Txa/16/2015 Of Smt. Shama Nirdoshkumar Pai v. Commissioner Of Income Tax

1 txa12-15ors. IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 1 OF 2015 WithTAX APPEAL NO.2 OF 2015WithTAX APPEAL NO. 10 OF 2015WithTAX APPEAL NO.12 OF 2015WithTAX APPEAL NO.16 OF 2015WithTAX APPEAL NO.80 OF 2014WithTAX APPEAL NO.81 OF 2014WithTAX APPEAL NO.82 OF 2014WithTAX APPEAL NO.83 OF 2014WithTAX APPEAL NO.84 OF 2014With TAX APPEAL NO.85 OF 2014WithTAX APPEAL NO.86 OF 2014 TAX APPEAL NO. 1 OF 2015 Shri Shankar Dalal,son of Shri Laxman Dalal,aged 67 years, occupation-Retired,married, Indian National,residing at 1-B Kamat Plaza, St. Inez,Panaji-Goa. PAN: ….. Appellant V e r s u s Commissioner of Income Tax,Aykar Bhavan, Panaji-Goa (Above are registered address) ….. Respondents 2 txa12-15ors. Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. S. Linhares, Additional Government Advocate for the Respondent. TAX APPEAL NO.2 OF 2015 Smt. Gauri Dalal,wife of Shri Shankar Dalal,aged 63 years, occupation-Retired,married, Indian National,residing at 1-B Kamat Plaza, St. Inez,Panaji-Goa. PAN: ….. Appellant V e r s u s Commissioner of Income Tax,Aykar Bhavan, Panaji-Goa(Above are registered address) ….. Respondents Mr. N.N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. S. Linhares, Additional Government Advocate for the Respondent. TAX APPEAL NO. 10 OF 2015 Shri Gopal Prabhu,son of late Shri Venkatesh Prabhu,aged 84 years, occupation-Retired,married, Indian National, residing atH. No.1015 Babrem Loliem,Canacona Goa, PAN: ….. Appellant V e r s u s Commissioner of Income Tax, Aykar Bhavan, 3 txa12-15ors. Panaji-Goa. (Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. S. Linhares, Additional Government Advocate for the Respondent. TAX APPEAL NO. 12 OF 2015 Shri Prabhakar Shastri, son of late Shri Krishna Shastri,aged 72 years, occupation-Retired,married, Indian National, residing atC/o Durgadas Shastri, H. No.1828,Desai Nagar, Sanquelim-Goa, PAN : ….. Appellant V e r s u s Commissioner of Income Tax, Aykar Bhavan, Panaji-Goa. (Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. A. Razaq, Additional Government Advocate for the Respondent. TAX APPEAL NO. 16 OF 2015 Smt. Shama Nirodoshkumar Pai,wife of Shri Nirdoshkumar Pai,aged 52 years, occupation-Service,married, Indian National, residing atC-110 Altess Manor,Kerant, Caranzalem-Goa, PAN: …. Appellant V e r s u s Commissioner of Income Tax, 4 txa12-15ors. Aykar Bhavan,Panaji-Goa.(Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. S. Linhares, Additional Government Advocate for the Respondent. TAX APPEAL NO. 80 OF 2014 Shri Radhesh Guinde,son of Shri Gajanan Guinde,aged 40 years, occupation-Business,married, Indian National, residing atBlock AF-6 Bldg. A-2 CD Patanga,Alto Aquem, Margao – Goa,PAN: ALPPGG0026J. ….. Appellant V e r s u s Commissioner of Income Tax,Aykar Bhavan,Panaji-Goa.(Above are registered address) …... Respondent V e r s u s Commissioner of Income Tax, 4 txa12-15ors. Aykar Bhavan,Panaji-Goa.(Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. S. Linhares, Additional Government Advocate for the Respondent. TAX APPEAL NO. 80 OF 2014 Shri Radhesh Guinde,son of Shri Gajanan Guinde,aged 40 years, occupation-Business,married, Indian National, residing atBlock AF-6 Bldg. A-2 CD Patanga,Alto Aquem, Margao – Goa,PAN: ALPPGG0026J. ….. Appellant V e r s u s Commissioner of Income Tax,Aykar Bhavan,Panaji-Goa.(Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant.Ms. S. Linhares, Additional Government Advocate for the Respondent. TAX APPEAL NO. 81 OF 2014 Smt. Archana Guinde,wife of Shri Shailesh Guinde,aged 41 years, occupation-Housewife,married, Indian National, residing at BH/03 Janata Housing SocietyAlto Aquem, Margao-Goa,PAN: . …... Appellant V e r s u s 5 txa12-15ors. Commissioner of Income Tax,Aykar Bhavan,Panaji-Goa. (Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. S. Linhares, Additional Government Advocate for the Respondent. TAX APPEAL NO. 82 OF 2014 Shri Gajanan Guinde,son of late Shri Naryayan Guinde,aged 81 years, occupation-Retired,widower, Indian National, residing at BH/03 Janata Housing Society,Alto Aquem, Margao-Goa. PAN: . ….. Appellant V e r s u sCommissioner of Income Tax,Aykar Bhavan,Panaji-Goa.(Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. S. Linhares, Additional Government Advocate for the Respondent. TAX APPEAL NO. 83 OF 2014 Smt. Sudha P. Khaunte,wife of Shri Pundalik Khaunte,aged 70 years, occupation-Retired,married, Indian National, residing atNo.4C/F2, Model Milenium Vistas,Caranzalem, Tiswadi, Goa, PAN: ….. Appellant 6 txa12-15ors. V e r s u s Commissioner of Income Tax,Aykar Bhavan,Panaji-Goa. (Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. S. Linhares, Additional Government Advocate for the Respondent. TAX APPEAL NO. 84 OF 2014 Smt. Sonia Guinde,wife of Shri Radhesh Guinde,aged 35 years, occupation-Housewife,married, Indian National, residing atBlock AF-6 Bldg A-2 CD Patanga,Alto Aquem, Margao-Goa, PAN: . ….. Appellant. V e r s u s Commissioner of Income Tax, Aykar Bhavan,Panaji-Goa.(Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. S. Linhares, Additional Government Advocate for the Respondent. TAX APPEAL NO. 85 OF 2014 Shri Shailesh Guinde,son of Shri Gajanan Guinde,aged 45 years, occupation-Business,married, Indian National, residing atBH/03 Janata Housing Society,Alto Aquem, Margao-Goa.PAN: . ….. Appellant 7 txa12-15ors. V e r s u s Commissioner of Income Tax,Aykar Bhavan,Panaji-Goa.(Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. Amira Razaq, Additional Government Advocate for the Respondent. Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. S. Linhares, Additional Government Advocate for the Respondent. TAX APPEAL NO. 85 OF 2014 Shri Shailesh Guinde,son of Shri Gajanan Guinde,aged 45 years, occupation-Business,married, Indian National, residing atBH/03 Janata Housing Society,Alto Aquem, Margao-Goa.PAN: . ….. Appellant 7 txa12-15ors. V e r s u s Commissioner of Income Tax,Aykar Bhavan,Panaji-Goa.(Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. Amira Razaq, Additional Government Advocate for the Respondent. TAX APPEAL NO. 86 OF 2014 Shri Pundalik K. Khaunte, son of late, Krishna Khaunte,aged 74 years, occupation-Retired,married, Indian National, residing at No.4C/F2, Model Milenium Vistas, Caranzalem, Tiswadi, Goa. PAN: …... Appellant V e r s u s Commissioner of Income Tax, Aykar Bhavan, Panaji-Goa. (Above are registered address) …... Respondent Mr. N. N. Sardessai, Senior Advocate with Ms. N. Shirodkar, Advocate for the Appellant. Ms. S. Linhares, Additional Government Advocate for the Respondent. CORAM :- ANOOP V. MOHTA & NUTAN D. SARDESSAI, JJ. DATE :- 23[rd] March, 2017. 8 txa12-15ors. ORAL J U D G M E N T :- (PER ANOOP V. MOHTA, J.) Taken out from the final hearing Board. Heard finally byconsent of the parties. As common issues are involved revolvingaround the common facts and the properties, we are disposing of theseTax Appeals by this Judgment. 2.The Appellant-assesses have challenged a common orderdated 6.6.2014, passed by the Income Tax Appellate Tribunal, PanajiBench, Panaji (ITAT), thereby the respondent-Revenue Department'sappeals have been partly allowed and so also the Cross Objections filedby the Assessees. That resulted into reversal of the order passed by theCommissioner of Income-Tax (Appeals) (CIT) dated 8.4.2013 for theAssessment Year 2007-08. The Income Tax Officer, had by orderdated 6.6.2014 Ward 2(3) under Section 143(3) read with section 147of the Income Tax Act, 1961 (IT Act) therefore, revived the returns byshowing the Long Term Capital Gains liabilities under Section 45 ofthe IT Act and initiated penalty proceedings under Section 271(1)(c)of the IT Act and further directed initiation of action for filinginaccurate particulars of income. The Assessees' appeals, was allowed by the CIT(A) by 9 txa12-15ors. order dated 8[th] April, 2013, and the findings given based upon therecords and the Judgments of this Court, by observing as under : “6. Since the facts of this case are identical to that of CIT vs. Smt. Debbie Alemao & CIT Vs. MinguelChandra Pais, respectfully following judgment of thejurisdictional Bombay High Court, the AO is directedto delete the the addition made as Capital Gains arisingon sale of agricultural land and this Ground of Appealof the Appellant is allowed. 7.In view of the above, other Grounds of Appealof the appellant become infructuous and therefore, theyare not adjudicated upon.” Reference was also made to the Judgment of this Court in case of CIT Vs. Minguel Chandra Pais 282 ITR 618 by noting asunder : “The AO has noted that the said land was entered in therevenue record as an agricultural land i.e. garden ororchard. It is contended by the revenue that the landwas not actually used for agriculture in as much as noagricultural income was derived from this land and wasnot shown by the respondents in their Income TaxReturn. This was explained by saying that there werecoconut trees in the land but the agricultural incomederived by sale of coconut was just enough to maintainthe land and there was no actual surplus, hence, no 7.In view of the above, other Grounds of Appealof the appellant become infructuous and therefore, theyare not adjudicated upon.” Reference was also made to the Judgment of this Court in case of CIT Vs. Minguel Chandra Pais 282 ITR 618 by noting asunder : “The AO has noted that the said land was entered in therevenue record as an agricultural land i.e. garden ororchard. It is contended by the revenue that the landwas not actually used for agriculture in as much as noagricultural income was derived from this land and wasnot shown by the respondents in their Income TaxReturn. This was explained by saying that there werecoconut trees in the land but the agricultural incomederived by sale of coconut was just enough to maintainthe land and there was no actual surplus, hence, no 10 txa12-15ors. agricultural income was shown from this land. In ouropinion, if an agricultural operation does not result ingeneral of surplus that cannot be a ground to say thatthe land was not used for the agricultural purpose. It isnot disputed that the land was shown in the revenuerecord to be used for agricultural purpose and nopermission was ever obtained for non-agriculturalpurpose by the respondents.” 4.This Court admitted the appeals on two questions of law.The appellants are pressing only the following question of law. Whether, on a true and proper construction of Section2(14) of the Income Tax Act, the Tribunal was justifiedin holding that 80% of the land is not an agriculturalland and liable to capital gains tax and, as such, thefinding thereon is perverse ? 5. For deciding the appeals, the factual background requires to be noted because of typical, nature of transfer of “agricultural land”within the State of Goa is involved. The ancestral properties were neverdivided/partitioned any time. It is necessary to clarify at this stageitself that there are total of 20 vendors to the Deed of Sale dated 4[th]May, 2007. However, out of the said 20 vendors, assessment of only16 vendors was reopened by the Income Tax Department out of which 11 txa12-15ors. in the following list of cases, are the 12 vendors. The Assessment ofthe remaining 4 vendors out of the total 20 vendors, namely BhushanPrabhu Gaonkar, (Vendor No.9), Mrs. Seema Prabhu Gaonkar (VendorNo.8), Mr. Nikhil Bhobe, (Vendor No.7) and Mrs. Seema Bhobe(Vendor No.6), was never re-opened by the Department and, therefore,we are proceeding to deal with the above 12 appeals. 6. The appellants are individuals deriving income fromsalaries and income from other source (interest income). TheAppellants are also co-owners of an ancestral agricultural land inCanacona Taluka along with other family members. The Agricultural 12 txa12-15ors.land is called “VATTORIANT” or “VADTURY” measuring 2,18,250sq. meters within the limits of village panchayat of Loliem in CanaconaTaluka, South Goa District which was sold by the Appellants vide saledeed No. 39/2008 dated 19.2.2007. 6. The appellants are individuals deriving income fromsalaries and income from other source (interest income). TheAppellants are also co-owners of an ancestral agricultural land inCanacona Taluka along with other family members. The Agricultural 12 txa12-15ors.land is called “VATTORIANT” or “VADTURY” measuring 2,18,250sq. meters within the limits of village panchayat of Loliem in CanaconaTaluka, South Goa District which was sold by the Appellants vide saledeed No. 39/2008 dated 19.2.2007. On 30.7.2007, the Appellant filed their return of incomedeclaring an income from the sources. The Appellants claimed gain onsale of agricultural land as exempt since the land does not constitute“Capital Assets” as defined under Section 2(14) of the Act. The saidreturns were assessed by the revenue under Section 143(1) of the Act.On 07.02.2012. the Appellants were served with a noticeunder Section 148 of the Act calling upon to file return of income sinceaccording to the AO income had escaped assessment. On 19.3.2012,the Appellants filed a letter in response to the above notice and statedthat return filed on 30.07.2007 be treated as return filed in complianceto notice under Section 148 of the Act and also requested the AO tofurnish reasons recorded for issuing the notice. On 20.03.2012, the AOfurnished the reasons recorded for re-opening the case of theAppellants. 02.04.2012, the appellants filed its objection. On7.04.2012 the AO rejected the objections. On 5.10.2012, the AO 13 txa12-15ors. passed an order under Section 143(3) read with Section 147 of the Actassessing income derived by denying exemption on account of gainsarising from sale of agricultural land inter alia on the ground that theland does not constitute agricultural land since no agriculturaloperations were carried out regularly and same is sold to a companyengaged in the business of development of infrastructure, activity.However, the AO gave a finding that the though the land is locatedbeyond the specified limits from the municipal limits i.e. beyond 8kms, yet it is to be treated as capital asset. On 09.11.2012, the Appellant filed an appeal against theaforesaid order with the office of Commissioner of Income Tax( CIT)Appeals, inter alia challenging the initiation of reassessmentproceedings and also on the merits of the case. By order dated08.04.2013, the aforesaid appeal was disposed off. The Commissionerof Income- tax (Appeals) did not decide the jurisdictional ground onvalidity of initiation of proceedings but on merits held the land asagricultural land and hence exempt from capital gains tax. 7.Aggrieved by the order, the Assessing Officer (AO) filedan appeal to the Income Tax Appellate Tribunal, Panaji Bench at 14 txa12-15ors. On 09.11.2012, the Appellant filed an appeal against theaforesaid order with the office of Commissioner of Income Tax( CIT)Appeals, inter alia challenging the initiation of reassessmentproceedings and also on the merits of the case. By order dated08.04.2013, the aforesaid appeal was disposed off. The Commissionerof Income- tax (Appeals) did not decide the jurisdictional ground onvalidity of initiation of proceedings but on merits held the land asagricultural land and hence exempt from capital gains tax. 7.Aggrieved by the order, the Assessing Officer (AO) filedan appeal to the Income Tax Appellate Tribunal, Panaji Bench at 14 txa12-15ors. Panaji, Goa. On 11.07.2013, the Appellants filed cross objections inthe Appeals on the ground relating to validity of intuition ofreassessment proceedings etc. The Appellants also filed a detailedpaper book with the office of the Tribunal containing documents to berelied upon at the time of the hearing. The Appellants also filed anapplication of additional evidence. On 01.04.2014, a site inspectionwas ordered to be carried out by the Tribunal. On 7.08.2014, theRevenue filed their report of the site visit. On 08.05.2014, theAppellant filed its reply to the report. 06.06.2014, the Tribunaldisposed off the aforesaid appeals and cross objection filed by theparties by a common order. The Tribunal held that proceedings underSection 147 read with 148 were validly initiated. As per the appellantthe Tribunal fails to consider the Judgments of CIT V. Debbie Alemaoand Joaquim Alemao (196 Taxman 230 HC Mumbai/Tax Appeal1/2006 and Tax Appeal 2/2006) and CIT Vs Minguel Chandra Pais andAnr (282, ITR 618 HC Mumbai/Tax Appeal 1 of 2002). Thejudgments relate to sale of agricultural land in Goa and are also fromthe jurisdictional High Court of Mumbai. 8.The definition of “capital” includes certain properties butalso excludes agricultural land in India, as specifically 15 txa12-15ors. defined/explained under Section 2(14)(iii) of the IT Act. The term“long-term capital gain” is also settled, which means capital gainarising from the transfer of a long term capital asset. The scope andpower of the respective Tax Authorities, including the AppellateAuthroity/Tribunal is also settled, as well defined by variousJudgments, particularly the provisions of the IT Act and the Rulesmade thereunder. 9. It is necessary to consider the provisions of the Goa, Daman and Diu Land Revenue Code, 1968. (Code) and the Rulesmade thereunder. The Code defines the term “agriculture” underSection 2(1), “2. (1) “agriculture” with its grammatical variationsand cognate expressions, means raising of useful orvaluable products which derive nutriment from the soilwith the aid of human labour and skill and includeshorticulture, dairy farming, poultry farming, stockbreeding and grazing” 10.The term “agriculture” admittedly not defined specificallyunder the IT Act. However, judicially the said term has been explainedin various Judgments, including the Judgments of the Supreme Court inthe case of Commissioner of Wealth Tax Vs. H.V. Mungale [(1984) 145 16 txa12-15ors. ITR 208] and Motibhai D. Patel (Dr.) vs. Commissioner of Income Tax[(1981) 127 ITR 671]. These Judgments are referred and relied uponby the learned Counsel appearing for the Department as the impugnedOrder revolves against the assessee which reflects the reasons andfoundation so laid by the Supreme Court to ascertain which land andthe activities in such situation or otherwise requires to be treated as“agricultural land” and/or “non-agricultural land”. It depends upon the“agriculture” activities on such land recognised under the Local LandLaw. 16 txa12-15ors. ITR 208] and Motibhai D. Patel (Dr.) vs. Commissioner of Income Tax[(1981) 127 ITR 671]. These Judgments are referred and relied uponby the learned Counsel appearing for the Department as the impugnedOrder revolves against the assessee which reflects the reasons andfoundation so laid by the Supreme Court to ascertain which land andthe activities in such situation or otherwise requires to be treated as“agricultural land” and/or “non-agricultural land”. It depends upon the“agriculture” activities on such land recognised under the Local LandLaw. 11. The impugned order and the whole action of theDepartment proceeds on the foundation and arrived at a conclusionagainst the assessee holding that the land in question so transferred is a“non-agricultural land” and falls within the ambit of “non-agriculturalland” because of use and/or non-use and/or stated to be unused forspecific agricultural purpose for want of labour and no-agriculturaloperations and/or no specific regular income continuously for threeyears, as required and many other such facets. We could have gone indetail of the same if required, as the law in this regard as opined by theSupreme Court needs to be respected by all. But, at the same time, itis necessary to consider the facts and circumstances of the case and the 17 txa12-15ors. local laws/laws of land, which recognises the meaning of “agriculture”while dealing with the transfer of property of such agricultural lands. 12.For the purposes of such transfer of land, in our view, wehave to consider the provisions of the Code in question and so also thedefinition so provided to deal with the concept of “agricultural land”.There is no issue that the land owners require to transfer the propertywithin the framework of laws. Under the Code, there is no bar that anagriculturist and/or one who possesses agricultural land cannottransfer such land to any third party who is not agriculturist. Nothingcontrary has been pointed out and/or placed on record that anypermission and/or formalities are required to be completed beforetransfer of such lands. Under the Code, a transfer could be made to anon-agriculturist and/or to a person whose activities are not related toagricultural project or purpose. There is no question of raising anyobjection by third party, if the owner of such land decides to transferthe ancestral agricultural property/land to a third party by a commonsale deed. The assessee had received the consideration. Admittedly,the property was not divided and/or sub-divided. Admittedly, beforetransfer of the property, the parties were fully aware about the nature ofthe land which includes rocky area, use and usable area for agricultural, 18 txa12-15ors. purpose number of trees, plants growing or in existence for so manyyears, apart from certain plantations. Being the ancestral agriculturalproperty, the families were using the agricultural produce for their ownconsumption. 18 txa12-15ors. purpose number of trees, plants growing or in existence for so manyyears, apart from certain plantations. Being the ancestral agriculturalproperty, the families were using the agricultural produce for their ownconsumption. 13.Here, at this stage, it is relevant to note the definition of theterm “agriculture” as reproduced above. This definition, in our view,ought not to have been overlooked, while taking any action against theassessees. The definition itself provides that expression “agriculture”means raising of useful or valuable products which derive nutrimentfrom the soil with the aid of human labour. This inclusive definition,no where provides and/or takes away rights of the assessee to treat suchland as an agricultural land which they had been using before transferand/or till the date it came to be transferred as an “agricultural land”.There is nothing to prevet them from using such land for derivingnutriment from the soil with the aid of human labour and skill, whichalso includes the appellants' own labour and/or skill. Whatever numberof trees which are developed and/or grown were planted, developedand grown by the assessees for so many years and/or have beenmaintaining the same for various activities as, even reported by theDepartment, through the respective reports. This also is sufficient to 19 txa12-15ors.support their claim that the land throughout has been used as an“agricultural land”. The various trees planted and the fruit productsderived from it are being consumed for their private purposes, in noway, can be or should have been the foundation against them to heldthat it was never used and/or unusable or remained unused for anyagricultural activities. The definition of “agriculture” itself permitted,such unused land to be used and utilized even for grazing, horticulture,dairy farming, stock breeding. This is clear terms of the law and soalso the intent of the Code which governs such agriculture land and itstransfer. The report so submitted and/or referred to by the Departmentagainst the assessee, in our view, is unsustainable, unacceptable andcontrary to the specific provisions of the Code. All the “agriculture”activities so defined covers the agriculture land in question.Therefore, exemption from the capital gain is the only option, on factand the law. 14.The Supreme Court Judgment so read, definitely requiresto be used and utilized. The position of law is clear, so also the termslike “agriculture” and/or “agricultural land”, “ancestral agriculturalland. The assessees have been using it for agricultural purpose asclaimed. Hence, the burden lies upon the Department to disprove 20 txa12-15ors. and/or place material on record to show that activities or no activitiesor do use or no use of such land not fall within the ambit of“agriculture” so defined under the Code. The decision taken by theRevenue Department by overlooking this provision and Code isimpermissible, unacceptable and so the demand and the penalty. 14.The Supreme Court Judgment so read, definitely requiresto be used and utilized. The position of law is clear, so also the termslike “agriculture” and/or “agricultural land”, “ancestral agriculturalland. The assessees have been using it for agricultural purpose asclaimed. Hence, the burden lies upon the Department to disprove 20 txa12-15ors. and/or place material on record to show that activities or no activitiesor do use or no use of such land not fall within the ambit of“agriculture” so defined under the Code. The decision taken by theRevenue Department by overlooking this provision and Code isimpermissible, unacceptable and so the demand and the penalty. 15.This Court further requires to consider that a person whowants to use such agricultural land for any non-agricultural purpose,requires to submit an application to the concerned Authority, which issubject to the order/decision and/or permission if sanctioned, suchagricultural land can be used and converted into and/or usable for non-agricultural purpose and not otherwise. By any act or inaction ofunauthorised use of such agricultural land to non-agricultural purpose,in no way, legally converts such agricultural land to non-agriculturalland. It is only subject to penalty and/or charges for such use ofagricultural land to non-agricultural purpose. Admittedly, there isnothing on record to show that such application was ever filed at anypoint of time prior to the date of its transfer and/or even thereafter atleast by the assessee or by the third party, after purchase of suchproperty. The owners of such property are always at liberty to convertand/or take action. Even otherwise such subsequent action or inaction, 21 txa12-15ors. in no way is sufficient to prove such tax liability (Long term capitalgain) upon the original vendor, who sold the property as the ancestralagricultural property. 16. The tax law is very clear that it requires clear provisionand clear facts and defaults and/or act of suppression or inaccuratesubmissions of facts to avoid tax liability. The case in hand, therefore,requires to be considered in the background of geographical as well asphysical conditions of the agriculture property and its use andutilization for the stated “agriculture” purpose. The agriculturalpurpose, so defined, under the Code therefore, always remains sameone who owns such property and so also the purchaser and/or the thirdparty. Therefore, merely because the assessees could not produceand/or could not use and utilize the land fully by employing labourersand/or unable to give the crop statements should not have been thecriteria, specifically when the assessees and the owners of the land hadbeen using the products for their personal consumption. The wholeapproach of the Tribunal and the AO is incorrect and unsustainable inlaw. Section 105 of the Code further clarifies the position with 22 txa12-15ors. Section 105 of the Code further clarifies the position with 22 txa12-15ors. regard to presumption of correctness of entries in the record of rightsand register of mutations. It provides that an entry in the record ofrights, and certified entry in the register of mutation shall be presumedto be true and until the contrary is proved or a new entry is lawfullysubstituted therefor. The assessees have placed on record material tojustify their claim. There is no issue with regard to assessees'ownership, title and the name recorded in the land records at the relvanttime. Even, otherwise, in view of settled position of law, all concernedare bound by the entries, unless contra material is placed on record.On the contrary, adverse findings are given by the Department solelybased upon the so called inspection initially taken at the stage ofassessment by the concerned officer and later on by the Tribunalmembers. We are not going into the aspect of powers of the Tribunal toconduct inspection and give its own finding for the first time. This isin the background that the parties themselves requested the AppellateAuthority to have inspection of the land. Such party cannot, therefore,and/or agitate any issue with regard to the inspections so made.Therefore, we are not dealing with the inspection report on merits, inthe peculiar facts and circumstances of the case, as it was done at theinstance of the assessees. But the fact that this inspection reports, inno way, has considered the purpose and object of the Code and the 23 txa12-15ors. definition of “agriculture” so liberally mentioned. The relevant part ofthe report, reads thus : “... The above property is bounded on the Southern sideby a rain water gutter which quoins the Arabian Sea.On the western side of the property is Arabian Sea.The property is hill area on the Western side and plainon the Eastern side. I could see old trees such asMango trees, Cashew trees, Jackfruit trees, coconuttrees, kokum trees, acacia trees and wild trees. Thickbushes and grass grown between the trees and it wasdifficult to move around the property and there is noeasy access. There were no labourers or workers seeninside the property. The village Talathi stated that noagriculture activity carried out in the said property.” 18.The above is one illustration to show how the wholeproceedings proceeded to impose such tax and the penalty. The firstAppellate Authority however, did not accept the position and referringto the Judgment of the Division Bench of this Court, reversed the basicorder of assessment. The Tribunal(ITAT) however, on the request, sorecorded above, reinspected the land/area and gave additional reasonsby observing that: “ … It is not denied even by the Revenue that partof the land consists of dry crop i.e. trees of cashew,mango, jack, kokum and coconut. To the extent these 24 txa12-15ors. 18.The above is one illustration to show how the wholeproceedings proceeded to impose such tax and the penalty. The firstAppellate Authority however, did not accept the position and referringto the Judgment of the Division Bench of this Court, reversed the basicorder of assessment. The Tribunal(ITAT) however, on the request, sorecorded above, reinspected the land/area and gave additional reasonsby observing that: “ … It is not denied even by the Revenue that partof the land consists of dry crop i.e. trees of cashew,mango, jack, kokum and coconut. To the extent these 24 txa12-15ors. trees are standing on the land, this portion of the land,in our opinion, has to be regarded to be agriculturalland as this portion of the land is being used for thepurposes of agricultural. Neither the Assessee nor theRevenue produced before us the exact measurement ofthe land on which the trees are standing and out ofwhich dry crop is grown. To the extent the land isactually used for dry crop, the land has to be regardedto be an agricultural land. Since, there areapproximately 3500 trees standing on the land, whichis not denied even by the Revenue and has beenaccepted by the ld. AR, we therefore to the best of ourknowledge estimate that atleast 10 mtrs area isrequired for one fruit tree and therefore, there areapproximately 35000 sq. metres area of the land whichcan be regarded to be cultivable. On the upper sidewas estimate 1/5[th] of the land i.e. about 42,000 sq. mtrs.to be cultivable land therefore, we hold this importationof the land to be the agricultural land. The balance4/5[th] of the land in our opinion cannot be regarded to bethe agricultural land. “ 19.The findings given by the ITAT, for the first time of thisnature, therefore, ultimately require to be tested by this Court in thisappeal for the first time. It is settled that the appeals under Section260A of the IT Act have a limited scope and purpose. We have to dealwith the question of law so framed and the arguments so advanced in 25 txa12-15ors. respect thereof. But, as whole report itself and the findings given bythe Tribunal(ITAT) about the nature of land and its use, withoutconsidering the definition and the provisions of the Code, we are notinclined to proceed further. The finding of facts so recored by theTribunal itself confirms the position that the case of the assessees fallwithin the ambit of definition of “agriculture” as defined under theCode. The property requires to be treated as agricultural land and its'activities are “agricultural” in nature. 20.Submission is made by the learned Counsel appearing forthe respondent-Department supporting the impugned orders so passedagainst the Assessee that the matter be remanded back forconsideration as this factual aspect always goes to the root of thematter in view of the Judgment of the Supreme Court referred above toascertain the nature and use of such land as “agricultural land” and/or“non-agricultural land”. We are not inclined to accept this submissionat this stage of the proceedings, specifically when the whole approachof reassessing and/or visiting the land by holding inspection after morethan 2 to 3 years of the transfer of the property itself is anunacceptable situation. The Supreme Court Judgment, therefore, inour view, in the facts and circumstances of the case and the provisions 26 txa12-15ors. of law, as referred above, ought not to have been applied by keepingin mind the purpose and object of the Code. The law laid down by theSupreme Court, as already recorded, needs to be respected by all, butalways keeping in mind the facts and position of law. Those judgmentsalso covers the case of the assessees. The subject land in agricultureland and had been used for the agriculture purpose as defined under thelaw. 26 txa12-15ors. of law, as referred above, ought not to have been applied by keepingin mind the purpose and object of the Code. The law laid down by theSupreme Court, as already recorded, needs to be respected by all, butalways keeping in mind the facts and position of law. Those judgmentsalso covers the case of the assessees. The subject land in agricultureland and had been used for the agriculture purpose as defined under thelaw. 21.The Division Bench of this Court in the Commissioner ofIncome Tax vs. Shri Minguel Chandra Pais and another, Tax AppealsNo.1 and 2 of 2002, dated 23.3.2005, considering the Supreme Court'sJudgments referred above, has ultimately held that the the subject landwas agricultural land, ordinarily used for agricultural purpose. In para19, it was observed thus : “..... It is therefore obvious that the assesses hadabundantly proved that the subject land sold by themwas agricultural land not only as classified in therevenue record, but also it was subjected to thepayment of land revenue and that it was actually andordinarily used for agricultural purpose at the relevanttime. ..” The judgment was further following by the Division Benchof this Court in the Commissioner of Income Tax vs. Smt. Debbie 27 txa12-15ors. Alemao, Tax Appeal No. 1 and 2 of 2006 dated 9[th] September, 2010.For the reasons so recorded above, order passed by the CIT(A),referring to those Division Bench Judgments in the background arerequire to be maintained. The assessees are not liable for such tax. Noquestion of penalty. Therefore, such demand and the penalty isrequired to be quashed and set aside. 22.Strikingly, an order is placed by the learned SeniorCounsel appearing for the assessee that the Revenue Department,except these 12 matters, have not proceeded or reopened the similarlyplaced four matters. The order and the action therefore, on same factsand circumstances, as arising out of the same sale deed, has attainedfinality. In Berger Paints India Ltd., vs. Commissioner of Income Tax,Calcutta, (2004) 12 SCC 42, the Supreme Court has opined in thisregard, at paras 12 thus : “12. In view of the judgments of this Court in Union of Indiavs. Kaumudini Narayan Dalal, (2001) 10 SCC 231, CIT vs.Narendra Doshi, (2004) 2 SCC 81, and CIT vs. ShivsagarEstate , (2004) 9 SCC 420, the principle established is that ifthe Revenue has not challenged the correctness of the lawlaid down by the High Court and has accepted it in the caseof one assessee, then it is not open to the Revenue tochallenge its correctness in the case of other assesses, withoutjust cause.” 28 txa12-15ors. 23.We are inclined to observe that the property in questioncannot be treated as “Capital Asset” as contemplated under Section2(14) (iii) of the Act. It is wrong to hold, in view of the facts andcircumstances and the nature of agricultural land because of peculiarsituation of the land near the sea side or stony side of the sea, thatassessees are not doing any regular agriculture operation, this is also onthe ground that they never shown agriculture income out of it. Anyagriculture produce and products can be for personal use also. 24.Therefore, taking overall view of the matter including thereports placed on record, which supports the case of the assessee andfor the reasons so recorded above, we are inclined to allow theseappeals. Hence, we pass the following:- ORDER a. The appeals are allowed. b. The issue is answered in favour of the assessee. c. No costs. NUTAN D. SARDESSAI, J. ANOOP V. MOHTA, J.