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Income Tax - Case Laws
Showing 201 to 220 of 421 Records
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2012 (4) TMI 442 - DELHI HIGH COURT
Valuation of property - ITAT considered AO was not justified in making the addition of Rs 75 lakhs being the difference between the apparent consideration and the real value of the assets of Company formed by HUF – Held that:- Agreement dated 30.11.2002 executed between Khandelwals and Shri Sunil Bedi all the requisite clearances were obtained by the seller - vide second MoU M/s Fashion Flair International Private Limited agreed to pay Rs.6.35 crore to M/s Span Properties Private Limited for purchase of its entire shareholding subject to obtaining necessary approval for construction of a commercial building on the land in question, and that there was no material produced by the assessee to indicate that the market value of the land had gone down between December, 2000 and November, 2002 - Since the entire share holding of Khandelwas in Span Properties Private Limited was transferred to Shri Sunil Bedi, he, on account of his ownership of the entire share holding of Span Properties Private Limited, also acquired ownership of the land in question. Hence, it would be difficult for us to accept that the value of the entire share holdings of Khandelwas in Span Properties Private Limited could have been less than Rs 6.35 crore minus the liabilities of the company - AO was justified in making the addition being the difference between the apparent consideration and real value of the assets – against assessee.
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2012 (4) TMI 441 - DELHI HIGH COURT
Notice to re-open the assessment as income chargeable to tax has escaped assessment - Writ petition by assessee on validity of the re-opening of the assessment – Held that:- the material gathered by the Investigation Wing provides required nexus by the reference to the names of at least three companies in which Mukesh Gupta was a Director, through which, inter alia, he was admittedly carrying on the business of providing accommodation entries for commission. These companies had subscribed for the shares issued by the assessee - assessee is linked to the business of Mukesh Gupta which leads to conclusion that income chargeable to tax had escaped assessment because of the failure of the petitioner company to furnish fully and truly all material particulars necessary for its assessment – against assessee.
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2012 (4) TMI 440 - DELHI HIGH COURT
Addition to income on account of non-deduction of TDS in terms of section 40(a)(ia) – Held that:- The tenor and purport of the terms of the agreement were that it was not a case where the licensee was doing any work for the assessee even within the wider meaning of the term “any work” as defined in Section 194C - assessee running a study centre through various licensees or franchisees and the agreement is not for making any payment to the licensee for any work done for the assessee and that it was a case of sharing of fees for carrying out respective obligations under a contract – in favour of assessee.
Claim of interest paid to the Noida Authority on account of purchase of land -allowable as revenue expenditure u/s 36(1)(iii) of the Act – Held that:- In order to claim allowance in respect of interest, there should be borrowing of capital and that unpaid purchase price of an asset does not amount to borrowing of capital, though a debt may be created - the interest was paid to Noida Authority not in respect of any capital borrowed from that Authority, but on the price of the plot remaining unpaid as per the provisions of the lease deed - there being no “capital borrowed”, the interest is not allowable as a deduction u/s 37(1) – against assessee.
ITAT deleted addition made by the AO on account of disallowance of bonus paid to the Directors in terms of Section 36(1)(ii) – Held that:- It was observed in the Bombay High Court case Metplast Pvt. Ltd vs DCIT (2011 (12) TMI 320 - Delhi High Court ) that so long as the bonus or commission is paid to the directors for services rendered and as part of their terms of employment it has to be allowed and sec.36(1)(ii) does not apply – in favour of assessee.
Claim of Non-compete fee payable as revenue expenditure solely on the basis of agreement period and the mode of payment – Held that:- The period for which the assessee sought to eliminate competition was only 12 months which was too short a period to be considered as conferring an enduring benefit to the assessee and the non-compete fee was to be paid to the two persons in equal installments over a period of time – in favour of assessee.
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2012 (4) TMI 438 - DELHI HIGH COURT
Long term capital gains on Sale of two mutual fund - the expression “not less than” - AO treated the two gains as short term capital gains as the instruments had not been held for a period of more than 12 months immediately preceding the date of transfer – Held that:- To qualify as a short term capital asset, the capital asset should be held by the assessee for 12 or 36 months, but the moment the said time limit is crossed the assessee continues to be the holder/owner of the said asset, the same is to be treated as a long term capital asset - the date on which the asset is acquired is not to be excluded because the holding starts from the said date.
There is nothing in the said Section to show and hold that the time period would not include fraction of a day. The expression “not more than” clearly in this case would refer and include the date on which the asset is first held or acquired. Thus, an asset acquired on the 1st of January would complete 12 months at the end of the said year, i.e., on 31st of December and if it is sold next year and if the proviso to Section 2(42A) applies, it would be treated as a long term capital gains. - in favour of assessee.
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2012 (4) TMI 435 - DELHI HIGH COURT
Entitlement to assessee to reduce interest paid on bank overdrafts from the interest received on FDRs and exclude profit from the sale of EDP receipts under the duty remission scheme while calculating deductions u/s 80HHC – Revenue appeal - Held that:- Ninety per cent of not the gross rent or gross interest but only the net interest or net rent, which has been included in the profits of business of the assessee as computed under the head “Profits and Gains of Business or Profession”, is to be deducted under clause (1) of Explanation (baa) to Section 80-HHC for determining the profits of the business” as per clause (1) of Explanation (baa) to Section 80-HHC – in favour of assessee.
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2012 (4) TMI 434 - DELHI HIGH COURT
Whether penalty can be imposed on the assessee where additions are made under the normal provisions of the Act but actually the taxable income of the assessee is assessed under Section 115JB and there is no addition for book profits – Held that:- Though there was concealment but that had its repercussions only when the assessment was done under the normal procedure - it is the deemed income assessed under section 115JB of the Act which has become the basis of assessment as it was higher of the two and tax is paid on the income assessed u/s 115JB - the concealment did not lead to tax evasion at all - Penalty not to be imposed – in favour of assessee.
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2012 (4) TMI 423 - DELHI HIGH COURT
Understatement of the sale of bullion (gold and silver) made by the assessee – Addition made by AO as there are cash sales which are not verifiable and the rates whereof is below the average rate of Delhi Bullion Association - ITAT deleted the addition made by the AO - Held that:- It is not the case of the AO that he has come across any material showing that the assessee is receiving something over and above that entered into the books of accounts maintained - all the requisite books and records are maintained duly audited and no specific defect in the same has been pointed out - the lower rates of the Delhi Bullion Association were also comparable with that shown by the assessee even though the rates of the Delhi Bullion Association were in respect of the retail trade and not in respect of the wholesale trade in which the assessee was involved– against revenue.
Addition on account of stock of silver bars written off - assessee contended that during weighing and re-weighing of the silver bars on a repeated basis a weight loss due to breakage of corners of the silver bricks occurs - The CIT (A) confirmed the addition as silver was not a perishable commodity – Held that:- AO while rejecting the explanation given by the assessee did not make any verification as to whether in the type of trade i.e., wholesale trade in silver a negligible amount of breakage occurs or not - AO without any evidence to this effect could not conclude that the sales had been made outside the books of accounts - on this basis the Tribunal on facts reversed the finding of the CIT (A) as also the Assessing Officer - the Tribunal arrived at this conclusion and the same is a pure finding of fact.
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2012 (4) TMI 422 - DELHI HIGH COURT
Saga of errors from both the assessee and the revenue - Society carrying on charitable activities formed in the year 1979 - no income tax return filed till 2003 - AO did not issue any notice U/S. 147/148 to the respondent-assessee calling upon them to file a return for the period prior to 1.4.2003 - school in Alwar treating itself as an assessee filing returns with the AO at Alwar – society filed an application in Form 10A for registration under Section 12A - Order passed by Tribunal that the respondent-society shall be treated as registered under Section 12A w.e.f. 1.4.1997; the notices issued under Section 147/148 of the Act to the school will be treated as having been validly issued to the respondent-society and therefore, the Assessing Officer will assess the income of the respondent-society for the assessment year 1998-99 onwards for all the assessment years – Revenue appeal to dis allow the registration on retrospective effect and there was delay of 3 years & 4 months in preferring an appeal against the order - Held that:- if the order of the Tribunal is set aside it will be against and contrary to the interest of the Revenue as they would not be able to now assess required tax in respect of income right from 1998-99 onwards - as noticed lapses on both the sides and interfering with the impugned order will lead to difficulties and not in the interest of the Revenue when the respondent-assessee has not been issued notice under Section 147/148 for any of the assessment years - appeal is dismissed.
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2012 (4) TMI 421 - ITAT DELHI
Rejection for registration under sec. 12A – Held that:- It is not ascertainable as to how the activities of the assessee are not genuine - the only reason that marginal surplus at 21.4% over the gross receipts in A/Y 2008-09 would not establish as to how the activities of the assessee could not be put to a test of genuineness and not to be a consideration for rejecting the application for grant of registration - allow the appeal of assessee and direct the Learned CIT to issue registration certificate in accordance with law - in favour of assessee.
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2012 (4) TMI 420 - KERALA HIGH COURT
Addition made on loan amount disclosed in the cash flow statement - Tribunal reversing the order of the first appellate authority and confirming that of the Assessing Officer – Held that:- The mere production of confirmation letters does not discharge the liability of the assessee to offer satisfactory explanation for the loan receipts - the production of such material cannot lead either to a conclusion that the Assessing Officer has to discredit the same or call for further details in the event of non-satisfaction –assessee contented with the production of confirmation letters without any further material regarding the identity, status or capacity of the creditors or even the dates on which the said loans were said to be made - against assessee.
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2012 (4) TMI 419 - GUJARAT HIGH COURT
Reopening - Validity of notice - proposal to withdraw the benefit of deduction u/s 80IA - held that:- only on scrutiny assessment the total income of the petitioner was determined after allowing deductions under section 80-IA(4)(iii) and section 80-IA(10) - the notice for reopening within the period of four years from the end of the relevant assessment year is not found sustainable.
It is also required to be noted that while disposing of the objections, it was harped upon the Assessing Officer that the mandated condition for availing of the benefit under section 80-IA(4)(iii) was to have an industrial park notified by the Central Board of Direct Taxes and the factum of not possessing the Central Board of Direct Taxes notification was not brought on the record by the assessee. This failure also attributed to the assessee-company for not disclosing fully and truly. This very basis ; as mentioned hereinabove, is not sustainable in wake of clear direction by this Bench to the Union of India for issuance of such notification and this very edifice on which this re-opening is based has been demolished.
Notice for reopening; even though issued within four years from the end of the relevant assessment year and in spite of the Assessing Officer having wide powers under section 147 of the Act (in the post-amendment period - with effect from 1st April, 1989) overwhelmingly, the factual matrix and the decision of this court would not permit such a notice to continue, and resultantly, the impugned notice dated October 1, 2009, issued under section 148 of the Income-tax Act, 1961, and all consequential proceedings are hereby set-aside and are quashed.
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2012 (4) TMI 418 - GUJARAT HIGH COURT
Block assessment - Penalty u/s 158BFA - whether mandatory or discretionary - power of AO - held that:- It is true that Section 273B of the Act which provides that penalty shall not be imposed in certain cases on the assessee proving that there was reasonable cause for failure to pay tax refers to several provisions such as Section 271, 271A, etc., makes no mention of Section 158BFA(2). This still does not mean that penalty under Section 158BFA (2) is mandatory. - penalty under Section 158BFA (2) is not mandatory.
Power of the Tribunal to delete the penalty - Tribunal interfered with the penalty on the ground which was not permissible. Additions made on the basis of estimation may be one of the grounds on which discretion not to impose penalty may be exercised. However, in absence of any requirement to prove concealment or furnishing of inaccurate particulars found in Section 271 [1](c) of the Act cannot form the sole basis to delete penalty imposed by the Assessing Officer and confirmed by Commissioner [Appeals] - Held that: Tribunal committed a grave error in interfering with the penalties imposed by the Assessing Officer and confirmed by the CIT [A] on the grounds mentioned in the order. - Decided in favor of the revenue
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2012 (4) TMI 417 - ITAT CHENNAI
Deduction u/s 54 and 54-F - Reopening - assessment u/s 147 - held that:- the reopening was definitely valid since the No Objection Certificate from Appropriate Authority issued on 21.02.2000 was never brought to the notice of Assessing Officer by the assessee during the course of original assessment proceedings.
Regarding eligibility of exemption u/s 54 and 54F - held that:- The original agreement of sale of the Chennai property was made on 28-6-1996. Based on that agreement, NOC from the Appropriate Authority was obtained on 8-10-1996. Thereafter a supplementary agreement was executed on 6-2-1998 in order to accommodate the actual extent of the landed property arrived at on re-measurement.
When the sequences of events are considered in a wholesome manner, it is evident that the possession of the property was handed over to the buyers and the consideration was paid by the buyers on 28-11-1999 itself. This giving away of the possession of the properties to the buyers against receipt of the consideration of the transaction, has satisfied the requirements of "transfer" within the meaning of section 2(47) of the Income-tax Act, 1961 and within the meaning of section 53A of the Transfer of Property Act.
It is to be seen that the NOC issued on 21-2-2000 relates back to 8-10-1996 and as such reinforces the fact of transfer of the property on 28-11-1999, when the possession was handed over to the buyers. In these circumstances, as far as this case is concerned, therefore, there is complete compatibility between the application of section 2(47) of the Income-tax Act, 1961 with section 53A of the Transfer of Property Act and Chapter XX-C of the Income-tax Act, 1961.
Investment made by the assessee on 9.12.1998 in the residential property was well within the time period mentioned for availing deduction under Section 54 / 54F of the Act. - Decided in favor of assessee.
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2012 (4) TMI 416 - ITAT, AHMEDABAD
Depreciation on intangible assets - AO disallowed the depreciation - various assets including integrated software - During the survey, it was found by the survey team that these assets were not there in the premises and if the appellant had any objection regarding the list of the assets in the survey report, the same has to be objected there itself and ought to have corrected - AO denied claim of the assessee because no fixed assets register was maintained by the assessee but same was produced before the AO subsequently - held that:- Merely because the parties who had supplied assets to the assessee have not responded to the notice of the AO may not be a ground for denying claim of the assessee on tangible assets - the material supplied by the assessee is not examined in detail and complete details of the assets are recorded in the report of valuation prepared prior to the survey at the instance of IDBI, therefore, we are of the view the matter as regards depreciation on tangible assets requires reconsideration at the level of the AO
Regarding deduction u/s 80HHC and 80 IA - Held that: assessee made a claim of deduction under these provisions when income is computed at profit. The learned CIT(A), therefore, rightly directed the AO to consider this issue particularly when the assessee fulfilled conditions under these provisions. The learned CIT(A) merely directed the AO to allow the claim of the assessee as per law
Regarding bad debts u/s 36 (1) (vii) - Held that: debts having been written off in the books of accounts in the year under consideration, the claim of bad debts is allowable to the assessee - Appeal is allowed
Disallowance of insurance expense - AO rejected the claim of the assessee because the insurance cover was taken for loss of production and expected profit whereas insurance expenses were debited on estimate basis relating to destruction of machinery, building, raw material and finished goods. - held that:- Once assessee has shown income on account of insurance receipts out of the same incident and claimed expenses out of the same incident relating thereto, the claim of the assessee should have been appreciated and considered for both i.e. income and the expenditure on account of insurance. Similarly, assessee shall have to satisfy the AO as to how expenses have been claimed and should have filed the supporting evidences. - matter remanded back.
Regarding disallowance to the extent of 25% on disallowance of Rs.3,08,17,231/- made by the AO on account of nongenuine purchases - arned Counsel for the assessee reiterated the submissions made before the authorities below and submitted that search was carried out by central excise department on 15-02-2002 which is prior to the start of the financial year relevant to the assessment year under appeal 2003-04 - It is not in dispute that search was carried out by central excise department prior to start of the financial year in appeal. The financial year starts from 01-04-2002 and would end on 31-03-2003 for assessment year 2003-04 under appeal - In the absence of any material on record against the assessee, we do not find any justification to sustain even part addition against the assessee - Decided in favor of the assessee
Disallowance of various expenses - assessee Company filed return of income in response to notice u/s 148 of the IT Act and has made additional claims on these expenses. Such claims were not made in the original return of income. - held that:- the proceedings u/s 147 are meant for the benefit of revenue and not for assessee, the assessee cannot be permitted to convert the re-assessment proceedings into an appeal or revision in disguise and sick leave in respect of items earlier rejected or claim relief in respect of items not claimed in the original assessment proceedings, unless relatable to escaped income.
Regarding addition of Rs.10,55,53,967/- u/s 36(1) (iii) - It was submitted before the learned CIT(A) that the AO did not issue any show cause notice on this issue and that all the advances were made for business purposes either for purchase of materials or plant and machinery - The learned Counsel for the assessee submitted that the entire disallowance has been made by the AO purely on estimate basis without establishing any nexus between the funds borrowed and advances granted - It was submitted that recently the Hon’ble Supreme Court has held that in case of loans to associate concerns and/or outside parties, commercial expediency from the businessman’s point of view has to be taken into consideration and while doing so, revenue cannot sit in the arm-chair of the assessee - Held that: the assessee is having sufficient own funds, therefore, there is no question of diversion of interest-bearing funds for giving loans and advances - Decided in favor of the assessee
Regarding addition on account of loss on sale of raw materials of Rs.2,69,86,470 - After verification of the evidences produced by the assessee the AO had come to the conclusion that the loss claimed in respect of such sales of raw material is fictitious and therefore, the same has been disallowed and as per the clear finding in the assessment order, the AO stated that the addition made be confirmed - learned Counsel for the assessee also submitted that huge volumes of additional evidences are in order and the AO did not find any mistake in the same and hence, he has not commented on any of them - Held that: CIT(A) considering the details furnished found that the assessee has suffered loss and such findings of the learned CIT(A) have not been rebutted through any evidence or material on record - Appeal is dismissed
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2012 (4) TMI 415 - KERALA HIGH COURT
Denial of waiver of interest, levied under Section 234A, B and C of the Income Tax Act – Held that:- there is no provision in the Act, providing for waiver of such interest – notification dated 23.05.1996 provides the circumstances in which such waiver is permissible which says that where the return of income could not be filed by the assessee due to unavoidable circumstances and it was later filed voluntarily without detection by the Assessing Officer - no details thereof have been furnished by assessee and this factual issue was not established before the 1st respondent - denial of the request for waiver of interest cannot be said to be against the provisions of the notification – against assessee.
Request for waiver of interest levied under Section 220(2) – Held that:- Apart from the pleading that the non-payment of tax was due to reasons beyond the control of the assessee, the assessee has not established this factual question - the ingredients of the other conditions specified in Section 220(2)(a) also are not established – against assessee.
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2012 (4) TMI 403 - DELHI HIGH COURT
Revenue expenditure u/s 37(1) - Deletion of the addition made by the AO on account of commission claimed on payment to various agents in respect of sale of machinery – Revenue contested that seven buyers had stated categorically in their written responses that in the transactions of purchase made by them of the web offset printing machines from the assessee, no commission agent was involved – Held that:- For AY 2005-06 any amount paid by way of commission to persons in respect of these seven buyers cannot be regarded as business expenditure and the same would not be allowable as Revenue expenditure under Section 37(1) but as far as the other payments by way of commission are concerned, there is no evidence which has been produced by the Revenue – partly allowed in favour of revenue.
Assessment Year 2006-07 – Held that:- No evidence from any of the buyers indicating that there was no commission agent between them and the assessee company - there is no material on record nor is there any other evidence which the Revenue could produce to indicate that the commission paid to the commission agent was not genuine – against revenue.
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2012 (4) TMI 402 - ITAT MUMBAI
Invoking the provisions of section 50B to sale of assets of the M Seal Division of the Appellant - assessee contented that it was an itemized sale - Slump sale – Held that:- A close analysis of the agreement and the deeds entered into by the appellant with PIL confirms that the business as a whole was sold and not an itemized sale of assets - Directors' report and Auditors' report also talk about 'sale of business' - the business of Sealants and Adhesives of assessee includes all the processes from manufacturing to marketing and as per the ‘Agreement to Grant’ Appellant had agreed to sell/transfer and assign all rights, benefits, titles, interests of any nature in relation thereto 'business of Sealants and Adhesives', thus leading to sale of entire business – as a result of the nine agreements/ deeds entered with PIL business of Sealants and Adhesives carried out by the Appellant had gone to PIL irrevocably - agreements/deeds entered in to by both the parties prove that they are part of the one transaction only and to considered as ‘ slump sale' – against assessee.
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2012 (4) TMI 401 - ITAT CHENNAI
Rejection of claim of exemption under section 54– assessee submitted that non compliance with the provisions of section 54 within the time prescribed was for reasons beyond her control as the money which was blocked by her by paying advances to procure the property was not realized within the time - Held that: - Payment of advance and return of the same are all matters of normal commercial agreements and cannot act as supervening impossibilities - two out of the three persons to whom advances were made are assessee’s own sons to whom she handed over the money who enjoyed it for long time - these events do not lead to supervening impossibilities to constructed the residential property beyond three years of the prescribed time limit – against assessee.
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2012 (4) TMI 400 - ITAT HYDERABAD
Assessee in default - TDS u/s 194J - Trust directly makes payments to various hospitals as per the MOUs it entered with such hospitals. - Held that: A close reading of the above provisions of S.194J and S.2(31) of the Act, makes it clear that the assessee, which is claimed to be having no source of income and constituted without any profit motive, as well as the hospitals to which payments have been made clearly constitute 'person' as defined in S.2(31) of the Act, and the services rendered by the hospitals, being in the nature of medical services, also comes within the scope of 'professional services' as defined in Explanation to S.194J, thereby, making the payments made by the assessee towards such services fall within the ambit of professional services. - Decided against the assessee.
Regarding bifurcation of payment made to hospital - learned counsel for the assessee, submitted that elements of payment towards bed charges, medicines, follow up services, outpatient services, transportation charges, implants, expenditure incurred for conducting camps at village levels, do not strictly fall within the scope of 'fee for professional services' which alone can be considered as falling within the scope of the provisions of S.194J - Decided in favor of the assessee by way of direction to AO to bifurcate the payments made by the assessee trust to the hospitals into various element, and confine the demand raised in terms of S.201(1) of the Act, only to the payments which assume the nature of fee for professional services, as noted above
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2012 (4) TMI 399 - ITAT CHENNAI
Claim of exemption u/s 54B and expenditure incurred towards improvement of land - Sale of 1.81 acre of land by Assessee and his co-owners – assessee out of his 1/3rd share in the sale consideration purchased another piece of agricultural land - claim disallowed - Held that:- It is essential that for claiming the benefit of exemption of section 54B, capital asset sold should have been used either by the assessee or his parents for agricultural purposes in the two years immediately preceding the date on which the transfer took place - detailed enquiry ascertain by AO and the land revenue authorities categorically statement that as per revenue records no crop was cultivated/agricultural activity undertaken on the land owned by the assessee - no concrete evidence has been brought on record by the assessee to controvert the finding of facts recorded by the lower authorities - production of statements of neighbours of the assessee are vague and sketchy - the assessee has miserably failed to prove that the land in question was agricultural land and he had cultivated crops in the land – against assessee.
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