Natukaari Gopal, Hyderabad vs Assessee

Shri Natukaari Gopal, The Income Tax Officer, Kondapur Mandal, Vs Ward-I, Medak Dist., Sanga Reddy [PAN: AJUPN 1204 C]

(Appellant) (Respondent)

For Assessee : Shri K.C.Devdas, AR For Revenue : Shri Rajat Mitra, DR

Date of Hearing : 19-01-2015 Date of Pronouncement : 21-01-2015

ORDER

PER B. RAMAKOTAIAH, A.M. :

This is an assessee's appeal filed against the order of the Commissioner of Income Tax(Appeals)-III, Hyderabad dated 04-06-2014 on the issue of taxation of capital gains on sale of agricultural land pertaining to assessee.

2. Briefly stated, assessee stated to be an illiterate and eking out his lively-hood by raring cattle owns a small bit of land situated at Malkapur :- 2 -: I.T.A. No. 1474/Hyd/2014 Sri Natukaari Gopal

Village, Kondapur Mandal, Medak District. On 17-11-2006, assessee and another person by name Mr.Pravin Kumar sold 30 guntas of agricultural land located at Survey No.139 of the said village for a recorded consideration of Rs.1,50,000/-. It seems there were certain survey operations in the premises of Smt. Bhagya Lakshmi and others on 22-08-2008. Assessing Officer noticed that those people purchased property to an extent of 15.14 guntas and assessee's share of price paid by those people was at Rs.24,91,860/- as against Rs.1,50,000/- recorded in the sale deed. Assessing Officer therefore issued a notice u/s.142(1) calling for return of income. Assessee being un-educated, did not respond to the notices and filed certain letters informing Assessing Officer that the deal was finalized through brokers. He got only Rs.11,00,000/- and has discharged certain family liabilities and also purchased agricultural land of 20 guntas. Assessing Officer issued further notices and called for details. As there was no response, he has completed the assessment considering the price stated to have been paid by the purchaser as income of assessee, without computing the capital gains. Assessee preferred appeal before Ld.CIT(A).

3. In the mean time, assessee asked for certified copies of the assessment order and other relevant documents of Smt. Bhagya Lakshmi and others through the authorized representative. Assessing Officer vide his letter dt.23-05-2014 did not furnish any evidence stating that this is a third party information which cannot be revealed to the authorized representative. Assessee made further submissions to the CIT(A) of not giving enough opportunity but also bringing to tax amounts on the basis of third party statements without confronting assessee. Ld.CIT(A) dismissed assessee's contentions, without considering the merits dismissed the appeal.

:- 3 -: I.T.A. No. 1474/Hyd/2014 Sri Natukaari Gopal

4. Before us, it was the contention that assessee should be given due opportunity and Ld.Counsel relied on various documents placed on the Paper Book. Ld.DR however, relied on the orders of the authorities.

5. Having considered the rival contentions and perusing the orders of the authorities and the documents placed on record, we are unable to understand how the Assessing Officer can determine the sale price as income of assessee. Moreover, assessee was not aware about the statement given by the said Smt. Bhagya Lakshmi and others. It is also noticed that assessee has sold the agricultural property to one Mr. T.Chandra Sekhar and Shri V.Papaiah being the vendors. How these two are connected with Smt. Bhagya Lakshmi in the purchase of the so called 15.14 acres is not coming out of the assessment order. Not only that the basis of determining the price is also not forthcoming from the orders. In fact assessee asked for copies of the documents relied on by the Assessing Officer which are also denied to him as stated above.

6. We also perused the sale deed dt.17-11-2006. It is clear from the recitals that property is ancestral property devolved on assessee by way of partition. In that case, the status of assessee, being HUF property or individual also required to be determined. Not only that, 1/4th of the share of the property, as can be seen from the recitals of the sale deed, pertain to his son who also became vendor No.2. When the sale deed is very clear about respective shares, how the entire amount can be brought to tax in the hands of assessee was also not explained by the Assessing Officer. Further, document of sale indicates that the property sold was agricultural land. Whether sale of agricultural land can be considered as a capital asset or not also required to be considered. Principles of natural justice have not been followed in this case, we are of the opinion that assessee should be given due opportunity. Since :- 4 -: I.T.A. No. 1474/Hyd/2014 Sri Natukaari Gopal

assessee seems to be an illiterate person, it is the duty of the officer to explain the provisions of law, so that the person can follow the proceedings. It is all the more necessary that Assessing Officer should follow the provisions of law before raising a demand against assessee. We were also surprised to note that Ld.CIT(A) dismissed the appeal without considering any of the contentions or issues involved in the assessment. We are of the opinion that assessee should be given due opportunity. Assessing Officer should determine the correct status, shares of the assessee and the price he received so that correct capital gains can be brought to tax. Assessing Officer is directed to examine all the issues and then only complete the assessment as per facts and provisions of law. Assessee is free to raise any objections or contentions involved in the assessment procedure.

7. With these observations/ directions the orders of the authorities are set aside to decide the issue afresh and complete the assessment accordingly.

8. In the result, appeal is allowed for statistical purposes.

Order pronounced in open Court on 21st January, 2015.

Sd/- Sd/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER

Hyderabad, Dated 21st January, 2015

TNMM :- 5 -: I.T.A. No. 1474/Hyd/2014 Sri Natukaari Gopal

Copy to :

1. Shri Natukaari Gopal, No.3-60, Malkapur Village, Kondapur Mandal, Medak Dist., C/o. Shri B.Narsing Rao & Co., Chartered Accountants, Plot No.554, Road No.92, Jubilee Hills, Hyderabad-96.

2. The Income Tax Officer, Ward-1, Sangareddy.

3. CIT(A)-III, Hyderabad

4. CIT-II, Hyderabad

5. D.R. ITAT, Hyderabad.