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TMI Blog2015 (7) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and the learned Commissioner of Income Tax (Appeals) -I has erred in confirming the same. 3. The learned Deputy Commissioner of Income Tax, Central Circle- 1(1), Pune (DCIT) has erred in treating agriculture income earned from sale of Agricultural lands of Rs. 65,67,973/- as taxable income, without considering provisions of the law and facts of the case and the learned Commissioner of Income Tax (Appeals) - I has erred in confirming the same. 4. Without considering provision of section 2, section 10 and other sections of the Act and the powers of the Central Government, the learned Deputy Commissioner of Income Tax, Central Circle-1(1) Pune (DCIT) has erred in treating sale of agricultural land which is outside the purview of tax, as the said land is situated outside the Municipal limit, as taxable income and the learned Commissioner of Income Tax (Appeals) -I has erred in confirming the same. 5. Without considering the facts and the circumstances of the case, the teamed Deputy Commissioner of Income Tax, Circle-1(1), Pune (DCIT) has erred in holding that assessee is engaged in business activity of purchasing and selling land and assessing the income from sale o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l lands, agriculture activity has been continuously carried on by the assessee for several years past. The assessee is also member of "Sant Tukaram Sahakari Sakhar Karkhana Mayradit". The assessee has been supplying sugarcane to this co-operative sugar factory. 5. The assessee has also taken production of rice, vegetables like tomato, kakadi, onion, leafy vegetables, chilly, cauliflower, etc. depending upon season. Sugar cane is also grown. 6. The assessee had to purchase residential home and an Office and diversify into some business activity. Substantial financial outlay was required for the purpose of purchase of a residential house and an office place, and capital for business with a view to generate resources, the assessee has sold some of his holding of agricultural lands. 7. Your honour, will therefore, appreciate that the assessee has acquired the lands for agriculture. He has carried out agricultural activities. He continues to carry on agricultural activities. For certain needs of resources, the assessee has sold some of the agricultural lands. On sale of agricultural lands no income-tax is attracted. Accordingly, the assessee has compiled his return of income. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has done supervision activity for which Rs. 10 lakhs has been received during the year. He further noted that the assessee in his statement recorded on 18-12-2007 has stated that in some of the lands his brothers are co-purchasers but the assessee has not given these details. He therefore called for the details of sales effected till date and details of properties purchased with his brothers. From the details furnished by the assessee, he noted that majority of the lands has been sold as of now. Therefore, the motive of selling the agricultural land is absolutely clear. The assessee, according to the AO, has sold the agricultural land for simple reason that he got the required rate on account of boom in real estate prices. According to him, if the intension of the assessee was to retain the agricultural land for agricultural activity, he would not have sold the land under any circumstances. Therefore, the activity of the assessee according to the AO is nothing but an adventure in nature of trade. He therefore was of the opinion that the profit on account of such act needs to be taxed under the head. He observed that during the year the assessee has sold the following lands : S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely 40 acres of land were acquired by him from various land owners from approximately 1986 onwards and from 1995 onwards approximately 30 to 32 acres of land were sold to different persons in different years out of the same. It was also admitted in his statement that he received approximately Rs. 3.10 crore on sale of the above referred lands against the cost of Rs. 80lakhs. It was also admitted in the said statement that the land purchased from 30 to 35 owners were sold to 6 to 8 buyers. AO has also pointed out in the assessment order that during the course of survey it was revealed that assessee was also engaged in the subplotting of the land. However, the same was denied by the assessee during the course of appeal. Finally the Ld.CIT(A) while upholding the action of the AO has observed as under : "4.4. After considering the above referred issue in the facts and circumstances of the case I am of the considered opinion that the ground of appeal under consideration cannot be allowed. It is clear from the facts available on record that the appellant belongs to a group which is actively engaged in different business activities including real estate and land. The appellant has not i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee to obliviate from his legal responsibility, more so when it relates to his claim. Furthermore, the nature of the information related to purchase and sale of land and those details are not difficult to be gathered and obtained even if not retained in regular course, as the appellant must be knowing the persons who sold their lands or his agents or the persons or the agents who purchased the lands. These details could also have been obtained by him from revenue records as he was party to those transactions. Furthermore, considering the importance of these documents, these are generally preserved and retained safely by the involved persons. Therefore, on these considerations, it cannot be accepted that the appellant had any difficulty in obtaining and submitting such details. In such a view of the matter, none compliance on these issues has to be considered adversely assuming that the appellant deliberately prevented its submission as he was knowing that its production before the competent authority would nail him with the taxation of the receipts claimed exempt. It is also an established principle of law that the burden of proving that a particular income is wholly or par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Smt. Parvatidevi and Others Vs. CIT (AP) 164 ITR 675, it has been held that joint purchase of land by four persons and joint sale thereof of lands fit for housing is an adventure of the nature of trade. In the case of Hemchand Hirachand Shah Vs. CIT, Gujarat, 206 ITR 55, it was held that agriculturist purchasing land in a series of transactions and selling them within a reasonable short period would be of the nature of business. In the case of appellant also, it was shown that in many cases lands were jointly purchased. All these judgments also support differently the inference drawn by the Assessing Officer in the available facts of the case. Therefore, Ground No. 1 is treated as dismissed." 9. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 10. The Ld. Counsel for the assessee strongly challenged the order of the CIT(A). Referring to page 242 of the paper book he drew the attention of the Bench to the details of rural agricultural land purchased and sold by the assessee. He submitted that the main activity of the assessee is agriculture and transportation business. To meet his business requirement the assessee sold some of the agricultural lan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 005-06 and 2006-07, the details of which are as under : Details of Rural Agriculture Land Purchased and Sold after year 2000 till 2006 except for lands sold in A.Y. 2005-06 & 2006-07 Sr.No. Village Gat no Date of sale Name of buyer Sale consideration Date of acquisition Cost of acquisition 1 Chandkhed 145 22/09/2000 Sopan Jagannath Bhagwat 225,000 21.01.1994 22,000 2 Pusane 102 19/08/2002 Dhyaneshwar Balwadkar 6,10,000 21.08.1998 3 Chandkhed 140 19/08/2006 Bhagwat 1,65,000 20.04.1998 139,124 4 Chandkhed 135 and 18/10/2006 Dr.Arjun Rao 15,600,000 16.06.2005 450,000 137 11.09.2000 1,380,000 5 Chandkhed 140 23/08/2006 Mistri Santosh 2,00,000 20.04.1998 95,948 12. Referring to the order of the Tribunal in the case of the brother of the assessee for A.Y. 2007-08 vide ITA Nos. 551 and 554/PN/2012 order dated 30-07-2013 he submitted that the Tribunal has dismissed the appeal filed by the Revenue. He submitted that the Revenue had challenged the order of the CIT(A) wherein the CIT(A) has held that the profit on sale of such land is exempt from tax being agricultural l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or A.Y. 2001-02, a copy of which is placed at pages 215 to 217 of the paper book, and submitted that the assessee has incurred loss. He submitted that the assessee therefore had to sell a part of his agricultural property for business purpose. Referring to the copy of the assessment order for A.Y. 2003-04 he submitted that because of the brought forward loss the business income has been determined by the AO at NIL. Referring to page 242 of the paper book he submitted that the holding period of the land is more than 8 years. So far as the decision relied on by the Ld. Departmental Representative is concerned he submitted that the facts in that case are distinguishable and are not applicable to the facts of the present case. He submitted that each case has to be decided on its own sets of facts. He accordingly submitted that the order of the CIT(A) be set aside and the income from sale of agricultural land be treated as exempt. 17. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. From the various d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural land as business income which was held by the CIT(A) as exempt being surplus from sale of agricultural land. On further appeal filed by the Revenue, the Tribunal dismissed the appeal filed by the Revenue by observing as under : "12. We have carefully considered the rival submissions. The pertinent facts in this case are that in the year 2000-01 assessee purchased certain agricultural land which has been sold during the year under consideration. In the interregnum, assessee declared agricultural income from the said land during the assessment years 2002-03, 2003-04 and 2004-05. Ostensibly, there is no dispute to the fact that the land in question was an agricultural land. It is also clear from the orders of the authorities below that at no stage, assessee undertook any development activity on such land, akin to a developer, for instance, there is no construction of compound wall, laying of internal roads, sub-plotting, etc.. The land has been sold by the assessee without taking any steps to further develop it so as to add value to it, in order to maximize the profits on sale. The CIT(A) has also brought out that in the State of Maharashtra only an agriculturist can own agricul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 14. We may also refer to the decision of the Pune Bench of the Tribunal in the case of Gopal Kasat (supra) relied upon by the Assessing Officer to say that the income by selling of agricultural land was to be assessed as a business transaction. In the case of Gopal Kasat (supra), assessee purchased certain lands which were subject-matter of acquisition proceedings by the Government. The Tribunal, in this background, noted that the assessee was aware, at the time of purchase, that the land could not be held as an investment for a long period as the same was under acquisition proceedings. The aforesaid factor prevailed with the Tribunal to hold that surplus on sale of such land was to be treated as 'business income' and not as 'capital gains'. In the present case, the facts stand on an entirely different footing inasmuch as there is no material to show that at the time of purchase assessee had any intention of doing any business of dealing in agricultural lands. In-fact, in our view, the CIT(A) rightly relied upon the judgement of the Hon'ble Bombay High Court in the case of CIT vs. Bombay Oilseeds & Oil Exchange Ltd., 202 ITR 198 (Bom.) to hold that it was for the Revenue to pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nicipal limits. Further, the Assessing Officer in the assessment order passed u/s.143(3) for A.Y. 2008-09 has not disturbed the claim of the assessee that such income is exempt from tax being sale of agricultural land. Therefore, the decision relied on by the Ld. Departmental Representative is not applicable to the facts of the present case. In this view of the matter the order of the CIT(A) is set aside and the grounds raised by the assessee are allowed. 21. Ground of appeal No.6 by the assessee reads as under : "6. The learned Deputy Commissioner of Income Tax, Central Circle 1(1), Pune (DCIT) has erred in treating agriculture income of Rs. 2,00,630/- as undisclosed income under section 69A of the Income Tax Act, 1961 without considering provisions of the law and facts of the case and the learned Commissioner of Income Tax (Appeals) - I has erred in confirming the same." 22. Facts of the case, in brief, are that the Assessing Officer noted from the details furnished by the assessee that the assessee had shown gross receipt on account of sale of agricultural produce at Rs. 7,69,115/- and the expenditure on account of agricultural activity at Rs. 2,40,485/-. Thus, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant during the course of appeal also has submitted similar details and on the basis of the same it is not possible to find any fault in the finding of the Assessing Officer. Considering the same, Ground No. 6 is treated as dismissed. " 24. Aggrieved with such order of the CIT(A) the assessee is in appeal before us. 25. The Ld. Counsel for the assessee submitted that there are no defects in the accounts maintained by the assessee who is holding around 40 acres of land. In A.Y. 2004-05, the assessee has declared Rs. 4,50,000/- as agricultural income which was accepted by the Assessing Officer in the summary assessment. He submitted that the disallowance made by the Assessing Officer is not justified and therefore the agricultural income declared by assessee should be accepted. 26. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). 27. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. From the various details furnished by the assessee we find th ..... 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