TMI Blog2020 (5) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... it falls within jurisdiction of CMDA during relevant period or not, whether agricultural activities were conducted by assessee on the said land or not, whether the said land is a capital asset u/s 2(14) or is an agricultural land entitling assessee to exemption etc. , before arriving at the conclusion as to chargeability to tax of the capital gains earned by assessee on the sale of said land. The assessee is claiming exemption and hence onus is on assessee to prove that its income falls within four corners of exemption provisions as are contained in the 1961 Act. Matter needed to go back to the file of the AO for framing denovo assessment on merits of the issue as well on legal/jurisdictional ground raised by assesse wrt reopening of the concluded assessment u/s 147 - Decided in favour of assessee for statistical purposes. - ITA No.2209/Chny/2017 - - - Dated:- 8-5-2020 - Shri Ramit Kochar, Accountant Member And Shri Duvvuru R.L. Reddy, Judicial Member For the Appellant : Mr. M.Karunakaran, Adv. For the Respondent : Mr. Vana Srinivasa Rao, JCIT ORDER PER RAMIT KOCHAR, ACCOUNTANT MEMBER: This appeal filed by the assessee is directed against appellate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,11,17,182/- which was claimed as an exempt income on the grounds that capital gains arising on sale of a agricultural land is exempt from income-tax. The AO on verification observed that land under Survey No.1248 1249 was classified as Residential Area Clause-1 and hence the said land is capital asset wherein short term capital gains arising from sale of said land is chargeable to tax in respect of Survey Nos.1248 1249. The case of the assessee was reopened by AO by invoking provisions of Section 147 of the 1961 Act and notice u/s.148 dated 08.08.2014 was issued by the AO to the assessee. Admittedly the reopening of the concluded assessment was done by Revenue beyond four years from the end of assessment year and originally return of income was processed by Revenue by conducting scrutiny assessment u/s 143(3) of the 1961 Act. The assessee on his part during the course of re-assessment proceedings submitted that the return of income originally filed be treated as return of income filed in response to notice issued u/s 148 of the 1961 Act. The assessee submitted before the AO screenshot of website showing the classification of land as agricultural land for the period from 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by AO both on legal/jurisdictional ground as well on merits, vide reassessment order dated 03.03.2016 passed by the AO u/s 143(3) read with Section 147 of the 1961 Act. 4. Aggrieved by aforesaid reassessment order passed by the AO, the assessee filed first appeal with Ld.CIT(A), challenging the legality and validity of reopening of the concluded assessment both on legal/jurisdictional ground as well on merits, , the Ld.CIT(A) rejected claim of the assessee upholding the reopening u/s.147 of the Act on legal grounds as well on merits, by holding as under vide appellate order dated 08.06.2017 as under: 5. My Observations: 5.1. Firstly, the issue of jurisdiction i.e. validity of reopening is taken up. It is seen that, the reopening of assessment u/s. 147 was based on an objection raised by the Revenue Audit Party. The Assessing had reasons to believe that income chargeable to tax had escaped assessment for AY 2008-09, and, after duly recording the reasons and obtaining the approval of the higher authorities for the re-opening, has issued notice u/s.148. The reasons recorded by the Assessing Officer for the re-opening, (as contained in the assessment folder), are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was obtained by the Assessing Officer based on verification of the website of the Tamilnadu Registration Department specifically with regard to the classification of the impugned lands as Residential Area-Class I , justifies and vindicates the reopening of assessment u/s. 148. It is pertinent to note that re-opening of assessment on the basis of new information has been upheld in a plethora of decisions, such as: a) Hon'ble Supreme Court in the case of Kalyanji Mavji Co, Vs. CIT (102 ITR 287) (SC) (1976) has held that there is no change of opinion if the assessment is reopened on new facts which came to notice subsequently, even though they are already on record. b) In the case of ACIT Vs. Kanga Co., (2010) TIOL - 464 - ITAT - MUM, it was held that Tangible material, for the purpose of reopening u/s. 148, need not be from outside the Return of Income. c) The reopening of assessment on the basis of a factual error pointed out by the Audit Party has been held to be valid by the Hon'ble Apex Court in the case of CIT Vs. PVS Beedies Pvt. Ltd. (SC) 237 ITR 13. Similarly, it has been held in a plethora of decisions that information obtained from oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... letter. 5.2.2. The fact that the Tahsildar at Thiruporur, in his response just referred to, has covered the period starting from 2003, specifically only up to 2007, is on account of the fact that these very impugned lands have been reclassified as Residential area-Class I, w.e.f. 1.8.2007. In other words, the Tahsildar stops with the reference ending up to 2007, since covering the subsequent period (i.e. subsequent to 1.8.2007) in his reply, would be irrelevant/redundant. 5.2.3. Based on the discussions contained in the preceding two paragraphs, it is very clear that: (a) No agricultural activity whatsoever was carried out on the impugned lands from 2003 to 2007. (b) The land itself has been converted/reclassified as Residential w.e.f. 1.8.2007, precluding the user for agricultural activities. These two points itself lead to the inevitable conclusion that the appellant has no case at all for claim of exemption, as far as user of the land for agricultural purpose, is concerned. In this context, it is very pertinent to refer to the decision of the Hon.ble ITAT, C Bench, Chennai in the case of ACIT Vs. Shri Pallavaram Kothandaraman Ramesh, in ITA No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icate of the Talsildar, Thiruporur categorically stating that no agricultural activities have been carried out in the impugned lands, only goes to strengthen the case of the appellant. Enquiries carried out by the Assessing Officer with the Sub-Registrar, Thiruporur, have revealed that the impugned lands were clarified as Residential Type-I, Class-I . Although the formal classification of the impugned land as residential has taken place on 1.8.2007, five days after the sale of the land on 26.7.2007, I am wholly in agreement with the stand taken by the Assessing Officer that since classification of lands is a long-drawn process, by no stretch of imagination, can it be assumed that the character/nature of land has changed over this extremely brief period of 5 days. It is not the case of the appellant that he had actually carried out agricultural activities during the short period that he held the lands. In fact, the very nature of the locality already being Residential, which fact was formally announced on 01.08.2007, itself would have precluded the carrying on of agricultural activities by the appellant. These crucial factors, along with the fact that the appellant has he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Constitution Bench of Hon ble Supreme Court in the case of Commissioner of Customs v. Dileep Kumar Company in Civil Appeal No. 3327 of 2009 , dated 30.07.2018 is relevant. It is also observed that originally assessment was framed by AO u/s 143(3) r.w.s. 143(2) of the 1961 Act , while assessment is reopened by AO by invoking provisions of Section 147 of the 1961 Act after four years from the end of assessment year and first proviso to Section 147 shall be applicable. The assessee has made disclosure in the return of income filed with Revenue that the assessee has earned ₹ 7000 from agricultural operations carried on this land measuring 4.45 acres , but what transpires from the enquiry made by the AO from Tahsildar is that this land was not used for agricultural activities during 2003-2007, except for survey number 1395/3B . Thus, as per government records no agricultural activities were carried on in this land from 2003-2007, except on survey number 1395/3B. Before us, the assessee has contended that the assessee grew some water melon and pumpkin on this land but no evidence is placed on record. Even on being asked by the AO , the assessee did not co-operated with the AO a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or furnishing of inaccurate particulars warranting levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961? ii. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the levy of penalty under Section 271(1)(c) on the claim of the appellant that the land sold by it would fall within the meaning of Section 2(14)(iii) of the Income Tax Act, 1961 and therefore, exempt from capital gains ? And iii. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in upholding the levy of penalty under Section 271(1)(c) when the assessee had not done any positive act to convert the agricultural land held by it into plots for real estate business ? 7. It is not out of place to mention here that by order dated 12.7.2019, we answered two issues, which arose in these appeals. The relevant portions in the order dated 12.7.2019 read thus : 4. We have heard Mr.M.P.Senthil Kumar, learned counsel for the appellant/assessee and Mr.M.Swaminathan, learned Senior Standing counsel for the respondent/revenue. 5. The first substantial question in TC(A) 181 183 of 2009 is whether the land sold by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (ii) any other area which the State Government may, having regard to its location, population (population being more than one lakh) and such other relevant factors as the circumstances of the case may require by notification in the Tamil Nadu Government Gazette, declare to be an urban agglomeration and any agglomeration so declared shall be deemed to belong to category II in that schedule; 8. In terms of the above definition, if any land is notified by the Government as an urban agglomeration, it would automatically fall within the said category as described in the schedule. Admittedly, the land has been notified to fall within the jurisdiction of the CMDA. The provisions of Development Control Rules, which is applied by CMDA, would stand attracted to all lands, which are within the urban agglomeration. Thus by virtue of the notification, the Government of Tamil Nadu has included the area in which the subject lands are situated to be part of an urban agglomeration. Therefore, the assessee, if he seeks to plead that it is not an urban land, the onus is on the assessee that the land was mainly used for the purpose of agriculture. 9. In our considered view by operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to declare the land as an agricultural land for the purpose of claiming the benefits and even though this Court in TCA.Nos.181 and 183 of 2009 affirmed the finding of the Tribunal that the land in question is not an agricultural land, that, by itself, will not be a reason to impose penalty under Section 271(1)(c) of the Act unless and until it is established that the assessee had wilfully concealed the particulars or furnished inaccurate particulars or taken a false plea. 25. The learned counsel for the assessee has placed reliance on the decision in the case of CIT Vs. Gem Granites [reported in (2013) 80 CCH 0160 ChenHC], to which, one of us (TSSJ) was a party. 26. The appeals in TCA.Nos.181 and 183 of 2009 were relating to the quantum assessments for the year 2001-02 and 2002-03. Admittedly, the assessee treated the land as a non agricultural land and this aspect has been noted by the Assessing Officer in the following terms : Further, in page 3 part 2 of the sale deed, there is a mention that as per agreement dated 29.6.2000, the necessary amount to be paid to the promoters and developers of this plot Sri.R.P. Dharmalingam and Shri.V.Shanmugam for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing plots by filling sand, levelling, forming roads, carrying out other developmental activities. 28. To be noted, we are concerned with the assessment year 2001-02. Therefore, when the penalty proceedings were initiated, the Assessing Officer was fully justified in holding that the assessee was consciously aware of the real position and knowingly furnished inaccurate particulars of income in the revised return. The assessee is not an individual, but a company, which is an association of persons consisting of other corporate giants. Therefore, there TCA.No.181 of 2009 etc. cases is no reason to interfere with the factual finding recorded by the Assessing Officer stating that the assessee was consciously aware of real position and knowingly furnished inaccurate particulars. The CIT(A) reversed the order of the Assessing Officer on the ground that the Assessing Officer proceeded on the assumption that the assessee was guilty. When the correctness of the same was examined, in our considered view, the Tribunal rightly held that there is a wilful concealment. We find that there is absolutely no ground to interfere with the common order passed by the Tribunal. Since we have alr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has not furnished any evidence even before us to prove that agricultural operations were carried on the said land but only bald statement is made that water melon and pumpkin was grown. The assessee has filed additional evidences before us to contend that Government of Tamil Nadu vide Notification in G.O. Ms No. 153 dated 20.06.2013 had included Thaiyur Village in the Mamallapuram Local Planning Area , which is post the said previous year. The said land falls within Chengalpattu District , which falls within jurisdiction of CMDA and it is to be verified from which date the said land came within CMDA as there are master plans which were revised from time to time . In our considered view, there is a need for detailed verification and enquiry in the instant case with respect to classification of said land , whether it falls within jurisdiction of CMDA during relevant period or not, whether agricultural activities were conducted by assessee on the said land or not, whether the said land is a capital asset u/s 2(14) or is an agricultural land entitling assessee to exemption etc. , before arriving at the conclusion as to chargeability to tax of the capital gains earned by asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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