INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "F": NEW DELHI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 1130/Del/2018
(Assessment Year: 2009-10)
Dharam Pal, Vs. ITO,
Garg R Kumar & Associates, Ward-1(2),
7, Adv. Chambers, RDC, Raj Ghaziabad
Nagar, Ghaziabad
PAN: BOSPD8894J
(Appellant) (Respondent)
Assessee by : Shri Rakesh Kumar Garg, CA
Shri Ankit Garg, CA
Revenue by: Shri S. L. Anuragi, Sr. DR
Date of Hearing 21/08/2018
Date of pronouncement 15/11/2018
ORDER
PER PRASHANT MAHARISHI, A. M.
1. This is an appeal filed by the assessee against the order of the ld CIT(A)-
2, New Delhi dated 09.01.2018 for the Assessment Year 2009-10.
2. The assessee has raised the following grounds of appeal:-
"1. The assessing officer has erred in law and on merits of case was not
justified in initiating proceedings u/s 147 of the Income Tax Act,
1961 as there was no reason to believe with learned AO of escaping
the assessment at the time of issuing of the notice. The very base
taken by the learned AO is vague, wrong, farfetched and against
the facts of the case. Hence, the proceedings initiated under section
147 are not valid as it was not based on reason to believe; rather
reason to believe is erroneous and untenable.
2. That under the facts and circumstances of the case, the learned
CIT(A) has erred in law and on merits of case was not justified in
sustaining addition of Rs. 3400000/- on sale of agriculture land
though it complies with all the conditions mentioned in Section 2(
14) (iii) of the Income Tax Act 1961. Further in clause b of above
section, Central Government is empowered to specify the name of
municipality having regard to the extent of, and scope for
urbanization of that area etc.. In fact said notification comprises
only one municipality, namely Ghaziabad which is in the vicinity of
Page | 1
the impugned land. Undisputedly it is situated at a distance of more
than 8 kms away from the limits of municipality of Ghaziabad;
hence it is a rural agriculture land and as per law it is not a subject
matter of taxation.
3. Further the learned CIT (A) has erred in law as well as on merits of
case was not justified to measure the distance of impugned land
from the outer limit of `Loni' Nagar Palika as he was of the view that
it can be judged from any municipality nearest to impugned land.
However facts are contrary to it, it can only be measured from the
municipality of Ghaziabad which is covered in notification no SO
10(E) dated 06.01.1994 and not the Nagar Palika of `Loni' as it is
not included in above notification."
3. Brief facts of the case shows that assessee is an agriculturist who sold as
agricultural land at Narayannagar , Rampur Ghaziabad on 29/4/2008
34, 00, 000/. The assessee did not file any return of income or
originally. Therefore, notice under section 148 of the income tax act was
issued on 10/3/2016. The reason being that according to the AR
information that assessee sold immovable property situated at Ghaziabad
for a sum of 34 lakhs on 29/4/2008 and the impugned land is a capital
asset being situated within municipal limits of Ghaziabad Nagar Nigam.
This fact was also confirmed by SR oh IV, Ghaziabad through his office
letter dated 13/12/2012 in response to the query of the learned assessing
officer dated 5/12/2012.
4. In response to the notices issued by the learned assessing officer none
appeared. Therefore notice under section 144 of the act was issued on
13/6/2016 and assessee did not comply with the learned assessing officer
and therefore the learned assessing officer was of the view that assessee
has no plausible explanation to offer with regard to the short-term capital
gain liability on sale of immovable property for 34 lakhs. Accordingly,
the assessment under section 144 read with section 147 of the income
tax act was passed on 28/6/2016 determining the total assessed income
of assessee at 34 lakhs.
5. The assessee aggrieved with the order of the learned assessing officer
preferred an appeal before the learned commissioner of income tax
(appeals) 2, Noida. Before the learned commissioner of income tax
appeals the assessee furnished and application for admitting of the
additional evidence under rule 46A (3) of the income tax rules 1962
Page | 2
which were admitted by the learned commissioner of income tax appeals)
number 4.9 of his order. With respect to the merits of the addition the
assessee submitted before him that the impugned land sold by the
assessee is not a capital asset as it is an agricultural land and further the
population of the village where the agricultural land is situated is about
3000 during the financial year 2008 9 which is also certified by the
gram pradhan. Further the land is also situated beyond 8 km of the
Minister limit of Nagar Nigam of Ghaziabad therefore according to the
assessee all the conditions for holding that same is not a capital asset are
fulfilled. The learned commissioner of income tax obtained remand report
from the assessing officer dated 5/12/2017 where the AO reiterated the
facts stated in the assessment order. He also obtained the rejoinder,
which was submitted by the assessee on 26/12/2017 reiterating the same
facts. Thereafter the learned commissioner held that that only issue to be
decided in the present appeal is whether the impugned agricultural land
false beyond 8 km of distance from the outer limit of the nearest
municipality or not. To decide this issue he obtained the distance based
on the Google Maps distance locator to find the distance from the Loni
Nagar palika and the Ghaziabad Nagar Nigam tow nearest Municipalities
near the village of Narainanagar, Alias Rampur. According to that he
found that the distance between the immovable property to Loni Nagar
Palika is 8.8 Kms. and to Ghaziabad Nagar Nigam is 17.5 km. Based on
the above he found that even if it is considered that the Loni is extended
up to a small radius of only 3 km the village Narainnagar will be only 5.8
km away from the outer limit of the Loni Nagar Palika. Therefore he held
that according to the provisions of section 2 (14) (iii)(b) of the act the
impugned plot of land is a capital asset and therefore the assessee is
liable to pay capital gain over sale of such land. He further held that the
said land was purchased in the year 1988 through 3 different purchase
dates and granted the cost of acquisition as mentioned in those purchase
deeds at indexed cost. Therefore, he upheld the chargeability of the
capital gain on the sale of impugned land.
Page | 3
6. Assessee aggrieved with the order of the learned commissioner of income
tax appeals has preferred appeal before us. It is submitted that Loni is
not included in the notification number SO 10 (E) dated 6/1/1994 and
therefore distance from Loni cannot be measured in any eventuality for
ascertaining whether the land in question is a rural agricultural land
honourable agricultural land. It was further stated that the circular
provides that the distance of 8 km can be measured in respect of
Ghaziabad municipal limits only. He further relied upon the decision of the
coordinate bench in case of Pratibha Jain versus ACIT (ITA number
5028/del/2011 and Sri Bali Ram versus ITO ITA number 6152/Del/2016.
His main argument is that that Loni is not covered in the notification
number 9447 dated 6/1/1994 issued by the central board of direct taxes
hence it is not a capital asset and not liable for long-term capital gain.
7. The learned departmental representative relied upon the orders of the
lower authorities and submitted that the land is situated within the
specified distance from the municipality and therefore it is a capital asset
in transfer of which it is chargeable to the capital gain.
8. We have carefully considered the rival contention and perused the orders
of the lower authorities. Undisputedly the assessee is an agriculturist and
sold a rural agricultural land at Village Narainanagar alias Rampur
Ghaziabad. The central government has issued a notification number SO
9447 dated 6/1/1994, which provides for the name of the states and the
name of municipality et cetera. According to that Ghaziabad the specified
serial number 20 of the State UP. Loni is not specified in any of the
municipality mentioned at serial number 1 to 59 of that notification in the
list of state of UP. Therefore, it is apparent that for holding whether the
impugned land is a capital asset or not the distance of this land has to be
measured only from municipal limit of Ghaziabad and not from Loni. As it
has been stated by the learned commissioner appeals that the distance
from the Ghaziabad Ministry per limit of the impugned land is 17.5 km
and therefore it is not a capital asset and capital gain is not chargeable on
sale of this agricultural land. In the remand report, also it is apparent that
the impugned land is situated beyond 8 km from Ghaziabad Nagar Nigam.
Page | 4
Identical issue has been decided by the coordinate bench in ITA number
6152/Del/2016 for assessment year 2008 09 dated 23/8/2017 where
the land was also situated near Loni and the learned AO measured the
distance from Loni and not from Ghaziabad. In view of this, the issue
squarely covered in favour of the assessee. The learned departmental
representative could not controvert the above decision or did not draw
any other decisions over notice. Therefore, respectfully following the
decision of the coordinate bench we hold that impugned land sold by the
assessee is not a capital asset as it is situated beyond 8 km from the
outer limit of the Ghaziabad Nagar Nigam. Hence, no capital gain is
chargeable in the hands of the assessee on sale of the impugned
agricultural land. Accordingly, the orders of the lower authorities are
reversed and AO is directed to delete the addition on this account.
Ground number 2 of the appeal of the assessee is allowed.
9. With respect to ground number 1 we are of the opinion that the learned
assessing officer is correctly initiated the reopening of the assessment
because the assessee has sold a impugned land and no return of income
has been filed. In view of this the learned assessing officer has
reasonable believe that income of the assessee has escaped the
assessment. According to this ground number 1 of the appeal is
dismissed.
10. In view of the above findings on the issue of reopening ground number 1
of the appeal of the assessee is dismissed and on merit assessee
succeeds and therefore ground number 2 of the appeal of the assessee is
allowed.
11. Accordingly appeal of the assessee is partly allowed
Order pronounced in the open court on 15/11/2018.
Sd/- Sd/-
(AMIT SHUKLA) (PRASHANT MAHARISHI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 15/11/2018
A K Keot
Copy forwarded to
Page | 5
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
Page | 6
Date of dictation
Date on which the typed draft is placed before the
dictating member
Date on which the typed draft is placed before the
other member
Date on which the approved draft comes to the Sr.
PS/ PS
Date on which the fair order is placed before the
dictating member for pronouncement
Date on which the fair order comes back to the Sr.
PS/ PS
Date on which the final order is uploaded on the 15.11.2018
website of ITAT
date on which the file goes to the Bench Clerk
Date on which the file goes to the Head Clerk
The date on which the file goes to the Assistant
Registrar for signature on the order
Date of dispatch of the order
Page | 7
|
