The ITO, Ward-1, Tenali v. Smt Tadavarthy Kanakavalli, Repalle

ITA 74/VIZ/2011 | 2007-2008
Pronouncement Date: 04-07-2011 | Result: Dismissed

Appeal Details

RSA Number 7425314 RSA 2011
Assessee PAN ABJPT5549D
Bench Visakhapatnam
Appeal Number ITA 74/VIZ/2011
Duration Of Justice 4 month(s) 8 day(s)
Appellant The ITO, Ward-1, Tenali
Respondent Smt Tadavarthy Kanakavalli, Repalle
Appeal Type Income Tax Appeal
Pronouncement Date 04-07-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 04-07-2011
Assessment Year 2007-2008
Appeal Filed On 24-02-2011
Judgment Text
ITA NO 74 OF 2011 TADAVARTHY KANAKAVALLI W/O T DASA RATHA RAMA RAO REPALLE PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER ITA NO. 74/VIZAG/2011 ASSESSMENT YEAR:2007-08 ITO WARD-1 TENALI (APPELLANT) VS. TADAVARTHY KANAKAVALLI W/O T DASARATHA RAMA RAO REPALLE (RESPONDENT) PAN NO: ABJPT 5549D C.O NO. 3/VIZAG/2011 (ARISING OUT OF ITA NO. 74/VIZAG/2011) ASSESSMENT YEAR:2007-08 ITO WARD-1 TENALI (APPELLANT) VS. TADAVARTHY KANAKAVALLI W/O T DASARATHA RAMA RAO REPALLE (RESPONDENT) PAN NO: ABJPT 5549D DEPARTMENT BY: SMT. D. KOMALI KRISHNA SR.DR ASSESSEE BY: SHRI C.V.S. MURTHY CA ORDER PER SHRI B. R. BASKARAN ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 01-12 -2010 PASSED BY LD CIT(A) GUNTUR AND THEY RELATE TO THE ASSESSMENT YE AR 2007-08. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER: (I) THE CIT (A) ERRED BOTH UNDER LAW AND ON FACTS O F THE ASSESSEES CASE. (II) THE CIT (A) OUGHT NOT TO HAVE ACCEPTED THE ASS ESSEES DISTORTED FACTS AND RELAYING ON THE SAME AND OUGHT NOT TO HAVE ALLOWED THE ASSESSEES APPEALS. ITA NO 74 OF 2011 TADAVARTHY KANAKAVALLI W/O T DASA RATHA RAMA RAO REPALLE PAGE 2 OF 10 (III) THE CIT (A) ERRED UNDER LAW THAT IN NOT PROPERLY APPRECIATING THE ASSESSING OFFICERS JUDICIALLY APP ROVED AND RECOGNIZED CASE LAWS QUOTED COMPARING WITH THE ASSESSEES CASE FACTS. (IV) THE CIT (A) ERRED IN LAW IN NOT CONCLUDING THE ASSESSEES CASE TO BE TREATED AS ADVENTURE IN NATUR E OR TRADE. (V) CONSIDERING THE G.O.MS. NO.352 MA. DTD. 30.7.2001 ISSUED BY MUNICIPAL ADMINISTRATION AND URBAN DEVELOPMENT GOVT. OF ANDHRA PRADESH NOTIFYING THE SURROUNDING (PROPOSED SHAMSHABAD INTERNATIONAL AIRPORT) AREA LANDS AS COMMERCIAL AND SPECIAL DEVELOPMENT AREA THEREBY THE LANDS IN QUESTION ARE NOT AGRIL.LANDS BUT COMMERCIAL LANDS. (VI) IF THE CIT (A)S ORDER IS FOUND TO BE CORRECT ON THE FACTS OF THE CASE AND IN THE EYES OF LAW THEN CONSIDERI NG THE G.O. MS. NO.352 M.A. DTD 30-7-2001 ISSUED BY THE MUNICIPAL ADMINISTRATION AND URBAN DEVELOPMENT GOV T. OF A.P ALTERNATIVELY THE CIT (A) OUGHT TO HAVE CONSIDERED THE SAME TO TAX THE PROFITS LIABLE TO CA PITAL GAIN. (VII) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING. IN THE CROSS OBJECTION THE ASSESSEE IS ASSAILING TH E DECISION OF LD CIT(A) IN ENHANCING THE ASSESSMENT BY RS.12 000/-. 3. THE FACTS RELATING TO THE ISSUES ARE STATED IN BRIEF. THE ASSESSEE FILED HER RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATI ON DECLARING NIL INCOME. SHE IS DERIVING INCOME FROM HOUSE PROPERTY SHARE INCOME FROM A PARTNERSHIP FIRM AND AGRICULTURAL INCOME. HER CASE WAS TAKEN UP FOR SCRUTINY. THE ASSESSING OFFICER NOTICED THAT THE A SSESSEE HAD PURCHASED AGRICULTURAL LANDS ADMEASURING AC.4.20 GTS FOR A CO NSIDERATION OF RS.15.03 LAKHS IN THE FINANCIAL YEAR 2005-06 AND THE SAID LA ND WAS SOLD DURING THE YEAR UNDER CONSIDERATION FOR A SUM OF RS.67.50 LAKH S THEREBY MAKING A ITA NO 74 OF 2011 TADAVARTHY KANAKAVALLI W/O T DASA RATHA RAMA RAO REPALLE PAGE 3 OF 10 HUGE PROFIT OF RS.52.47 LAKHS. THE ASSESSEE CLAIME D THE SAID INCOME AS EXEMPT WITH THE SUBMISSION THE GAIN IS A CAPITAL GA IN ARISING OUT OF AN AGRICULTURAL LAND WHICH IS NOT A CAPITAL ASSET WIT HIN THE MEANING OF SEC. 2(14) OF THE ACT. HERE THERE IS NO DISPUTE WITH R EGARD TO THE FACT THAT THE SAID LAND IS LOCATED ABOUT 22 KMS. AWAY FROM THE MU NICIPAL LIMITS OF HYDERABAD. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD INDULGED IN SUCH KIND OF PURCHASE AND SALE OF LANDS IN THE E ARLIER YEARS. ACCORDINGLY THE ASSESSING OFFICER FOR THE DETAILED REASONS STA TED IN THE ASSESSMENT ORDER TREATED THE SALE TRANSACTION AS AN ADVENTURE IN THE NATURE OF TRADE AND BROUGHT THE ABOVE SAID GAIN TO TAX. WHILE DOING SO HE ALSO TOOK THE AGRICULTURAL INCOME OF RS.12 000/- DECLARED BY THE ASSESSEE FOR CALCULATING THE TAX. 3.1 THE ASSESSEE CARRIED THE MATTER IN APPEAL B EFORE THE LD CIT(A). THE FIRST APPELLATE AUTHORITY HELD THAT THE IMPUGNE D SALE TRANSACTION CANNOT BE TAKEN AS AN ADVENTURE IN THE NATURE OF TRADE WIT H THE FOLLOWING OBSERVATIONS: REGARDING ADVENTURE IN THE NATURE OF TRADE I AM N OT ABLE TO TOE THE LINE OF THE ASSESSING OFFICER. AS SEEN FROM THE RECORDS THE APPELLANT CAN CHOOSE ANY AREA OR PLACE FOR PURCHASE OF AGRICULTURAL LAND. THERE IS NOTHING WRO NG IN WAITING WITHOUT CULTIVATION TO GET A HIGHER PRICE WHICH BY ITSELF DOES NOT TANTAMOUNT TO ADVENTURE IN THE NATU RE OF TRADE. THE FACTS OBTAINED IN THE PRESENT CASE ARE DISTINGUISHABLE TO THE CASES CITED BY THE ASSESSING OFFICER. THE FREQUENCY OF SALE AND PURCHASE OF AGRICULTURAL LANDS AS OPINED BY THE ASSESSING OFFICER WAS NOT THAT ALARMI NG TO PUT IN A CATEGORY OTHER THAN THAT OF INVESTMENT IN AGRI CULTURAL LANDS. THUS IN THE GIVEN FACTUAL MATRIX I AM UNAB LE TO AGREE WITH THE ASSESSING OFFICER THAT THE INVESTMENT IN A GRICULTURAL LANDS IN AN ADVENTURE IN THE NATURE OF TRADE. THE AGRICULTURAL INCOME OF RS.12 000/- DECLARED BY THE ASSESSEE WAS IN THE NATURE OF LEASE RENT RECEIVED ON THE LEASE OF T HE IMPUGNED LANDS. ITA NO 74 OF 2011 TADAVARTHY KANAKAVALLI W/O T DASA RATHA RAMA RAO REPALLE PAGE 4 OF 10 DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASS ESSEE HAD FILED A CONFIRMATION LETTER FROM THE LESSEE OF THE LAND. H OWEVER THE SAID LESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER. HENCE DURING THE COURSE OF APPELLATE PROCEEDING THE LD CIT(A) DIRECTED THE AS SESSING OFFICER TO EXAMINE THE SAID LESSEE AND FILE A REMAND REPORT. THE ASSESSING OFFICER REPORTED THAT THE LESSEE WAS NOT ABLE TO PRODUCE AN Y EVIDENCE LIKE PURCHASE BILLS FOR SEEDS/MANURES/FERTILIZERS BILLS FOR SALE OF AGRICULTURAL PRODUCE ETC. THE SAID LESSEE WAS ALSO NOT AWARE OF ANOTHER BIT OF LAND HELD BY THE ASSESSEE IN THE SAME AREA WHICH THE AS SESSING OFFICER CONSIDERED AS BEYOND COMPREHENSION. HENCE THE ASSE SSING OFFICER OPINED THAT THE AUTHENTICITY OF THE CLAIM OF AGRICULTURAL OPERATIONS BY THE SAID LESSEE IS NOT PROVED. ACCORDINGLY THE ASSESSING OFF ICER RECOMMENDED THE ENHANCEMENT OF INCOME OF THE ASSESSEE BY RS.12 000/ - BY DISALLOWING THE AGRICULTURAL INCOME. ACCORDINGLY THE LD CIT(A) ENH ANCED THE INCOME OF THE ASSESSEE WITHOUT GIVING NOTICE OF ENHANCEMENT TO TH E ASSESSEE. AGGRIEVED BY THE ORDER OF LD CIT(A) BOTH THE REVENUE HAS FILE D THIS APPEAL AND THE ASSESSEE HAS FILED THE CROSS OBJECTION BEFORE US. 4. THE GROUNDS NUMBERED AS 1 2 AND 7 IN THE APP EAL OF THE REVENUE ARE GENERAL IN NATURE AND HENCE REQUIRE NO ADJUDICATION . IN THE GROUNDS NUMBERED AS 5 AND 6 THE REVENUE IS RAISING A NEW C LAIM THAT THE IMPUGNED LANDS FALL WITHIN THE LIMITS OF AREA DECL ARED AS SPECIAL DEVELOPMENT AREA BY G.O.MS.NO.352 MA DTD. 30-7-20 01 ISSUED BY THE MUNICIPAL ADMINISTRATION AND URBAN DEVELOPMENT GOV ERNMENT OF ANDHRA PRADESH. HOWEVER WE NOTICE THAT THIS WAS NOT THE CASE OF THE ASSESSING OFFICER FOR BRINGING THE IMPUGNED GAIN ON SALE OF L AND. SECONDLY IT WAS NOT SHOWN THAT THE AUTHORITY CONCERNED WITH THE DEVELOP MENT OF THE AREAS IS A MUNICIPALITY AS DEFINED U/S 2(14) OF THE ACT. AS PE R THE PROVISIONS OF SEC. 2(14)(III) OF THE ACT THE AGRICULTURAL LAND WILL F ALL IN THE DEFINITION OF CAPITAL ASSET ONLY IF IT IS SITUATE IN ANY AREA WHICH IS C OMPRISED WITHIN THE ITA NO 74 OF 2011 TADAVARTHY KANAKAVALLI W/O T DASA RATHA RAMA RAO REPALLE PAGE 5 OF 10 JURISDICTION OF A MUNICIPALITY (WHETHER KNOWN AS MU NICIPALITY MUNICIPAL CORPORATION NOTIFIED AREA COMMITTEE TOWN AREA COM MITTEE TOWN COMMITTEE OR BY ANY OTHER NAME). IN VIEW OF THE AB OVE CITED REASONS WE DO NOT FIND ANY MERIT IN THE SAID GROUNDS AND ACCOR DINGLY DISMISS THEM. 5. IN THE GROUNDS NUMBERED AS 3 AND 4 THE CONTE NTION OF THE REVENUE IS THAT THE IMPUGNED SALE TRANSACTION IS IN THE NATURE OF ADVENTURE IN THE NATURE OF TRADE. HOWEVER DURING THE COURSE OF HEA RING THE LD D.R CONTENDED THAT THE IMPUGNED LAND IS NOT AN AGRICULT URAL LAND AND HENCE THE ASSESSEE CANNOT CLAIM THE BENEFIT OF SEC. 2(14) OF THE ACT FOR CLAIMING EXEMPTION OF THE PROFIT REALIZED ON THE SALE OF IT. HOWEVER ON A CAREFUL PERUSAL OF ASSESSMENT ORDER AND THE APPELLATE ORDER WE NOTICE THAT THERE IS NO DISPUTE BETWEEN THE PARTIES ON THIS ISSUE I. E. WHETHER THE IMPUGNED LAND IS AN AGRICULTURAL LAND OR NOT. THE FOLLOWING OBSERVATIONS OF LD CIT(A) CLARIFY THE SAID POSITION: 5.1 I HAVE CONSIDERED THE WRITTEN SUBMISSIONS M ADE BY THE APPELLANT AND THE CASE LAWS MENTIONED IN THE SUBMISSIONS. I HAVE ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDER. THE FACT THAT THE APPELLANT HAS PURCHASED THE SUBJECT AGRICULTURAL LAND OF 4 ACRES AND 34 GUNTAS ON 12.09.2005 FOR A CONSIDERATION OF RS.15 03 000/- INCLUDING REGISTRATION CHARGES OF RS.49 250/- WHICH WAS SOLD ON 31.01.2007 FOR A CONSIDERATION OF RS.67 50 000/- IS NOT DENIED. IT IS ALSO NOT DENIED THAT THE AGRICULTURAL LAND IN QUESTION I S NOT A CAPITAL ASSET WITHIN THE MEANING OF SEC. 2(14)(III) AND AS SUCH THE SALE PROCEEDS OF WHICH WERE EXEMPT FROM TAX. ON GOING THROUGH THE RECORDS THOROUGHLY IT TRANSPIRES THAT THE ONLY POINT FOR CONSIDERATION FOR THE AO WAS AS TO HOW THE DIFFEREN CE OF RS.52 47 000/- COULD BE BROUGHT TO TAX HENCE THE POINT OF DISPUTE IS NOT WHETHER THE IMPUG NED LAND IS AN AGRICULTURAL LAND OR NOT AS CONTENDED BY LD D.R. WE ALSO NOTICE THAT THE ASSESSING OFFICER HAS REFERRED THE IMPUGNED LAND AS DRY AGRICULTURAL LAND ITA NO 74 OF 2011 TADAVARTHY KANAKAVALLI W/O T DASA RATHA RAMA RAO REPALLE PAGE 6 OF 10 THROUGH OUT THE ASSESSMENT ORDER. THE CERTIFICATE ISSUED BY THE ASST. EXECUTIVE ENGINEER ROADS DIVISION DESCRIBES THE IM PUGNED LAND AS AGRICULTURAL LAND. THE ASSESSEE HAS ALSO FILED A C OPY OF ORDER ISSUED BY THE MANDAL REVENUE OFFICER MAHESWARAM MANDAL FOR TRANS FERRING THE NAME OF THE ASSESSEE IN THE PATTA BOOK AND REVENUE RECORDS. HENCE WE ARE UNABLE TO APPRECIATE AT THIS STAGE THE CONTENTION OF THE LD D.R THAT THE IMPUGNED LAND IS NOT AN AGRICULTURAL LAND. 6. NOW THE SOLITARY ISSUE UNDER CONSIDERATION I S WHETHER THE IMPUGNED SALE TRANSACTION CAN BE DESCRIBED AS AN ADVENTURE I N THE NATURE OF TRADE. WE NOTICE THAT THE ASSESSING OFFICER HAS CONSIDERED FOLLOWING POINTS FOR THIS PURPOSE. A) THE ASSESSEE HAS PURCHASED 262 SQ. YARDS OF SIT E IN APRIL 2003 AND SOLD THE SAME IN JANUARY 2005. SIMILARLY SHE HAS PURCHASED 2 ACRES OF AGRICULTURAL LAND IN APRIL 2004 AND SOLD THE SAME IN MAY 2005. THE ASSESSEE HAS BORROWED FUNDS FOR THE SAID PURPOSES. B) THE ASSESSEE HAS SMELLED THE REAL ESTATE BOOM DUE T O THE DEVELOPMENT OF INFORMATION TECHNOLOGY INDUSTRY AROU ND HYDERABAD AND HENCE ENTERED INTO THE IMPUGNED LAND DEAL WITH AN ULTERIOR MOTIVE OF SPINNING HUGE PROFITS. C) THE ASSESSEE IS NOT AN AGRICULTURIST. D) THE ASSESSEE COULD HAVE PURCHASED GOOD FERTILE LAND S IN AND AROUND RAPALLE WHERE SHE IS RESIDING INSTEAD OF PUR CHASING THE IMPUGNED LAND WHICH IS LOCATED ABOUT 380 KMS AWAY F ROM HER HOME TOWN. THE ASSESSEE CONTENDED BEFORE THE LD CIT(A) THAT IT IS THE PREROGATIVE OF THE ASSESSEE TO REGULATE HER INVESTMENTS AND TRANSA CTIONS AND THE ASSESSING OFFICER COULD NOT IMPOSE ANY METHODOLOGY OR MANNER OF CARRYING OUT THE INVESTMENTS AND TRANSACTIONS UPON THE ASSES SEE. WE FIND FORCE IN THE SAID CONTENTIONS OF THE ASSESSEE. WE ARE ALSO OF THE VIEWS THAT THE VARIOUS POINTS DISCUSSED BY THE ASSESSING OFFICER A ND EXTRACTED ABOVE ARE ITA NO 74 OF 2011 TADAVARTHY KANAKAVALLI W/O T DASA RATHA RAMA RAO REPALLE PAGE 7 OF 10 NOT BASED ON ANY EVIDENCES AND HENCE THEY CAN ONLY BE TAKEN AS SURMISES MADE BY THE ASSESSING OFFICER. 7. THE ASSESSING OFFICER HAS COMPARED THE DECIS ION OF HONBLE SUPREME COURT IN THE CASE OF M/S VENKATASWAMI NAIDU (G) & C O. VS. CIT (1959) (35 ITR 594) WITH THE INSTANT CASE AND HELD THAT THERE IS PARITY OF FACTS BETWEEN THE TWO. IN THIS CONNECTION THE ASSESSING OFFICER HAS EXTRACTED THE FOLLOWING ON THE ABOVE SAID DECISION OF THE HON BLE SUPREME COURT IN THE ASSESSMENT ORDER. THE ASSESSEE FIRM M/S. VENKATA SWAMY & CO (G) WHIC H ACTED AS A MANAGING AGENT PURCHASED FOR A TOTAL CONSIDERATION OF RS.8 713/- FOUR CONTIGUOUS PLOTS OF LAND ADJACENT TO THE PLACE WHERE THE MILLS OF THE COMPAN Y MANAGED BY IT WERE SITUATED. THE FIRST PURCHASE WAS MADE IN OCT. 1941 AND THE SECOND AND SUBSEQUENT PURCHASES WERE MADE IN NOV.41 JUNE 42 AND NOV.42. AS LONG AS THE ASSESSEE WAS IN POSSESSION OF THE LAND IT MADE NO E FFORT TO CULTIVATE IT OR ERECT ANY SUPER STRUCTURES ON IT BU T ALLOWED LAND TO REMAIN AS IT IS UNUTILIZED EXCEPT FOR THE R ENT RECEIVED FROM HOUSE WHICH EXISTED ON ONE OF THE PLOTS. THE A SSESSEE SOLD THE LAND TO THE COMPANY MANAGED BY IT IN TWO L OTS IN SEPTEMBER AND NOVEMBER 1947. THE QUESTION WAS WHETH ER THE EXCESS REALIZED BY THE ASSESSEE BY THE TWO SALE S OVER ITS COST PRICE WAS ASSESSABLE TO INCOME TAX. IT WAS HELD THAT THE ASSESSEE KNEW THAT IT WOULD BE ABLE TO SELL THE LANDS TO THE MANAGED COMPANY WHENEVER IT THOUGHT IT SO TO DO AND THAT THE ASSESSEE PURCHASED THE FOUR PLOTS OF LAND WITH THE SOLE INTENTION OF SELLING TH EM TO THE COMPANY MILLS AT A PROFIT AND THAT THEREFORE THE TRANSACTION WAS AN ADVENTURE IN THE NATURE OF TRADE . IT COULD BE NOTICED THAT THE MAIN POINTS WHICH TRIGG ERED THE HONBLE SUPREME COURT IN THE ABOVE CITED CASE TO HOLD THAT THE IMPUGNED TRANSACTIONS OF PURCHASE AND SALE OF LAND ARE:- (A) THE ASSESSEE THEREIN WAS MANAGING A MILL. (B) THE LANDS WERE SITUATED ADJACENT TO THE SAID MILL. ITA NO 74 OF 2011 TADAVARTHY KANAKAVALLI W/O T DASA RATHA RAMA RAO REPALLE PAGE 8 OF 10 (C) THE ASSESSEE DID NOT CARRY OUT ANY AGRICULTURAL ACT IVITY AND ALLOWED THE LAND TO REMAIN AS IT IS UNUTILIZED EXCE PT LETTING OUT A HOUSE EXISTED ON ONE OF THE LAND. (D) THE ASSESSEE KNEW THAT IT WOULD BE ABLE TO SELL THE LANDS TO THE COMPANY MANAGED BY HIM WHEN EVER IT THOUGHT IT TO D O SO AND HENCE THE ASSESSEE PURCHASED THE FOUR PLOTS OF LAND WITH THE SOLE INTENTION OF SELLING THEM TO THE COMPANY MILLS AT A PROFIT . HENCE IT IS CLEAR NOW THAT THE INTENTION OF THE AS SESSEE AT THE TIME OF MAKING INVESTMENT IS THE SOLE CRITERIA FOR DECIDING THE NATURE OF TRANSACTION. IN THE CASE BEFORE THE HON'BLE SUPREM E COURT THE SURROUNDING CIRCUMSTANCES PROVED THAT THE INTENTION OF THE ASSESSEE THEREIN WAS TO SELL THE LANDS PURCHASED BY HIM FOR A PROFIT TO THE COMPANY MANAGED BY HIM AT A LATER DATE. HOWEVER IN THE IN STANT CASE THERE IS NO EVIDENCE OR CIRCUMSTANCE TO SHOW THAT THE INITIAL I NTENTION OF THE ASSESSEE TO PURCHASE THE IMPUGNED LAND IS TO SELL IT FOR A P ROFIT. THE ASSESSEE HAS LEASED OUT THE IMPUGNED LAND FOR CARRYING OUT AGRIC ULTURAL OPERATIONS AND DECLARED THE LEASE RENT AS HIS AGRICULTURAL INCOME WHICH WAS ACCEPTED BY THE ASSESSING OFFICER INITIALLY DURING THE ASSESSME NT PROCEEDINGS. ACCORDING TO LD A.R THE IMPUGNED LANDS WERE SOLD ONLY TO AN INDIVIDUAL AND NOT ANY INFORMATION TECHNOLOGY COMPANY. THE LD A.R ALSO TO OK SUPPORT OF THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. SMT. DEBBIE ALEMAO REPORTED IN (2011) (239 CTR (BOM) 326) THE H EAD NOTES OF WHICH READ AS UNDER: CAPITAL GAINS-AGRICULTURAL LAND-LAND SHOWN AS AGRI CULTURAL LAND IN REVENUE RECORDS-ADMITTEDLY THE LAND WAS SH OWN IN THE REVENUE RECORDS AS AGRICULTURAL LAND AND NO PER MISSION WAS EVER OBTAINED FOR NON-AGRICULTURAL USE BY THE A SSESSEE- PERMISSION FOR NON-AGRICULTURAL USE WAS OBTAINED FO R THE FIRST TIME BY THE PURCHASER AFTER IT PURCHASED THE LAND-A S REGARD THE CONTENTION OF THE REVENUE THAT NO AGRICULTURAL INCOME WAS SHOWN FROM THIS LAND IT WAS EXPLAINED BY THE A SSESSEE THAT THE AGRICULTURAL INCOME DERIVED BY SALE OF COC ONUT GROWN ON THE LAND WAS JUST ENOUGH TO MAINTAIN THE LAND AN D THERE ITA NO 74 OF 2011 TADAVARTHY KANAKAVALLI W/O T DASA RATHA RAMA RAO REPALLE PAGE 9 OF 10 WAS NO SURPLUS-THUS THE FINDING RECORDED BY THE TW O AUTHORITIES BELOW THAT THE SAID LAND WAS USED FOR T HE PURPOSE OF AGRICULTURE IS BASED ON APPRECIATION OF EVIDENCE AND APPLICATION OF CORRECT PRINCIPLES OF LAW-HENCE NO INTERFERENCE IS WARRANTED. IN VIEW OF THE FOREGOING DISCUSSIONS WE ARE OF THE VIEW THAT THE IMPUGNED SALE TRANSACTION CANNOT BE TAKEN AS ADVENTURE IN TH E NATURE OF TRADE AND ACCORDINGLY UPHOLD THE ORDER OF LD CIT(A) ON THIS I SSUE. 8. IN THE CROSS OBJECTION THE ASSESSEE IS ASSA ILING THE DECISION OF LD CIT(A) IN TREATING THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE AS NON- AGRICULTURAL INCOME. IT IS ALSO CONTENDED THAT THE LD CIT(A) HAS ENHANCED THE ASSESSMENT WITHOUT GIVING A REASONABLE OPPORTUN ITY TO THE ASSESSEE. IN THIS REGARD WE MAY EXTRACT THE RELEVANT PROVISIO NS OF SEC. 251(2) WHICH READ AS UNDER: THE COMMISSIONER (APPEALS) SHALL NOT ENHANCE AN ASSESSMENT OR A PENALTY OR REDUCE THE AMOUNT OF REF UND UNLESS THE APPELLANT HAS HAD A REASONABLE OPPORTUNI TY OF SHOWING CAUSE AGAINST SUCH ENHANCEMENT OR REDUCTION . IT WAS NOT SHOWN BY THE REVENUE THAT THE ASSESSEE WA S GIVEN REASONABLE OPPORTUNITY FOR THE PURPOSE OF ENHANCEMENT OF INCOM E. SINCE THE ACTION OF THE LD CIT(A) IS AGAINST THE MANDATE OF THE PROVISI ONS OF ACT THE SAID ENHANCEMENT IS LIABLE TO BE QUASHED. EVEN ON MERIT S WE NOTICE THAT THE ASSESSEE HAS FILED CONFIRMATION LETTER FROM THE LES SEE AND IN THE STATEMENT TAKEN FROM HIM THE LESSEE HAS ACCEPTED THAT HE HAS CARRIED OUT AGRICULTURAL OPERATIONS ON THE IMPUGNED LAND. THE ASSESSING OFFICER HAS INITIALLY ACCEPTED THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE. ONLY IN THE COURSE OF REMAND PROCEEDINGS THE ASSESSING OFF ICER HAS RECOMMENDED FOR TREATING THE SAME AS NON-AGRICULTURAL INCOME FO R THE REASON THAT THE LESSEE COULD NOT PRODUCE BILLS ETC. IN OUR VIEW ON E CANNOT EXPECT A SMALL FARMER TO MAINTAIN DETAILED ACCOUNTS OF HIS AGRICUL TURAL ACTIVITIES WITH SUPPORTING BILLS. HENCE WE DO NOT FIND ANY MERIT I N THE RECOMMENDATION ITA NO 74 OF 2011 TADAVARTHY KANAKAVALLI W/O T DASA RATHA RAMA RAO REPALLE PAGE 10 OF 10 MADE BY THE ASSESSING OFFICER. ACCORDINGLY WE FIND NO MERIT IN ENHANCING THE INCOME OF THE ASSESSEE BY TREATING THE AGRICULT URAL INCOME AS NON- AGRICULTURAL INCOME. 9. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED AND THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 4 TH JULY 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE:04-07-2011 COPY TO 1 THE ITO WARD-1 TENALI 2 SMT. TADAVARTHY KANAKAVALLI W/O T DASARATHA RAMA RAO D.NO.10-14- 122 (7) MUNICIPAL OFFICE ROAD REPALLE-522 205 GU NTUR 3 4. THE CIT (A) GUNTUR THE CIT GUNTUR 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM