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2025 Supreme(Mad) 4488
IN THE HIGH COURT OF JUDICATURE AT MADRAS
K.R. SHRIRAM, CJ., SUNDER MOHAN, J.
The Commissioner of Income Tax, Central Circle –3(4), Chennai - Appellant
Versus
Pandit Vettrivel – Respondent
TCA No.114 of 2025
Decided On : 24-06-2025
For the Appellant : Mr. Karthik Ranganathan
For the Respondent: Mr. N.V. Balaji
The Income Tax Appellate Tribunal correctly classified the land as agricultural based on credible evidence, rejecting the Revenue's claims of commercial intent and business income.
Headnote:(A) Income-tax Act, 1961 - Section 260A, Section 132, Section 144, Section 153A, Section 143(3), Section 254 - Appeal against Tribunal's order allowing assessee's appeal regarding income classification and tax assessments - Tribunal ruled evidence supported agricultural classification of land against Revenue's claim. (Paras 1-12)
(B) Factual evidence in tax assessments - Tribunal emphasized thorough consideration of evidence produced by assessee, dismissing Revenue's unsubstantiated claims regarding land use and income classification. (Paras 5-11)
(C) Agricultural income and adventure in trade - Inquiry into nature of land ownership and intent behind purchase established that income should be considered agricultural, reversing previous assessments. (Paras 6-12)
Facts of the case:
The appeal arose from assessments that classified the income from land sale as business income rather than agricultural due to its alleged commercial potential. The ITAT found the agricultural status of the land evident from revenue records and the evidence presented by the assessee, which was dismissed by the lower authorities.
Findings of Court:
The ITAT's finding that the assessed land was classified as agricultural, with evidence of agricultural activities, was upheld. No substantial evidence was provided by Revenue to counter this classification.
Issues: The main issues included the classification of land as agricultural, the validity of evidence provided by assessee, and the nature of income arising from the sale of land.
Ratio Decidendi: The court held that the ITAT's decision was based on factual evidence that supported the agricultural classification of the land, which was not adequately rebutted by the Revenue, therefore the classification of income as agricultural was correct.
Result: Appeal is dismissed.
| Table of Content |
|---|
| 1. assessment of income and procedural history. (Para 2) |
| 2. itat's decision on additions made in tax assessment. (Para 3) |
| 3. substantial questions of law proposed. (Para 4) |
| 4. evidence of land characterization as agricultural. (Para 5 , 6 , 7) |
| 5. itat's factual findings regarding evidence. (Para 8 , 9 , 10 , 11) |
| 6. final order dismissing the appeal. (Para 12) |
JUDGMENT :
(K.R.SHRIRAM, CJ.)
Revenue has filed this appeal under Section 260A of the Income-tax Act, 1961 (the Act) aggrieved by an order dated 22.9.2023 passed by the Income Tax Appellate Tribunal (ITAT) allowing the appeal of assessee (respondent herein).
2. Assessee, an individual, was earning a living as an astrologer. The original return of income was filed on 2.8.2007 reporting a total income of Rs.17,98,611/-. A search under Section 132 of the Act was conducted on 23.8.2007. Following this, an assessment dated 14.12.2009 was made under Section 153A read with Section 144 of the Act, which determined the total income of Rs.11,90,90,658/-. Assessee carried the matter in appeal to the Commissioner of Income Tax (Appeals) (CIT(A)), who dismissed the appeal and confirmed the finding of the Assessing Officer. Assailing the said order, assessee preferred an appeal before the ITAT, which by order dated 18.12.2015, set aside the assessment order and remanded the matter for fresh adjudication.
3. A fresh assessment order dated 30.12.2016 under Section 143(3) read with Section 153A read with Section 254 of the Act was issued determining the total income at Rs.11,95,35,658/- by making certain additions. This was carried in appeal by assessee and the CIT(A), vide an order dated 27.9.2019, dismissed the appeal. Assessee carried this in appeal before the ITAT, which, by the impugned order dated 22.9.2023, allowed the appeal. The ITAT deleted the addition towards profit on sale of land amounting to Rs.6,56,03,940/- and also the addition towards agricultural income amounting to Rs.4,25,140/-.
4. Against the said order, this appeal is preferred and the following substantial questions of law have been proposed:
(1) Whether in the facts and circumstances of the case, the ITAT has erred in holding that the impugned land is agricultural in nature merely because it is recorded as such in the revenue records, without appreciating the material evidence and facts on record?
(2) Whether the ITAT has failed to consider the ratio of the Apex Court decision in the case of Sarifabibi Mohammed Ibrahim and others v. CIT , (1993) 204 ITR 631 in this regard?
(3) Whether the ITAT erred in not considering that the very fact that the land is sold to a non-agriculturist and to be used for non-agricultural activity is a factor germane to the determination of the issue as held by the Bombay High Court in the case of Gopal C. Sharma v. CIT , (1994) 209 ITR 946 (Bom)?
(4) Whether the ITAT erred in holding that the transaction cannot be considered as 'adventure in the nature of trade' without considering the Supreme Court decision in the case of G.Venkatswamy Naidu v. CIT (1959) 35 ITR 594 in which it is held that even an isolated and single transaction may be of an adventure in nature of trade if some of essential features of trade are present in such a transaction and in the instant case the intention to make profit is very much evident?
(5) Whether the ITAT erred in law in not considering that abnormally high sale consideration is also a factor determinative of the issue whether the land is agricultural or not as held by the Supreme Court in the case of Sarifabibi Mohammed Ibrahim and others v. CIT (1993) 204 ITR 631 ?
(6) Whether the ITAT erred in deleting the addition made by disallowing the agricultural income claimed by the assessee without appreciating that the assessee has not produced any evidence for earning agricultural income?”
5. In our view, the entire finding of the ITAT has been based on factual evidence available before the ITAT. Assessee had acquired certain parcel of land at Cha
