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TMI Blog2023 (3) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... -31, New Delhi dated 26.05.2017 for Assessment Year 2010-11. 2. The assessee has raised the following grounds of appeal:- 1. That the order of the Ld. CIT (A) passed u/s 250 of the Income Tax Act, 1961 is bad in law and on facts. 2. That the Ld. CIT(A) has erred in not admitting the additional grounds taken u/s 250 (5) of the I. T Act. 2.1 That the Ld. CIT (A) failed to appreciate that the additional grounds taken were the legal grounds which according to Hon'ble Apex court in case of NTPC 229 ITR 383 can be raised at any stage of the proceedings. 2.2 That the Ld. CIT(A) has erred in ignoring the judgement of jurisdictional Hon'ble Delhi High Court in the case of CIT v Kabul Chawla [2016] 380 ITR 573 (Delhi) whereby it was held that completed assessments can be interfered with by the Ld. AO while making addition u/s 153A only on the basis of some incriminating material found during search. 3. That the Ld. CIT(A) has erred in sustaining the addition of Rs. 2,00,000/-on account of agricultural income which is otherwise treated as exempt income under the Income Tax Act. 3.1 That the addition was sustained despite the fact that numerous sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant were also covered. Accordingly, proceedings u/s 153A were initiated. In response thereto, the return of income was filed u/s 153A showing total income of Rs 1.78,490/- which was the same as declared in the original return. The assessment was completed u/s 153A/143(3) vide order dated 31.03.2016 by the ld. AO, at an income of Rs 3,78.490/-, making an addition of Rs 2,00,000/- on account of agriculture income. 4. Aggrieved the assessee filed appeal before the ld CIT(A), who confirmed the order of the AO and treated the addition of Rs. 2 lac as income from non-agricultural activities. Further, the ld CIT(A) enhanced the income of the assessee by Rs. 7.32 crores by disallowing the deduction claimed u/s 54B of the Act on the grounds that the land purchased by the assessee was hitherto a non-agricultural land. During the year 5. The provision of section 54B is as under:- 54B. (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee being an individual or his parent, or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) the amount not so utilised shall be charged under section 45 as the income of the previous year in which the period of two years from the date of the transfer of the original asset expires; and (ii) the assessee shall be entitled to withdraw such amount in accordance with the scheme aforesaid. 6. The reasons given by the ld CIT(A) are as under:- 5. Enhancement of Income 5.1 A perusal of the pleadings and the assessment records showed that the appellant had inter alia claimed deduction u/s 54B of the Act, amounting to Rs.7,32,79,132/-. The gains are found to have arisen on sale of land at Punjab Khor. Delhi (acquired by the appellant through gift from her brother in 2001). It was also seen that the appellant filed a revised Computation of income during the assessment proceedings on 16.03.2016, including therein agricultural income from said Punjab Khor land which she said to have omitted while filing the original return of income. 5.1.1 The aforesaid land at Punjab Knor, was sold by her resulting in the capital gains as narrated and the sale consideration is said to have been invested in purchasing a land at Village Anangpur, District Faridabad (thro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.4 Before adverting to the issue of enhancement further, I would like to observe that the approach of the AO in the assessment proceedings on this issue was casual which apart from being erroneous also caused serious prejudice to the interests of Revenue. Apart from the issue of agricultural land purchased in Faridabad which has been dealt with later in this order, it is-observed that even in the context of the sale of Punjab Khor land it is seen that the Id. AO has accepted the factum of sale without verifying the availability of funds with the buyer In other words, Id. AO has accepted the claim of the appellant without peeping into as to whether the buyer had explained sources of income or not. 5.5 In exercise of powers vested us 251, to enhance the assessment by withdrawing the exemption u/s 549 erroneously allowed by the AO, the appellant was, vide notice for enhancement dated 24.04.2017, called upon to file submissions showing as to how the conditions as stipulated u/s 548 get satisfied in her case. The said notice is reproduced as under: This is in connection with the aforesaid appeal for the AY 2010-11 filed by you against the assessment order dated 31.03.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural income of Rs.2,00,000/-as offered by you in the revised computation filed during the course of the assessment proceedings, as income from other sources. Since, neither the return of income filed originally nor the same filed in response to the notice u/s 153A showed any agricultural income nor there were evidences available with the AO at the time of assessment proving the factum that the impugned land was actually being used for agricultural purposes, it is clear that the AO inadvertently erred in not disallowing the claim for deduction u/s 548 especially when she had not accepted the very agricultural income which was germane to the allowance of such deduction. 5 Under the circumstances, in exercise of powers vested in me u/s 251. I propose to enhance the assessment by withdrawing the deduction u/s 548 inadvertently allowed by the AO, You are hereby given the opportunity to file submissions showing as to how the conditions as stipulated u/s 548 get satisfied in ne your your case 6 Your reply, if any, should reach to the undersigned on or before. 17.05 2017 at 11.00AM Failing the above, it shall be presumed that you have no objection to the proposed enhancement. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain rights accruing to a purchaser by way of becoming member of or acquiring shares in a co-operative society company, or association of person or by way of any agreement in a co-operative society company or association of persons or by way of any agreement or any arrangement whereby such person acquires any right in any building which is either being constructed or which is to be constructed Transactions of the nature referred to above are not required under the registration Act, 1908. Such arrangements confer the privileges of ownership without transfer of title in the building and are a common mode of acquiring flats particularly in multi-storeyed constructions in big cities. The definition also does cover cases where possession is allowed to be taken or retained in part performance of a contract, of the nature referred in section 53A of the Transfer of Property Act, 1882 New sub clauses (v) and (vi) have been inserted in section 2(47) to prevent avoidance of the capital gain liability by recourse to transfer of rights in the manner referred to above. The newly inserted sub-clause (vi) of section 2(47) has brought into the ambit of transfer, the practice of enjoyment of pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ators Promoters Pvt. Ltd. on 18th December, 2009 vide registered deeds dated 1st December 2009 and 12th Dec 2009 (Copy of deeds furnished vide letter dated 17.05.2017) IV. Whether Mr. Ved Chaudhary is related to Mr Trilok Chaudhary Yes, Mr. Ved Chaudhary is also the brother in law of the assessee and elder brother of Mr. Trilok Chaudhary 2 Without prejudice to the above, it is submitted that your good-self is seeking to invoke powers u/s 251 of the Income Tax Act to enhance the assessment by withdrawing exemption u/s 548 of Rs 7,32,79,132/- inadvertently allowed by the Ld. AO on capital gain on sale of land at Punjab Khor. Your Honour will appreciate that sec 251 of the Act cannot be praised into the service to substitute the view/decision of the assessing officer 3 At para 32 of the notice dated 24.04.2017, your goodsell has stated that on the directions of the Id. AO, copy of sale/purchase deed of Anangpur land was not filed during assessment proceedings. Respectfully submitting, this is not correct The Id AO vide letter dated 18.03.2016 asked to substantiate the claim of exemption u/s 548 In response thereto, the assessee filed her reply dated 28.03.2016 (copy of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. This submission is clearly an act of purgery aimed at putting blinkers on the eyes of justice. The argument of 'substitution of the AO's view' also does not hold good on the ground that for the various reasons mentioned above, Id. AO had clearly viewed filing of the Purchase/Sale Deed as clinching and indispensable for the purpose of allowing deduction u/s 548. However, disregarding her own insisted upon requirement, she apparently inadvertently, allowed the said deduction, thus committing a patent error 5.8 Before concluding the issue, it is considered relevant and important to note that the entire sale consideration (towards the purchase of agricultural land at Faridabad) is found paid by the appellant in cash. Another important aspect in purchase of the above said land at Faridabad to be taken note of is that despite having paid entire purchase consideration, the appellant does not take care to get the property registered in her name despite knowing full well that as per law (e.g. under the Registration Act etc.) for getting the legal ownership, registration is must. Entire conduct of the appellant is incomprehensible and against the prudence and human pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- i. ii .. 5.9.1 In the result, inter alia as shown above, it is held that the appellant is not entitled to deduction u/s 54B of the Act because neither the agricultural income nor the purchase of agricultural land is proved and further that the appellant has failed to satisfy the mandatory condition of 'purchase of any other land for being used for agricultural purposes' as enunciated u/s 54B of the Act. 5.8.4 Accordingly, I hold that the appellant is not entitled for the deduction claimed and direct enhancement of the income of the appellant by an amount of Rs.7,32,79,132/-. The AO is accordingly, directed to give effect to the above findings and raise the additional demand. Penalty proceedings u/s 271(1)(c) are separately initiated for furnishing inaccurate particulars of income to the extent of Rs.7,32,79,132/-as mentioned supra. 7. The submission of the assessee before the Tribunal are as under:- 7. Nowhere in the assessment order, there was any reference or mention about the exemption claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that neither the agricultural income nor the purchase of agricultural land is proved and further that the appellant has failed to satisfy the mandatory condition of purchase of any other land for being used for agricultural purposes. 10. Before us the assessee submitted the documents with regard to purchase of land on the payments thereof. We have gone through the certificate of Tehsildar also. With regard to mode of transfer of property reliance is placed on the order of the ITAT Delhi Bench in case of Babita Gupta Vs. CIT 100 ITR(T) 252 and judgment of jurisdictional High Court in the case of Ram Gopal 372 ITR 498. We also gone through the Khara Girdawari which was submitted before the ld CIT(A) reflecting the crops grown in Kharif and Rabi. 11. Since the land sold has been proven to be used for agriculture purpose in the preceding two years and the land purchased by the assessee has been proved to be agriculture land and the purchase has taken place within the stipulated period allowed by the Income Tax Act, 1961, we hold that the assessee is eligible for claim of exemption u/s 54B of the Act and also the receipt of Rs. 2 lacs be treated as income from agriculture. 12 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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