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THAKORBHAI MAGANBHAI PATEL Versus INCOME TAX OFFICER AND 2

2016 (9) TMI 1195 - GUJARAT HIGH COURT

Reopening of assessment - exemption from the payment of capital gain - agricultural land - nature of land - Held that:- There is serious doubt about genuineness of the certificate dated 16.1.2013 of the Executive Engineer certifying that the land in question was situated beyond 8 kms from the outer limit of Vadodara Municipal Corporation, upon which the petitioner heavily relied. Shri K.D. Patel who is supposed to be the author of the certificate has since retired from Government service but has .....

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is found on the record and Shri K.D. Patel, retired Executive Engineer, who has gone on oath stating that he had never issued said certificate. If that be so, the very foundation of the petitioner's case of the land being at a distance of more than 8 kms from the outer limit of Vadodara Municipal Corporation fails. This would also match with the present information which Revenue collected after the assessment was over in form of statement of Shri Sohan M. Patel and certificate issued by the Dep .....

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e hereinabove. - SPECIAL CIVIL APPLICATION NO. 4756 of 2016 - Dated:- 21-9-2016 - MR. AKIL KURESHI AND MR. A.J. SHASTRI, JJ. FOR THE PETITIONER : MR RK PATEL, ADVOCATE FOR THE RESPONDENT : MR KM PARIKH, ADVOCATE, MR HARDIK VORA, AGP ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has challenged a notice dated 27.3.2015 for reopening the assessment for the assessment year 20082009. 2. Brief facts are as under. The petitioner is an agriculturist and held large tracks of .....

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ection 143(3) of the Income Tax Act ( the Act for short). During such assessment, the assessee was confronted with the sale transaction of the agricultural land and the question of capital gain arising from such sale. The assessee contended that the agricultural land which he inherited was sold on 10.6.2008 but the stamp paper was purchased on 31.3.2008 and in fact, the transaction falls within the assessment year 20092010. He also relied on a certificate from one Shri K.B. Patel to contend that .....

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econd contention of the land being beyond a distance of 8 kms from the limit of Vadodara Municipal Corporation by accepting the certificate produced by the petitioner stated to have been issued by Shri K.D. Patel Executive Engineer, Road and Building division, District Vadodara, in this regard. 4. It appears that the Assessing Officer later on found that the petitioner had deposited ₹ 1.05 crores (rounded off) in his bank account by cash and that the distance between Vadodara Municipal Cor .....

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suring 2.28.98 Hectare (246382.48 sq ft) to Shri Jitendrabhai Natwarlal Patel and Kamleshbhai Patel vide a sale deed executed on 31.03.2008. The assessee received a sum of ₹ 1,10,70,000/in cheque and cash in this sale of land, which he admitted in his statement. The assessee has invested the sum in various properties, Gold and Instruments like LIC, Mutual Fund, Post office. The assessment in this case was completed u/s 143(3) r.w.s. 147 of the Act on 23/01/2013 accepting returned income at .....

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he sale of the said land. Subsequently, Shri Soham N. Patel, Addl. Assistant Engineer, VMC, Baroda was examined on oath on 10.07.2013 and he has stated that the said plot of land is situated not more than 2 km from the outer limit of VMC. Therefore, the said plot of land does not fall under the exclusion clause of being Agriculture land u/s 2(14) of the IT Act and will attract capital gain tax. The incidence of capital gain arise in FY 20072008 as sale deed was executed on 31.03.2008, though, th .....

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ch negates the incorrect evidence submitted by assessee regarding distance of land. Under the above said facts, I have reason to believe that the assessee has not disclosed ₹ 1,05,72,000/as cash sale consideration of the land and Rs, 1,10,70,000/has escaped assessment as capital gain receipts. Hence, there has been failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for AY 200809. The notice u/s 148 of the IT Act for AY 200809 is requ .....

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osal of the objections. 6. From the reasons recorded, it can be seen that for the assessment year 20082009, the assessee had upon notice being issued by the Revenue filed a return disclosing sale of agricultural land for a sum of ₹ 4.98 lacs. No further disclosure of any sale consideration paid or to be paid came on record during the entire assessment proceedings. However, it appears that in the later year i.e. assessment year 20092010, the assessee was confronted with cash deposits in his .....

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Vaghodia in the District Vadodara together with his father and two brothers. The said land was equally divided by three brothers by Memorandum of Understanding entered on 17/01/2008. Copy of Memorandum of Understanding is enclosed herewith. The appellant entered into a banakhat to sell his share admeasuring 2,46,000 sq. ft. at the rate of ₹ 45 per square feet. The banakhat was entered with Shri Kamleshbhai Natubhai Patel and Shri Navinbhai Pujabhai Patel on 25/03/2008 and the said banakhat .....

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d herewith for ready reference. The appellant received ₹ 2,01,000/at the time of entering in to said banakhat from these two persons. Out of this, ₹ 1,55,000/were paid in cash and remaining amount of ₹ 46,000/was received by Bank of Baroda Cheque No. 269168 which is stated in the said banakhat. It is further stated in the said banakhat that remaining amount would be paid at the time of execution of sale deed. Copy of banakhat is enclosed herewith. As per this banakhat, appellan .....

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istered sale deed for ₹ 4,98,000/is enclosed herewith. Shri Kamlesh Natubhai Patel issued several cheques of ₹ 1,04,17,000/from State Bank Of Mysore as security towards amount remained to be paid as per banakhat and not reflected in the registered sale deed. The said cheques were not presented by appellant in the bank as per mutual understanding with Shri Kamlesh Natubhai Patel. Shri Kamlesh Natubhai Patel handed over cash on various dates as per the terms of banakhat in lieu of the .....

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Amount of cash received Document against which cash received 25/03/2008 155000 As stated in banakhat 04/04/2008 400000 At the time of registration of banakhat with notary 10/06/2008 9017000 At the time of registration of sale deed 20/10/2008 400000 On surrender of State Bank of Mysore cheq. No.s 23888 and 23889 of ₹ 2,00,000/each given earlier as security towards amount aggregate in banakhat 20/20/2008 600000 On surrender of State Bank of Mysore cheq . No.s 23890 and 23891 of ₹ 3,00 .....

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or not would in terms of section 2(14) of the Act depend on the fact whether the land was situated beyond a distance of 8 kms from the outer limits of Vadodara Municipal Corporation. Section 2(14) defines the term 'capital assets' which means besides other property of any kind held by an assessee, whether or not connected with his business or profession, an agricultural land in India not being land situate in any area within such distance not being more than eight kilometers from the loc .....

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ating that the land was situated beyond 8 kms from Vadodara Municipal Corporation limits. In this context, the reasons recorded suggest that subsequently statement of Shri Sohan M. Patel, Additional Assistant Engineer, Vadodara Municipal Corporation was recorded on oath on 10.7.2013 who stated that the land in question is situated not more than 2 kms from the outer limit of Vadodara Municipal Corporation. The Assessing Officer therefore, formed a belief that the land falls within the exclusion c .....

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oner raised the following contentions : 1) That the Assessing Officer proceeded with the assessment without disposing of the petitioner's objection. 2) There was no failure on part of the assessee to disclose truly and fully all material facts. 3) The assessee relied on certificate issued by Shri K.D. Patel, the then Executive Engineer, which clearly stated that the land was situated beyond a period of 8 Kms. from the outer limitation of Vadodara Municipal Corporation. 4) The authorities are .....

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relied on decision of Jabalpur Bench of Income Tax Appellate Tribunal in case of Smt.(Dr.) Subha Tripathi v. Deputy Commissioner of Incometax, Circle6, Jaipur. 9. On the other hand, learned counsel Shri Parikh for the department opposed the petition contending that the petitioner produced a false certificate. Shri K.D. Patel has disowned having issued any such certificate. The entire assessment originally done was on the basis of a certificate which was not genuine. There is sufficient material .....

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. We may first take up the question of non disposal of the objections. It is true that in the communications, the petitioner has requested for supply of documents. However, the petitioner also raised the objections to the Assessing Officer exercising the powers of reassessment. In true spirit if these communications were examined, the Assessing Officer would have realised that the assessee was objecting to the process of reopening. In terms of decision of Supreme Court in case of GKN Driveshafts .....

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so. 11. As noted, the Assessing Officer pressed in service two grounds which according to him were not on record during the original assessment. One is the undisclosed sale consideration of ₹ 1.05 crores received by the petitioner for the sale of land in question. It has now come on record through the petitioner's own admission that though the sale deed recorded sale consideration of ₹ 4.98 lacs, the petitioner received additional sum of ₹ 1.05 crores in cash. The purchaser .....

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uter boundary of Vadodara Municipal Corporation is to be reckoned for the purpose of measuring the distance. Would it be the date of notification i.e. 6.1.1994 under which the Government of India in terms of clause (iii) of subsection (14) of section 2 of the Act specified the outer limits in connection with different township and cantonment area or the date on which the sale of land actually took place. Second aspect would be what would be the exact distance between the outer limits of Vadodara .....

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cond explanation to this notification in which it has been specified as under : (2) The reference to municipal limits or the limit of Cantonment Board in the schedule to this notification is to the limits as existing on the date on which the limits as existing on the date on which the notification is published in the Official Gazette. 14. For two reasons, the contention of the petitioner, that for the purpose of this petition, the outer limit of Vadodara Municipal Corporation as on 6.1.1994 shou .....

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1994 was the last of the notifications issued by the Union of India or were there later notifications either expanding the boundaries or refixing the distances, depend on the development of various urban agglomeration, is also not clear on record. We may therefore, for prima facie consideration, accept the stand of the Revenue that it would be the outer limit which would be relevant for ascertaining the distance. It is well settled at the stage of reopening of assessment the Assessing Officer mu .....

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hich it was stated that the distance between the limit of Vadodara Municipal Corporation and the Hanumanpura village is more than 8 kms. 16. Incometax authorities however, later on obtained a certificate dated 12.7.2013 from Deputy Municipal Commissioner, Vadodara, in which he had indicated that shortest aerial distance between various blocks of land and Vadodara Municipal Limit is as under : Sr. No. Block No. (Hanumanpura) Areal Distance in (KM) 1 43 0.760 2 44 0.434 3 45 0.528 4 46 0.456 5 65 .....

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t and the materials collected by the revenue authority later on, in our order dated 10.8.2006, we issued notice to the Secretary, Road and Building division, Government of Gujarat and called for certain information. We may reproduce the order as under : 1. While hearing this petition challenging a notice for reopening of the petitioner's assessment for the assessment year 200809, we noticed that prime question is of charging capital gain tax to the petitioner upon sale of his agricultural la .....

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of Vadodara Municipal Corporation and village:Hanumanpura is more than 8 kms. A copy of this certificate tendered by the petitioner is taken on record. 2. In the reasons recorded by the Assessing Officer for issuing the impugned notice for reopening, he has referred to a statement of Shri Sohan M. Patel, Additional Assistant Engineer, Vadodara Municipal Corporation, recorded on oath on 10.07.2013, in which he has stated that the land in question is situated at a distance not more than 2 kms from .....

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that the shortest aerial distance between the survey numbers in question ranges between 0.434 kms to 1.708 kms. 3. The later certificate referred to above, raise a serious doubt about the veracity of the first certificate dated 16.01.2013 issued by the Executive Engineer Shri K.D.Patel. If the aerial distance between the plot of land and the outer limit of Vadodara Municipal Corporation is barely a half km., it seems very unlikely that a distance by road between the Vadodara Municipal Corporatio .....

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nue survey numbers 43, 44, 45, 46 and 65 and block No.23paiki3(23A) of village:Hanumanpura. II. The authority shall also indicate whether Shri K.D.Patel, Executive Engineer, Road and Building Department, Vadodara, is still in service. If so, his affidavit shall be filed stating as to on what basis the said certificate dated 16.01.2013 was issued by him. 6. For said purpose, alongwith this order, the newly added respondent shall also be supplied a copy of certificate dated 16.01.2013. Direct serv .....

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shortest distance between Hanumanpura village site and land bearing revenue survey no.43,44,45,46 and 65 and Block No.23 paiki 3 (23A)of village Hanumanpura is 0.716 KM (Attach herewith and marked as AnnexureR2 is certificate of Assistant Town Planner, Vadodara Urban Development authority dated 06.09.2016. Thus, exact distance as required by shortest road is 3.516 km. 8. I further say and submit that, Shri K.D. Patel Executive Engineer R&B Department, Vadodara is retired from the Department .....

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further say and submit that, signature in the stated certificate is not even remotely matched with the signature of Mr. K.D. Patel. (Attached herewith and marked as AnnexureR4 is specimen signature card submitted to Treasury office, Vadodara for verification of signature.) 11. I say and submit that even Mr. K.D. Patel has denied issue of any such certificate. (Attached herewith and marked as AnnexureR5 is affidavit by Mr. K.D. Patel). 19. Along with this affidavit, the deponent has also produced .....

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