Commissioner of Income Tax Vs. Lal Singh and ors. - Court Judgment

SooperKanoon Citationsooperkanoon.com/635242
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided OnNov-20-2009
Judge Satish Kumar Mittal and; Mehinder Singh Sullar, JJ.
Reported in(2010)228CTR(P& H)575
AppellantCommissioner of Income Tax
RespondentLal Singh and ors.
DispositionAppeal by Revenue dismissed
Excerpt:
- satish kumar mittal, j.1. this appeal has been filed by the revenue under section 260a of the it act, 1961 against the order dt. 12th jan., 2007 passed by the tribunal, delhi bench 'd', new delhi in ita no. 5444/del/2004 for the asst. yr. 1996-97 raising the following substantial questions of law:(i) whether the order of the learned tribunal is perverse as it failed to actually discover the factum of distance of the land from the municipal limit and only distinguished between the two facts available on record?(ii) whether the learned tribunal failed to appreciate that the report of the it inspector was more elaborate and descriptive giving the distance from the municipal octroi to the location of the land and simply believed the report of the patwari countersigned by the tehsildar?(iii) whether the learned tribunal has misdirected itself in not appreciating that the assessee had himself shown the capital gain of rs. 86,65,900 and had claimed deduction under section 54b of rs. 86,93,750 on account of cost of purchase of new land and that the assessee could not produce any evidence of purchase of new land for claim of deduction under section 54b before the ao?(iv) whether the learned tribunal is bound to discover the correct facts as it is the highest fact finding authority, which it failed to do?2. in the present case, in the financial year 1995-96 relevant to asst. yr. 1996-97, late smt. pusha devi wife of jug lai had sold her agricultural land situated in village fazilpur, jharsa for a sum of rs. 89,75,000. after her death, notices under section 148 were issued to her legal heirs. in response to that, a return was filed showing the net taxable income of rs. 37,000. in the said return, the long-term capital gain was shown as nil. in order to claim that the agricultural land owned and sold by the assessee did not fall in the definition of 'capital assets' as defined in section 2(14)(iii) of the it act, 1961, the assessee produced a certificate from tehsildar, gurgaon to the effect that the land of the assessee was situated beyond 8 kms. from the gurgaon municipal limits. the ao while not accepting the said report and while relying upon the report given by the inspector, did not accept the assessee's contention of exemption under section 54b and determined the capital gain to the tune of rs. 86,65,900 in the assessment order. against the said order, the assessee filed an appeal. the commissioner of income-tax (appeals), panchkula [hereinafter referred to as 'the cit(a)'] vide its order dt. 24th sept., 2004 allowed the said appeal while observing as under:i have carefully considered the facts and submissions made. i have also verified the assessment records. i find that the assessee's contention is correct that the ao had written to the tehsildar, gurgaon vide his letter dt. 9th jan., 2004, requesting the tehsildar to furnish the distance certificate of the land from the nearest municipal limits of gurgaon. the tehsildar had reported on 16th jan., 2004 that the land was at a distance of 8.2 kms. the above copy of the letter as well as the tehsildar's report are available in the assessment records. a copy of this letter with the report of the tehsildar is also furnished by the assessee at p. 5 of the paper book. it is not understood why this fact does not find mention in the assessment order. the ao has not given any reason why he considered this report not to be adequate, and directed the inspector to submit the report regarding the distance of the land (the direction of the ao is available in order sheet entry dt. 21st jan., 2004). it is a well-established fact that it is the tehsildar working under the state government, is competent to measure the distance of the land, more competent to measure the distance of the land, more competent than the inspector of the department. in fact, in almost all the similar cases, the department has accepted the tehsildar's report regarding the measurement of the distance of the land. if the ao was not satisfied as to the distance certificate, he should have recorded the reasons and requested the higher authorities to tehsildar of the state government for measurement of the same.3. the revenue filed the appeal against the said order, which has been dismissed by the income-tax appellate tribunal (hereinafter referred to as 'the tribunal') vide order dt. 12th jan., 2007 while observing as under:we have heard the rival submissions. we have also perused the record. we are of the opinion that the ao erred in computing the long-term capital gain on the basis of the report of the inspector and he did not believe the report of the tehsildar. we agree with the opinion of the learned cit(a) that he should have requested the higher authorities of the state government if he did not believe his report to be correct or he could have summoned the tehsildar under section 131 of the it act in order to verify the veracity of the report. he was not justified in brushing aside the report of the revenue official who is competent to measure the distance of the land. the cit(a) observed that the tehsildar is more competent than the inspector of the department to measure the distance of the land. thus, we do not find any infirmity in the order of the cit(a) and the same is sustained for the reasons given therein.4. against the said order, the revenue has filed the instant appeal.5. we have heard the counsel for the parties.6. after hearing the counsel for the parties, we are of the opinion that in the instant case, the cit(a) as well as tribunal, after appreciating the material, have recorded a pure finding of fact about the distance of the land of the assessee from the municipal limits. the said finding is based upon the report of the tehsildar dt. 16th jan., 2004. we have perused all the three reports which have been placed on record by the appellant along with affidavit of shri sanjay kumar, ito, ward-4, gurgaon. one report issued by the tehsildar, gurgaon is dt. 21st april, 2003. the said report was given on the application made by the assessee in which it is certified that the land of the assessee is almost 8 kms. away from the municipal limits. the second report was also given by the tehsildar which is dt. 16th jan., 2004. the said report was given by the tehsildar on an application having been filed by the ito, ward-2, gurgaon. in the said application, khasra number of the land of the assessee was given and it was asked as to what was the distance of the said land with the municipal limits of gurgaon. in the said report, it was certified by the tehsildar that the land of the assessee is situated at a distance of 8.2 kms. away from the municipal limits. we have also perused the report dt. 21st jan., 2004 given by inspector abhishek kumar to the ito. in the said report, it has been stated that he had visited the site of agricultural land sold by smt. pusha devi assessee, along with shri mukesh yadav, grandson of late smt. pusha devi, who identified the land and the said land is situated near to village fazilpur and the distance of land from rajiv chowk municipal octroi is 5.3 kms.7. in our view, the cit(a) has rightly not accepted the aforesaid report of the inspector. in the said report, neither the khasra number of the land of the assessee was given nor it has been explained how the distance of the said land with the municipal limits was measured. even otherwise, without the help of the revenue officials, it is difficult for a person to identify the land and then to measure the distance of the said land with the municipal limits. on the other hand, cit(a) has rightly relied upon the report dt. 16th jan., 2004 given by the tehsildar on the application of the ao itself and the same cannot be discarded. therefore, there was no justification for ignoring the said report. further, except the report dt. 16th jan., 2004 given by the tehsildar, which was relied upon by the revenue to show that the distance of the land of the assessee from the municipal limits was less than 8 kms., there is no other material on the record contrary to the said report. in view of these facts, we are of the opinion that a pure finding of fact has been recorded by the cit(a) and the tribunal on the issue of distance after considering the evidence available on the record. the said finding cannot be said to be perverse, illegal or contrary to the evidence available on the record. therefore, in our opinion, from the order of the tribunal, no substantial question of law is arising in this appeal. thus, there is no merit in the appeal and the same is hereby dismissed.
Judgment:

Satish Kumar Mittal, J.

1. This appeal has been filed by the Revenue under Section 260A of the IT Act, 1961 against the order dt. 12th Jan., 2007 passed by the Tribunal, Delhi Bench 'D', New Delhi in ITA No. 5444/Del/2004 for the asst. yr. 1996-97 raising the following substantial questions of law:

(i) Whether the order of the learned Tribunal is perverse as it failed to actually discover the factum of distance of the land from the municipal limit and only distinguished between the two facts available on record?

(ii) Whether the learned Tribunal failed to appreciate that the report of the IT Inspector was more elaborate and descriptive giving the distance from the municipal octroi to the location of the land and simply believed the report of the Patwari countersigned by the Tehsildar?

(iii) Whether the learned Tribunal has misdirected itself in not appreciating that the assessee had himself shown the capital gain of Rs. 86,65,900 and had claimed deduction under Section 54B of Rs. 86,93,750 on account of cost of purchase of new land and that the assessee could not produce any evidence of purchase of new land for claim of deduction under Section 54B before the AO?

(iv) Whether the learned Tribunal is bound to discover the correct facts as it is the highest fact finding authority, which it failed to do?

2. In the present case, in the financial year 1995-96 relevant to asst. yr. 1996-97, late Smt. Pusha Devi wife of Jug Lai had sold her agricultural land situated in village Fazilpur, Jharsa for a sum of Rs. 89,75,000. After her death, notices under Section 148 were issued to her legal heirs. In response to that, a return was filed showing the net taxable income of Rs. 37,000. In the said return, the long-term capital gain was shown as nil. In order to claim that the agricultural land owned and sold by the assessee did not fall in the definition of 'capital assets' as defined in Section 2(14)(iii) of the IT Act, 1961, the assessee produced a certificate from Tehsildar, Gurgaon to the effect that the land of the assessee was situated beyond 8 kms. from the Gurgaon municipal limits. The AO while not accepting the said report and while relying upon the report given by the Inspector, did not accept the assessee's contention of exemption under Section 54B and determined the capital gain to the tune of Rs. 86,65,900 in the assessment order. Against the said order, the assessee filed an appeal. The Commissioner of Income-tax (Appeals), Panchkula [hereinafter referred to as 'the CIT(A)'] vide its order dt. 24th Sept., 2004 allowed the said appeal while observing as under:

I have carefully considered the facts and submissions made. I have also verified the assessment records. I find that the assessee's contention is correct that the AO had written to the Tehsildar, Gurgaon vide his letter dt. 9th Jan., 2004, requesting the Tehsildar to furnish the distance certificate of the land from the nearest municipal limits of Gurgaon. The Tehsildar had reported on 16th Jan., 2004 that the land was at a distance of 8.2 kms. The above copy of the letter as well as the Tehsildar's report are available in the assessment records. A copy of this letter with the report of the Tehsildar is also furnished by the assessee at p. 5 of the paper book. It is not understood why this fact does not find mention in the assessment order. The AO has not given any reason why he considered this report not to be adequate, and directed the Inspector to submit the report regarding the distance of the land (the direction of the AO is available in order sheet entry dt. 21st Jan., 2004). It is a well-established fact that it is the Tehsildar working under the State Government, is competent to measure the distance of the land, more competent to measure the distance of the land, more competent than the Inspector of the Department. In fact, in almost all the similar cases, the Department has accepted the Tehsildar's report regarding the measurement of the distance of the land. If the AO was not satisfied as to the distance certificate, he should have recorded the reasons and requested the higher authorities to Tehsildar of the State Government for measurement of the same.

3. The Revenue filed the appeal against the said order, which has been dismissed by the Income-tax Appellate Tribunal (hereinafter referred to as 'the Tribunal') vide order dt. 12th Jan., 2007 while observing as under:

We have heard the rival submissions. We have also perused the record. We are of the opinion that the AO erred in computing the long-term capital gain on the basis of the report of the Inspector and he did not believe the report of the Tehsildar. We agree with the opinion of the learned CIT(A) that he should have requested the higher authorities of the State Government if he did not believe his report to be correct or he could have summoned the Tehsildar under Section 131 of the IT Act in order to verify the veracity of the report. He was not justified in brushing aside the report of the Revenue official who is competent to measure the distance of the land. The CIT(A) observed that the Tehsildar is more competent than the Inspector of the Department to measure the distance of the land. Thus, we do not find any infirmity in the order of the CIT(A) and the same is sustained for the reasons given therein.

4. Against the said order, the Revenue has filed the instant appeal.

5. We have heard the Counsel for the parties.

6. After hearing the Counsel for the parties, we are of the opinion that in the instant case, the CIT(A) as well as Tribunal, after appreciating the material, have recorded a pure finding of fact about the distance of the land of the assessee from the municipal limits. The said finding is based upon the report of the Tehsildar dt. 16th Jan., 2004. We have perused all the three reports which have been placed on record by the appellant along with affidavit of Shri Sanjay Kumar, ITO, Ward-4, Gurgaon. One report issued by the Tehsildar, Gurgaon is dt. 21st April, 2003. The said report was given on the application made by the assessee in which it is certified that the land of the assessee is almost 8 kms. away from the municipal limits. The second report was also given by the Tehsildar which is dt. 16th Jan., 2004. The said report was given by the Tehsildar on an application having been filed by the ITO, Ward-2, Gurgaon. In the said application, Khasra number of the land of the assessee was given and it was asked as to what was the distance of the said land with the municipal limits of Gurgaon. In the said report, it was certified by the Tehsildar that the land of the assessee is situated at a distance of 8.2 kms. away from the municipal limits. We have also perused the report dt. 21st Jan., 2004 given by Inspector Abhishek Kumar to the ITO. In the said report, it has been stated that he had visited the site of agricultural land sold by Smt. Pusha Devi assessee, along with Shri Mukesh Yadav, grandson of late Smt. Pusha Devi, who identified the land and the said land is situated near to village Fazilpur and the distance of land from Rajiv Chowk municipal octroi is 5.3 kms.

7. In our view, the CIT(A) has rightly not accepted the aforesaid report of the Inspector. In the said report, neither the Khasra number of the land of the assessee was given nor it has been explained how the distance of the said land with the municipal limits was measured. Even otherwise, without the help of the Revenue officials, it is difficult for a person to identify the land and then to measure the distance of the said land with the municipal limits. On the other hand, CIT(A) has rightly relied upon the report dt. 16th Jan., 2004 given by the Tehsildar on the application of the AO itself and the same cannot be discarded. Therefore, there was no justification for ignoring the said report. Further, except the report dt. 16th Jan., 2004 given by the Tehsildar, which was relied upon by the Revenue to show that the distance of the land of the assessee from the municipal limits was less than 8 kms., there is no other material on the record contrary to the said report. In view of these facts, we are of the opinion that a pure finding of fact has been recorded by the CIT(A) and the Tribunal on the issue of distance after considering the evidence available on the record. The said finding cannot be said to be perverse, illegal or contrary to the evidence available on the record. Therefore, in our opinion, from the order of the Tribunal, no substantial question of law is arising in this appeal. Thus, there is no merit in the appeal and the same is hereby dismissed.