Parties to appeal cannot produce additional evidence on their own

By | October 14, 2015

Parties to appeal cannot produce additional evidence of their own but if Tribunal so requires, same can be produced on recording of reasons by Tribunal

additional evidence

IN THE ITAT AMRITSAR BENCH

Income-tax Officer

v.

Pankaj Dutta

A.D. JAIN, JUDICIAL MEMBER
AND B.P. JAIN, ACCOUNTANT MEMBER

IT APPEAL NO. 104 (ASR.) OF 2011
[ASSESSMENT YEAR 2002-03]

MARCH  23, 2015

Tarsem Lai for the Appellant. Joginder Singh for the Respondent.

ORDER

 

B.P. Jain, Accountant Member – This appeal of the Revenue arises from the order of the CIT(A), Jammu, dt. 17th Jan., 2011 for the asst. yr. 2002-03. The Revenue has raised the following grounds of appeal:

“1. On the facts and circumstances, the learned CIT(A) was not justified in deleting the addition on account of long-term capital gain as the assessee had transferred land measuring 764 Kanals as his capital contribution to the firm M/s Jammu Agro Industries, Food Mart, Jammu and his capital account had been credited by an amount of Rs. 1,52,40,000 on account of his capital contribution made in kind, which the assessee failed to prove that land under consideration is agricultural and situated beyond 8 kms. from the limits of the Municipality.
2. On the facts and circumstances, the learned C1T(A) ignored the certificate issued by the Municipal Authorities in which it was clearly stated that the land under consideration was situated at a distance of approx. 8 kms. from the limits of the Municipality.
3. On the facts and circumstances, the learned CIT(A) was not justified in relying only on the certificate issued by the revenue authorities and did not give due credence to the physical verification made by the Inspector and the Municipal Corporation official that the land was found to be falling within 8 kms. of municipal limits as on 15th Feb., 2002.”

2. The brief facts of the case are that the return of income was filed on 25th July, 2002 declaring an income of Rs. 81,072 and an agricultural income of Rs. 70,000, Subsequently, an information was received by the AO that the assessee in the firm M/s Jammu Agro Industries Food Park, Khanpur, Nagrota, has introduced a land measuring 76.4 Kanals as his opening capital which was credited by an amount of Rs. 1,52,40,000 which was stated to represent the market value of the land at the time of introduction as capital on 15th Feb., 2002 relevant to the asst. yr. 2002-03. The AO after recording the reasons, issued notice under s. 147 of IT Act, 1961 on 21st Feb., 2008 to show-cause as to why tax on capital gain should not be levied on assessee on account of transfer of capital asset as provided under s. 45(3) of the IT Act, 1961 as the land under reference represented the capital asset as defined under s. 2(14)(iii)(b) of the IT Act, 1961. The AO has also written a letter to the Commr., Municipal Corporation, Jammu asking for the following information:

(i) Whether the said land whole patch falls within the territorial jurisdiction of your municipal corporation/other municipality/notified area committee/town area committee or any, other name or cantonment board.
(ii) If the entire land is not covered under cl. (i) above, please specify the part/part/area of land and description thereof covered falling under cl. (i) above.
(iii) Area and description of the land (whole or part of the land) falling in any area within a distance of 8 kms. from the local limits of any municipality or cantonment board.
(iv) Area of the land which is not covered under cls. (i), (ii) and (iii) above.

2.1 After the receipt of information, on the basis of two letters received and discussed by him in the assessment order by AO from Municipal Corporation. Jammu, the AO went on to make the impugned addition.

2.2 The learned CIT(A) deleted the addition and the relevant findings of the learned CIT(A) given at pp. 17 to 24 of the order are reproduced for the sake of convenience as under :

‘The AO on the basis of letters dt. 23rd Dec., 2008 and 27th Dec., 2008 issued by Sr. Town Planner, Municipal Corporation, Jammu in response to AO’s letter dt. 19th Nov., 2008 held (hat the land in question was within eight kms. from the municipal area and was a capital assets. Here the written submissions of the assessee dt. 3rd Dec., 2009 is also to be considered especially para 7(b) and para 8 that the AO while quoting letter dt. 23rd Dec., 2008 has omitted words ‘not’ from the sentence ‘the land which falls in village Khanpur (Ghomanasa side) does not fall in the territorial jurisdiction of Municipal Corporation as on 15th Feb., 2002’ and the AO also not correctly quoted the letter dt. 27th Dec., 2009 where it was mentioned that the said land was falling eight kms. by road from the Municipal Corporation. This has been quoted as AO ‘falling within eight kms. by road from Municipal boundary’. This is verified by me from the records and it is found that the contention of the assessee is correct that the two letters which form the basis of decision of the AO to treat the land in question as a capital asset are not quoted correctly by the AO in the assessment order. It is admitted by the AO in the remand report that the land did not fall within municipal area of Jammu Municipal Corporation as on 15th Feb., 2002. It is also admitted that in the first instance that the exact location of the land was not correctly located and only on a joint inspection by one JMC official, Inspector of Income-tax and the assessee himself and revised report was submitted.

A careful look into case records reveals that the material on records is not confined to just the two letters from Senior Town Planner, Municipal Corporation, Jammu, as reproduced by the AO though quoting certain key words not correctly. There are other correspondences from the Municipal Corporation as well as certificates from Tehsildar as well as Addl. Municipal Commr., Jammu which points to facts vital for decision of the issue. These facts and relevant material is ignored to be discussed or even considered by the AO. These are reproduced as following :

1. Letter from Sr. Town Planner, Municipal Corporation, Jammu dt 4th Dec., 2008.

“The undersigned is directed to request you to refer your office letter No. cited above and to state that the land at Food Park Khanpur, Nagrota Bhawan, docs not fall within the jurisdiction of the Municipal Corporation, Jammu.”

2. Letter from Tehsildar. Jammu dt. 13th Nov., 2008

“As reported by the field staff, the information called for is given as under :

1. That the land in question was in the shape of Garden in revenue record which classifies as agricultural and the land revenue was applicable in such types of land but at present such types of land are presently exemption from land revenue”.

2. That in the revenue record it was reflected as Garden’ the copy of Khasra Girdawari for the year 2001-02 is enclosed for favour of your kind perusal.

3. That in the revenue record the entry of ‘Garden’ had been reflected since Kharief 1998 till it was disposed of to M/s Jammu Agro Industries Food Park, Khanpur, Nagrota Bhawan, Jammu.

4. That in the revenue Records, the entry of ‘Garden’ existed but the types of fruit trees were not reflected in the revenue record and the annual income as reported by the field staff was about Rs. 75,000

The revenue record is available in the ‘Record Room’. Gole Gujrat under Director Land Records and the record if any required can be had from that office.

The record received vide aforesaid letter is returned in original.”

3. Letter from Sr. Town Planner dt. 15th Dec., 2008

“Please recall the discussion held with you; and in continuation on to this office letter No. 480/BS/2008, dt. 4th Dec., 2008, the following is the point-wise reply as desired by you:

(a) For point (v) of the letter under ref: The said land (whole patch) falls outside the territorial jurisdiction of the Corporation limits
(b) For point (vi) of the letter under ref: The entire land falls outside the Corporation area
(c) For point (vii) of the letter under ref : The said area in whole falls within local area under territorial jurisdiction of Jammu Dev. Authority and falls within 8 kms. of the limits of the corporation area, the last limit of which is near Hotel Ashok, Manda, Jammu & along the bridge on NH way bye-pass.
(d) For point (viii) of the letter under ref : (a) Neither whole nor part of land falls within corporation area.

4. Letter from Sr. Town Planner dt. 23rd Dec., 2008

(a) For point (v) of the letter under ref : Khanpur (Ghomanasa side) does not fall in the territorial jurisdiction of Municipal Corporation at present, nor did it fall in Corporation are prevailing as on 15th Feb., 2002.
(b) For point (vi) of the letter under ref : The entire area of 76.4 kanals is falling outside the corporation area.
(c) For point (vii) of the letter under ref: The entire area of 76.4 kanals is falling in local area i.e. within jurisdiction of Jammu Development Authority, as notified vide SRO : 263, dt. 9th Aug.. 2004 and falls within 8 kms. from the Municipal Corporation area.
(d) For point (viii) of the letter under ref: Whole area of 76.4 kanals of land falls within local area.

5. Letter from Sr. Town Planner, Municipal Corporation, Jammu dt. 27th Dec., 2008.

“Please recall your discussion held on 23rd Dec., 2008, on telephone. In this connection and in continuation to this office letter No. 470/BS/2008, dt. 23rd Dec., 2008, the undersigned has to clarify the position of the land measuring 76.4 kanals falling in village Khanpur (Ghomanasa) side as under :

(a) The Municipal limits on 15th Feb., 2002 were falling up to Lane No. 4, Anand Nagar settlement which is located on left side of Patta Chnungi Ghomanasa Road, and from this Municipal boundary, the said land of 76.4 kanals was filling 8 kms., by road from the Municipal Boundary as on 15th Feb., 2002.

6. Letter from Sr. Town Planner, Municipal Corporation, Jammu dt. 12th Jane, 2009.

“I am directed to ref. to your letter No. ITO/W-2(2)/Jmu/2008-09/1349, dt. 19th Nov., 2008 and further this office letter No. 472/BS/2008, dt. 27th Dec., 2008 regarding the above noted subject and again to say that the information has already been forwarded to your office stating therein that the land in question does not fall within the Municipal Limits of Jammu. Besides, it has also already been intimated that the said land is at ‘approximately distance of 8 kms. from the Municipal Limits. However, for any further clarification/authentication with regard to the distance of the said land from the municipal limits. Your may approach the Dy. Commr., Jammu.”

7. Letter of Asstt. Commr., Jammu to Divisional Commr., Jammu dt. 8th March, 2002.

“On the cited above, I am directed to say that this office has received an application from the above named firm for permission to set up a food processing unit at Khanpur, Tehsil, Jammu. Before the said case is processed and sanctioned by the Govt. of India, a certification to the , . effect that the said area is permitted for industrial activity is required. In this connection a report was called from the subordinate revenue agency who has certified that in the above case permission of the Govt. to permit change of land use is required. The Tehsildar Jammu in his report has further stated that the kind of land as per the revenue record sis. Bagh Abi (Orchard Irrigated) which cannot be permitted for any other use without the permission of the Revenue Minister. Therefore, it is requested that the case may kindly be recommended to the higher authorities for seeking permission of the Hon’ble Revenue Minister for change of land use comprising of permission of the Hon’ble Revenue Minister for change of land use comprising of Kh. Nos. 217(1K3M). 218(oK.llM), 220(oK.04M)221 (6K13M) 222(4K14M), 223(1K.14M). 224(6K.8M),8 225(0K.16M). 226(12K.13M)227 (OK.12M), 228(15K. 18M; 229(0K.04M). 22 Min (8K-12M), 230(12K-13M), 231(OK-04M)\232(OK-12M), 233(6K-10M) total area measuring 76 Kanals 04 Marlas.”

8. Certificate dt. 9th July, 2002 from Asstt. Commr., Jammu.

“It is certified that land under Khasra Nos. 217 (1 Kanal 3 Marlas), 218 (11 marlas), 219 (1 Kanal 12 Marlas), 220 (4 marlas) 221 (6 Kanals 11 marlas), 222(4 kanals 14 marlas), 223 (1 kanal 14 marla), 224 (18 Marlas), 225 (16 marlas), 226 (12 Kanals 19 marlas), 227 (17 marlas), 228 (156 kanals 11 marlas), 229 (4 marlas), 229 Min. (8 kanals 12 marlas), 230 (12 kanals 13 Marlas), 231, (4 marlas), 232(12 marlas) and 233 (6 kanals 10 marlas) total measuring 76 kanals 4 marlas situated at village Khanpur Bhawan Tehsil Jammu is owned and possessed by Sh. Pankaj Dutta, partner, Jammu Agro Industrial Park.

It is further certified that vide Govt. order No. 18 Rev (18 of 2002 dt. .. April, 2002, the Govt, of J. & K has granted permission for use the above land for industrial purpose.

It is further added that the owner of the land is entitled for its transfer to another entrepreneurs”.

9. Certificate of Addl. Dy. Commr., Jammu dt 31st July, 2002.

“As per the report of Tehsildar, Jammu made under his No. 1156/OQ dt. 30th July, 2002, village Khanpur Bhawan, Tehsil & district Jammu is situated at distance of more than 8 kms. from the Jammu Municipality limits, with a population of 676.”

From the reproduction of these documents as above the following is very clear that the land in question was undoubtedly out of the jurisdiction of Municipal Corporation of Jammu on 15th Feb., 2002 and thereafter also and they were not competent to decide on it. From this fact that the land in question was not falling within the jurisdiction of Municipal Corporation, Jammu it is ruled out that the land could be held as a capital asset under s. 2(14)(iii)(a) of the IT Act.

Now remains the dispute of applicability of s. 2(14)(iii)(b) of IT Act, as to whether the land was within 8 kms. from the outer boundary of municipal limits. There are five letters from Sr. Town Planner, Municipal Corporation, Jammu and they are either in conflict with each other or highly confused. For example letter dt. 4th Dec., 2008 states that the land at Food Park, Khanpur, Nagrota Bhawan does not fall within the jurisdiction of the Municipal Corporation, Jammu. The certificate is silent on the distance but on 15th Dec., 2008 though it was reiterated that the land was not under the jurisdiction of the Municipal Corporation yet was within 8 kms. of the limits of the corporation area. It is already discussed that these two letters are in respect of some other land and not the laud belonging to assessee, which is admitted in the remand report. In view of this the Municipal Corporation who had no jurisdiction (as confirmed in all letters addressed to the AO) had without referring to the land in question has issued these two letters and hence they are not worthy of cognizance.

The letter dt. 23rd Dec., 2008 it was once again confirmed that the land was outside municipal jurisdiction yet was within 8 kms. from the Municipal Corporation area. There is another letter dt. 27th Dec., 2008 which further confirms the matter as it states that the land was falling 8 kms. by road from the municipal boundary. These are the two letters which are quoted incorrectly in the assessment order.

Surprisingly, there is another letter dt. 12th June, 2009 which is again in response to original query letter issued by the AO on 19th Nov., 2008 which states that the distance was approximately 8 kms. from the Municipal limits. The Sr. Town Planner in this letter advises the AO that for further clarification or ‘authentication’ he might approach the Dy. Commr., Jammu.

Here we may also see the letters/certificate issued by Tehsildar and Asstt. Commr., Jammu regarding the nature of the land. As quoted above the letter dt. 13th Nov., 2008 from Tehsildar, Jammu clarifies the position of land at the time of transfer that it was an agricultural land mentioned as an irrigated orchard in the revenue records. From the letters/certificates of A.C. (Revenue) dt. 8th March, 2002 and 9th July, 2002 it is clear that the change in land use was approved on 17th April, 2002, which means that the land undoubtedly was an agricultural land on the date of the transfer i.e., 15th Feb., 2002 and the jurisdiction of the land vested with revenue authorities i.e., D.C. of Jammu and his office. It is on record that A.D.C. Jammu has certified in his letter dt. 31st July, 2002 that the said land was at a distance of more than 8 kms. from Jammu Municipal limits with a population of 676. This certificate was issued once again verified by the AO, who found it to be genuinely issued in view of his report dt. 10th Dec., 2010 sent to this office.

In view of this I am convinced that the said land was at a distance more than 8 kms. and further the certificates issued by revenue authorities who had the jurisdiction over the land are to be relied. Now one more issue erupts to be dealt with and that is whether the distance is to be measured by road or the area distance (i.e., Crow’s flight) it is to be taken. This issue is raised by the AO in his letter dt. 10th Dec., 2010 addressed to this office. In reply to this report, the Authorised Representative has filed a case law in CIT v. Satinder Pal Singh [2010] 33 DTR (P&.H) 281 decided by the Punjab & Haryana High Court, the pleaded notes read as under :

“Capital gains-Agricultural land-Measurement of distance from the municipality, etc.-Distance of the agricultural land belonging to the assessee has to be measured in terms of the approach by road and not by a straightline distance on horizontal plane or as per crow’s flight-Reckoning of urbanization as a factor for prescribing the distance is of significance which would yield to the principle of measuring distance in terms of approach road rather than by straight line or horizontal plane-If principle of measurement of distance is considered straight line distance on horizontal plane or as per crow’s flight taken it would have no relationship with the statutory requirement of keeping in view the extent of urbanization.”

Here, it is pertinent to note that as per the certificate of A.D.C., Jammu dt. 31st July, 2002 also mention, the population of 676 where the land was located which shows that hardly any urbanization had taken place. Looking to the decision as cited by Authorised Representative coupled with the fact of scant urbanization, I respectfully follow the decision as above. In view of the above, it is held that the land in question has not proved to be a capital asset either as per s. 2(14)(iii)(a) or 2(14)(iii)(b) of the IT Act and the addition made by AO is deleted.”‘

3. The learned Departmental Representative made a prayer for the admission of additional evidence and argued that evidence goes to the root of the matter. The said evidence, in fact, a letter from Dy. Commr., Jammu, who was approached to give a finding as to whether the land in question is within 8 kms. or not and following documents were filed;—

1. Letter of DC, Jammu dt. 12th Jan., 2015.
2. Report dt. 6th Feb., 2015 of Tehsildar Jammu.
3. Copy of Hindi translation of above letter.
4. Letter under No. 715/NTG dt. 3rd Jan., 2015 of Naib Tehsildar, Jammu
5. Copy of Hindi translation of above letter.

4. The learned counsel for the assessee, Mr. Joginder Singh, CA strongly objected to the admission of the said additional evidence for the reason that there is no proceeding pending before the AO or the learned CIT(A) and whereas the authorization of the AO to collect the additional evidence as per r. 29 of ITAT Rules, 1963 is not on record. Therefore, party to the appeal are not entitled to produce any additional evidence before the Tribunal but the same can only be produced if the Tribunal so requires to enable it to pass an order or for any other substantial cause for the reasons to be recorded by the Tribunal for allowing the admission of such additional evidence. In the present case, the Tribunal has not required any such document to be produced before it or no substantial cause has been established by the Department for admission of such additional evidence, especially the said additional evidence has been procured without any authority with the AO or the CIT(A). Such production of additional evidence by the learned Departmental Representative of his own cannot be admitted under the 1TAT Rules, 1963.

5. We have heard the rival contentions and perused the facts of the case. We are convinced with the arguments made by the learned counsel for the assessee Sh. Joginder Singh, CA and objections raised by him that the parties to the appeal cannot produce additional evidence of their own but if the Tribunal so requires, the same can be produced on recording of reasons by the Tribunal. But in the present case, the Tribunal has not has not required such evidence. Moreover, there is no proceeding of assessment pending before the AO or before the learned CIT(A) and none of the authorities below have the authority to obtain or collect such additional evidence and therefore, there is no substantial cause established by the learned Departmental Representative to admit such additional evidence. Accordingly, the additional evidence submitted by the learned Departmental Representative, Mr. Tarsem Lal, Jt. CIT, is not admitted and the application under ITAT Rules, 1963 submitted before us is rejected.

6. As regards the merits of the case, the learned Departmental Representative relied upon the order of the AO and argued that the impugned land falls within 8 kms. from the Municipal Corporation area, as per Senior Town Planner, Municipal Corporation, Jammu, as per letter dt. 23rd Dec., 2008 available at PB-2. The learned counsel for the assessee, Mr. Joginder Singh, invited our attention to the letter dt. 23rd Dec., 2008 available at PB-2 issued by the Senior Town Planner, Municipal Corporation, Jammu, which in fact, is reproduced hereinbelow, for the sake of convenience:

“Please recall the discussion held with you and in continuation to this office letter No: 480/BS/2008, dt. 4th Dec., 2008, the following is the point-wise reply as desired by you.

(a) For point (v) of the letter under ref : This land, which falls in village Khanpur (Gho-Manasa side) does not fall in territorial jurisdiction of Municipal Corporation at present, nor did it fall in corporation area prevailing as on 15th Feb., 2002.
(b) For point (vi) of the letter under ref : The entire area of 76.4 Kanals is falling outside the Corporation area;
(c) For point (vii) of the letter under ref : The entire area of 76.4 Kanals is falling in local area i.e. within jurisdiction of Jammu Dev. Authority, as notified vide SRO: 263, dt. 9th Aug., 2004 and falls within 8 Kms from the Municipal Corporation area.
(d) For point (viii) of the letter under ref : Whole area of 76.4 Kanals of land falls within local area.”

7. In the said letter, it is clearly mentioned by the Senior Town Planner, Jammu that the land which falls in village Khanpur (Gho-Manasa side) does not have territorial jurisdiction of Municipal Corporation at present, nor did it fall in Corporation area prevailing as on 15th Feb., 2002. The relevant date is 15th Feb., 2002 for the year ending 31st March, 2002. relevant to asst. yr. 2002-03. whereas the learned Departmental Representative is referring to point ‘c’ in the said letter hereinabove with regard to notification at Sr. No. 263 dt. 9th Aug., 2004 with regard to the jurisdiction of Jammu Development Authority and Municipal Corporation area whereas the said land does not fall within the jurisdiction of Municipal Corporation or the Jammu Development Authority on the relevant date i.e. 15th Feb., 2002 and therefore, the learned counsel for the assessee relied upon the order of the learned CIT(A), who has rightly deleted the addition so made by the AO.

8. We have heard the rival contentions and perused the facts of the case. We are convinced with the arguments made by the learned counsel for the assessee, Mr. Joginder Singh, CA that at PB-2, a letter issued by Senior Town Planner, Jammu dt. 23rd Dec., 2008 is evident in itself that the land in question does not fall within the territorial jurisdiction of Municipal Corporation or Corporation area as at 15th Feb., 2002 which is the relevant date and point ‘c’ in the said letter, cannot be made applicable to the present facts and circumstances of the case and therefore, not applicable, as argued by the learned Departmental Representative. Accordingly, the land being outside the jurisdiction of Municipal Corporation, Jammu and therefore, cannot be treated as capital asset under s. 2(14)(iii)(a) or (iii)(b) of the Act. In the facts and circumstances, the order of the learned CIT(A), as reproduced hereinabove, is well reasoned one and we find no infirmity in his order, who has rightly deleted the addition so made by the AO. Thus, all the grounds of the Revenue are dismissed.

9. In the result, the appeal filed by the Revenue in ITA No. 104/Asr/2011 is dismissed.

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