TMI Blog1986 (6) TMI 77X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is that the AAC erred in holding that the sale of agricultural land situated in Alleppey municipal limits gives rise to capital gains. 2. The original assessment in this case was completed under section 143(1) on 30-4-1983 on a total income of Rs. 33,700. After the completion of the original assessment, the same has been reopened under section 143(2) (b) for bringing to tax the capital gains arising on the sale of agricultural land belonging to the assessee and situated inside the urban area. On appeal before the AAC it was contended by the learned counsel for the assessee that the sale of agricultural land within the municipal limits of Alleppey has been brought to the notice of the ITO by means of a statement accompanying the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd raised by the assessee, the learned counsel contended that on an analysis of the language of section 143(2) (b) certain inherent conditions for issue of notice are to be satisfied. These are (a) on the basis of assessment records the ITO finds that the return is incomplete or incorrect, or (b) the ITO has some information or material in his possession on the basis of which he may doubt the correctness or completeness of the return. If none of these conditions exists then issue of a notice under section 143(2) (b) only on the basis of the ITO's sweet will is neither justified nor permissible under the provisions of the Act. It is so because in terms of section 143(2) (b) the ITO is empowered to verify the correctness and completeness of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(1), the reopening of the assessment by the ITO under section 143(2) (b) is bad in law. On merits, he relied upon the decision of this Bench of the Tribunal in the case of D. Ramarajan Nair v. ITO [IT Appeals No. 414 (Coch.) of 1985 dated 6-11-1985], wherein the Tribunal, following the decision of the Bombay High Court, in the case of Manubhai A. Sheth held that the sale of agricultural land even situated within the municipal limits will not give rise to capital gains tax. 4. The learned departmental representative, on the other hand, contended before us that the assessment made under section 143(1) being a summary assessment, the ITO is fully empowered to reopen the assessment under section 143(2) (b). He further contended before us t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointed out earlier, the fact of sale and the amount realised by the assessee by such sale and the fact as how the assessee is entitled to claim exemption have been brought to the notice of the ITO in the enclosure to the return. Since the return filed by the assessee was neither incorrect nor incomplete the reopening of the assessment by the ITO under section 143(2) (b), in our opinion, is not permissible and, therefore, bad in law. The AAC while deciding the merits of the case has given a finding that the land sold by the assessee is an urban land. On a perusal of the assessment order, it is seen that the ITO has given a categorical finding that the capital gains arising to the assessee from the transfer of urban agricultural land is liab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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