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TMI Blog2024 (2) TMI 892X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is not a necessary condition for deciding that a particular parcel of land was agricultural land. The matter has been restored to the AO only to examine the evidence filed by petitioner and conducting enquiry, if necessary, with the concerned authorities of the Government to find out the true nature and character of the land sold and only if, the AO comes to a conclusion on the basis of material brought on record that the lands sold by petitioner are not in the nature of agricultural land, can he come to conclusion that the land would come within the purview of capital asset as defined under Section 2(14) of the Act. We hereby quash and set aside the impugned order dated 24th March 2022 and remand the matter for passing the fresh assessment order. The AO will only examine whether the evidence brought on record to establish the claim that the lands sold are in the nature of agricultural land, was authentic. If the AO has to reject the evidence filed by petitioner, he shall bring contrary material on record. For that, the AO has to conduct an enquiry to ascertain the authenticity of the certificates filed by petitioner. AO may take such steps as required by conducting necessary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. 3. Petitioner, on its part, vide letter dated 24th February 2016, submitted, and which is also the case of petitioner in this petition as well, that the agricultural land sold was a rural agricultural land as per Section 2(14)(iii) of the Act and the agricultural land situated in rural area was not covered in the definition of capital asset. Therefore, no capital gain was applicable. It was submitted that provisions of Section 2(14)(iii) of the act does not require that agricultural operations should be undertaken on such land at the time of transfer or immediately prior to the transfer. It was also submitted that only in cases where Section 10(37) and Section 54B of the Act were applicable, for claiming exemption from sale of agricultural land, there was requirement that the land should be used for agricultural purposes during the preceding two years from the date of transfer. Petitioner also relied upon circular dated 13th April 2011 issued by Government of India, Ministry of Rural Department, New Delhi- F.M. 24011/2009-LRD, which provides that there is no tax liability on the transfer of rural agricultural lands. 4. The Assessing Officer (AO) by his order dated 28th March ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and was requested to furnish his reply on 20th March 2019. Despite reminder being sent, the AO did not furnish any reply. There is nothing on record to indicate whether any action was taken against the said AO. We would expect the department atleast, now to take action against the concerned AO for not responding to the communication, stated to have been sent by the CIT (A). 5. Aggrieved by the order of CIT(A), petitioner preferred an appeal before the Income Tax Appellate Tribunal (ITAT). No appeal was filed by the Revenue or any cross objection filed. Therefore, the finding of the CIT(A) that actual carrying on of agricultural operations is not a necessary condition for deciding that a particular parcel of land was agricultural land, has attained finality. In our view also, in the facts and circumstances of this case, actual carrying on of agricultural operation was not necessary condition. We say this because it is petitioner s claim that the agricultural land sold was not within the jurisdiction of municipality or municipal corporation or notified area committee or town area committee or town committee or a cantonment board and which has a population of not less than ten thousan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the learned Commissioner (Appeals), the Assessing Officer chose not to offer any comment on the additional evidences filed by the assessee. Be that as it may, the facts on record clearly reveal that the assessee produced certain documentary evidences from the Village level officers to demonstrate that the lands sold were in the nature of agricultural land. Further, the sale deed also describes the lands sold as agricultural land. Unfortunately, learned Commissioner (Appeals) has not whispered even a single word on the veracity of additional evidences furnished by the assessee. If the additional evidences furnished by the assessee mentioning the lands sold as agricultural land did not inspire confidence or required further verification, learned Commissioner (Appeals) should have conducted proper enquiry to ascertain the authenticity of the certificates issued by Talati and Gramsewak. Without disproving the correctness of the confirmation/certificates issued by the Talaties and Gramsewak, learned Commissioner (Appeals) was not justified in rejecting assessee s claim of agricultural land, that too, on the premise that the assessee failed to furnish any evidence to show that the land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order dated 5th May 2021 came to be passed. A petition was filed challenging the said assessment order on the ground that the AO did not strictly follow the mandatory provisions of Section 144B of the Act. The said order does not indicate that any personal hearing was granted. The said order was quashed and set aside by this court on 3rd January 2022 in Writ Petition No. 1292 of 2021 and the matter was remanded for denovo consideration. The AO was directed to strictly comply with the mandatory requirements of Section 144B of the Act and also the order passed by the ITAT on 28th September 2019. Subsequently, a fresh assessment order dated 24th March 2022 has been passed which is impugned in this petition. The fresh assessment order also proceeds on the basis that petitioner did not show any evidence of carrying on of agricultural operation in the land. This is despite recording in the impugned order, what the ITAT had held that the CIT(A) has accepted petitioner s contention that actual carrying on of agricultural operation is not a necessary condition for deciding that a particular parcel of land was agricultural land. Therefore, the AO should have, instead of passing the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land would not be covered under definition of capital asset as stated in Section 2(14)(iii) of the Act. Moreover, the ITAT has not disturbed the findings of the CIT(A) that actual carrying on of agricultural operation is not a necessary condition for deciding that a particular parcel of land was agricultural land. As noted earlier, we agree with the opinion of the CIT(A) in this regard because Section 45(1) of the Act reads as under: Capital gains. 45. (1) Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H, be chargeable to income-tax under the head Capital gains , and shall be deemed to be the income of the previous year in which the transfer took place. ************************************** Capital asset is defined under Section 2(14) of the Act, and reads as under: (14) capital asset means (a) property of any kind held by an assessee, whether or not connected with his business or profession; **************************************** but does not include ----- ***************************************** (iii) agricultural land in India, not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank of India; (iv) such income has arisen from the compensation or consideration for such transfer received by such assessee on or after the 1st day of April, 2004. Explanation . For the purposes of this clause, the expression compensation or consideration includes the compensation or consideration enhanced or further enhanced by any court, Tribunal or other authority; (emphasis supplied) Section 54B Capital gain on transfer of land used for agricultural purposes not to be charged in certain cases. 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 Hindu undivided family for agricultural purposes (hereinafter referred to as the original asset), and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purposes , then, instead of the capital gain being charged to income-tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the land would come within the purview of capital asset as defined under Section 2(14) of the Act. 9. In the circumstances, we hereby quash and set aside the impugned order dated 24th March 2022 and remand the matter for passing the fresh assessment order. The AO will only examine whether the evidence brought on record to establish the claim that the lands sold are in the nature of agricultural land, was authentic. If the AO has to reject the evidence filed by petitioner, he shall bring contrary material on record. For that, the AO has to conduct an enquiry to ascertain the authenticity of the certificates filed by petitioner. The AO may take such steps as required by conducting necessary enquiry with the concerned Government authorities. The contention of petitioner cannot be rejected purely on presumption that the lands sold were not an agricultural lands because petitioner sold the parcels of lands within two years of purchase. If the AO is satisfied that the parcels of land actually are not situated in an area which will fall under Section 2(14)(iii), the AO shall proceed on the basis that in the facts and circumstances of the case, actual carrying on of agricultural opera ..... X X X X Extracts X X X X X X X X Extracts X X X X
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