 in respect of consideration paid amounting to ₹ 33,66,000/- in which the appellant s share is 25%. The stamp duty Registry Expenses are ₹ 1,34,640/-. The A.O. is accordingly directed to allow deduction u/s 54B at ₹ 8,75,160/- to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade as an alternative ground to claim u/s.54B of the Act. However, AO dismissed the same on the ground of Assessee s failure to discharge onus with respect to furnishing of evidences in support of investment of gains in construction of the residential house. Assessee filed a certificate from Architect only. During the assessment proceedings, AO rejected the said certificate of the Architect cum builder of the said house. However, CIT(A) allowed the claim of the assessee as per his discussion in page 10 of his order. Before us, the AR relied on the respective orders of the AO or the CIT(A) as the case may be. On hearing the parties, we find the adjudication of this issue becomes a necessity only when the relief under the provisions relating to section 54B of the Act, is denied. 47. Therefore, considering the relief granted by us for the detailed reasons given in the paragraphs above, we are of the opinion that the adjudication this ground constitute an academic exercise only. Therefore, we proceed to dismiss the same as an academic. Accordingly, Ground No.4 of the Revenue is dismissed as academic. 48. Ground Nos.5 and 6 of Revenue in the case of Shri Govardhan S. Pawar and Gro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PLOT NO.3. BANJARA COLONY, AURANGABAD- Phone : 4. Permanent A/c No. : AKTPP0531C 5. Birth Date : 15/10/1969 6. Status : Individual (01) 7. Resident 8. Ward : 2(2) 9. Sex : Female 10. Income for the prev. year 1.4.2004-31.3.2005 11. Assessment Yr : 2005-2006 13. Details of Bank account (for refund cases) 12. Return :Original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wheet/ Tuwar Rs. 8,193-50 13. 098/7-98 02-01-2006 ---do--- Tuwar Rs. 10,346-64 14. 011/44-03 19-02-2006 ---do--- Tuwar Rs. 1,23,094-08 15. 862/043 01-02-2006 R.RajendraKumar Basha Sons Bajri Rs. 95,589-95 16. 986/042 19-12-2005 ---do--- Makka Rs. 57,431-42 17. 862/039 08-05-2005 ---do--- Jawari 72,261-05 18. 896/043 23-12-2005 ---do--- Matki/ Udid 22,575-84 19. 628/60 04-04-2006 ---do--- Tuwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the appellant to the extent of ₹ 1,90,000/- i.e. 20% of agricultural income declared, is treated as income from other sources. The appellant gets relief of ₹ 3,13,642/-. Thus, Ground No.2 is partly allowed. 54. From the above extracts, it is evident, the AO examined the Gut wise details and also the Agricultural Income on the strength of the receipts available with the AO. He, accordingly arrived at a scientific output of ₹ 4,46,358/- as net Agricultural Income out of his exercise and the balance of (Rs.9,05,000/- - ₹ 4,46,358/-) is added as income of the assessee. 55. On the other hand, the CIT(A) applied flat rate of 20% in both case of Shri Govardhan S. Pawar and Smt. Anita G. Pawar without having any basis. He summarily disallowed only a sum of rupees i.e. 20% of the 9.5 lakhs in the case of Shri Govardhan Shamrao Pawar and i.e. 20% of the 8.5 lakhs in the case Smt. Anita Govardhan Pawar. In our view, the order of the AO is more analytical and credible on this issue and it has a basis of documents in the form of agricultural receipts. Therefore, we are of the view that the orders of the AO in both the cases on this issue is fair and reason ..... X X X X Extracts X X X X X X X X Extracts X X X X
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