TMI Blog2021 (6) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... umita Roy, Judicial Member For the Assessee : Shri Vijay Patel, A.R For the Revenue : Shri Dinesh Singh, Sr.D.R ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax(Appeals)-13, Ahmedabad, dated 13/03/2020 arising in the matter of assessment order passed under s.143(3) of the Income Tax Act, 1961 (here-in-after referred to as the Act ) relevant to the Assessment Year 2016-2017. 2. The assessee has raised the following ground of appeal: On the facts and circumstances of the case as well as in law, the Ld.CIT(A) has grossly erred in rejecting the contention of the appellant and sustaining impugned addition of ₹ 4,77,58,546/- on account of appellant s claim of exemption u/s.54B of the Act, when the same is wholly unwarranted. 3. The solitary 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 for an amount of ₹ 4,77,58,546/- only. 4. The facts in brief are that the assessee in the present case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ltural operations carried out on the lands in dispute has filed extract 7/12 and 8A form before the AO during the assessment proceedings. 4.3 Similarly, the assessee also submitted that new lands purchased for ₹ 6,64,83,153/- were also used for the purpose of agricultural purposes and agricultural activity. For this the assessee filed the extract of form 7/12 before the AO. 4.4 Thus the assessee appealed that the conditions provided for claiming exemption under section 54B of the Act have been satisfied and therefore he is eligible for such exemption. The assessee, likewise, also submitted that similar claim were also made by the co-owners which were not disputed by the Income Tax Department in the assessment of such co-owners which was made under section 143(3) of the Act. 4.5 However, the AO during the assessment proceedings found that: i. The assessee has not furnished any detail with respect to the 3rd party carrying out the agricultural operations including the agreement if any with the party. In fact, the identity of the 3rd party carrying out agricultural operations was to be established to justify that there were agricultural operations on the land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the photographs attached by the assessee with sale deed at the time of sale of the impugned land also suggests that there was no agricultural operations carried out by the assessee. viii. On verification of the sale deed for transfer of the lands made by the assessee, it was found that the land in question was not capable of carrying out any agricultural activity. This fact has been categorically admitted by the assessee in the sale deed. 4.6 In view of the above, the AO concluded there was no agricultural operation carried out the lands in dispute. Thus the first condition as specified under section 54B of the Act for claiming exemption that the transferred land should be used for the purpose of agriculture activity in two immediate previous year from the date of transfer has not been satisfied. 4.7 Likewise, there was no agricultural income declared by the assessee with respect to new agricultural land purchased by it for the agricultural operations except a meagre amount of ₹ 38,963/- only in the F.Y. 2015-16 to 2017-18 which is negligible against the investment made by the assessee. The AO also found that the sale deed entered by the assessee for the purc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in 7/12 in a computerized manner without field visit even where no agricultural operations are carried out as per the findings given as aforesaid. (f) Without prejudice to the above, even if the agricultural activity had been carried out in the small portion of the land, the same does not meet the requirement of the law to claim the deduction u/s 54B of the Act, in respect of entire land holding. (f) It has been mentioned in the purchase deed of new asset that there is no possibility to get any agriculture produce from such land. The photograph attached to the purchase deed of new asset shows spontaneous growth wild bushes and, thus not cultivable and, moreover, there is no intention of the assessee or his heirs to carry out agricultural operations as mentioned in the sale deed. (f) No evidence for new asset claimed to be purchased through banakhat for ₹ 7,00,000/- has been filed and thus, the claim of deduction to that extent was clearly inadmissible. It has now been admitted that the transaction agreed did not took place. 5. Aggrieved assessee preferred an appeal to the learned CIT (A): 5.1 The assessee before the learned CIT(A) aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invested for the purchase of agricultural land and the agricultural activity was carried out on the same as evident from the extract of 7/12 form. 6. However, the learned CIT (A) disregarded the contention of the assessee and confirmed the order of the AO by observing as under: The assesee is non-resident and has been staying in USA for very long time and has been visiting India as and when required. It has been submitted by the appellant that himself that the appellant is an NR living in USA since long, that his parents and his real brother residing in India have supervised/carried out and looked after the agricultural activity carried out on the said land and that the agricultural activity was carried out on the said land by a third party on crop sharing basis. The words of the appellant are that It is learnt that they have given the said agricultural land for cultivation to the farmer on sharing basis upto F. Y.2014-15. The supervision was to be done by the appellant, his parents and his real brother Shri Nitin K Patel The farmer was given I/3rd share in the agricultural produce. All the related expenses were to be borne by the farmer. Further more in respect of agri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly established by the deeds of conveyance. 5.14 Accordingly the disallowance of claim of deduction u/s.54B and the consequential addition of ₹ 4,77,63,118/- as made by the AO in the assessment order impugned in the appeal under consideration is confirmed. 7. Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us 8. The learned AR before us filed a paper book running from pages 1 to 133 and contended that there were agricultural operations carried out on the lands in dispute in the earlier years. For this purpose, the learned AR drew our attention on the extract 7/12 along with form No. 8 which are placed on pages 41 to 106 and the affidavit of the party who carried out the agricultural operations on such lands which is placed on pages 35 to 40A of the paper book. 8.1 The learned AR further submitted that the land which was owned by the assessee jointly with the father and the brother, the exemption under section 54B of the Act was allowed in their assessment framed under section 143(3) of the Act. The copies of the assessment order are placed on pages 110 to 133 of the paper book. 8.2 The learned AR to support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cultural purposes. For availing of this exemption the following conditions have to be fulfilled: (i) The gain should arise from transfer of a capital asset, being land. (ii) The land transferred should have been used by the assessee or his parents or HUF for at least two years immediately preceding the date of transfer for agricultural purposes. (iii) The assessee should purchase within a period of two years after the date of transfer, other land being used for agricultural purposes. 10.1 Now coming to the facts of the present case. The assessee owns certain pieces of adjoining agricultural lands in respect of which he was claiming that these lands were used for agricultural operations. The details of the lands bearing different survey number stand as under: 1 85 12444 Sq. Mtr. Village: Khoraj Dist. Gandhinagar 20.05.2015 Pujan Rajesh Bhai Joshi 4,97,76,000 2 83 19425 Sq.Mtr. Village: Khoraj Dist. Gandhinagar 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck.no.354760630310716 on 31/07/2016 has been selected for scrutiny. Following issue(s) have been identified for examination: i. Whether value of consideration for computation of capital gains has been correctly shown in the return of income. ii. Whether deduction from capital gains has been claimed correctly. In view of the above, I would like to give you an opportunity to produce any evidence/information which you feel is necessary in support of the said retutn of income on or before 17/07/2017 at 12.12 PM 10.3 Accordingly notice under section 142(1) of the Act was issued dated 03-08- 2018 requiring the assessee to furnish the details with respect to sale of property bearing survey no.-83 and details of purchase of new agricultural land. The copy of the same is available on pages 13 to 14 of additional paper book. The AO after verifying the details accepted the claim of the assessee without any modification which can be verified from the assessment order under section 143(3) placed on pages 114-115 and 127-128 of paper book. The relevant finding of the AO in case of Shri Nitin Kanubhai Patel reads as under: In response to the notices genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as taken the stand that he carried out the agricultural operations on the land in dispute after engaging a person who was responsible to bear the expenses in connection with the agricultural operations, it is implied that the assessee was not supposed to incur such agricultural expenses. Accordingly, no liability can be fastened on the assessee to produce the details of the expenses with the supporting vouchers. In fact the assessee shifted his onus upon the revenue by furnishing the affidavit of the party who admitted to have carried out agricultural operations on the lands of the assessee. In the event of any doubt or the requirement for furnishing the details of the expenditure, the revenue was empowered to collect the necessary details from the impugned third party under the provisions of section 133(6)/131 of the Act. But we find that the revenue has not exercised its power granted under the statute. Accordingly we hold that, the affidavit furnished by the assessee cannot be rejected without assigning any strong reason with corroborative evidence. Accordingly, the finding of the authorities below that no prudent farmer will carry out agricultural operations on the lands of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at, states in India. The extract gives information of the survey number of the land, the name of the owner of the land and its cultivator, the area of the land, the type of cultivation - whether irrigated or rain fed, the crops planted in the last cultivating season. It also records loans extended to the land owner given by government agencies, including the purpose - such as loans or subsidies for buying seeds, pesticides or fertilisers, for which the loan was given, the loans could be given to the owner or the cultivator. It is one of the documents that provides evidence of the ownership of the land it represents. In rural areas the ownership of a particular plot of land can be established on the basis of the 7/12 extract. It is called as Record of Rights or Record of Land Rights 11.2 From the above, we find that the certificate was issued by the government authorities and therefore it cannot be rejected or presumed to be defective on their face value. These are the data and statistics maintained by the land revenue authority for various purposes. In the event of any doubt on the genuineness of such certificates, the revenue should have enquired from the respective autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 to till 19th May 2015. As such, the assessee in the year under consideration has used the land only for 50 days approximately as the same was sold on 20th May 2015. Admittedly, the assessee for part of the year has claimed to have carried out agricultural operations at his own or by his father without engaging 3rd party. Thus, certainly the assessee should have produced the vouchers in support of the expenses incurred in connection with such agricultural operations for part of the year. But the assessee failed to do so. However, we are not inclined to take any adverse view against the assessee for such short period of time in the year under consideration for the reason that it has been held for the earlier year that the land in dispute has been used for the agricultural operations for the substantial time. 11.5 One of the allegation was that the land in dispute has been sold based on the rate of per square metre which normally does not happen with respect to the agricultural land. As such, the basis for selling the land per square meter is used for the lands which are capable of commercial use. However we are not convinced with the finding of the AO that the agricultura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies are being carried out. Such admission of the assessee while selling the land in case of some sale deeds is reproduced hereunder: Sale Deed: Survey Number 56/1 : ₹ 78,30,000/- No income is of agricultural is made available over this land and sale with hereon are now under the land, there is no possibility to get any agricultural produce from this land. Our children s are not interested to farming over this land. Sale deed of Survey No.57/2A: ₹ 48,75,000: This land is of agricultural nature, but no any income is made available from the said land and adjacent lands are being sold have from time to time with high prices for the non-agricultural usages etc. Taking of crops/ harvesting is becoming impossible over this land, and our children's are not at all interested to do agricultural activities. You are paying us very good amount for this land. This cost is proper and even marketable. Its interest amount is becoming more than that of producing crops over this land. We are in the position to maintain our self on the strength of this income of sale. This amount is sufficient for the progress and uptiftment of our family S ..... X X X X Extracts X X X X X X X X Extracts X X X X
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