TMI Blog2011 (8) TMI 1135X X X X Extracts X X X X X X X X Extracts X X X X ..... inding has been given by the Assessing Officer in this regard. - S.P.No.55/Mds/2011 & I.T.A.No.1371/Mds/2011, S.P.No.56/Mds/2011 & I.T.A.No.1372/Mds/2011, S.P.No.57/Mds/2011 & I.T.A.No.1373/Mds/2011 - - - Dated:- 18-8-2011 - SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER] For the Appellant: Shri N.Devanathan For the Respondent: Shri K.Meghanath Chowhan, JCIT/DR O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: The above captioned matters which include three stay petitions and three appeals, each pertaining to assessment year 2007- 08 and filed by the assessees, are being disposed of by a common order for the sake of convenience and brevity. S.P.No.55/Mds/2011 I.T.A.No. 1371/Mds/2011 in the case of Shri Mainraj 2. The appeal has been filed by the assessee against the order of the ld. CIT(A), Chennai, dated 24.6.2011, for assessment year 2007-08. The facts leading to the appeal from which stay petition also emanates, are that the assessee, a trader in edible oil, had filed his return of income for assessment year 2007-08 on 21.2.2008 admitting a total income of ₹ 8,08,861/-. The Assessing Officer issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return of income for the above assessment year 2007-08 before the jurisdictional assessing officer, viz: Assistant Commissioner of Income tax claiming exemption in respect of capital gains on sale of agricultural lands. The learned Assessing Officer initiated proceedings u/s 143(3) scrutiny proceedings and in response to notice u/s 143(2) I have filed complete particulars in respect of my claim regarding non taxability of capital gains, the following are the particulars filed namely: a) Village cultivation record showing the agricultural operations carried on the land; b) Population census of the village. c) Distance from the local limits of municipality. d) Photographs of cultivation. e) Opinion from the counsel . f) Certificate from the village officer showing the nature of land . g) Sale Proceeds taken by the Axis Bank towards discharge of liability directly take from the buyer. h) The fact the buyer has used the land for other purpose is not relevant in the light of binding decision of Madras High Court decision reported in 292 ITR 481 (Mad) relied on. i) Free electricity given by the Govt paid and refunded by EB . It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a capital asset, can be summarized as under: 1. The lands were situated in notified area as per Sec.2(14). 2. The assesses has not performed any agricultural operations on the said lands from the date of acquisition of lands in 1998. Instead, they appointed one Mr. P. Natarajan, as care taker who in turn carried out a little agricultural operations now and then. 3. Neither the assessees nor the care taker has maintained any account in respect of Primary and Secondary agricultural operation~ like ploughing, tilling, sowing , labour, manure and fertilizers, harvesting, gross yield, net agrl. income derived etc. 4. The land is situated in Chennai Metropolitan Area vide Sl.no. 295 at local Body /village no. 187. 5. The sellers of the land have been in business of edible oil trade for the last 15 years. 6. Most of the lands adjoining the lands in question are nonagricultural in nature. 7. The lands were sold to a company whose activity is development and construction residential houses. 8. The agricultural lands near by fetches about ₹ 15 lakhs per acre. 9. Apparently the seller s intention of purchasing the land in 1998 is not for A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nion of India 29 ITR 1 SC and the revenue in any event and without prejudice erred in issuing notification at the fag end of the limitation of completion of assessment much to the detriment of the appellant/department . 4. The learned CIT (A) erred in confirming assuming jurisdiction u/s 147 of the income tax Act where there exists live 143 (2) proceedings pending on the date of issuance of notice and hence there is no escapement of income warranting initiation of proceedings u/s 147 of the Act. 5. The learned CIT (A) ought to have appreciated that the ingredient to reopen the assessment are singularly absent in the case of the appellant, namely proper recording of reasons, existence of reason to believe, absence of tangible materials and satisfaction. 6. The learned CIT(A) fundamentally failed to appreciate even assuming without admitting for the sake if argument that the centralization was for coordinated investigation still the assessment cannot be completed under sec tion147 r.w section 143 (3) of then Act a catch 22 situation for the revenue in the absence if incriminating materials leading to formation of reasons to believe that income had escaped asst. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d CIT(A) erred in allowing partly sums in respect of travelling and conveyance and marketing expenses without considering the evidence and explanation offered by the appellant 13. The learned CIT(A) ought to have appreciated that much damage could have been avoided on account of fag end of centralization of the case at the close of the limitation period and the addition was made without causing any enquiry 14. The learned CIT (A) erred in confirming charging interest u/s 234A and 234B of the Act. 15. The appellant craves leave to file additional grounds. 9. In the meantime, when there was pressure of the Department on the assessee to deposit the outstanding tax, a stay petition has been filed for the stayal of the entire amount, as per law. When we were hearing the stay petition, it was thought that instead the appeal can be disposed of as very simple issue is involved and all relevant documents are available in the paper books, etc. It was concurred by both parties and we also thought it fit to decide the appeal instead of passing any order on stay petition because whatever view, prima-facie, we are going to take in the stay petition it would virtually decide t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer has made spot inspection and has found that the land is situated exactly at a distance of 7.8 kms from the municipal limits of Tambaram, by main road through Salaiyur is not found to be correct. He has referred to Ariel distance which according to him, will show that the land is within 8 kms from Tambaram. In our opinion, these are very weak form of evidence which are in the hands of the Revenue in view of the fact that Ariel distance cannot be taken in such cases and only distance measured in terms of approach by road and not by a straight line distance on horizontal plane or crow s flight to reckon the distance between a municipal corporation and a village. In this regard, decision of Hon'ble P H High Court rendered in the case of CIT vs Satinder Pal Singh, (2010) 229 CTR (P H) 82, a copy of which is placed on record, can be relied upon. In this case, it has been held thus: The maximum distance prescribed by s. 2(14)(iii)(b) which may be incorporated in the notification could not be more than 8 kms. from the local limits of municipal committee or cantonment board etc. The notification has to take into account the extent of, and scope for urbanization of that area and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the list of: inferences drawn by the Assessing Officer in our earlier portion of this order, itself shows that he has accepted in principle that agricultural activities were carried on this land before sale because he has mentioned that Shri P. Natarajan was appointed as caretaker who carried out agricultural operations but now and then. The other evidence in this regard produced by the assessee are as under: (i) Village cultivation records, namely, chitta and adangal maintained by the Government for the purpose of levy of tax called kist shows the land is agricultural land and also given a finding that the assessee had cultivated paddy and the had paid kist in the nature of levy for holding agricultural land and yield of agricultural income. (ii) Existence of electricity pump set having 3 horse power and electricity supply given by Government free of cost to genuine agriculturists connected to the Big Well owned by the assessee. (iii) Electricity charges incurred but not taken by Electricity Board for consumption of electricity to show that the pump set was used for agricultural operations (a concession given by the Government). This also shows that the crops ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r similar reasons as was heard in Shri Mainraj s case. 21. Briefly stated, the facts leading to the appeal and stay petition are that the assessee filed her return of income for assessment year 2007-08 on 20.2.2008 admitting a total income of ₹ 3,72,393/-. The source of income has been shown as income from other sources . As discussed in the case of Shri Mainraj, as a sequel to the survey/search conducted in the case of M/s Rajarathinam Constructions Pvt. Ltd on 27.2.2008, it was noticed that the assessee had sold a piece of land measuring 3.5 cents situated at Perumbakkam village for a consideration of ₹ 6,75,000/-. The relevant details of this transaction are as under: Sl.No. Name of seller Extent of Land Consideration Nature of Document Date 1 Smt. Usharani 3.5 cents 6,75,000 Sale deed 01.03.2007 22. In this background, this case was notified to Central Circle III(2) vide notification No.13/2008-09 dated 23.12.2008 in C.No.6121/Centrn/2008-9/V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007-08, admitting total income of ₹ 4,14,745/- before the jurisdictional Assessing Officer i.e Business Circle V (3) on 21.2.2008. As a result of search u/s 132 and simultaneous survey u/s 133A in the business premises of M/s Rajarathinam Cosntructions Pvt. Ltd on 27.2.2008 it was found that this assessee had sold a piece of land situated in Perumbakkam Village for a consideration of ₹ 1,60,00,000/-. The relevant details of sale transaction are as under: Sl. No. Name of seller Extent of land Consideration Rs. Nature of Document Date 1. Mr.Sugandararaj 1.19 acres 1,60,00,000 Sale receipt cum declaration 01.03.2007 29. The jurisdiction of this case was transferred to Central Circle III(2) vide same notification as were in earlier cases. Consequently, notice u/s 148 was issued on 14.12.2009. Subsequently, notices u/s 143(2) and 142(1) were also issued on 23.12.2009. These notices were complied with and the assessee s ld.AR filed the requisite details. Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the partnership firm (in which he is a partner) which is basically dealing in oil and made a loss by incurring expenses. I, therefore, hold that the appellant has failed to discharge his burden in establishing and in explaining the rationale of the expenditure. However, considering that the appellant has returned receipt of ₹ 4,31,100/- from sale of oil, I hold that the disallowance of expenses of ₹ 3,00,000/- would be fair and reasonable. Accordingly, the disallowance of expenses made in the assessment order is sustained at ₹ 3,00,000/-. 33. Before us, similar arguments from both sides were advanced. After considering the rival submissions, we find that that the disallowance sustained by the ld. CIT(A) is on a higher side. In our considered opinion, the disallowance to the tune of ₹ 1 lakh out of the total expenses claimed of ₹ 4,79,275/- would be justified in the given facts and circumstances of the case. Therefore, we partly allow this issue. 34. In so far as the charging of interest u/s 234A and 234B is concerned, that will take a consequential effect. 35. As regards reopening of assessment u/s 147 r.w.s 148 is concerned, it is held t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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