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Shree Bhagwanbhai Revabhai Prajapati and others Versus The ACIT, Central Circle 1 (4) , Ahmedabad and others

2015 (7) TMI 73 - ITAT AHMEDABAD

Eligibility exemption u/s.54B with regard to the on money received on sale of agriculture land - undisclosed income of the block period - Held that:- Assessee has received ₹ 1,90,88,759/- (including on money) (Assessing Officer has taken ₹ 95,25,836/- only on which the exemption u/s.54B was claimed) on account of sale consideration of of Gatrad land. The said sale consideration includes mount of sale consideration shown in sale deed and on money received thereon. Out of sale consider .....

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sing Officer has taken ₹ 95,25,836/- only) on account of sale of Gatrad agriculture land. Assessing Officer has not allowed the exemption u/s.54B on the ground that basic requirement of claim of exemption u/s.54B is that first condition of land should be used by assessee being an individual or his parent or HUF for agriculture purpose has not been complied with. We have decided this issue in preceding favour in favour of assessee.

Regarding allowability of claim of claim of ‘’o .....

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th regard to undisclosed income of the block period. Thus assessee is entitled for getting benefit of exemption under section 54B with regard to the ‘on money’. See Commissioner of Income Tax, Central II, Versus M/s. Sheth Developers (P) Ltd. [2012 (8) TMI 159 - BOMBAY HIGH COURT] - Decided in favour of assessee. - IT(SS)A. No. 377/Ahd/2014,IT(SS)A. No. 24/Ahd/2015 - Dated:- 24-6-2015 - Shri Shailendra Kumar Yadav and Shri N. S. Saini, JJ. For the Petitioner : Shri O. P. Vaishnav, CIT D.R. For t .....

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ad, has grossly erred in not considering the appellant s submissions made before him as such the order is against principle of natural justice, bad in law and deserves to be cancelled. 2) On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals)-I, Ahmedabad, has grossly erred in allowing the legitimate exemption u/s 54B to the extent of ₹ 39,38,100/- being the sale consideration received as per registered sale deed only. She has not allowed the legiti .....

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f the Act. He may be directed to withdraw the same. 4) On the facts and in the circumstances of the case, the Ld. Commissioner of Income Tax (Appeals)-I, Ahmedabad, has grossly erred in confirming the initiation of penalty proceedings u/s. 271(1)(c) & 271AAA r.w.s. 274 of the Act. He may be directed to withdraw the same. 2.1 In IT(SS)A No. 24/Ahd/2015, Revenue has filed the appeal on the following grounds: 1. The C.I.T.(A) has erred on facts and law in allowing exemption u/s. 54B of the Act .....

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ch land on which assesse claimed exemption is given as under: Sr. No. Block No. Ownership ratio Sale Consideration (Being assessee s share) Amount of exemption claimed u/s.54B on Capital Gains (Being assessee s share) 1. 253 One-third 25,74,590 25,30,094 2. 260 One-third 6,98,723 4,14,535 3. 277 One-third 4,41,337 4,33,710 4. 283 One-sixth 10,29,909 10,12,310 5. 285 One-third 7,35,441 7,22,880 6. 286 One-third 40,45,836 39,77,053 95,25,836 90,90,582 As against the sale consideration of ₹ 9 .....

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hat the assessee has not satisfied the condition no. (i) (supra). The basic requirement for claiming the exemption u/s 54B of the Act is that the land should be used by the assessee being an individual or his parent, or a HUF for agricultural purposes (hereinafter referred to as the original asset)], and the assessee must within a period of two years after that date, purchased another land for agricultural purposes. Moreover, the assessee has not declared any agricultural income in the return of .....

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of bills for purchase of seeds, fertilizers, pesticides, etc., details of irrigation facility and also the copies of 7/12 extract and complete bills in respect of the crops sold. The A R. has not been able to produce any details / evidence in respect of the agricultural activities carried out by the assesses on the land sold in respect of which exemption is claimed despite given adequate opportunity. Further, the assessee has submitted an agreement with Shri Dalpatsinh Abhaysinh Chauhan, who is .....

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ence as discussed supra to prove that any agricultural activity has been carried out on the land in the two years immediately preceding the date on which transfer of such agricultural land took place irrespective of who carried it out. As stated above, the assessee to support his contention has submitted the aforesaid agreement for carrying-out cultivation on agricultural land. This clearly established that agricultural activity, if any, was not carried out by the assessee or his parents. Accord .....

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e crops were grown on the land during the F.Y.2006-07. However, no details of crops grown during any of the subsequent years i.e. F.Ys.2007-08, 2008-09 & 2009-10 appear in the document. Therefore, it is evident that, in fact, no agricultural activity was carried out even by the tenant, Shri Dalpatsinh A. Chauhan in the two years preceding the sale of the land by the assessee. Under the circumstances, the assessee is not eligible for availing the benefit of exemption u/s.54B of the Act. Accor .....

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ricultural land. Before us, stand of Revenue is that CIT(A) erred in allowing the legitimate exemption u/s 54B to the extent of ₹ 39,38,100/-. As basic condition of Section 54B of the Act clearly state that there should be land used by assesse being an individual or his parents which is not fulfilled in this case. Accordingly, order of CIT(A) on this issue be set aside and that of Assessing Officer should be restored. On other hand, learned Authorized Representative submitted that CIT(A) h .....

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i. Whether assesse is eligible to that relief u/s.54B of the Act, 1961 while computing capital gain. ii. Whether relief in computation u/s.54B of the Income Tax Act,1961 can be claimed against unaccounted additional sale receipt in the form of on money not reflected in sale consideration. It is not in dispute that assessee s relevant record for agriculture i.e. 7/12 reveals the crops at the said land at relevant point of time. Assessing Officer has disallowed the claim of assesse on the ground .....

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ok place, was being used by [the assesse being an individual or his parent, or a Hindu undivided family ] for agricultural purposes [(hereinafter referred to as the original asset)], and the assesse has within a period of two years after that date, purchased any other land for being used for agricultural purposes, then, instead of the capital gain being charged to income tax as income of the previous year in which the transfer took place, it shall be dealt with in accordance with the following p .....

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il; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced, by the amount of the capital gain.] The word in Section 54B is was being used by [the assesse being an individual or his parent, or a Hindu undivided family] for agric .....

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that assesse was not in cultivatory possession of the land in question and he did not produce the evidence of expenditure on agriculture and has not shown agricultural income in his return and revenue record i.e. Form No.7/12 is beyond two years immediately preceding year to the relevant assessment order. 5.1 As per Section 54B of the Income Tax Act, assesse has to establish the fact that land in question is being used by assesse for agricultural purpose in two years immediately preceding the re .....

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ssion of the agricultural land in question. Even this fact has not been disputed in the remand report by Assessing Officer. In appeal, CIT(A) verified the same and found that as per revenue record, land in question was used for agricultural purpose. The explanation used for agricultural purpose in Section 54B can only be description of agricultural land which is subject matter of transfer and not condition precedent for granting relief u/s.54B. Even if, assesse is not in cultivator possession hi .....

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nauthorized said land, it seized to be agricultural one. In case before us, there is nothing like this. There is nothing on record to suggest that assesse was not engaged in agricultural activity on the land in question which is evident from relevant revenue records as well. Burden is on assessee to establish that land is agricultural one. At the same time, onus is on department to establish otherwise that land was nonagricultural one. In case before us, as per revenue record, land in question i .....

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ase, assesse group was subject to search and seizure proceedings on 28.07.2011 Mr. Motibhai Revabhai Prajapati in his statement u/s.l32(4) of Income Tax Act, 1961 recorded on that day stated on page 5, "On the basis of papers found and seized from my and my partners' residence and office, I disclose following unaccounted income; I and my partners have earned capital gain income from sale of Gatrad land. Out of this income ₹ 8 crore is out of books. I have accepted this in my state .....

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e. Condition to claim 54B claim was not fulfilled as stated above. Assessing Officer has fully rejected claim u/s. 54B of Income Tax Act, hence, he has not discussed the treatment of on money for the purpose of claim u/s. 54B of the Act, 1961. 6.1 At the appellate proceeding, assessee was asked to explain that claim u/s. 54B of Income Tax Act, 1961 be allowed against on money received by him out of books. He explained that after disclosure u/s. 132(4) of Income Tax Act, 1961, money so received h .....

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the agriculture land situated at Village: Gatrad, Ta. & Dist. Ahmedabad - A.Y. 2011-12 & 2012-13 2) 'On Money' received on sale ,, of residential house situated at Nirmal Bunglows, Vastral, Ahmedabad. Rs.43,00,000/- Disclosed in the hands of Motibhai Revabhai Prajapati who owned the Bunglow-A.Y. 2012- 13 3) Under statement of sale consideration (on money) of the residential Units 85 Commercial Shops. ₹ 7,29,00,000/- Disclosed in the hands of 4 business concerns: I) Madhav O .....

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377; 8 crore was made on account of on money received on sale of agriculture land situated on Village: Gatrad, Taluka/District: Ahmedabad. The disclosure on account of on money received in lieu of sale consideration of agriculture land has bifurcated in various group persons hands as under: Sr. No. Name of Individual in whose hands the disclosure is made Amounts as per sale deed On Money Received Total Sale Consideration Investment made in another agriculture land within prescribed period and ex .....

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ssee has received ₹ 1,90,88,759/- (including on money) (Assessing Officer has taken ₹ 95,25,836/- only on which the exemption u/s.54B was claimed) on account of sale consideration of of Gatrad land. The said sale consideration includes mount of sale consideration shown in sale deed and on money received thereon. Out of sale consideration received, assessee has invested ₹ 92,47,100/- (Assessing Officer has mistakenly taken as ₹ 90,90,582/-) in another new agriculture land .....

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the ground that basic requirement of claim of exemption u/s.54B is that first condition of land should be used by assessee being an individual or his parent or HUF for agriculture purpose has not been complied with. We have decided this issue in preceding favour in favour of assessee. 6.2 Regarding allowability of claim of claim of on-money the ld. AR drew our attention to the decision of Hon ble Gujarat High Court in the case of CIT vs. Suman Paper & Boards Ltd. (2009) 221 CTR 0781 wherein .....

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