ORDER

PER VIKAS AWASTHY, JM :

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-2, Nashik dated 31-03-2016 for the assessment year 2011-12.

2. The brief facts of the case as emanating from records are : The assessee is an individual. The assessee filed his return of income for the impugned assessment year on 30-09-2011 declaring total income of Rs.72,69,115/-. The case of the assessee was selected for scrutiny under CASS. Statutory notice u/s. 143(2) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) was issued to the assessee on 02-08- 2012. In scrutiny assessment proceedings, the Assessing Officer observed that the assessee had sold four parcels of land and had claimed deduction u/s. 54B of the Act in respect of one of the land comprising in S. No. 37/6 admeasuring 18.07 gunthas at Ashane Shiwar, Taluka-Karjat, Distt.- Raigad. Summons were issued to the assessee u/s. 131 seeking details of property sold. The Assessing Officer after analyzing the documents furnished by the assessee concluded that the assessee has failed to establish that the agricultural activities were carried out by the assessee. The Assessing Officer remarked that the assessee has failed to conclusively substantiate the sale of agricultural produce. Thus, the Assessing Officer disallowed assessee‟s claim of deduction u/s. 54B of the Act.

As regards the other three parcels of land comprising in S. No. 37/2, 37/4 and 37/5 at Ashane Shiwar, Taluka-Karjat, Distt.-Raigad the assessee had offered the gain from sale aforesaid lands as Short Term Capital Gain. The Assessing Officer held the gain arising from sale of said three parcels of land as business income. Aggrieved against the order of Assessing Officer dated 11-03-2014, the assessee filed appeal before the Commissioner of Income Tax (Appeals).

In proceedings before First Appellate Authority, the assessee raised additional ground stating that the agricultural land sold by assessee does not fall within the definition of Capital Asset as defined u/s. 2(14) of the Act. The Commissioner of Income Tax (Appeals) sought remand report before the Assessing Officer on the fresh claim made by assessee. The Commissioner of Income Tax (Appeals) after considering the documents on record and the remand report held that the land comprising in S. No. 37/6 does not fall within the meaning of capital asset u/s. 2(14) of the Act. However, as regards gain on sale of the other three parcels of land comprising in S. No. 37/2, 37/4 and 37/5 at Ashane Shiwar, Taluka- Karjat, Distt.-Raigad the Commissioner of Income Tax (Appeals) upheld the findings of Assessing Officer in treating the same as „Business Income‟. Now, the assessee is in second appeal before the Tribunal assailing the findings of Commissioner of Income Tax (Appeals) by raising following grounds :

“1. The learned CIT(A) erred in law and on facts in confirming the action of the learned AO in treating the surplus on sale of Agricultural land at Gat No.37/2, 37/4 and 37/5 Mauge Ashane Shiwar Karjat of Rs.70,64,920/- as adventure in the nature of trade and assessing the same as business income.

2. The learned CIT(A) erred in law and on facts in not appreciating that the Agricultural land at Gat No. 37/2, 37/4 and 37/5 Mauge Ashane Shiwar Karjat was outside the purview of definition of capital assets within the meaning of Section 2(14) of the I.T Act and thus not liable or chargeable to tax.

3. The learned CIT(A) erred in law and on facts in directing the amount of Rs.25,85,147/- to be assessed as exempt in respect of Gat No. 37/6 Mauge Ashane Shiwar Karjat Instead of Rs.26,56,000/- which is assessed by learned AO. There has been thus a mistake in adopting the amount may kindly be rectified.

4. The appellant craves to add, alter, modify or substitute any ground of appeal at the time of hearing.”

3. Smt. Deepa Khare appearing on behalf of the assessee submitted that the assessee had sold agricultural land vide two registe