CA Sandeep Kanoi
The facts of the case are that the assessment u/s 143 (3) was completed on 08-06-2009 wherein the short term capital gain of Rs. 53,98,220/- (i.e. profit on transfer of agricultural land) was charged to tax on the basis of the income declared by assessee. But the land which was the subject matter of transfer was agricultural land and being an agricultural land the asset can not be termed as capital asset as defined section 2(14) and hence the profit on transfer of such land cannot be charged as capital gain.
Because of the wrong presumption about the chargeability of tax on this land (ignoring the fact that the land is agricultural land) the income was declared in the return of income and even during the course of assessment proceedings or till the time assessment completed, this mistake could not be rectified due to the ignorance of the facts and legal provisions.
It was during the course of appellate proceedings of one of the relative of director the portion of the profit on the aforesaid land was charged to tax by their assessing officer and during the course of appellate proceedings when the matter was referred to the another counsel, it was noticed by them that there should not be any tax on transfer of this land because the land was agricultural land.
In appeal, CIT(A) after having considered the submission as well as the case laws cited by the assessee, granted relief to the assessee and the same has been opposed by the Revenue in its further appeal. The ld. D.R. submitted that the CIT(A) erred in allowing capital exemption to the short term capital gain of Rs. 53,98,220/- disclosed by the assessee in the return of income and prayed that the order of the CIT(A) be set aside and that of the order of Assessing Officer be restored. On the other hand, the ld. Authorised Representative supported the order of the CIT(A).
Held by ITAT
We have considered the rival submission and perused the material available on record, we find that the assessee was not aware of this fact that the sale proceeds arised out of sale of an agricultural land is exempt from tax u/s 10 of the Act hence the assessee inadvertently could not adduce the said fact before the Assessing Officer as well as while filing the return of income. The assessee’s claim is in accordance with’ the provisions of law and gets support from the CBDT circular No. 14 (XL-35) dated 11/04/1955, wherein it has been clearly stated that the officers of department must not take advantage of ignorance of an assessee as to his rights. It is duty of the department to assist a tax payer in every reasonable way, particularly in matter of claiming and securing reliefs. Due to non-awareness, the assessee could not file certificate from the “Group Gram Panchayat, Ambhai-Amgaon, Khutal” for justification of its claim. It is settled legal position that assessee can raise its legal claim at any stage. The course of appellate proceedings, the ld. Authorised Representative of the assessee filed a copy of certificate from “Group Gram Panchayat, Ambhai-Amgaon certified by Gram Sevak and Sarpanch, which suggested that the land is not situated in area, which is comprised within the jurisdiction of a municipality or a cantonment board and which has a population of not less than ten thousand or in any area within such distance, not being more than eight kilometer from the local limits of any municipality or cantonment board. This fact has not been disputed before us on behalf of Revenue. Taking note of all the facts available on record, the CIT(A) found the assessee’s claim proper and appropriate in accordance with the provisions of law and accordingly allowed the same. There is nothing brought on record by the Revenue against this factual finding of the CIT(A). Under these circumstances, we are not inclined to interfere with the findings of CIT(A) by allowing the exemption to the short term capital gain of Rs. 53,98,220/- disclosed by the assessee in the return of income on the ground that subject matter of STCG was agricultural land as defined u/s 2(14) of the Act. We uphold the same.