ITO, Bangalore v. Sri. C.R. Manohara, Bangalore

ITA 371/BANG/2014 | 2007-2008
Pronouncement Date: 28-11-2014 | Result: Allowed

Appeal Details

RSA Number 37121114 RSA 2014
Assessee PAN AJZPM9900D
Bench Bangalore
Appeal Number ITA 371/BANG/2014
Duration Of Justice 8 month(s) 11 day(s)
Appellant ITO, Bangalore
Respondent Sri. C.R. Manohara, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2014
Appeal Filed By Department
Order Result Allowed
Bench Allotted A
Tribunal Order Date 28-11-2014
Assessment Year 2007-2008
Appeal Filed On 18-03-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER ITA NOS.371 & 372/BANG/2014 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER WARD 9(3) BANGALORE. VS. SHRI C.R. MANOHARA NO.88-89 M.C. HALLI SARJAPUR ROAD ANEKAL TALUK. BANGALORE 562 125. PAN : AJZPM 9900D APPELLANT RESPONDENT APPELLANT BY : SHRI P. DHIVAHAR JT. CIT(DR) RESPONDENT BY : NONE DATE OF HEARING : 26.11.2014 DATE OF PRONOUNCEMENT : 28.11.2014 O R D E R PER N.V. VASUDEVAN JUDICIAL MEMBER ITA NO.371/B/14 IS AN APPEAL BY THE REVENUE A GAINST THE ORDER DATED 20.12.2013 US/. 143(3) OF THE ACT OF THE CIT( APPEALS) LTU BANGALORE RELATING TO A.Y. 2007-08. ITA NO.372/B/1 4 IS ALSO AN APPEAL BY ITA NO. 371 & 372/BANG/2014 PAGE 2 OF 8 THE REVENUE AGAINST THE ORDER DATED 20.12.2013 U/S. 271(1)(C) OF CIT(APPEALS) LTU RELATING TO A.Y. 2007-08 ITA NO.371/BANG/2014 2. THE ASSESSEE IS AN INDIVIDUAL. FOR THE A.Y. 20 07-08 HE FILED A RETURN OF INCOME ON 30.10.2007 DECLARING A TOTAL IN COME OF RS.3 33 487. RETURN WAS PROCESSED U/S. 143(1) OF THE ACT. THERE AFTER RETURN OF INCOME WAS TAKEN UP FOR REGULAR ASSESSMENT U/S. 143(3) OF THE ACT. THERE WAS A SURVEY CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 21.10.2009 U/S.133A OF THE ACT. THE ASSESSEE ADMITTEDLY IS A PERSON ENGAGED IN THE BUSINESS OF LAND DEVELOPMENT AND REAL ESTATE CONSUL TANCY. IN THE COURSE OF SURVEY A STATEMENT OF THE ASSESSEE WAS RECORDED WITH REFERENCE TO SALE OF LAND BY THE ASSESSEE IN SY. NO. 126/2. DODDA THI MMASANDRA VILLAGE ANEKAL TALUK SARJAPURA HOBLI BANGALORE MEASURING 28 GUNTAS. THE ASSESSEE HAD GAINED A SUM OF RS.39 75 820 ON SALE O F THE AFORESAID LAND. THE OFFICER CONDUCTING THE SURVEY QUESTIONED THE AS SESSEE AS TO WHY PROFIT ON SALE OF AGRICULTURAL LAND WAS NOT OFFERED TO TAX IN THE RETURN OF INCOME FILED BY HIM. IN REPLY THE ASSESSEE SUBMITTED THA T HE WAS UNDER THE IMPRESSION THAT INCOME ON SALE OF AGRICULTURAL LAND IS EXEMPT FROM TAX. HE ALSO SUBMITTED NOW THAT HE HAS BEEN APPRISED OF TH E CORRECT LEGAL POSITION HE WOULD FILE REVISED RETURN OF INCOME OFFERING IN COME FROM SALE OF AGRICULTURAL LAND TO TAX. FOLLOWING WAS THE RELEVA NT QUESTION AND ANSWER RECORDED AT THE TIME OF SURVEY:- ITA NO. 371 & 372/BANG/2014 PAGE 3 OF 8 Q.5 ON PERUSAL OF THE DETAILS OF AGRICULTURAL IN COME IT IS SEEN THAT YOU HAVE CLAIMED EXEMPTION ON SALE OF AGRICULT URAL LANDS. PLEASE NOTE THAT PURCHASE AND SALE OF AGRICULTURAL LAND IS A BUSINESS TRANSACTION AND THE PROFIT IS LIABLE TO BE TAXED. WHAT DO YOU HAVE TO SAY? ANS. I WAS UNDER THE GENUINE IMPRESSION AND BELIEF THAT THE SALE OF AGRICULTURAL LAND IS EXEMPT FROM TAX BUT WHEN T HE SAME WAS POINTED OUT BY YOUR AUTHORITIES I AM AGREEABLE TO OFFER THE SAME FOR TAXATION. I WAS IGNORANT OF THE RELEVANT PROVIS IONS AND THE OMISSION WAS WITHOUT ANY EVIL INTENTION. FURTHER I WILL BE FILING THE REVISED RETURN OF INCOME CONSIDERING ALL THESE ASPECTS FOR THE ASSTT. YEARS 2006-07 ONWARDS. 3. THE ASSESSEE DID NOT FILE A REVISED RETURN OF IN COME OFFERING INCOME ON SALE OF AGRICULTURAL LAND TO TAX. THE ASSESSEE HOWEVER FILED A REVISED STATEMENT OF TOTAL INCOME IN WHICH PROFIT ON SALE O F AGRICULTURAL LAND WAS SHOWN BY THE ASSESSEE. ACCORDINGLY A SUM OF RS.39 75 820 BEING PROFIT ON SALE OF AGRICULTURAL LAND WAS BROUGHT TO TAX BY THE ASSESSING OFFICER. AGGRIEVED BY THE AFORESAID ORDER OF AO THE ASSESSE E FILED APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(APPEALS) ASSESSEE POINTED OUT TH AT AGRICULTURAL LAND IN QUESTION IN DODDA THIMMASANDRA VILLAGE WAS 10 KM S. AWAY FROM THE MUNICIPAL LIMITS AND IN THIS REGARD HE FILED A CER TIFICATE FROM THE DY. TAHSILDAR SARJAPURA HOBLI ANEKAL TALUK BANGALORE . THE ASSESSEE THUS CONTENDED THAT AGRICULTURAL LAND IN QUESTION WAS NO T A CAPITAL ASSET AND THEREFORE INCOME FROM SUCH SALE WAS NOT ASSESSABLE TO TAX UNDER THE HEAD CAPITAL GAINS. IT WAS ALSO SUBMITTED THAT INCOME IN QUESTION CANNOT ALSO ITA NO. 371 & 372/BANG/2014 PAGE 4 OF 8 BE ASSESSED AS INCOME FROM BUSINESS OR PROFESSION. ON WHAT BASIS THE ASSESSEE CLAIMED THAT THE INCOME IS NOT FROM BUSINE SS OR PROFESSION IS NOT STATED BEFORE CIT(A). THE ASSESSEE SUBMITTED THAT THE AO DESPITE ABOVE DOCUMENTARY EVIDENCE AND CONTENTIONS BEING PUT FORT H BEFORE HIM DID NOT CONSIDER THE SAME AND BROUGHT TO TAX INCOME ON SALE OF AGRICULTURAL LAND. THE ASSESSEE THUS PRAYED THAT ADDITION MADE BY TH E AO BE DELETED. 5. THE CIT(APPEALS) AGREED WITH THE CONTENTIONS PUT FORTH BY THE ASSESSEE AND HELD AS FOLLOWS:- 6. GROUNDS NOS. 2 TO 7 RELATE TO THE ADDITION OF RS. 39 75 820 TOWARDS PROFIT FROM SALE OF AGRICULTURAL LANDS AS D ISCUSSED ABOVE. I HAVE GONE THROUGH THE APPELLANTS SUBMISSION AND FIND THAT THE TEHSILDARS CERTIFICATE INCLUDES THE AREA OF DODDA THIMMASANDRA IN THE AREAS SPECIFIED AS BEING BEYOND 10 KILOMETRE S FROM THE MUNICIPAL LIMITS OF BBMP. NO MATTER WHAT THE COMMIT MENT FOR REVISION OF INCOME ETC. GIVEN BY THE ASSESSEE DURIN G THE SURVEY AND THEREAFTER IT IS AN UNDISPUTED FACT THAT THE L AND SOLD DID NOT CONSTITUTE A CAPITAL ASSET WITHIN THE MEANING OF SECTION 2(14) OF THE IT ACT AND IGNORING THIS ASPECT IN SPITE THE T EHSILDARS CERTIFICATE HAVING BEEN MADE AVAILABLE SHOWS LACK OF JUDICIOUS APPLICATION OF MIND BY THE AO. ALTHOUGH THE CERTIFI CATE IS ADMITTED AS RELEVANT EVIDENCE IN THIS APPEAL THE AO IS DIRECTED TO CONDUCT AN INDEPENDENT VERIFICATION AND IF THE FAC TS ARE FOUND TO BE CONSISTENT TO GIVE EFFECT TO THIS ORDER BY ACCE PTING THE FACTUAL CONTENTION OF THE APPELLANT. 6. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) REVE NUE HAS PREFERRED THE PRESENT APPEAL RAISING THE FOLLOWING EFFECTIVE GROUNDS:- 2. THE LD. CIT(A) ERRED IN HOLDING THAT THE LAND S IN QUESTION ARE AGRICULTURAL LANDS AND DOES NOT FALL UNDER THE DEFINITION OF ITA NO. 371 & 372/BANG/2014 PAGE 5 OF 8 CAPITAL ASSET U/S 2(14) OF THE I.T. ACT WHEN THE AS SESSEES MAIN BUSINESS ACTIVITY ITSELF IS TRADING OF PURCHASE AND SALE OF LANDS. 3. THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE REMAND REPORT SUBMITTED BY THE ASSESSING OFFICER WHEREIN I T WAS CLEARLY BROUGHT OUT THAT THE ASSESSEE HAD FILED THE REVISED STATEMENT OF TOTAL INCOME OFFERING THE SAID INCOME OF RS. 39 75 820/- AS PART OF VOLUNTARY DECLARATION CONSEQUENT TO SURVEY U/S 1 33A OF THE I.T. ACT ON 21.10.2009. 7. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHA LF OF THE ASSESSEE. IN THE CIRCUMSTANCES WE PROCEED TO HEAR THE LD. DR AND DECIDE THE APPEAL. 8. THE LD. DR SUBMITTED THAT THROUGH THE PROPERTY I N QUESTION WAS AN AGRICULTURAL LAND AND THEREFORE NOT A CAPITAL ASSET WITHIN THE MEANING OF DEFINITION OF CAPITAL ASSET AS CONTAINED IN SECTI ON 2(14) OF THE ACT THE FACT THAT THE SAID LAND WAS STOCK-IN-TRADE OF THE BUSINE SS OF REAL ESTATE DEVELOPMENT CARRIED ON BY THE ASSESSEE HAD BEEN OVE RLOOKED BY THE LD. CIT(APPEALS). IT WAS ALSO SUBMITTED THAT PROFIT ON SALE OF SUCH STOCK-IN- TRADE WOULD GIVE RISE TO INCOME FROM BUSINESS AND T HOUGH THE LAND MAY BE AN AGRICULTURAL LAND YET ON SALE OF SUCH LAND WHIC H IS HELD AS STOCK-IN- TRADE INCOME ACCRUING WOULD BE ASSESSABLE AS INCOM E FROM BUSINESS. THE LD. DR SUBMITTED THAT THE AO HAS ALSO ASSESSED THE SAME AS INCOME FROM BUSINESS AND NOT UNDER THE HEAD CAPITAL GAINS . 9. WE HAVE GIVEN A CAREFUL CONSIDERATION TO THE SUB MISSIONS MADE ON BEHALF OF THE REVENUE. THE QUESTION WHETHER THE LA ND IN QUESTION WAS HELD AS INVESTMENT OR STOCK-IN-TRADE OF THE BUSINESS HA S NOT BEEN DISCUSSED ITA NO. 371 & 372/BANG/2014 PAGE 6 OF 8 EITHER BY THE AO OR THE CIT(APPEALS). THE AO HAS P ROCEEDED ON THE BASIS THAT ASSESSEE IS A LAND DEVELOPER AND THEREFORE LAN D HELD BY THE ASSESSEE WILL BE PART OF STOCK-IN-TRADE OF THE BUSINESS CARR IED ON BY THE ASSESSEE. THOUGH THIS IS A POSSIBILITY BUT IT CANNOT BE SAID THAT ALWAYS LAND HELD BY A PERSON WHO IS IN THE BUSINESS OF DEVELOPING AND SEL LING OF LAND WILL BE STOCK-IN-TRADE. IT APPEARS TO US THAT THE ISSUE HA S NOT BEEN PROPERLY CONSIDERED BY THE REVENUE AUTHORITIES. WE ARE OF T HE VIEW THAT THE LD. CIT(A) HAS ALSO NOT CONSIDERED THIS ASPECT. IF THE LAND IN QUESTION IS HELD AS STOCK-IN-TRADE THEN NOTWITHSTANDING THE FACT TH E SAME IS AN AGRICULTURAL LAND INCOME FROM SALE OF SUCH LAND WOULD BE TAXABL E AS BUSINESS INCOME. WE THEREFORE SET ASIDE THE ORDER OF THE CIT(APPEA LS) AND REMAND THE ISSUE TO THE ASSESSING OFFICER FOR FRESH CONSIDERAT ION IN LIGHT OF THE OBSERVATIONS AS ABOVE. 10. FOR STATISTICAL PURPOSES APPEAL OF THE REVENUE IS ALLOWED. ITA NO.372/BANG/2014 11. AS FAR AS THIS APPEAL IS CONCERNED THE SAME AR ISES OUT OF THE ORDER OF AO IMPOSING PENALTY ON THE ASSESSEE FOR NOT DECL ARING THE INCOME FROM SALE OF AGRICULTURAL LAND IN THE RETURN OF INCOME. ACCORDING TO AO THE ASSESSEE WOULD NOT HAVE FILED REVISED COMPUTATION O F TOTAL INCOME OFFERING INCOME ON SALE OF AGRICULTURAL LAND BUT FOR THE SU RVEY U/S. 133A OF THE ACT. THE AO ACCORDINGLY CONCLUDED THAT ASSESSEE WAS LIAB LE TO PAY PENALTY U/S. 271(1)(C) OF THE ACT. ITA NO. 371 & 372/BANG/2014 PAGE 7 OF 8 12. ON APPEAL BY THE ASSESSEE THE CIT(APPEALS) CAN CELLED THE ORDER IMPOSING PENALTY FOR THE REASON THAT ADDITION MADE IN THE QUANTUM PROCEEDINGS IN RESPECT OF WHICH PENALTY WAS IMPOSE D U/S. 271(1)(C) OF THE ACT HAD BEEN DELETED. 13. AGGRIEVED BY THE ORDER OF CIT(A) REVENUE HAS P REFERRED THE PRESENT APPEAL. 14. THE LD. DR SUBMITTED THAT DECLARATION OF INCOME IN THE REVISED STATEMENT OF TOTAL INCOME BY THE ASSESSEE WAS NOT V OLUNTARY AND THE SAME HAD BEEN DECLARED ONLY CONSEQUENT TO SURVEY U/S. 13 3A OF THE ACT. ACCORDING TO HIM THEREFORE ASSESSEE IS GUILTY OF H AVING FURNISHED INACCURATE PARTICULARS OF INCOME/CONCEALED PARTICUL ARS OF INCOME AND THEREFORE PENALTY U/S. 271(1)(C) HAD TO BE IMPOSED . 15. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D R AND ARE OF THE VIEW THAT THE ORDER OF THE CIT(APPEALS) CANCELLING THE ORDER OF AO IMPOSING PENALTY HAS TO BE UPHELD FOR THE REASON T HAT ADDITION MADE IN THE QUANTUM PROCEEDINGS HAS BEEN SET ASIDE TO THE AO FO R FRESH CONSIDERATION. ACCORDINGLY PENALTY IMPOSED ON THE ASSESSEE WILL N OT SURVIVE. HOWEVER IN THE SET ASIDE PROCEEDINGS THE AO WILL BE AT LIB ERTY TO INITIATE PENALTY PROCEEDINGS AFRESH IF HE SO DESIRES. WITH THESE O BSERVATIONS APPEAL OF THE REVENUE IS DISMISSED. ITA NO. 371 & 372/BANG/2014 PAGE 8 OF 8 16. IN THE RESULT ITA NO.371/BANG/2014 IS ALLOWED FOR STATISTICAL PURPOSES WHILE ITA NO.372/BANG/2014 IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF NOVEMBER 2014 . SD/- SD/- ( ABRAHAM GEORGE) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMB ER BANGALORE DATED THE 28 TH NOVEMBER 2014 . /D S/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR / SENIOR PRIVATE SECRETARY ITAT BANGALORE.