Case Law Details
Shamji Manekji Shah Vs DCIT (ITAT Mumbai)
The issue under consideration is whether the onus to prove the case which strictly falls under exemption provisions is fully on the taxpayer?
In the present case, the assessee is seeking to claim exemption from income-tax on gains on sale of land on the grounds that land sold was an agricultural land used by the assessee for agricultural purposes and hence the onus is on the assessee to prove that its case fall strictly within conditions stipulated within taxing statute of 1961 for seeking exemption from income-tax before any claim for exemption can be granted to the assessee.
ITAT states that, exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. The ratio in Sun Export case (supra) is not correct and all the decisions which took similar view as in Sun Export Case (supra) stands overruled. Thus, since the assessee is seeking exemption from income-tax on the gains arising from the sale of aforesaid land claiming the same to be agricultural land used for agricultural purposes by the assessee during the period when it was held by the assessee, the onus is on the assessee to prove that his case strictly comes within the parameters of the exemption clauses as are contained in the 1961 Act which are to be strictly construed. It is also well established rule of evidence as enshrined in Section 114(g) of the Indian Evidence Act, 1872 that the evidences which could be and is not produced would , if produced , be unfavourable to the person who withholds it. It is incumbent on the assessee to produce all cogent evidences to substantiate and prove its case that gains arising from sale of land are exempt from income-tax. With the observations as made by us in this order , they are setting aside and restoring this matter back to the file of AO for denovo framing of an assessment by afresh determination of the issue on merits in accordance with law. The assessee is directed to produce all necessary cogent evidences/explanations before the AO in set aside proceedings to substantiate its claim of exemption . The AO shall admit all relevant evidences/explanations submitted by the assessee in support of its contentions in its defence which shall be evaluated by the AO on merits in accordance with law. The AO if wishes to rely on any documents/evidences collected at the back of the assessee to prejudice assessee shall forward/furnish copy of such documents to the assessee for rebuttal. ITAT reiterate that the assessee is seeking to claim exemption from income tax on gains arisen from sale of land on the ground that the land was an agricultural land used for agricultural purposes by the assessee and the onus is on the assessee to prove that its case strictly falls under exemption provisions as are contained in the 1961 Act. Thus, the appeal filed by the assessee is allowed for statistical purposes.
FULL TEXT OF THE ITAT JUDGEMENT
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