Commissioner of Income Tax, Faridabad vs Lal Singh

Satish Kumar Mittal, J.—This appeal has been filed by the revenue u/s 260A of the income tax Act, 1961 against the order dated 12-1-2007 passed by the income tax Appellate Tribunal, Delhi Bench ''D'', New Delhi in ITA No. 5444/D/04 for the assessment year 1996-97 raising the following substantial question of law:- (i) Whether the order of the ld. ITAT 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 ld. ITAT failed to appreciate that the report of the income tax 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 ld. ITAT has misdirected itself in not appreciating that the assessee had himself shown the capital gain of Rs. 86,65,900 and had claimed deduction u/s 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 u/s 54B before the Assessing Officer?

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

In the present case, in the financial year 1995-96 relevant to assessment year 1996-97, late Smt. Pusha Devi wife of Jug Lal had sold her agricultural land situated in Village Fazilpur, Jharsa for a sum of Rs. 89,75,000. After her death, notices u/s 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 income tax 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 Assessing Officer 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 u/s 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 (Appeal), Panchkula (hereinafter referred to as ''the CIT(A)'') vide its order dated 24-9-2004 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 Assessing Officer had written to the Tehsildar, Gurgaon vide his letter dated 9-1-2004, requesting the Tehsildar to furnish the distance certificate of the land from the nearest municipal limits of Gurgaon. The Tehsildar had reported on 16-1-2004 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 page 5 of the paper book. It is not understood why this fact does not find mention in the assessment order. The Assessing Officer 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 Assessing Officer is available in order sheet entry dated 21-1-2004). 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 Assessing Officer 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 the same.

The revenue filed the appeal against the said order, which has been dismissed by the income tax Appellate Tribunal (hereinafter referred to as ''the ITAT'') vide order dated 12-1-2007 while observing as under:-

We have heard the rival submissions. We have also perused the record. We are of the opinion that the Assessing Officer 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 ld. 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 u/s 131 of the income tax 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.

Against the said order, the revenue has filed the instant appeal.

We have heard the counsel for the parties.

After hearing the counsel for the parties, we are of the opinion that in the instance case, the CIT(A) as well as ITAT, 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 dated 16-1-2004. We have perused all the three reports which have been placed on record by the appellant along with affidavit of Shri Sanjay Kumar, income tax Officer, Ward-4, Gurgaon. One report issued by the Tehsildar, Gurgaon is dated 21-4-2003. 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 dated 16-1-2004. The said report was given by the Tehsildar on an application having been filed by the income tax Officer, 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 dated 21-1-2004 given by Inspector Abhishek Kumar to the income tax Officer. 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. 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 dated 16-1-2004 given by the Tehsildar on the application of the Assessing Officer itself and the same cannot be discarded. Therefore, there was no justification for ignoring the said report. Further, except the report dated 16-1-2004 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 ITAT 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 ITAT, no substantial question of law is arising in this appeal. Thus, there is no merit in the appeal and the same is hereby dismissed.