Patwari certificate should be on government letter head bearing government seal, signature and designation of designated local revenue authority – ITAT
In a recent judgment, ITAT Indore has held that Patwari certificate for municipal limit of land should be on government letter head instead of plain paper leaving no doubt before tax authorities and should bear government seal, signature and designation of designated local revenue authority.
ABCAUS Case Law Citation:
4542 (2025) (05) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A) in confirming action of the Assessing Officer (AO) in treating sale of agricultural land as undisclosed Short Term Capital Gain.
The Income Tax Department was in possession of information that the assessee had sold lands during the relevant Assessment Year. However, no return of income was filed with the Income Tax Department declaring any gain on sale of properties.
That Department (Revenue) initiated reopening proceedings u/s 147/148 of the Income Tax Act, 1961 (the Act). However, the assessee remained totally non compliant. Notice(s) u/s 148, 142(1) were not replied and no required information was furnished to the Assessing Officer (AO).
A show cause notice was issued calling upon the assessee as to why the assessment order should not be passed u/s 144 of the Act was however replied wherein it was stated by the assessee that he was a farmer and that he derived his income from the agricultural activities.
With regard to sale of immovable properties, the assessee stated that he had sold the lands vide sale deed. It was further stated that lands were agriculture land which were 16 Km away from City in terms of aerial distance and 8 Km away from Municipal Limits in terms of aerial distance. The properties do not fall under the purview of capital assets within the meaning of Section 2(14) of the Act therefore consideration amount realised were exempted from tax purview. A google map and a certificate from Patwari was placed on record but no valid return of income was filed.
The AO observed that certificate of Patwari was just on a plain paper. Hence, the legal authenticity of the certificate was not ascertainable. Further credibility of google map cannot be corroborated in absence of valid certificate from competent authority.
The AO was of the view that it could not be established by the assessee that the lands were not capital assets within the meaning of section 2(14) of the Income Tax Act. Under the circumstances, the AO rejected the submission filed by the assessee as not tenable. Also, no information was available with regard to cost of acquisition or date of acquisition of lands. The assessee had also not filed return also in response to notice u/s 148.
Therefore, the AO treated the sales consideration amount as undisclosed Short Term Capital Gain and determined total income of the assessee. The penalty proceedings u/s 271(1)(c) of the Act were also initiated for concealing particulars of income.
Before the Tribunal, the assessee contended that the impugned order was illegal, bad in law and in violation of the principles of natural justice.
The Tribunal observed that the core issue in the instant appeal was whether the assessee was liable to pay capital gain tax on account of sale of agricultural land as the subject agricultural land does not fall within the meaning of Section 2(14) of the Act which defines capital assets. Whether, google map and certificate of Patwari were proof enough to establish this fact?
The Tribunal observed that the CIT(A) had dismissed the appeal of the assessee as he had remained non-compliant during the appellate proceedings and had not provided any concrete evidence relating to the addition made by the AO during the course of assessment.
The Tribunal opined that on the basis of findings of CIT(A), it would be just, fair and convenient that all the materials, papers, documents suitably be placed before CIT(A) in a manner known to law so that CIT(A) can adjudge and adjudicate at least first appeal of the assessee on meritorious grounds by passing a reasoned and speaking order by taking into consideration entire gamut of case.
The Tribunal directed the assessee to place on record before CIT(A) credible evidence worth credence in support of plea that agricultural immovable property does not fall within the meaning of Section 2(14) consequently not exigible for any tax.
With regard to certification of Patwari the Tribunal opined that such certificate should be on government letter head instead of plain paper leaving no doubt before tax authorities. It should bear government seal, signature and designation of designated local revenue authority. With regard to issue of municipal limit necessary certificate too should be placed by the assessee of competent authorities preferably Town & Country Planning Authority evidencing the aerial distance from municipal limits and further stating that immovable properties are outside municipal limit of any development plans.
Accordingly, the Tribunal set aside the impugned order remanded the case back to the file of CIT(A) to pass a fresh order on merits after giving full and complete opportunity to assessee.
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