IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR

BEFORE SH. A.D.JAIN, HON’BLE JUDICIAL MEMBER AND
SH. T.R. MEENA HON’BLE ACCOUNTANT MEMBER

I.T.A. No.280(Asr)/2013
Assessment Year: 2008-09
Kishore Chand Tayal (Appellant) vs The Deputy Commissioner of Income Tax (Respondent)
Date of Order : 26-10-2015

ORDER

PER A.D. JAIN (JM):

This is assessee’s appeal for Assessment Year 2008-09, taking the following grounds:

“1. That the ld. CIT (A) has erred in law and on facts in confirming the addition of Rs.5,60,840/- as taxable income on the sale of agricultural land situated out of the notified area.

2. That the Ld. CIT(A) has erred in law and on facts in not considering the additional evidence filed by the appellant before the Ld. CIT(A).

3. It is, therefore, prayed that addition of Rs.5,60,840/- may kindly be deleted and the additional evidence filed by the assessee before the Ld. CIT(A) may kindly be considered or any other relief as may deemed fit be allowed.”

2. An application for adjournment has been filed on behalf of the assessee. However, we have rejected the same, in view of the fact that the appeal was filed on 29.04.2013. It has been adjourned on numerous occasions. A ‘Synopsis of main points to be argued and case laws relied on’ has been placed on the file on behalf of the assessee and this has been taken into consideration. The arguments of the learned DR, who has strongly supported the impugned order, have also been taken note of.

3. The only grievance of the assessee is that the learned CIT(A) has erred in confirming the addition of Rs.5,60,840/.- on the sale of agricultural land situated outside the notified area, without considering the additional evidence filed by the assessee.

4. As per the record, the A.O noticed that the assesse had shown net profit of Rs.18,87,036/- as per the audit report, whereas net taxable income was shown at Rs.12,36,110/- in the return of income. The assessee explained before the AO that in the computation of income, besides the claim of deduction of Rs.1,0,000/- u/s 80C of the IT Act, profit of Rs.5,60,840/- on the sale of agricultural land had also been claimed as exempt, since the agricultural land was not a capital asset, but had been kept as stock in trade under the head of Agricultural Land Trading Account. The A.O asked the assessee to explain as to how the land sold was agricultural land, when he had never shown any agricultural income in his income tax returns. The assessee stated that carrying on agricultural operations was entirely immetarial. The A.O was not satisfied with the assessee’s explanation. He held that a piece of land could not be treated as agricultural land only if it was being used for cultivation, whereas the assesse’s land had also been sold to M/s (First Promoters & Developers (P) Ltd. Delhi), a colonizer. The A.O held that the assessee was engaged in the trade of purchase and sale of land, as was aparrent from the trading account furnished by the assesse. The A.O, therefore, treated the profit of Rs.5,60,840/- as income liable to tax and added the same to the income returned.

5. Before the learned CIT, interalia, the assesse furnished a copy of Khasra Girdawari in support of his contention that the land in question was agricultural land as per the revenue record. However, the learend CIT(A), without taking into consideration the said document filed by the assessee, dismissed the claim of the assessee by observing that just because the land under consideration was agricultural land in the revenue record, it could not be treated as agricultural land for the purposes of the Income Tax Act.

6. Copies of the aforesaid Khasra Girdawari have also been filed before us. It is irrefutable and not refuted that the Khasra Girdawari is a crop inspection book, which is mandatorily to be maintained under the Land Revenue Act. This documents shows the cultivation done over a particular land. Cultivation of crops over a piece of land shows, obviously, that such land is agricultural land. In the present Khasra Girdawari, the crops for Kharif 2005 and Rabi 2006 with regard to Village Bhokhara, Tahsil and District Bhatinda, have been depicted. The land has been shown to be under self cultivating possession, through mutation, of, amongst others, the assesse to the extent of ¼ share. The category of the land according to the previous Jamabandi, has been shown to be “Chahi”, i.e., land irrigated by well.

7. Therefore, these specific relevant attributes of the land in question, as depicted in the Khasra Girdawari, have erroneously not been taken into consideration by the learned CIT(A) and the assessee’s specific stand has been rejected by merely observing that just because the land has been shown as agricultural land in the revenue record, it cannot be treated as agricultural land for the purposes of the Income Tax Act. Once the Khasra Girdawari remains unquestioned, it cannot be said that the land has merely been shown as agricultural land in the revenue record. The specific recitals in the Khasra Girdawari prove beyond the shadow of a doubt that agricultural operations are in fact being carried out thereat.

8. Therefore, the order of learned CIT(A) is a result of complete misreading of nonreading of the additional evidence filed by the assessee in the shape of the aforesaid Khasra Girdawari. Accordingly, we deem it appropriate to remit this matter to the file of the learned CIT(A), to be decided afresh in accordance with law, taking into consideration the aforesaid Khasra Girdawari and our above observations thereon. Before us, the assessee has also filed copies of purchase deed and sale deed in respect of the land in question. According to the assessee, these documents also show that the land in question was agricultural land situated outside the notified area and, therefore, not a capital asset under the provisions of section 2(14) of the I.T. Act. These documents also go to the root of the matter and since the case is being remitted to the learned CIT(A), as above, the learned CIT(A) will also take into consideration the said purchase deed and sale deed. The assessee shall be provided due opportunity of hearing and the assesse shall cooperate in the remand proceedings. Ordered accordingly.

9. In the result, for statistical purposes, the appeal of the assessee is treated as allowed.

Order pronounced in the open court on 26th October, 2015.

Sd/-                                                      Sd/-
(T. R. MEENA)                                     (A.D. JAIN)
ACCOUNTANT MEMBER                    JUDICIAL MEMBER