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TMI Blog2021 (6) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... i Waseem Ahmed, Accountant Member And Ms Madhumita Roy, Judicial Member For the Assessee : Shri Vijay Patel, A.R For the Revenue : Shri Dinesh Singh, Sr.D.R ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-13, Ahmedabad, dated 13/03/2020 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2016-2017. 2. The assessee has raised the following ground of appeal: On the facts and circumstances of the case as well as in law, the Ld.CIT(A) has grossly erred in rejecting the contention of the appellant and sustaining impugned addition of ₹ 4,77,58,546/- on account of appellant's claim of exemption u/s.54B of the Act, when the same is wholly unwarranted. 3. The solitary issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by denying the exemption claimed under section 54B of the Act for an amount of ₹ 4,77,58,546/- only. 4. The facts in brief are that the assessee in the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions carried out on the lands in dispute has filed extract 7/12 and 8A form before the AO during the assessment proceedings. 4.3 Similarly, the assessee also submitted that new lands purchased for ₹ 6,64,83,153/- were also used for the purpose of agricultural purposes and agricultural activity. For this the assessee filed the extract of form 7/12 before the AO. 4.4 Thus the assessee appealed that the conditions provided for claiming exemption under section 54B of the Act have been satisfied and therefore he is eligible for such exemption. The assessee, likewise, also submitted that similar claim were also made by the co-owners which were not disputed by the Income Tax Department in the assessment of such co-owners which was made under section 143(3) of the Act. 4.5 However, the AO during the assessment proceedings found that: i. The assessee has not furnished any detail with respect to the 3rd party carrying out the agricultural operations including the agreement if any with the party. In fact, the identity of the 3rd party carrying out agricultural operations was to be established to justify that there were agricultural operations on the lands in dispute. ii. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale deed at the time of sale of the impugned land also suggests that there was no agricultural operations carried out by the assessee. viii. On verification of the sale deed for transfer of the lands made by the assessee, it was found that the land in question was not capable of carrying out any agricultural activity. This fact has been categorically admitted by the assessee in the sale deed. 4.6 In view of the above, the AO concluded there was no agricultural operation carried out the lands in dispute. Thus the first condition as specified under section 54B of the Act for claiming exemption that the transferred land should be used for the purpose of agriculture activity in two immediate previous year from the date of transfer has not been satisfied. 4.7 Likewise, there was no agricultural income declared by the assessee with respect to new agricultural land purchased by it for the agricultural operations except a meagre amount of ₹ 38,963/- only in the F.Y. 2015-16 to 2017-18 which is negligible against the investment made by the assessee. The AO also found that the sale deed entered by the assessee for the purchase of new land clearly specifies that lands purchased by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operations are carried out as per the findings given as aforesaid. (f) Without prejudice to the above, even if the agricultural activity had been carried out in the small portion of the land, the same does not meet the requirement of the law to claim the deduction u/s 54B of the Act, in respect of entire land holding. (f) It has been mentioned in the purchase deed of "new asset" that there is no possibility to get any agriculture produce from such land. The photograph attached to the purchase deed of new asset shows spontaneous growth & wild bushes and, thus not cultivable and, moreover, there is no intention of the assessee or his heirs to carry out agricultural operations as mentioned in the sale deed. (f) No evidence for new asset claimed to be purchased through banakhat for ₹ 7,00,000/- has been filed and thus, the claim of deduction to that extent was clearly inadmissible. It has now been admitted that the transaction agreed did not took place. 5. Aggrieved assessee preferred an appeal to the learned CIT (A): 5.1 The assessee before the learned CIT(A) again reiterated that the cultivation on land in dispute was carried out by the third party on contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evident from the extract of 7/12 form. 6. However, the learned CIT (A) disregarded the contention of the assessee and confirmed the order of the AO by observing as under: The assesee is non-resident and has been staying in USA for very long time and has been visiting India as and when required. It has been submitted by the appellant that himself that the appellant is an NR living in USA since long, that his parents and his real brother residing in India have supervised/carried out and looked after the agricultural activity carried out on the said land and that the agricultural activity was carried out on the said land by a third party on crop sharing basis. The words of the appellant are that "It is learnt that they have given the said agricultural land for cultivation to the farmer on sharing basis upto F. Y.2014-15. The supervision was to be done by the appellant, his parents and his real brother Shri Nitin K Patel The farmer was given I/3rd share in the agricultural produce. All the related expenses were to be borne by the farmer. Further more in respect of agricultural income not shown in earlier years, it is submitted by the appellant that the agricultural produce was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e consequential addition of ₹ 4,77,63,118/- as made by the AO in the assessment order impugned in the appeal under consideration is confirmed. 7. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us 8. The learned AR before us filed a paper book running from pages 1 to 133 and contended that there were agricultural operations carried out on the lands in dispute in the earlier years. For this purpose, the learned AR drew our attention on the extract 7/12 along with form No. 8 which are placed on pages 41 to 106 and the affidavit of the party who carried out the agricultural operations on such lands which is placed on pages 35 to 40A of the paper book. 8.1 The learned AR further submitted that the land which was owned by the assessee jointly with the father and the brother, the exemption under section 54B of the Act was allowed in their assessment framed under section 143(3) of the Act. The copies of the assessment order are placed on pages 110 to 133 of the paper book. 8.2 The learned AR to support the contention of the assessee that there were agricultural operations carried out on the lands in dispute has also filed the screenshot of Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land transferred should have been used by the assessee or his parents or HUF for at least two years immediately preceding the date of transfer for agricultural purposes. (iii) The assessee should purchase within a period of two years after the date of transfer, other land being used for agricultural purposes. 10.1 Now coming to the facts of the present case. The assessee owns certain pieces of adjoining agricultural lands in respect of which he was claiming that these lands were used for agricultural operations. The details of the lands bearing different survey number stand as under: 1 85 12444 Sq. Mtr. Village: Khoraj Dist. Gandhinagar 20.05.2015 Pujan Rajesh Bhai Joshi 4,97,76,000 2 83 19425 Sq.Mtr. Village: Khoraj Dist. Gandhinagar 20.05.2015 Pujan Rajesh Bhai Joshi 7,77,00,000 3 84/2-B 1113 Sq.Mtr Village: Khoraj Dist. Gandhinagar 20.05.2015 Pujan Rajesh Bhai Joshi 33,39,000 4 57/2-A 1619 Sq.Mtr. Village: Khoraj Dist. Gandhinagar 20.05.2015 Pujan Rajesh Bhai Joshi 48,57,000 5 56/1 3642 Sq.Mtr. Village: Khoraj Dist. Gandhinagar 20.05.2015 Pujan Rajesh Bhai Joshi 78,30,300 6 56/2+84/2-A 8798 Sq.Mtr. Vil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compliance to notices which are verified and placed on record. During the year under consideration assessee earned income from capital gain and income from other source." 10.4 From the above, there remains no ambiguity that the Revenue in respect of the land bearing survey No. 83 which was jointly owned by the assessee, has allowed the deduction under section 54B the of the Act. 10.5 In view of the above, we note that the revenue cannot take stand against the assessee in the given facts and circumstances as the revenue in the case of the co-owner has extended the benefit of deduction under section 54B of the Act. 10.6 Moving to the other lands where the assessee was having the absolute/part ownership. The details of such land have already been reproduced here in above and the reasons for denying the deduction under section 54B of the Act has already been discussed somewhere in the preceding paragraph. 10.7 One of the reason for denying the deduction under section 54B of the Act was that the assessee has not furnished any detail of third party who was carrying out the agricultural operations on the lands belonging to the assessee on sub-letting basis. In this regard we find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted even on deserted land. It depends upon what type of crop cultivated. Once the assessee has discharged the onus, then it is the duty of the revenue to prove it wrong based on corroborative evidences rather finding out the procedural lapses. In holding so, we draw support and guidance from the judgment of Hon'ble Rajasthan High Court in case of CIT vs. Jai Kumar Bakliwal reported in 45 taxmann.com 203 the relevant extract of the judgment reads as under: The logical interpretation will be that while the assessee has to prove as special knowledge i.e. from where he has received the credit and once he disclosed the source from which he has received money, he must also establish that so far as his transaction with his creditor is concerned, the same is genuine and his creditor had the creditworthiness to advance the loan which the assessee had received. When the assessee discharges the burden so placed on him, onus then shifts to the Assessing Officer, if the Assessing Officer assessee the said loan as the income of the assessee from undisclosed source he has to prove either by direct evidence or indirect/ circumstantial evidence that the money which the assessee received from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the certificates. Thus it is implied that there were changes in the records of revenue authorities but without having any doubt on the crop shown therein as cultivated in the different years. We also note that the Hon'ble Pune Tribunal in the case of Majid Khan Nisar Khan vs. ITO reported in 88 taxmann.com 841 has held that the documents filed by the assessee in the form of 7/12 is sufficient enough to hold that the agricultural activity was carried out on impugned land. The relevant finding of the Hon'ble bench reads as under: We are of the considered view that the claim of the assessee cannot be rejected merely on the ground that the traders have not maintained books of account or have not filed return of income. The assessee in his return of income for the past several years has been disclosing income from agriculture and the Department has been accepting the same without any query. The Land Revenue records clearly indicate that land is under cultivation and Jowar and Soyabean crops were grown. The Land Revenue records are maintained by the Govt. Department. There is an element of credibility in the records maintained by the Govt. agencies. 11.3 Once the assessee has disch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the agricultural operations. However, the provisions of section 54B of the Act were brought under the statute for those persons who are carrying out the agricultural operations and earning their bread and butter from agriculture operations. Under the provision, it was to protect them from the tax liability in the event they sale the agricultural land subject to investment of the gain in acquisition of new agricultural land. In this regard, we note that the provisions of section 54B of the Act does not require the assessee to carry out the agricultural operations himself. Rather the provisions states that even the parents of the assessee or family member of HUF may carry out the agricultural operations. In such a situation, the assessee shall be eligible for the deduction. Admittedly, this fact has not been disputed by the authorities below that the father of the assessee has not carried out any agricultural operation on the lands in dispute. Therefore, there is no violation of the provisions of law. 11.7 Going further, the report furnished by the inspector of income tax cannot be relied upon as it was furnished dated 17 December 2018 whereas the case before us pertains to the F. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking of crop, harvest is not possible over this.land, ding fanning over this land became very difficult over this land. Our heirs are not interested in farming activity. We have sold this land to you at reasonable. We are getting more interest income from this sale amount rather than income from farming. We are maintaining our families on the strength of the income from sell. We are not interested in farming hence we are selling you the same, for the benefits of our families." 11.9 We are also conscious to the fact that the entry of the land in the revenue records as agricultural land is not a conclusive evidence as contended by the learned DR at the time of hearing. Indeed, the contention of the learned DR appears to be true in the light of the judgment of constitution bench of Hon'ble Supreme Court in the case of Commissioner of Wealth Tax vs. Officer-in-Charge (Court of Wards) reported in 105 ITR 133 wherein it was held as under. If there is neither anything in its condition, nor anything in evidence to indicate the intention of its owners or possessors, so as to connect it with an agricultural purpose, the land could not be "agricultural land" for the purposes o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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