TMI Blog2019 (7) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... quiring of all right title and interest over the property as done by the Learned AO rightly found not justified by the Learned CIT(A). - ground of revenue dismissed Deduction u/s 54 - HELD THAT:- The case made out by the assessee towards Long Term Capital Gain on the ground of holding the property for more than 36 months before the sale of the same in the year 2008 and the plea taken by the assessee regarding wrong claim u/s 54D instead of 54 as well as the mistake towards description of the property and registering the deed of rectification with the office of the Sub-registrar from land to residential house with land appurtenant thereto and after careful consideration of the remand report and the reply filed by the assessee thereto particularly the deed of rectification which was taken into consideration by Learned CIT(A) u/s 46A we find no infirmity in allowing the prayer of the appellant by the Learned CIT(A) which, according to us clear and specific and without any ambiguity so as to warrant interference.Thus the same is hereby upheld. Consequently, the appeal fails and is accordingly dismissed. Agriculture income - AO treated undisclosed business - assessee is in pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT(A)-10, Ahmedabad arising out of the order dated. 26.02.1015 passed by the ITO Ward-1(3)(1) Ahmedabad u/s. 271(1)(c) of the Act for Assessment Year (A.Y.) 2009-10. Since both the appeals relate to the same assessee, hence the same are heard analogously and are being disposed of by a common order. ITA No. 1851/Ahd/2013 A.Y. 2009-10: 2. The Revenue has filed following grounds of appeal:- 1a). The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in directing to treat the income from capital gain as long term capital gain (LTCG) amounting to ₹ 1,30,35,454/- instead of assessed by the AO as short term capital gain (STCG) amounting to ₹ 1,30,35,454/-,when the purchase deed was registered in 2005. 1b). The Ld. Commissioner of Income-Tax (Appeals)-XV, Ahmedabad has erred in law and on facts in directing to allow deduction amounting to ₹ 58,25,310/- u/s.54 of the Act, out of long term capital gain of ₹ 1,30,35,454/- to ignore the fact that neither the original asset nor the new assetare in the nature of residence which is chargeable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of the said property on 04.10.2008 to a third party. The assessee claimed long term capital gain which was negated by the Learned AO on the ground that the period of holding capital assets is less than 36 months and the same is, therefore, treated to be as short term capital gain and charged accordingly. The same was deleted in appeal by the Learned CIT(A). Hence, the revenue is before us. The second issue relates to claim of exemption u/s 54 of the Act. In fact, initially the assessee claimed for exemption u/s 54D. Since the assessee does not fall under the ambit of such exemption the same has been rejected. In appeal, the same deleted by the Learned CIT(A). It is pertinent to mention that the AO disallowed the entire amount of deduction u/s 54 of the Act, which was in respect of utilization of part of the Long Term Capital Gain arising out of the transfer of the residential house with land appurtenant thereto, for acquiring another residential house. In fact, it was the case of the assessee before the first appellate authority that the assessee claimed this deduction u/s 54D instead of Section 54. A deed of rectification was also execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est whereof was acquired by the assessee in F.Y. 1994-95 upon payment of ₹ 4,00,000/- by two account payee cheque drawn with the Bombay Mereantile Co-op Bank on 04.01.1995. The transfer is thus completed in terms of Section 2(47)(v) of the Act. Subsequently, the property was sold on 04.10.2008 admittedly after holding the same for more than 36 months which qualifies the gain on such capital asset as Long Term Capital Gain arising on the said transfer. This particular aspect of the matter was duly taken care of by the Learned CIT(A) and the claim of the assessee was thus allowed. On the contrary, the Learned DR relied upon the order passed by the Assessing Officer. 6. We have heard the respective parties, perused the relevant materials available on record. It appears from the records that in fact the assessee purchased the property during F.Y. 1994-95 upon payment of ₹ 4,00,000/- by way of two account payee cheques drawn with the Bombay Mereantile Co-op Bank, possession whereof was handed over to the assessee by the vender. It is also a fact that the said property was ultimately registered by way of a sale deed on 16.12.2005; therefore the transfer of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rable time to take such stand upon rectification of such mistake and submitted the supporting document being the rectified registered deed of sale before the Learned CIT(A) the entire modus operandi was termed as an after thought by the Learned AO to avoid tax by the assessee. Such additional evidence was thus not acceptable as opined by the Learned AO in his remand report. In reply to the said remand report, the assessee submitted before the Learned CIT(A) that because of the wrong description of the property in the Registered Conveyance Deed as detected by the appellant after the assessment order was obtained and upon cross check of the description of the property with that of the Registered Sale Deed, the assessee had no other alternative but to execute a correction deed and to get it registered with the office of the Sub Registrar even at a substantial additional cost towards stamp duty and other charges. It was further clarified that the actual qualifying amount for deduction under the section was only ₹ 23,58,310/- as against the corresponding deduction of ₹ 1,23,65,260/- as inadvertently claimed in the return of income by the appellant when the appellant as bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property for more than 36 months before the sale of the same in the year 2008 and the plea taken by the assessee regarding wrong claim u/s 54D instead of 54 as well as the mistake towards description of the property and registering the deed of rectification with the office of the Sub-registrar from land to residential house with land appurtenant thereto and after careful consideration of the remand report and the reply filed by the assessee thereto particularly the deed of rectification which was taken into consideration by Learned CIT(A) u/s 46A of the Act we find no infirmity in allowing the prayer of the appellant by the Learned CIT(A) which, according to us clear and specific and without any ambiguity so as to warrant interference.Thus the same is hereby upheld. Consequently, the appeal fails and is accordingly dismissed. 7. Next ground of appeal relates to the order passed by the Learned CIT(A) in granting the Learned AO to treat ₹ 3,00,000/- only as business income and balance of ₹ 14,23,000/- as agricultural income of the assessee. 8. The case of the assessee is this that the assessee has been the legal and factual owner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gricultural activities being carried on those land, sale bills of crop and other details. Following the principle of consistency, all such evidences andagricultural income cannot be termed as in genuine transaction or sham transactions. From the 7/12 extracts following example reflect that appellant was carrying on the agricultural activities. (i) Survey no. 277/ka/paiki at Sanand Taluka Village Hirapur (Extract No. 0108030), Appellant is one of the owner and for F.Y.2008-09 kharif crop of Jwar was cultivated on 16 Hector 26 Are 85 sq. mt. area by appellant. (ii) Survey No. 269 at village Hirapur Tal. Sanad (Extract No. G01 08034), Appellant is one of the owner and for F.Y. 08-09 Kharif crop of wheat was cultivated on 6 Hector 95 Acre 05 sq. mt. area. (iii) Survey No. 262 at village Hirapur Tal. Sanad (Extract No. G 0108032), the appellant is one of the owner and Kharif crop of wheat was cultivated on 11 Hector 11 Acre 88 sq. mt. area in F.Y. 08-09. It is therefore the appellant's income from agricultural activities is not doubted. The only issue remain is the reasonability of ₹ 17,23,000/-from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITA No.86/Ahd/2016 for A.Y. 2009-10: 9. The assessment proceeding in respect of the return filed by the assessee on 31.03.2010 was finalized by the Learned AO u/s 143(3) of the Act on 05.12.2011 upon computation of total income at ₹ 1,52,83,020/- after making addition on the following: i. Disallowance of ₹ 1,35,54,000/- of deduction u/s 54 on LTCG and treating the income from capital gain as STCG ii. Agriculture income of ₹ 17,23,000/- treated as unaccounted business income Penalty proceeding u/s 271(1)(c) of the Act was initiated against the assessee; notice u/s. 274r.w.s. 271(1)(c) of the Act dated 05.12.2011 was also issued and duly served upon the assessee. The assessee in response to the above notice submitted the following before the Learned AO during the course of penalty proceeding. [4] In response to the above notice, the assessee had filed his reply dtd.29/01/2015. In the said reply the assessee inter alia narrated the operative part of the order in quantum appeal which is as follows: ..[4.3.3.C] It is, therefore, the appellant's income from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same on 04.10.2008 and therefore the period of holding of capital assets is less than 36 months. Since, the period of holding was less than 36 months income is taxed as short term capital gain and exemption claimed u/s. 54 D of ₹ 1,35,54,000/- was disallowed as the assessee has wrongly claimed exemption-u/s.54 D of the Act. The assessee has even not filed any explanations during the course of assessment proceeding when asked the details of claimed of exemption u/s. 54 D of the Act. In appeal the learned CIT(A) has directed to consider income from capital gain as long termcapital gain of ₹ 1,30,35,454/- and allow the deduction of ₹ 58,25,310/- u/s. 54 of the Act. Instead of 54 D as claimed by the assessee and confirmed the addition of ₹ 72,10,144/-. Regarding agriculture income assessee has failed to produce any evidence to substantiate his claim of cultivate agriculture produce also no evidence was produced to prove the ownership of land in the name of the assessee. The assessee also failed to file any explanation of show cause issued requesting as why agriculture income should not be treated as income from undisclosed source. Even the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particulars of income or concealment of income so as to justify levy of penalty under section 271(1)(c) of the Act in this regard. In view of the specific facts of the case as summarized above, we find no reason for imposing penalty under section 271(1)(c) of the Act. In this respect, at the time of instant appeal, the assessee relied upon the judgment passed by the original jurisdictional High Court in the matter of Bombaywala Readymade Stores. In that particular case, during search excess stock was found on physical verification as against book stock worked out as on date of search. The assessee, however, did not file return of income for relevant year in which search had been conducted. The assessment was finalized on the basis of materials available with the Assessing Officer. Penalty proceeding was also initiated for concealment of particulars of income. Since the income was assessed on estimated basis by the revenue in the absence of the return of income not filed by the assessee, penalty has been held not to be levied u/s 271(1)(c) of the Act for concealment of income. Taking into consideration the entire a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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