Shri P. Ramachandraiah Shetty, Bangalore v. CIT,BANGALORE-II, Bangalore

ITA 536/BANG/2009 | 2005-2006
Pronouncement Date: 10-02-2010 | Result: Allowed

Appeal Details

RSA Number 53621114 RSA 2009
Bench Bangalore
Appeal Number ITA 536/BANG/2009
Duration Of Justice 8 month(s) 15 day(s)
Appellant Shri P. Ramachandraiah Shetty, Bangalore
Respondent CIT,BANGALORE-II, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 10-02-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 10-02-2010
Date Of Final Hearing 09-12-2009
Next Hearing Date 09-12-2009
Assessment Year 2005-2006
Appeal Filed On 26-05-2009
Judgment Text
PAGE 1 OF 6 ITA NO.536/BANG/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH A' BEFORE SHRI K P T THANGAL VICE PRESIDENT AND SHRI A MOHAN ALANKAMONY A.M. ITA NO.536/BANG/2009 (ASST. YEAR 2005-06) SHRI P RAMACHANDRAIAH SHETTY SRINATH BUILDING SULTANPET BANGALORE-53. - APPELLANT VS 1. THE COMMISSIONER OF INCOME TAX BANGALORE-11 BANGALORE. 2. THE INCOME TAX OFFICER WARD-3(2) BANGALORE. - RESPONDENT APPELLANT BY : SHRI SRINIVASAN & SHRI NARENDRA SHARMA RESPONDENT BY : SMT. PREETHI GARG O R D E R PER K P T THANGAL VICE PRESIDENT : THIS APPEAL BY THE ASSESSEE IS FOR THE ASST. YEAR 2005-06 AND IS DIRECTED AGAINST THE ORDER OF THE LE ARNED CIT U/S 263 OF THE I T ACT. 2. THE GRIEVANCE OF THE ASSESSEE IS THAT ALL THE P OINTS THAT WERE TAKEN BY THE CIT U/S 263 WERE THOROUGHLY EX AMINED BY THE ASSESSING OFFICER IN GREAT DETAIL AND THIS FA CT HAS NOT BEEN CONSIDERED BY THE CIT AND THERE IS NO APPLICATI ON OF MIND PAGE 2 OF 6 ITA NO.536/BANG/2009 2 BEFORE PASSING THE ORDER U/S 263. IT IS FURTHER ST ATED BY THE ASSESSEE THAT THE DIRECTION TO MAKE A FRESH ASSESSM ENT AMOUNTS TO ORDERING FOR MAKING FISHING AND ROVING E NQUIRIES WITHOUT ANY MATERIAL IN SUPPORT THEREOF AND CONSEQUE NTLY THE IMPUGNED ORDER PASSED IS BAD IN LAW AND IS LIABLE T O BE CANCELLED. 3. IN THIS CASE THE ASSESSMENT WAS COMPLETED U/S 143(3) FIXING AN INCOME AT RS.1 97 920/- AGAINST RE TURNED INCOME OF RS.1 29 916/-. DURING THE RELEVANT ASST. YEAR ASSESSEE SOLD LAND IN VILLAGE HARIGADDE JIGANI HOBL I ANEKAL TALUK. WHILE GOING THROUGH THE PAPERS CIT NOTICED THAT THE ASSESSEE HAD NOT OFFERED ANY CAPITAL GAINS FOR TAXAT ION CLAIMING THAT IT PERTAINS TO TRANSFER OF AGRICULTURAL LAND S ITUATED BEYOND 8 KM OF ANY CORPORATION LIMIT. THE ASSESSING OFFICE R'S ORDER IS COMPLETELY SILENT ON THIS POINT HELD BY THE CIT. ON EXAMINING THE RECORD HE FURTHER NOTICED THAT ON THE DATE OF SALE THE LAND WAS DIVERTED FOR NON-AGRICULTURAL USE BY TAKING PERMISSION OF COMPETENT AUTHORITY. THUS THE CHARACTER OF THE LAND BECAME NON-AGRICULTURAL. HENCE THE SALE PROCEEDS FROM SUCH LAND IS LIABLE TO BE TAXED UNDER THE I T ACT 1961. HENCE NOTICE U/S 263 WAS ISSUED. IN RESPONSE TO THE ABOV E THE ASSESSEE HAS STATED BRIEFLY AS UNDER:- I) THE ASSESSEE AND HIS FAMILY USED TO DO AGRICULTURAL WORK IN THE LAND TILL THE DATE OF SALE. IF THE ASSESSEE HAD SOUGHT DIVERSION OF THE LAND FOR NON AGRICULTURAL PURPOSES IT PAGE 3 OF 6 ITA NO.536/BANG/2009 3 WAS BECAUSE AT THE INSTANCE OF THE BUYER OF LAND WHO WANTED TO PUT THE LAND TO USE FOR PURPOSES OTHER THAN OF AGRICULTURE. HOWEVER ON THE SALE DATE IT WAS AGRICULTURAL LAND AND NOTHING MORE. II) WITHOUT PREJUDICE TO THE ABOVE IT WAS FURTHER SUBMITTED THAT ALL DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER. HE HAD APPLIED HIS MIND AND COME TO A CONCLUSION THAT ASSESSEE WAS NOT LIABLE FOR PAYMENT OF CAPITAL GAINS TAX ON SALE OF THE LAND. HOWEVER THE LEARNED CIT DID NOT ACCEPT THE ABOVE S UBMISSION AND DIRECTED THE AO TO WORK OUT THE CAPITAL GAINS C HARGEABLE ON SALE OF THE LAND RECOMPUTE THE TOTAL INCOME OF THE ASSESSEE AND ISSUE A DEMAND NOTICE AND CHALLAN. WHILE DIREC TING SO HE NOTED THAT THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSING OFFICER HAD TAKEN CONSCIOUS DECISION NOT TO BRING THE TRANSFER OF THE LAND IN QUESTION TO CAPITAL GAINS B Y HOLDING THAT IT CONTINUES TO RETAIN THE CHARACTER OF AGRICULTURA L LAND. HE FURTHER HELD THAT SINCE THE LAND IN QUESTION STOOD DIVERTED ON THE DATE OF SALE OF THE LAND WHAT THE ASSESSEE REC EIVED WAS CONSIDERATION FOR SALE OF NON-AGRICULTURAL LAND. H ENCE HE HELD THAT THE ORDER PASSED BY THE ASSESSING OFFICER WAS E RRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. AGGRIE VED BY THE ABOVE ORDER THE ASSESSEE IS IN APPEAL BEFORE THE T RIBUNAL. 4. THE LEARNED AR PRODUCED THE CONVERSION ORDER DATED 14.6.2004. THE LEARNED AR BROUGHT OUR ATTENT ION TO PAGE 4 OF 6 ITA NO.536/BANG/2009 4 ASSESSEE'S WRITTEN SUBMISSION BEFORE THE LEARNED FI RST APPELLATE AUTHORITY PARTICULARLY PARA 2 WHEREIN IT IS SPECIFICALLY STATED THAT THE LAND IS SITUATED BEYOND 8 KM AND THE LAND SOLD IS AGRICULTURAL LAND. HENCE IT WAS SUBMITTED THAT THE LAND SOLD DOES NOT FALL WITHIN THE SCOPE OF CAPITAL ASSETS EX IGIBLE TO CAPITAL GAINS TAX. THE ASSESSEE'S REPRESENTATIVE R EITERATED THAT THE ASSESSEE WAS DOING AGRICULTURAL ACTIVITIES FOR SEVERAL YEARS AND CONTINUED TO DO THE SAME. ASSESSEE'S INTE NTION WAS ALWAYS TO DO THE AGRICULTURAL ACTIVITIES AND HENCE THE STAND OF THE CIT THAT THE CHARACTER OF THE LAND HAS BEEN CHA NGED IS ERRONEOUS. HENCE ASSESSEE'S REPRESENTATIVE SUBMIT TED THAT EVEN FOR IF THE ORDER PASSED BY THE ASSESSING OFFICE R IS PREJUDICIAL TO THE INTEREST OF REVENUE. IT IS NOT E RRONEOUS AND FOR THE ABOVE PROPOSITION HE RELIED ON THE DECISIO N OF THE HON'BLE SUPREME COURT IN THE CASE OF MALABAR INDUST RIAL CO. LTD. 243 ITR 83 AND G M MITTAL STAINLESS STEEL P. L TD. 263 ITR 255. 5. REPLYING TO THE ABOVE THE LEARNED DR SUBMITTED THAT THE ACTION U/S 263 WAS TAKEN TO BRING TO TAX C APITAL GAINS ARISING OUT OF SALE OF LAND WHICH HAD BEEN OMITTED TO BE LOOKED INTO BY THE ASSESSING OFFICER AS PER THE DETAILS FIL ED ALONG WITH THE RETURN OF INCOME BEFORE HIM; HENCE 263 PROCEED INGS. EVEN BEFORE THE SALE DEED THE LAND WAS EXECUTED. THE L AND WAS CONVERTED INTO NON AGRICULTURAL LAND BY THE ORDER OF THE SPECIAL DEPUTY COMMISSIONER DATED 14.6.2004. IT IS MENTION ED THAT PAGE 5 OF 6 ITA NO.536/BANG/2009 5 THE SALE DEED EXECUTED ON 17.12.2004. NOW THE ASSE SSEE CANNOT SAY THAT THE LAND STILL RETAINS THE CHARACTER OF THE AGRICULTURAL LAND. THE LEARNED DR FURTHER SUBMITTE D THAT THE COPY OF THE OFFICIAL MEMORANDUM DATED 21.12.2004 PAS SED BY THE SUB DIVISIONAL OFFICER BANGALORE SOUTH SUB DIV ISION TO SHOW THAT THE LAND CONVERSION TOOK PLACE AFTER THE DATE OF SALE I.E. AFTER 17.12.2004 WAS NOT EITHER BEFORE THE AS SESSING OFFICER NOR BEFORE THE CIT. THE LEARNED DR SUBMITT ED THAT AT THIS STAGE THIS EVIDENCE SHOULD NOT BE ADMITTED UN LESS THE ASSESSEE CAN PRODUCE THE ORIGINALS AND EXPLAIN THE DISCREPANCY IN HIS DOCUMENTS AS POINTED OUT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION GONE THROUGH THE ORDER OF THE REVENUE AND THE ASSESSMENT ORDER. CONSIDERING THE RIVAL SUBMISSION WE ARE OF THE VIE W THAT THE ORDER OF THE CIT PASSED U/S 263 CANNOT BE FAULTED W ITH. WE FIND NO MENTION IN THE ORDER OF ASSESSING OFFICER A NY REFERENCE TO CAPITAL GAINS AND MENTION OF THE FACTS THAT THE LAND WAS SITUATED BEYOND 8 KM OF THE CORPORATION LI MIT AND THE LAND CONVERSION TO NON AGRICULTURAL PURPOSES WERE D ONE BEFORE OR LATER. UNDER THESE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE LEARNED CIT WAS JUSTIFIED IN INVOKING THE JURIS DICTION U/S 263. AT THE SAME TIME WE ALSO TAKE NOTE OF THE PA PER NOW PRODUCED BEFORE US AND ALSO DIRECT THE ASSESSING OF FICER TO KEEP IN MIND THE SUBMISSION OF THE ASSESSEE BEFORE US WHILE PASSING THE CONSEQUENTIAL ORDER. WE DIRECT THE AO TO KEEP IN PAGE 6 OF 6 ITA NO.536/BANG/2009 6 MIND THE SUBMISSION OF THE ASSESSEE BEFORE THE CIT AND BEFORE THE TRIBUNAL FOR THE REASON THAT THE CIT AHS COME T O A DEFINITE CONCLUSION THAT THE ORDER IS PREJUDICIAL TO THE INT EREST OF REVENUE AND ERRONEOUS; BUT AT THE SAME TIME HE HAD NOT TAKEN INTO COGNIZANCE THE SUBMISSION OF THE ASSESSEE THAT THE LAND IS SITUATED BEYOND 8 KM AND THERE WAS CONVERSION AND TH E ASSESSEE WAS DOING AGRICULTURAL ACTIVITIES TILL THE SALE DEED WAS EXECUTED. THE ASSESSING OFFICER HAS TO TAKE COGNI ZANCE OF THE ABOVE FACTS WHILE PASSING CONSEQUENTIAL ORDER. ACCORDINGLY THE MATTER IS BEING SENT TO THE FILE OF THE ASSESSI NG OFFICER TO PASS AN ORDER AFRESH KEEPING IN MIND ALL THE ABOVE FACTS. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON 10TH FEBRUARY 2010. SD/- SD/- (A MOHAN ALANKAMONY) (K P T THANGAL) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE DTD.10/2/2010 COPY TO : 1. THE ASSESSEE 2.THE REVENUE 3. THE CIT( A) CONCERNED.4. THE CIT CONCERNED. 5. THE DR 6. GUAR D FILE. 7. GF ITAT NEW DELHI. MSP/5.2. BY ORDER ASST. REGISTRAR ITAT BANGALORE.