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TMI Blog2020 (5) TMI 652X X X X Extracts X X X X X X X X Extracts X X X X ..... n the savings bank account as income escaped - Cash deposit and consequent assessment of sale of agricultural land through which cash has been generated by the assessee is not an independent and unconnected issue. Therefore, respectfully following the ratio laid down by RANBAXY LABORATORIES LIMITED [ 2011 (6) TMI 4 - DELHI HIGH COURT] , we do not find any infirmity in the reopening of the assessment by the learned assessing officer. Therefore, this argument of the learned authorized representative is rejected. In view of this we do not find any infirmity in the action of the Ao in reopening of the case as well as the action of approving authority in granting approval u/s 151 (1) of the act. - Decided against assessee. Capital gain - nature of land sold - capital asset v/s agricultural land - whether the agricultural land sold by the assessee or his HUF is a capital asset ? - Before us, the assessee has submitted a certificate of the tehsildar of village Bhapra dated 29th of December 2017 which certifies that the impugned land sold by the assessee is situated approximately 5.5 km from the municipal limits of Samalkha. The above certificate produced by the assessee before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Pradeep Singh Gautam, Sr. D. R. ORDER PER PRASHANT MAHARISHI, AM: 1. These are the two appeals filed by two brothers involving same issue arising out of single transaction of sale of land those are argued together and therefore, are disposed of by this common order. 2. We first take up the appeal in ITA No. 8211/Del/2018 filed by the Mr. Surat Singh against the order of the ld CIT (A), Karnal dated 31.10.2018. The assessee has raised the following grounds of appeal:- 1. That in the facts and circumstances of the case and in law the order passed by Ld AO dated 29 12 2017and further order passed by Ld. CIT(A) on 31.10.2018 are bad in law as order has passed without affording any further opportunity to assessee to explain the case. 2 That in the facts and circumstances of the case and in law the Ld. CIT(A) sustaining the action of Ld. A.O. in making of addition of ₹ 8,76, 186/- to the total income on account of Capital Gain arising out of the agriculture land. 3. That in the facts and circumstances of the case and in law the ld CIT(A) erred in not accepting the tehsildar certificate due to mismatch in sign on first page and second pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 148 of The Income Tax Act, 1961 is issued in case of the assessee for the assessment year 2010 11. 4. In response to the above notice assessee filed his return of income declaring total income of ₹ 93699/- and disclosed agricultural income of ₹ 135485/-. In the return of income the assessee declared that his 1/5th share in sale consideration of agricultural land situated at tehsil Samlakha District Panipat is ₹ 977700/-, whose cost of acquisition is ₹ 505600/- resulting into long term capital gain of ₹ 472100/-. He further claimed an exemption u/s 54B of the Act for purchase of agricultural land of ₹ 4559910/-. He claimed his share in above property @ 1/5th, therefore, he did not earn any taxable long term capital gain. 5. The ld AO noted that assessee along with his four brothers has sold an agricultural land for ₹ 4888500/-. The assessee submitted that it was a joint family property, which was sold, and new property of agricultural land was purchased. The assessee also submitted that the capital gain earned is Nil. The assessee also submitted circle rate for FY 1995-96 should be adopted for the purpose of the computa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s holding that the certificate is merely a photocopy and mentions that the land is approximately 5.5 km away from Samalkha. The learned CIT A also held that there is a difference in signature on the first page and on the next page; it does not bear the stamp of the tehsildar on second page. Therefore the authenticity of the said evidences is suspect and hence cannot be accepted. The learned CIT A further held that statement signifying the distances on an approximate basis cannot be relied upon. He further held that the explanation of the assessee is merely an afterthought to wriggle out of the clear-cut finding made by the learned assessing officer. Accordingly, he dismissed the appeal of the assessee. Therefore, assessee is in appeal before us. 7. Assessee has filed an application for admission of the additional ground as per Rule 11 of The Income Tax Appellate Tribunal Rules. The assessee wanted to admit the following additional grounds of appeal:- On the facts and circumstances of the case the jurisdiction of the AO under section 147 is bad in law, as there is no independent application of mind to the material for reopening of the matter and clearly a case of borrowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds raised by the assessee in the additional ground. It is apparent that all these grounds raised by the assessee praying for admission as an additional ground are legal ground and goes to the root of the matter. They challenge the assumption of jurisdiction of ld AO to reopen the case of assessee as well as sanction of the approving authority. The assessee has also given reasons for not raising these grounds earlier. The assessee has also relied upon several binding judicial precedents before us for admission of the above grounds. In view of all these facts, we admit the additional grounds raised by the assessee and proceeded to adjudicate the appeal on the grounds raised in the original appeal memo as well as in the additional ground raised by the assessee. 11. The learned authorised representative raised his arguments as under:- a. The learned assessing officer has initiated the reopening of the assessment for the reason that assessee has deposited cash in his savings bank account. He submitted that there is no addition made by the learned assessing officer on that account. The learned assessing officer has made the addition based on the long-term capital gain earned by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at originally the land was owned by the great-grandfather of the assessee and later on devolved on assessee and his four brothers. He further referred to the court decree in the suit of declaration that father of the assessee has declared his four sons as the owner of the property. e. On the issue that even otherwise the impugned land sold by the assessee is not a capital assets as it is situated beyond specified distances from the municipal area of Samalkha,, He referred to the notification of the government of India clarifying that land was situated beyond specified distances therefore the land was rural agricultural land and has no capital gain. f. He further referred to the certificate issued by the tehsildar clarifying that the land was situated at 5.5 km from Municipality which has been discarded by the learned CIT A. He further referred to page number 35 which shows that the land was situated outside municipal area and stated that lower authorities have conveniently ignored the fact. He submitted that certificate is signed by Tehsildar under his seal and signature on the application of the assessee. He submitted that n the first page signature is of assessee as it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was reopened that as deposit of cash in his bank account. The learned departmental representative submitted that when it was found that cash deposit has a source of sale of an agricultural land, naturally the addition could not have been made on that account but it was interlinked with the computation of capital gain in the hands of the assessee and therefore the addition has been made by the learned assessing officer only on the reason for which it was reopened. f. In view of this, it was submitted that order passed by the lower authorities be sustained. 14. We have carefully considered the rival contentions and perused the orders of the lower authorities. 15. Admittedly, the learned assessing officer has recorded the reasons for reopening of the assessment stating that assessee has deposited cash in his bank account. At the cost of repetition, it is important to note the facts. The assessee is an agriculturist. He did not file his return of income. The assessee was served a notice under section 148 of the income tax act to explain the source of cash deposited in his savings bank account with state bank of Patiala of ₹ 16 lakhs. The learned assessing officer consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of the assessment. c. The serial number 12 of the above form asked that whether the principal joint Commissioner of income tax is satisfied on the reasons recorded by the AO that it is a fit case for issue of notice under section 148 of the income tax act, 1961. The learned joint Commissioner of income tax has stated that yes satisfied, it is a fit case for issue of notice under section 148. This is said to be not a proper satisfaction by ld AR. The identical issue arose in before honourable Delhi High Court in case of Sonia Gandhi V The Asst Commissioner of income tax [2018] 97 taxmann.com 150 (Delhi)/[2018] 257 Taxman 515 (Delhi)/[2018] 407 ITR 594 (Delhi) wherein it was held as under:- 49. As far as the question of satisfaction recorded by the Principal Commissioner, under Section 151 (1) is concerned, the legal requirements were spelt out by the Division bench ruling in Meenakshi Overseas (P.) Ltd. ( supra ), in the following terms: For the purpose of Section 151(1) of the Act, what the Court should be satisfied about is that the Additional CIT has recorded his satisfaction on the reasons recorded by the Assessing Officer that it is a fit case for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of assessment proceedings the AO came to know that source of cash deposit in the bank account of the assessee is arising out of the sale of an agricultural land. Naturally, when the assessing officer has come to know that the source of cash deposited in the bank account of the assessee is a sale of an agricultural land, AO could not have added the cash deposited in the bank account but the nature of income comprising in such bank deposits. Therefore after examining the facts of the case, ld AO made addition on account of chargeability of long term capital gain on sale of that assets. We do not find any infirmity in the action of the learned assessing officer when the source of the cash deposit in the bank account is found to be the sale of land, which was not offered for capital gain. Therefore there is a live, direct and solid connection - nexus between the reasons for which the case of the assessee is reopened and the addition made by the ld AO. Honourable Delhi High Court in RANBAXY LABORATORIES LTD. Vs. COMMISSIONER OF INCOME TAX 2011) 79 CCH 0445 Del HC (2011) 57 DTR 0281, (2011) 242 CTR 0117 (2011) 336 ITR 0136, (2011) 200 TAXMAN 242 has held that :- 10. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuated approximately 5.5 km from the municipal limits of Samalkha. The above certificate produced by the assessee before the lower authorities have been rejected for the reason that the tehsildar has mentioned the distance in approximation and further there is difference in signature. This issue if examined on verification of the certificate issued by that particular authority, they have stated that the distance is approximately 5.5 km. Definitely the property is not situated within 5 km of the municipality limits of that particular region. Otherwise, that authority would not have certified so. Further merely because the authority has mentioned approximately , that does not mean that property is situated within the 5 km of the municipal limits of that particular municipality. It may be possible that distance is higher than 5.5 km. there is no reason to presume that as the distance is certifying in approximation it is definitely within 5 Km of Municipal limits. It is one of the ways of certifying the distance because same is not measured up to last meter. Therefore for this reason rejection of the above certificate is devoid of any merit. 20. The second reason why the certi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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