TMI Blog2021 (1) TMI 320X X X X Extracts X X X X X X X X Extracts X X X X ..... r Kalol and 20 km away from district headquarter Gandhinagar. Therefore in our considered view the impugned land fulfils the criteria of being an agricultural land. Hence the same is outside the purview of capital asset and not liable to tax under the head capital gain. Accordingly we set aside the order of the learned CIT (A) and direct the AO to delete the addition made by him. Hence the issue raised by the assessee vide additional ground of appeal is allowed. Unexplained investment in purchase of land - HELD THAT:- Investment has been made by the assessee against the sale proceeds which has already been offered to tax and assessed in the assessment year 2010-11 by the AO vide order dated 28th March 2014. The burden lies upon the Revenue to prove the assessee s contention wrong based on cogent material that the amount received by the assessee against the sale properties bearing survey no- 197/1 and 198/1 at Motera village was not utilised for the investments in the properties as discussed above. But the revenue has not brought anything on record and also not pointed any defect in cash flow statement as prepared by the assessee. In the absence of any adverse finding by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to disprove the contention of the assessee. Entire amount recorded in the seized documents has been treated as income of the assessee without calculating the capital gain as per the provisions of section 48 of the Act. Assuming, but not admitting, that impugned amount represents the income of the assessee then it has to be worked out as per the provisions of law. None of the authorities below has given any benefit of the cost of acquisition and index cost as provided under section 48. In view of the above we disagree with the finding of the authorities below. Accordingly we set aside the finding of the learned CIT (A) and direct the AO delete the addition made by him. - IT(SS)A No(s) 121/Ahd/2017, 120/Ahd/2017, 150/Ahd/2017, 151/Ahd/2017 - - - Dated:- 6-1-2021 - Shri Mahavir Prasad, Judicial Member And Shri Waseem Ahmed, Accountant Member For the Assessee : Shri Tushar Hemani, Sr. Advocate with Shri P.B.Parmar A.Rs For the Revenue : Shri O.P. Sharma, CIT.DR ORDER PER BENCH: These four appeals have been filed at the instance of the Assessee and Revenue against the appellate orders of the Learned Commissioner of Income- Tax (Appeals), Ahmedabad [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held as under: Under section 254, the Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit. The power of the Tribunal in dealing with appeals is thus expressed in the widest possible terms. The purpose of the assessment proceedings before the taxing authorities is to assess correctly the tax liability of an assessee in accordance with law. If, for example, as a result of a judicial decision given while the appeal is pending before the Tribunal, it is found that a non-taxable item is taxed or a permissible deduction is denied, there is no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner (Appeals). Both the assessee as well as the department have a right to file an appeal/cross objections before the Tribunal. There is no reason why the. Tribunal should be prevented from considering questions of law arising in assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the same to the total income of the assessee. 8. Aggrieved assessee preferred an appeal to the learned CIT (A). 8.1 The assessee before the learned CIT (A) submitted that the land in question is the agricultural land which is not a capital asset as defined under the provisions of section 2(14) of the Act. Therefore, there cannot be any question of charging the capital gain arising on the sale of such lands and consequently the question of claiming/denying the exemption under section 54B of the Act does not arise. 8.2 However, the learned CIT (A) disagreed with the contention of the assessee and confirmed the order of the AO. 9. Being aggrieved by the order of the learned CIT (A), the assessee is in appeal before us. 10. The learned AR submitted before us which is reproduced as under: Motera land At the outset, AO has erred in denying exemption u/s.54B on the count that the land transferred by the assessee was Non-agricultureal land . It is a settled legal position that In order to claim exemption u/s.54B, The transferred land must be used for agricultureal purposes, The Act has laid emphasis on usage of land and not on the nomencla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed exemption u/s 54B . Even if such investments have been made prior to the date of sale deed, however since the same have been made out of sale consideration received pursuant to ATS, such investments would qualify for exemption u/s 54B. Nardipur land AO denied exemption of ₹ 23, 18,2487- u/s 54B on the solitary count that the underlying asset, resulting into' capital gain, was purchased on 19.11.08 and sold on 11.03.10 i.e. assessee did not own such land for a period of two years immediately preceding the date of transfer (Pg.19 of Asst. Order). At the outset, Nardipur land was Agricultural land not falling within the ambit of capital asset as defined undersection 2(14) of the Act. The assessee specifically pleaded the said aspect before the lower authorities (Pgs.61- 62 of P/B) and the same has not been controverted by the authorities. In view of the above facts read with definition of capital asset u/s 2(14), it becomes amply clear that the land transferred by the assessee during the year under consideration was not a capital asset at all. Once an asset does not fall within the ambit of capital asset i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be reduced, by the amount of the capital gain 12.1 On perusal of the above provisions we note that, to claim the exemption under section 54B of the Act with respect to the capital gain arising on the sale of land the assessee is required to use such land for agricultural operations for a period of 2 years immediately preceding the date on which the land was transferred. There was no requirement that the land which was sold has to be an agricultural land. As such the land should have been used only for agricultural operations for a period of 2 years immediately preceding the date on which the land was transferred. 12.2 We further note that the assessee before the authorities below has claimed to have used the land for the agricultural operations and this fact has not been doubted by the authorities below. Therefore it seems that such land was used for agricultural purposes for 2 years immediately from the date of sale/transfer of the land. Consequently, the assessee is eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onnected and therefore we have clubbed both of them together for the purpose of adjudication for the sake of brevity and convenience. 13.1 The 2nd issue raised by the assessee is that the learned CIT (A) erred in confirming the order of the AO by denying the exemption claimed under section 54B of the Act amounting to ₹ 23,18,248/- only. 14. The assessee in the return filed under section 153A of the Act has claimed exemption under section 54B of the Act amounting to ₹ 23,18,248/- against the short-term capital gain. However, the AO found that the assessee is eligible for exemption under section 54B of the Act if such land is continuously used for the purpose of agricultural operations for a period of 2 years before the date of transfer. As such the land was purchased by the assessee dated 19th November 2008 which was sold dated 11th March 2010. Thus, it is clear that the land was used by the assessee for the agricultural operations for a period less than 2 years. As such the use of the land for agricultural operation for 2 years was mandatory for claiming the exemption under section 54B of the Act. Accordingly the AO, rejected the claim of the assessee and confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussion, we note that the assessee has claimed exemption on the capital gain of ₹ 23,18,248/- arising on the sale of agricultural land. But the same was denied by the AO on the reasoning that the land was not used continuously for 2 years for the agricultural operations by the assessee. The view taken by the AO was subsequently confirmed by the learned CIT (A). 20.1 Admittedly, the assessee held the impugned land for a period less than 2 years and therefore the requisite conditions specified under section 54B of the Act have not been satisfied. Therefore we concur with the finding of the authorities below. 20.2 However the learned AR for the assessee vide additional ground changed the stand and claimed that the impugned land does not fall under the purview of capital asset as per provided under section 2(14) of the Act. In this regard we note that there was also a specific contention raised by the assessee before the learned CIT (A) stating that the land in question was not a capital assets being an agricultural land within the meaning of the provisions of section 2(14) of the Act and such contention has not been disputed by the learned CIT (A). As such the learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f agricultural land were utilized as per conditions of section exemption u/s 54B of the Act ought to have been allowed when the capital gain is charged to tax.. It be directed to be allowed now. 2. The Id' CIT(Appeals) erred in law and on facts in not appreciating the legal position explained to him that the prime requirement of allowing exemption u/s 54B is regarding the utilization of proceeds of sale of agricultural land in purchase of agricultural land which is done by the appellant and since the said fact is not disputed merely because such utilization was made in earlier year, exemption cannot be denied when all other conditions are otherwise fulfilled It be so held now and exemption to the extent of such utilization of cash receipt taxed as sales consideration. 3. The Id CIT(Appeals) erred in not following the case laws cited and in refusing to allow ground taken before him which he ought to have allowed. 4. The appellant craves to add, amend, alter, edit, delete, modify or change all or any of the grounds of appeal at the time of or before the hearing of the appeal. 22. The 1st issue raised by the assessee is that the learned CIT (A) erred in confirmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- and ₹ 67,19,537 on account of unexplained investment in the properties. . 28. The facts in brief are that there was a search and seizure operation under section 132 of the Act dated 27th April 2011 at the premises of the assessee. During the search, certain incriminating documents bearing Annexure A-1 page 48 49 and Annexure A-3 page 3-5 were found suggesting that the assessee has made cash payment against purchase of property at village namely Rupal, Acher and Nardipur in Gandhi Nagar district of Gujarat. On confrontation of the same the assessee in the statement furnished under section 132 (4) of the Act has accepted to have made cash payment over and above registered value which represents his undisclosed income. 28.1 However the assessee did not incorporate such unaccounted income as admitted during the search proceedings in the return of income filed under section 153A of the Act. The assessee reasoned that the impugned cash payment in the purchase of above mentioned properties represent re-investment of the unaccounted money received against the sale of agricultural land along with co-owners situated at Motera village bearing survey no- 197/1/ and 198/1 where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and with reference to the bank statements of the Appellant for few entries of cash withdralws from bank. The Assessing Officer has made addition merely by observing that direct nexus is not explained. Once the availability of cash from sale of land including cash receipts of on-money is accepted, there is no justification to ignore the same when the same is utilized for subsequent payment of cash on purchase of lands. The cash flow statement gives complete details of date wise receipt of cash and payment thereof and hence without any evidence or material that the said cash is utilized some where else, the addition cannot be made on the ground that payment out of such available balance was not established. The appellant filed cash book in the form of paper books for all these years. This cash book has been prepared merely on the basis of documents found seized during the course of search and relied by the A.O. for making addition in various assessment years and on the basis of bank accounts, which are regular and disclosed to the department by the appellant in the return of income regularly filed. Therefore, the cash book submitted by the appellant is fully reliable. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount recived on sale of land which was offered to tax viz a viz the amount invsted over and above the value declared in the purchase deed. The ld. DR supported the order of the AO. 32. On the other hand the learned AR before us reiterated the contentions made before the authorities below. The ld. AR supported the order of the ld. CIT-A. 33. We have heard the rival contentions of both the parties and perused the materials available on record. The facts of the case have already been discussed in the preceding paragraph which are not in dispute. Therefore we are not inclined to repeat the same for the sake of brevity and convenience. 33.1 Admittedly, certain incriminating documents marked as Annexure-A1 page no- 36-40 were found during the search conducted at the premises of the assessee showing the unaccounted receipt amounting to ₹5.50 crores against the sale of the properties at Motera village bearing survey number 197/1 and 198/1. As per the incriminating document bearing number Annexure-A1 page no- 36-40 the impugned amount of unaccounted cash was received by the assessee on different dates as detailed below: Date of Receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty was utilised for the re-investments in the properties situated at villages Rupak, Acher and Nardipur as discussed above. In this regard the assessee contended that investment was made out of the sale proceeds of the properties at Motera village received in cash which was not accounted. In support the assessee made cash flow statement showing receipt and payment of cash against sale and purchase of land. Indeed as per the incriminating document the assessee has received the cash before the investment in the properties as discussed above. Thus it seems that the investment has been made by the assessee against the sale proceeds which has already been offered to tax and assessed in the assessment year 2010-11 by the AO vide order dated 28th March 2014. 33.6 Thus the burden lies upon the Revenue to prove the assessee s contention wrong based on cogent material that the amount received by the assessee against the sale properties bearing survey no- 197/1 and 198/1 at Motera village was not utilised for the investments in the properties as discussed above. But the revenue has not brought anything on record and also not pointed any defect in cash flow statement as prepared by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 500000 Chq.no.374963, BOB Vadnagar 15-12-2010 2000000 Chq no.62711, UBOI, Vastrapur 07-01-2011 1500000 Chq no.374964, BOB, Vadnagar 11-01-2011 2500000 Chq no.724944, CBOI, S.M. Road 13-02-2011 2000000 Received in Cash from purchaser 36.2 However, the impugned Banakhat was not executed on account of some dispute and therefore the same got cancelled. Accordingly, the assessee did not get the cheques en-cashed as stated above as well as returned the amount of ₹20 lakhs which was received in cash. Thus the assessee claimed that he has not offered the same as income. The assessee also submitted that he has retracted the statement vide letter dated 13th February 2014. The assessee in support of his contention also submitted that the land which was to be sold is still in the name of his son which evidences that the transaction for the sale of land was not executed. 36.3 However, the AO rejected the conten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l dates of receipt of money falls before the date of search. Looking to these facts, the contention of the appellant that this transaction did not materialize is not acceptable. During the course of search, no evidence was found, which show that this transaction did not materialize. Even after the date of search and till disposal of this appeal by the undersigned, the appellant failed to establish that the amount received was returned through account payee cheque to the opposite party. If the transaction did not materalise, the other party will get back his money but the same has not been done in this case. Therefore, this contention of the appellant is rejected. Keeping in view these facts, the addition made by the A.O. are found justified. The loose paper indicated that the amount of ₹ 1,05,00,0007- was relating to profit of deal in respect of land at Village Motera Navi Sarat Land. However, from the said loose paper as reproduced by A.O. at Para 4 page 6 of the Assessment Order and as per statement recorded, there were three partners in the said amount of ₹ 1,05,00,0007-and amount mentioned against the Appellant's name is ₹ 70,00,000/-. It is settled legal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the receipt of money on account of sale of the property bearing survey number 114 at Motera which was not offered to tax though admitted in the statement furnished under section 132(4) of the Act. Accordingly the AO treated the same as unaccounted income. Subsequently, the learned CIT (A) confirmed the addition made by the AO in part by observing that the amount mentioned against the name of the assessee stands at ₹70 Lacs only. 44.1 Now the question arises whether the assessee has sold the impugned property and generated an income of ₹70 Lacs on sale of such property. Admittedly, the property was standing in the name of the assessee s son during the relevant time which evidences the fact that the title of the property has not been transferred to the buyer. The fact of the ownership of the land is with the son of the assessee can be verified from the document placed on pages 286-290 of the paper book showing the title of the property in the name of the assessee s son. 44.2 It was also contended that there was the Banakhat dated 26-11-2010 for the sale of the property between the assessee and the buyer which is available on record. As per the Bankhat the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of December 2014 reads as under:- Instances/complaints of undue influence/coercion have come to notice of the CBDT that some assessees were coerced to admit undisclosed income during Searches/Surveys conducted by the Department. It is also seen that many such admissions are retracted in the subsequent proceedings since the same are not backed by credible evidence. Such actions defeat the very purpose of Search/Survey operations as they fail to bring the undisclosed income to tax in a sustainable manner leave alone levy of penalty or launching of prosecution. Further, such actions show the Department as a whole and officers concerned in poor light. 2. I am further directed to invite your attention to the Instructions/Guidelines issued by CBDT from time to time, as referred above, through which the Boards has emphasized upon the need to focus on gathering evidences during Search/Survey and to strictly avoid obtaining admission of undisclosed income under coercion/undue influence. 3. In view of the above, while reiterating the aforesaid guidelines of the Board, I am directed to convey that any instance of undue influence/coercion in the recording of the statement durin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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