Daya Ram vs AO

“1.

That the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi, has grossly erred both in law and on facts in confirming the assessment of total income at ₹1,05,96,624 as against the returned income of ₹3,30,400, thereby sustaining an unjustified addition of ₹1,02,66,224.

2.

That the learned CIT(A) erred in law and on facts in confirming the disallowance of exemption amounting to ₹43,27,400 claimed under section 54B of the Income-tax Act, 1961, solely on the ground that the new agricultural land was purchased in the name of the assessee’s wife, ignoring that the entire investment originated from the sale proceeds of the assessee’s own agricultural land and that the beneficial ownership of the new asset vested solely in the assessee.

3.

That the learned CIT(A) has failed to appreciate that section 54B, being a beneficial provision intended to promote reinvestment in agricultural land, should be interpreted liberally in favour of the assessee, and that the section does not expressly require the purchase to be made in the assessee’s own name when the investment has been made out of the assessee’s funds. This position has been consistently upheld by several judicial authorities Hence, the disallowance of ₹43,27,400 is contrary to the weight of binding and persuasive judicial precedents.

4.

That the reliance of the learned CIT(A) on the judgment of the Hon’ble Punjab & Haryana High Court in Kamal Kant Kamboj v. ITO [2017] 397 ITR 240 (P&H) is misplaced. It is respectfully submitted that the said judgement has been erroneously applied to the facts of the present case. The ratio of Kamal Kant Kamboj cannot be mechanically invoked, as the facts of the appellant’s case are materially distinguishable inasmuch as the entire consideration herein was invested by the assessee himself, the lands were in fact used for agricultural purposes by the family, and there was no element of benami ownership or tax evasion.

In the appellant’s case, the entire investment in the new agricultural land—though purchased in the name of the appellant’s wife—was funded exclusively out of the sale proceeds of the agricultural land owned and sold by the appellant himself. The beneficial ownership, the source of investment, and the continued agricultural use of the property are all attributable solely to the appellant, thereby satisfying both the intent and substance of section 54B. Accordingly, the reliance on Kamal Kant Kamboj (supra) is misconceived, and the exemption under section 54B ought to have been allowed, particularly in light of the liberal and purposive interpretation adopted in CIT v. Kamal Wahal (Delhi HC) and Laxmi Narayan v. CIT (Rajasthan HC).

5.

That even otherwise, the jurisprudence laid down by the Hon’ble Supreme Court in CIT v. Podar Cement Pvt. Ltd. (1997) 226 ITR 625 (SC) and Mysore Minerals Ltd. v. CIT (1999) 239 ITR 775 (SC) supports the principle that “ownership” for the purposes of exemption provisions is to be understood in the beneficial and not merely legal sense, thereby entitling the assessee to relief u/s 54B when he is the real and beneficial owner of the reinvested property.

6.

That while the learned CIT(A) has rightly directed the Assessing Officer to refer the issue of valuation of the land to the Departmental Valuation Officer (DVO), he has erred both in law and on facts in failing to consider and adjudicate upon the detailed evidences and explanations already furnished by the appellant.

7.

That the learned CIT(A) rightly directed the Assessing Officer to refer the issue of valuation of land to the DVO; however, the consequential direction does not justify the sustaining of other additions without independent verification or appreciation of evidence submitted by the assessee.

8.

That the learned CIT(A) has failed to appreciate that the assessee had acted under a bona fide belief based on prevailing judicial interpretations, and therefore, initiation of penalty proceedings under section 270A is unjustified and without basis.

9.

That the learned CIT(A) has further erred in ignoring the ratio of the Hon’ble Supreme Court in CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 (SC), which mandates that where two reasonable interpretations of a taxing provision are possible, the one favouring the assessee must be adopted.

10.

That the assessment order as sustained by the learned CIT(A) is bad in law, arbitrary, and violative of the principles of natural justice, as sufficient opportunity to substantiate the claim and submit supporting documents was not afforded to the assessee.

11.

That the appellant craves leave to add, modify, or withdraw any of the above grounds at the time of hearing before the Hon’ble Tribunal.

PRAYER In view of the above grounds and the facts on record, it is most respectfully prayed that the Hon’ble Tribunal may kindly:

 Delete the disallowance of exemption of Rs.43,27,400 made under section 54B;

 Consider the Cost of acquisition Rs. 5,06,000.00 as we already taken the value less from the fair market value which is described in valuation report issued by the land valuer.

 Direct the Assessing Officer to allow full deduction under section 54B for the entire investment of ₹1,05,07,000; and  Grant such further or other relief as may be deemed fit in law and on facts.”