The Commissioner Of Income Tax, Tamil Nadu-Viii, Chennai v. The Income Tax Officer, Wardviii(2), Chennai-6

In the High Court of Judicature at Madras Coram : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal Nos.181 to 184, 521, 522, 545 & 546 of 2009MP.No.1 of 2009 in TCA. No.545 of 2009 & MP.No.2 of 2009 in TCA. No.546 of 2009 M/s.Chemmancherry Estates Company, Chennai-1....Appellant in TCA.Nos. 181 to 184 & 545 & 546of 2009 & Respondent inTCA.Nos.521 & 522 of 2009 The Commissioner of Income Tax,Tamil Nadu-VIII, Chennai...Appellant in TCA.Nos.521 & 522 of 2009Vs The Income Tax Officer, Ward-VIII(2), Chennai-6....Respondent in TCA.Nos.181 to 184 & 545 & 5462009 APPEALS under Section 260A of the Income Tax Act, 1961against the (i) common order dated 27.6.2008 made inITA.Nos.1876, 1909, 1877 & 1910/Mds/2006 on the file of theIncome Tax Appellate Tribunal, Chennai 'A' Bench for theassessment years 2001-02, 2001-02, 2002-03 and 2002-03(TCA.Nos.181 to 184 of 2009) (filed by the assessee). (ii) the common order dated 28.11.2008 made in ITA.Nos.2134 &2135/Mds/2007 for the assessment years 2001-02 and 2002-03(TCA.Nos. 545 & 546 of 2009) (filed by the assessee); and (iii) the common order dated 27.6.2008 made in ITA.Nos.1909and 1910/Mds/2006 for the assessment years 2001-02 and 2002-03(TCA.Nos. 521 and 522 of 2009) (filed by the Revenue). https://hcservices.ecourts.gov.in/hcservices/ Appeal against the order dated 26/05/2006 on the file ofthe Commissioner of Income Tax (Appeals) IX Chennai 600034 madein IT/Appeal No.31/2003-04 for the Assessment Year 2001-2002 andagainst the Order dated 31/03/2001 on the file of the Office ofthe Income Tax Officer Business Range-VIII(2) Chennai, Chennai-600 006 made in GIR No./PAN-31005-C for the Assessment Year2001-02 (TCA Nos.181 & 182 of 2009) Appeal against the Order dated 30/05/2006 on the file ofthe Commissioner of Income Tax (Appeals) IX Chennai 600 034 madein G.I.No./PANo.AAAAC0061C for the Assessment Year 2002-2003 andagainst the order dated 28/03/2005 on the file of the Income TaxOfficer, Business Ward VIII(2), Chennai-6 made in PAN/GIRNo. /31005-C for the Assessment Year 2002-03 (TCA 183 &184 of 2009) Appeal against order dated 30/05/2006 on the file of theCommissioner of Income Tax (Appeal No.148/2005-06 for theAssessment Year 2002-03 and against the Order dated 26/05/2006on the file of the Commissioner of Income Tax (Appeals) IXChennai 600 034 made in IT Appeal No.31/2003-04 for theassessment Year 2001-02 and against the order dated 28/03/2005on the file of the Income Tax Officer, Business ward VIII (2),Chennai 600 006 made in PAN/GIR No. /31005-C for theAssessment Year 2002-03 and against the order dated 31/03/2003on the file of the Income Tax Officer Business Range-VII (2)Chennai, Chennai-600 006 for the Assessment Year 2001-02(TCANos.521 & 522/2009) Appeal against the Order dated 11/07/2007 on the file ofthe Commissioner of Income Tax, (Appeals)-IX, Chennai made inPAN AAAAC0061C for the Assessment Year 2001-02 and against theorder dated 28/03/2007 on the file of the Income Tax Officer,Ward VIII(2), Chennai-6 made in VIII(2) AAAAC0061 C/PENAL TY/01-02 for the Assessment Year 2001-02 (TCA Nos.545 & 546/2009) (Judgment was delivered by T.S.Sivagnanam,J) We have elaborately heard Mr.M.P.Senthilkumar, learnedcounsel for the assessee and Mr.M.Swaminathan, learned SeniorStanding Counsel appearing for the Revenue. Appeal against the Order dated 11/07/2007 on the file ofthe Commissioner of Income Tax, (Appeals)-IX, Chennai made inPAN AAAAC0061C for the Assessment Year 2001-02 and against theorder dated 28/03/2007 on the file of the Income Tax Officer,Ward VIII(2), Chennai-6 made in VIII(2) AAAAC0061 C/PENAL TY/01-02 for the Assessment Year 2001-02 (TCA Nos.545 & 546/2009) (Judgment was delivered by T.S.Sivagnanam,J) We have elaborately heard Mr.M.P.Senthilkumar, learnedcounsel for the assessee and Mr.M.Swaminathan, learned SeniorStanding Counsel appearing for the Revenue. 2. TCA.Nos.181 to 184 and 545 and 546 of 2009 have beenfiled by the assessee under Section 260A of the Income Tax Act(for short, the Act) challenging the orders (i) dated 27.6.2008in ITA.Nos.1876, 1909, 1877 & 1910/Mds/2006 for the assessmentyears 2001-02, 2001-02, 2002-03 and 2002-03 and (ii) dated28.11.2008 in ITA.Nos.2134 & 2135/Mds/2007 for the assessmentyears 2001-02 and 2002-03, both passed by the Income TaxAppellate Tribunal, Chennai 'A' Bench. TCA.Nos.521 and 522 of2009 have been filed by the Revenue challenging the common orderdated 27.6.2008 in ITA.Nos.1909 and 1910/Mds/2006 passed by theIncome Tax Appellate Tribunal, Chennai 'A' Bench for theassessment years 2001-02 and 2002-03. 3. TCA.Nos.181 and 183 of 2009 were admitted on30.3.2009 on the following substantial questions of law : “(i) Whether, on the facts and in thecircumstances of the case, the Tribunal wasright in law in holding that the land sold bythe appellant would not fall within themeaning of Section 2(14)(iii) of the IncomeTax Act, 1961, to substantiate the claim thatno capital gains would arise therefrom? (ii) Whether, on the facts andcircumstances of the case, the Tribunal wasright in law in holding that the appellant isnot entitled to indexation of interestpayment on borrowed funds used for purchaseof land, which being 'cost of acquisition'?And (iii) Whether on the facts and in thecircumstances of the case, the Tribunal wasright in law in remitting back the issue ofallowing compound interest on borrowed fundsas cost of acquisition to the file of theassessing officer with a direction to examinethe genuineness of the payment of interest,when the CIT(A) had give categorical findingon this issue??” 4. TCA.Nos.182 and 184 of 2009 were admitted on30.3.2009 on the following substantial question of law : “Whether on the facts and in thecircumstances of the case, the Tribunal wasright in law in remitting back the issue ofallowing interest on borrowed funds as costof acquisition to the file of the assessingwith a direction to examine the genuinenessof the payment of interest, when the CIT(A)had given categorical finding on thisgenuineness and when the Department had notquestioned the genuineness of the payment ofinterest?” 5. TCA.Nos.521 and 522 of 2009 were admitted on13.7.2009 on the following substantial questions of law : “i. Whether, on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in law inallowing the claim of interest for thepurpose of acquiring capital asset as costof asset while computing the capital gains ?And ii. Whether, on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in followingthe High Court decision in the case of CITVs. Rajagopala [reported in 252 ITR 459],as the facts are distinguishable in thiscase, inasmuch as the decision rendered inthat case related to the period prior to theintroduction of concept indexation cost?” 6. TCA.Nos.545 and 546 of 2009 were admitted on 13.7.2009on the following substantial questions of law : “i. Whether, on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in law inallowing the claim of interest for thepurpose of acquiring capital asset as costof asset while computing the capital gains ?And ii. Whether, on the facts and in thecircumstances of the case, the Income TaxAppellate Tribunal was right in followingthe High Court decision in the case of CITVs. Rajagopala [reported in 252 ITR 459],as the facts are distinguishable in thiscase, inasmuch as the decision rendered inthat case related to the period prior to theintroduction of concept indexation cost?” 6. TCA.Nos.545 and 546 of 2009 were admitted on 13.7.2009on the following substantial questions of law : “i. Whether, on the facts and inthe circumstances of the case, the Tribunalwas right in law in holding that the claimof the appellant that the land held by itwas agricultural in nature, which hadsatisfied Section 2(14)(iii) and had notfallen within the exclusions of the Sectionand its claim of exemption from capitalgains would amount to concealment orfurnishingofinaccurateparticularswarranting levy of penalty under Section 271(1)(c) of the Income Tax Act, 1961? ii. Whether, on the facts and in thecircumstances of the case, the Tribunal wasright in law in upholding the levy of penaltyunder Section 271(1)(c) on the claim of theappellant that the land sold by it would fallwithin the meaning of Section 2(14)(iii) ofthe Income Tax Act, 1961 and therefore,exempt from capital gains ? And iii. Whether, on the facts and in thecircumstances of the case, the Tribunal wasright in law in upholding the levy of penaltyunder Section 271(1)(c) when the assessee hadnot done any positive act to convert theagricultural land held by it into plots forreal estate business ?” 7. It is not out of place to mention here that by orderdated 12.7.2019, we answered two issues, which arose in theseappeals. The relevant portions in the order dated 12.7.2019 readthus : “4. We have heard Mr.M.P.SenthilKumar,learnedcounselfortheappellant/assessee and Mr.M.Swaminathan,learned Senior Standing counsel for therespondent/revenue. 5. The first substantial questionin TC(A) 181 & 183 of 2009 is whether theland sold by the appellant would fall withinthe definition of agricultural land asdefined under Section 2(14) of Clause (iii)of the Act. To be noted that, the AssessingOfficer, Commissioner of Income Tax(Appeals)-IX (hereinafter referred to as CIT(A)) and the Tribunal concurrently held thatthe land sold by the assessee was not an agricultural land. Thus, the question wouldbe whether this Court while considering theappeals under Section 260-A of the Act canundertake an exercise of re-appreciation ofthe factual position. The answer to thisquestion should be in the negative, as anappeal under Section 260-A of the Act can bedecided only on substantial questions oflaw. 6. The two authorities and theTribunal examined the factual position, theconduct of the assessee, location of theland, purchaser of the land etc., and heldthat the land sold by the assessee was notan agricultural land. Apart from all thesefactors, one another most important factorwas that the land would fall within thejurisdiction of the Chennai MetropolitanDevelopment Authority (CMDA). Thus, we needto see what would be the effect of the landfalling within the limits of CMDA. Beforethat, we need to note that the land has beenassessed to tax as an urban land. The effectof such assessment also has to beconsidered. The Tamil Nadu Urban Land(Ceiling and Regulation) Act, 1978 definesthe urban land under Section 3(p) as follows: “(p) ‘urban land’ means- (i) any land situated within thelimits of an urban agglomeration andreferred to as such in the master plan or “(p) ‘urban land’ means- (i) any land situated within thelimits of an urban agglomeration andreferred to as such in the master plan or (ii) in a case where there is nomaster plan, or where the master plan doesnot refer to any land as urban land, anyland within the limits of an urbanagglomeration but does not include any suchland which is mainly used for the purpose ofagriculture.” 7. In terms of the above definition, anyland situated within the limits of an urbanagglomeration and referred to as such in themaster plan will be an urban land. In case,where there is no master plan, but the landlies within the limits of an urbanagglomeration it would fall outside thescope of urban land only when the land is mainly used for the purpose of agriculture.Section 3(n) defines urban agglomeration asfollows: ‘(n) “urban agglomeration” means - (i) the area comprised in theurban agglomeration specified in Schedule I;and (ii) any other area which theState Government may, having regard to itslocation, population (population being morethan one lakh) and such other relevantfactors as the circumstances of the case mayrequire by notification in the Tamil NaduGovernment Gazette, declare to be an urbanagglomeration and any agglomeration sodeclared shall be deemed to belong tocategory II in that schedule;’ 8. In terms of the abovedefinition, if any land is notified by theGovernment as an urban agglomeration, itwould automatically fall within the saidcategory as described in the schedule.Admittedly, the land has been notified tofall within the jurisdiction of the CMDA.The provisions of Development Control Rules,which is applied by CMDA, would standattracted to all lands, which are within theurban agglomeration. Thus by virtue of thenotification, the Government of Tamil Naduhas included the area in which the subjectlands are situated to be part of an urbanagglomeration. Therefore, the assessee, ifhe seeks to plead that it is not an urbanland, the onus is on the assessee that theland was mainly used for the purpose ofagriculture. 9. In our considered view byoperation of law, the land can never be anagricultural land though it is stated thatin the revenue record it is recorded as anagricultural land, the assessee sold theland as an agricultural land, the totalextent was in acres and not in square feet. 10. In our considered view, thedefinition of agricultural land as definedin Section 2(14) clause iii of the Act hitsat the assessee because the lands would fall within the jurisdiction of an urbanagglomeration/Corporation. In any event, thetwo authorities and the Tribunal haveextensively examined the facts and concludedthat the land is not an agricultural land. 11. We find no grounds tointerfere with the said factual findingconcurrently recorded by the authorities andthe Tribunal. Learned counsel placedreliance on the decision in the case of CITVs. Ashok Kumar Rathi [reported in 2018 404ITR 0173 (Madras)]. The said decision cannotrender any assistance to the case of theassessee on account of the facts which wereculled out by the Assessing Officer in theprocess of assessment establishing that theland sold by the assessee was not anagricultural land. The facts in the case ofAshok Kumar Rathi are differently couchedand the said decision cannot be applied tothe assessee's case. 12. Furthermore, the entire village ofChemmancherry has been notified under theprovisions of Tamil Nadu Land Urban Land(Ceiling and Regulation) Act as well asUrban Land Tax Act and the urban land tax iscollected. The Assistant Commissioner ofUrban Land is the jurisdictional officer interms of notification issued by theGovernment of Tamil Nadu. Thus, the assesseehas not made out any ground to interferewith the factual finding and we hold thatthere is no substantial question of lawarising for consideration. 12. Furthermore, the entire village ofChemmancherry has been notified under theprovisions of Tamil Nadu Land Urban Land(Ceiling and Regulation) Act as well asUrban Land Tax Act and the urban land tax iscollected. The Assistant Commissioner ofUrban Land is the jurisdictional officer interms of notification issued by theGovernment of Tamil Nadu. Thus, the assesseehas not made out any ground to interferewith the factual finding and we hold thatthere is no substantial question of lawarising for consideration. 13. Next we have to consider thesubstantial question of law No.3. We havecarefully perused the order passed by theTribunal and find that the Tribunal hasremanded the matter for fresh considerationto the Assessing Officer. The assessee'scase is that the CIT(A) has made acategorical finding regarding payment ofinterest by the assessee, receipt issued bythe landlords and returns. In any event, theassessee cannot be stated to be prejudicedbecause the Tribunal has given independentreasons as to why the Assessing Officershould take a fresh view. Therefore, we findthat there is no reason for interfering with the order passed by the Tribunal inremandingthematterforfreshconsideration.Accordingly,substantialquestion of law No.3 is decided against theassessee. 14. We have heard Mr.M.P.SenthilKumar, learned counsel for the appellant andMr.M. Swaminathan, learned Senior StandingCounsel for the respondent. Out of the threesubstantial questions of law framed forconsideration in these appeals i.e. TCA.Nos.181 to 184 of 2009 and TCA. Nos.521, 522,545 & 546 of 2009. We have decidedsubstantial questions of law No.(i) & (iii)i.e., with regard to Section 2(14)(iii) andthe order of remand passed by the Tribunalto examine the genuineness of payment ofinterest against the assessee. The otherissues will be heard on the next hearingdate. 15. List this matter on 25.7.2019.” 8. However, the matters were listed only today. 9. There are two other questions, which remain to beanswered by us. The first aspect is with regard to the intereston borrowed funds for acquiring capital asset and whether it hadto be treated as cost of acquisition in computing capital gains.The next aspect is with regard to indexation of interest. 10. With regard to the first aspect, the Tribunal, inthe impugned order, affirmed by the order passed by the CIT(A),who held that interest paid on funds borrowed for buying theland had to be treated as cost of acquisition. While renderingsuch a finding, the CIT(A) relied upon the decision of aDivision Bench of this Court in the case of CIT Vs. RajagopalaRao [reported in (2001) 252 ITR 459]. The Revenue challengedthis finding by filing TCA.Nos.521 and 522 of 2009. 11. With regard to the next aspect i.e. indexation ofinterest, by filing TCA.Nos.181 and 183 of 2009, the assessee isbefore us challenging the finding of the Tribunal, which heldthat the assessee is not entitled to indexation of interestpayment on borrowed funds used for the purchase of land. 12. Mr.M.Swaminathan, learned Senior Standing Counselfor the Revenue has placed reliance on the decision of theHon’ble Supreme Court in the case of CIT Vs. Tata Iron & SteelCompany Limited [reported in 1998 (2) SCC 366] wherein it hasbeen held as follows : 11. With regard to the next aspect i.e. indexation ofinterest, by filing TCA.Nos.181 and 183 of 2009, the assessee isbefore us challenging the finding of the Tribunal, which heldthat the assessee is not entitled to indexation of interestpayment on borrowed funds used for the purchase of land. 12. Mr.M.Swaminathan, learned Senior Standing Counselfor the Revenue has placed reliance on the decision of theHon’ble Supreme Court in the case of CIT Vs. Tata Iron & SteelCompany Limited [reported in 1998 (2) SCC 366] wherein it hasbeen held as follows : “Coming to the questions raised,we find it difficult to follow how themanner of repayment of loan can affect thecost of the assets acquired by the assessee.What is the actual cost must depend on theamount paid by the assessee to acquire theasset. The amount may have been borrowed bythe assessee. But even if the assessee didnot repay the loan it will not alter thecost of the asset. If the borrower defaultsin repayment of a part of the loan, cost ofthe asset will not change. What has to beborne in mind is that cost of an asset andcost of raising money for purchase of theasset are two different and independenttransactions. Even if an asset is purchasedwith no repayable subsidy received from theGovernment, the cost of the asset will bethe price paid by the assessee for acquiringthe asset. In the instant case, theallegation is that at the time of repaymentof loan, there was a fluctuation in the rateof foreign exchange as a result of which,the assessee had to repay a much lesseramount than he would have otherwise paid. Inour judgment, this is not a factor which canalter the cost incurred by the assessee forpurchase of the asset. The assessee may haveraised the funds to purchase the asset byborrowing but what the assessee has paid forit, is the price of the asset. That pricecannot change by any event subsequent to theacquisition of the asset. In our judgmentthe manner or mode of repayment of the loanhas nothing to do with the cost of an assetacquired by the assessee for the purpose ofhis business. We hold that the questionswere rightly answered by the High Court. Theappeals are dismissed.” 13. Reliance is also placed by the learned SeniorStanding Counsel for the Revenue on the latest decision of aDivision Bench of this Court in the case of Tmt.D.Zeenath Vs.ITO, Ward-I(1), Nagapattinam [reported in (2019) 105 Taxmann.com298] wherein it was held that where the property was mortgagedby the assessee after he had acquired the property, the amountpaid by the assessee to discharge the mortgage debt by sale ofthe said property could not be treated as cost of acquisition soas to allow the same as deduction under Section 48 of the Act. 14. The learned counsel for the assessee contends thatthe decision in the case of Tmt.D.Zeenath could not be appliedto the facts of the present case, as it was a case where theassessee mortgaged the property after acquiring. 15. In our considered view, there may not be anynecessity for this Court to decide these two questions namely(i) with regard to interest on borrowed funds for acquiringcapital asset and whether it should be treated as cost ofacquisition for computing the capital gain and (ii) with regardto indexation of interest, since we affirmed the order passed bythe Tribunal remanding the matter to the Assessing Officer toexamine the correctness of the payment of interest. 16. In fact, the Assessing Officer, while completingthe assessment under Section 143 read with Section 147 of theAct, held that there was no agreement between the lender and therecipients as to the date of repayment, rate of interest, forwhich, money is lent, etc. Therefore, the Assessing Officer heldthat the plea raised by the assessee that they availed the loansfrom five of their sister concerns at different rates ofinterest is only an afterthought to reduce the capital gains taxliability. 16. In fact, the Assessing Officer, while completingthe assessment under Section 143 read with Section 147 of theAct, held that there was no agreement between the lender and therecipients as to the date of repayment, rate of interest, forwhich, money is lent, etc. Therefore, the Assessing Officer heldthat the plea raised by the assessee that they availed the loansfrom five of their sister concerns at different rates ofinterest is only an afterthought to reduce the capital gains taxliability. 17. The Tribunal remanded the matter for a freshconsideration to examine the genuineness of the transaction.Thus, unless and until the assessee is able to succeed beforethe Assessing Officer in the de novo proceedings to be conductedon remand, the question of considering as to whether theinterest on borrowed funds should be treated as cost ofacquisition and as to whether the assessee is entitled toindexation of interest would not arise. Thus, in our consideredview, in the light of our decision to approve the order ofremand for examining the genuineness of the loan transactions,the two issues pointed out above have become academic and arenot required to be answered at this juncture. 18. Mr.M.Swaminathan, learned Senior Standing Counselfor the Revenue has pointed out that the Tribunal followed thedecision in the case of K.Rajagopala Rao, which was renderedwithout noticing the decision in the case of Tata Iron & SteelCompany Limited. 19. Per contra, the learned counsel for the assesseesubmits that while deciding the issue in the case ofK.Rajagopala Rao, the Division Bench of this Court confirmed thedecision of the Tribunal, which relied upon the decision of theHon’ble Supreme Court in the case of Challapalli Sugars LimitedVs. CIT [reported in (1975) 98 ITR 167 (SC)]. 20. In turn, it is the submission of Mr.M.Swaminathan,learned Senior Standing Counsel for the Revenue that thedecision in the case of Challapalli Sugars Limited is entirelyon different set of facts and that the Tribunal, in the decisionin the case of K.Rajagopala Rao, erred in relying upon thedecision in the case of Challapalli Sugars Limited and that thedecision in the case of Tata Iron & Steel Company Limited laysdown the correct position. 21. In any event, we have already held that the twoissues, which we have pointed out above, are not required to bedecided at this juncture, as they have become academic. However,we are conscious of the fact that the Revenue is on appeal asagainst the finding rendered by the Tribunal by filingTCA.Nos.521 and 522 of 2009. Since we have held that there is nonecessity to decide the aforementioned two questions, we have tonecessarily interfere with the order passed by the Tribunal,which granted relief to the assessee based on the decision inthe case of K.Rajagopala Rao. 22. For the above reasons, TCA.Nos.521 and 522 of 2009are allowed and the substantial questions of law are answered infavour of the Revenue. Further, we make it clear that subject tothe decision that may be taken by the Assessing Officer pursuantto the remand order passed by the Tribunal, which we haveaffirmed, we leave it open to the assessee to claim deductionunder Section 48 of the Act and make a further claim thatinterest on borrowed funds should be treated as cost ofacquisition as well as the aspect regarding indexation ofinterest and compound interest. 23. TCA.Nos.545 and 546 of 2009 : These appeals are filed by the assessee challenging thecommon order dated 28.11.2008, by which, the Tribunal confirmedthe order of levy of penalty. We have already extracted the https://hcservices.ecourts.gov.in/hcservices/ substantial questions of law, which were admitted. We have heardMr.M.P.Senthilkumar, learned counsel for the assessee andMr.M.Swaminathan, learned Senior Standing Counsel for theRevenue. 23. TCA.Nos.545 and 546 of 2009 : These appeals are filed by the assessee challenging thecommon order dated 28.11.2008, by which, the Tribunal confirmedthe order of levy of penalty. We have already extracted the https://hcservices.ecourts.gov.in/hcservices/ substantial questions of law, which were admitted. We have heardMr.M.P.Senthilkumar, learned counsel for the assessee andMr.M.Swaminathan, learned Senior Standing Counsel for theRevenue. 24. The endeavour of Mr.M.P.Senthilkumar, learnedcounsel for the assessee is to convince this Court that therewas no wilfulness on the part of the assessee to declare theland as an agricultural land for the purpose of claiming thebenefits and even though this Court in TCA.Nos.181 and 183 of2009 affirmed the finding of the Tribunal that the land inquestion is not an agricultural land, that, by itself, will notbe a reason to impose penalty under Section 271(1)(c) of the Actunless and until it is established that the assessee hadwilfully concealed the particulars or furnished inaccurateparticulars or taken a false plea. 25. The learned counsel for the assessee has placedreliance on the decision in the case of CIT Vs. Gem Granites[reported in (2013) 80 CCH 0160 ChenHC], to which, one of us(TSSJ) was a party. 26. The appeals in TCA.Nos.181 and 183 of 2009 wererelating to the quantum assessments for the year 2001-02 and2002-03. Admittedly, the assessee treated the land as a nonagricultural land and this aspect has been noted by theAssessing Officer in the following terms : “Further, in page 3 part 2 of thesale deed, there is a mention that as peragreement dated 29.6.2000, the necessaryamount to be paid to the promoters anddevelopersofthisplotSri.R.P.Dharmalingam and Shri.V.Shanmugam for thepurpose of filling sand, leveling, formingroads, carrying out other developmentalactivities and the approval of CMDA andother local bodies should be paid by youdirectly to them in time and you shouldobtain the necessary receipt for thisseparately subject to this condition theproperty as per schedule is handed over toyou. Therefore, the intention of bothpurchaser and seller are not conductagricultural operations in the said land,but to convert the land into house sites forsale. Though the assessee claims thatthe land as agricultural and situated in avillage, it is within the area marked inCMDA map and urban land tax has been paid.The agricultural operations have beenabandoned because the water is salty and noagricultural operations even ploughing andtilling has been done and it remains as abarren land. There is only one bore well fora vast land of this area, that too, has onlysalt water. Neither there is any big wellfor irrigation purpose nor there is any farmhouse. Further, it is not a stop gaparrangement to continue the agriculturaloperations in future. The CMDA and localbodies permission has been sought throughdevelopers to convert the land into houseplots. Not even single rupee has been earnedfor years together by way of agriculturalproduction. The land has been plotted androads laid before the sale, the land verywell situate in a developed area whereindustries and colleges have come up andland is sold on cent basis, which isnormally the case in the sale of house sitesonly. The purchaser is a housing cooperativesociety purchasing land for promotion ofplots for house construction. On localenquiry, it was found that house sites havebeen booked/sold out before 06.11.2002itself the date of which, VAO gave acertificate mentioned earlier. All thesefactors got to show that it is a nonagricultural land and also situated in urbandeveloped area and therefore, it is only acapital asset.” 27. By order dated 12.7.2019, in TCA.Nos.181 and 183of 2009, we affirmed the said finding and held that the land isa non agricultural land. In such circumstances, it has to beseen as to whether there is any wilfulness on the part of theassessee. The above finding of fact recorded by the AssessingOfficer will clearly show that as early as 29.6.2000, there wasan agreement with third parties for converting the land intohousing plots by filling sand, levelling, forming roads,carrying out other developmental activities. 28. To be noted, we are concerned with the assessmentyear 2001-02. Therefore, when the penalty proceedings wereinitiated, the Assessing Officer was fully justified in holdingthat the assessee was consciously aware of the real position andknowingly furnished inaccurate particulars of income in therevised return. The assessee is not an individual, but acompany, which is an association of persons consisting of othercorporate giants. Therefore, there is no reason to interferewith the factual finding recorded by the Assessing Officerstating that the assessee was consciously aware of real positionand knowingly furnished inaccurate particulars. The CIT(A)reversed the order of the Assessing Officer on the ground thatthe Assessing Officer proceeded on the assumption that theassessee was guilty. When the correctness of the same wasexamined, in our considered view, the Tribunal rightly held thatthere is a wilful concealment. We find that there is absolutelyno ground to interfere with the common order passed by theTribunal. Since we have already approved the finding recorded bythe Tribunal, which is on re-appreciation of facts, we find thatthe decision in the case of Gem Granites will not be of anyassistance to the case of the assessee. 29. In fine, TCA.Nos.181 to 184 of 2009 are disposed ofto the extent indicated above. TCA.Nos.521 and 522 of 2009 areallowed. TCA.Nos.545 and 546 of 2009 are dismissed. No costs.Consequently, the connected MPs are also dismissed. 30. It is relevant to point out that a Division Bench ofthis Court, vide two separate orders dated 24.8.2009respectively in MP.No.1 of 2009 in TCA. No.545 of 2009 andMP.No.2 of 2009 in TCA. No.546 of 2009, while granting stay,directed the assessee to deposit a sum of Rs.10 lakhs and Rs.5lakhs respectively without prejudice to their contentions in theappeals. It is not known as to whether the said amounts weredeposited or not. If the deposits were already made, it is wellopen to the Assessing Officer to make adjustments, if any andproceed further to recover the balance amounts and if not, it iswell open to the Assessing Officer to proceed to recover thepenalty imposed. Sd/- Assistant Registrar(CS VIII) //True Copy// Sub Assistant Registrar RS To 1.The Income Tax Appellate Tribunal, Madras 'A' Bench. 2.The Income Tax Officer, Ward-VIII(2), Chennai-6. 3.The Commissioner of Income Tax (Appeals)IX, Chennai 600 34. +2cc to Mr.Philip George, Advocate SR.68788, 68787+4cc to Mr.M.Swaminathan, Advocate Sr.68560, 68561, 68558, 68559 TCA.Nos.181 to 184, 521,522, 545 & 546 of 2009 and connected MPs sr[co]srg 23/09/2019