B. P. JAIN, ACCOUNTANT MEMBER
AND GEORGE GEORGE K., JUDICIAL MEMBER

K.P. Gopakumar, Sr. DR for the Appellant.Iype Mathew, CA for the Respondent.

ORDER

 

B.P. Jain, Accountant Member – This appeal of the Revenue arises from the order of the Ld. CIT (A), Kozhikode dated 10.06.2015 for the assessment year 2010-11.

2. The brief facts of the case are that the assessee filed its return of income for the assessment year 2010-11 declaring an income Rs. 4,41,496/-. The case of the assessee was selected for scrutiny through CASS by issuance of notice u/s. 143(2) of the Act. The assessment records revealed that the assessee sold property measuring 2 acres and 42.801 cents for a consideration of Rs. 3,38,63,200/-. The assessee had not shown the sale consideration in the return of income, claiming the same to be an agricultural property and not being a capital asset within the meaning of section 2(14) of the Act. The Assessing officer was of the opinion that since the assessee had not returned any agricultural income during the last 4 years, prior to the sale of property and also the fact that in the spot enquiry report of the Inspector of Income Tax, it was stated that the land in question was very close to the industrial park. The property sold by the assessee cannot be considered as agricultural property and was, therefore, liable for capital gains arising on its sale. Taking the cost in 1981 to be Rs. 35,000, the Assessing officer calculated the long term capital gain at Rs. 3,36,40,950/-.

3. Aggrieved by the assessment order dated 26.03.2013, the assessee preferred an appeal before the Ld. CIT (A) wherein the appeal of the assessee was allowed by holding that the land sold by the assessee cannot be treated as capital asset within the meaning of section 2(14) of the Act. Therefore, the sale was not liable for capital gains under the Act.

4. Aggrieved by the order of the Ld CIT (A) allowing the appeal of the assessee, the Revenue has preferred this appeal by raising the following grounds of appeal:

1.		The order of the learned Commissioner of Income Tax (Appeals) is against facts and circumstances of the case.
2.		Whether on the facts and in the circumstances of the case, the Commissioner of Income Tax (Appeals) is right in law in holding that the land sold by the assessee cannot be treated as a capital asset within the meaning of section 2(14) of the Income Tax Act?
3.		The decision of the Hon’ble ITAT, Cochin Bench in the case of M.J. Thomas v. Dy. CIT, Circle-2(2), Ernakulam in I.T.A. No. 224/Coch/2011 dated 06-06-2014, relied on by the CIT (A) is distinguishable from the facts of the present case as in that case the assessee had returned agricultural income from the transferred property in the earlier assessment years and in the present case the assessee had not returned agricultural income from the transferred property in the earlier assessment years.
4.		The conclusion reached by the Assessing officer regarding the nature of transferred property was not solely based on the report of the Income Tax Inspector but many other factors like the letter of the Secretary, Chelambara Grama Panchayath, dated 20-01-2011 addressed to the Income Tax Officer (Inv.), Kozhikode in which it was stated that as per the building assessment register and copies of the building tax receipt there were four buildings in the ownership of Sri K Faisal Rahiman bearing building numbers CPV/438,439,440,441 in the transferred property which were used as residential quarters and also the failure of the assessee to furnish any evidence regarding the agricultural activities carried out have been considered. In view of this, is not the decision of the Commissioner of Income Tax (Appeals) arrived at without appreciating the complete facts of the case?
5.		For these and other grounds that may be urged at the time of hearing, it is requested that the order of the CIT (A) may be set aside and that of the Assessing officer restored.

5. We shall take up Ground Nos. 2 to 4 at this stage. as the principal issue is that whether the land sold by the assessee can be treated as capital asset within the meaning of section 2(14) of the Act.

6. The Ld. DR submitted that the assessee had not declared the agricultural income from the land sold during the last four years preceding the relevant assessment year. It is the case of the Revenue that the intention to sell the land was commercial in nature as the transferee had built the buildings on the said land. The Ld. DR has relied upon the judgment in the case ofKalpetta Estate Ltd. v. CIT [1990] 185 ITR 318  (Ker.) to support his submission that the burden is on the assessee to show that the land was an agricultural land on the date of sale and if no agricultural operations were carried on, the land cannot be claimed to be agricultural. He has further relied upon the judgment of the Hon’ble Supreme Court in the case of CWT v. Officer-in-Charge (Court of Wards) [1976] 105 ITR 133 wherein it was held that agricultural land must be a land which could be said to be either actually used or ordinarily used or meant to be used for agricultural purposes

7. The Ld. DR has further based his submissions upon the report of the Inspector of the Income Tax stating that the land in question was very near to the industrial park. He has also relied upon the letter dated 20-01-2011 of the Secretary, Grama Panchayat. He also relied upon the order of the Assessing officer to canvass his submissions.

8. The Ld. AR on the other hand has rebutted the aforesaid arguments raised by the Ld. DR and has argued that the land in question is agricultural land. He has placed heavy reliance on the certificate of the Village Officer certifying that the property was used for coconut plantation and for growing other agricultural crops from 1981 onwards and the assessee was earning agricultural income out of the same. He has submitted that the Assessing officer erred in disregarding the certificate from the Village Officer by treating that it was obtained years after the date of transaction. As regards the report of the Inspector of Income Tax was concerned, it was submitted by the Ld. AR that only because the agricultural land was near to the highway as well as the industrial park, it would not mean that the same can be called as agricultural land. Rebutting the submissions of the Ld. DR that no agricultural income was earned, it was submitted by the Ld. AR that the net agricultural income was meagre and was therefore. not declared, as under the Income Tax Act, the same was not required to be declared if the agricultural income was below Rs. 5000. The Ld. AR has further submitted that the only because the buyer has used the land for commercial purposes, cannot mean that the land in question was not agricultural in nature.

9. The Ld. AR has strenuously argued that the case of the assessee was squarely covered by the ITAT, Cochin Bench in the case of M.J. Joseph v. Dy. CIT [IT Appeal No. 224 (Coch.) of 2011, dated 6-6-2014]. He further relied upon the order of the Ld. CIT (A) to support his submissions.

10. We have heard the rival submissions and perused the facts on record. The term ‘Capital asset’ is defined u/s 2(14) of the Income-tax Act and the same is extracted below:

‘(14) “capital asset means –

(a)		“property” of any kind held by an assessee, whether or not connected with his business of profession;
(b)		any securities held by a Foreign Institutional Investor which has invested in such securities in accordance with the regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) ,

but does not include —

(i)		any stock-in-trade (other than the securities referred to in sub-clause (b), consumable stores or raw materials held for the purposes of his business or profession’
(ii)		“personal effects, that is to say, movable property (including wearing apparel and furniture) held for personal use by the assessee or any member of his family dependent on him, but excludes —

(a)		jewellery;
(b)		archaeological collections;
(c)		drawings;
(d)		paintings;
(e)		sculptures; or
(f)		any work of art.

(Explanation 1) – For the purposes of this sub-clause, “jewellery” includes –

(a)		ornaments made of gold, silver, platinum or any other precious metal or any alloy containing one or more of such precious metals, whether or not containing any precious or semi-precious stone, and whether or not worked or sewn into any wearing apparel;
(b)		precious or semi-precious stones, whether or not set in any furniture, utensil or other article or worked or sewn into any wearing apparel.

(Explantion 2) – For the purposes of this clause-

(a)		the expression “Foreign Institutional Investor” shall have the meaning assigned to it in clause (a) of the Explanation to section 115AD;
(b)		the expression “securities” shall have the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation Act, 1956 (42 of 1956).

(iii)

agricultural land in India, not being land situate –

(a)		in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand; or
(b)		in any area within the distance, measured aerially, –

(I)		not being more than two kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than ten thousand but not exceeding one lakh; or
(II)		not being more than six kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than one lakh but not exceeding ten lakh; or
(III)		not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than 10 lakh.

		Explanation, – For the purposes of this sub-clause, “population” means the population according to the land preceding census of which the relevant figures have been published before the first day of the previous year”.
(iv)		61/2 per cent Gold Bonds, 1977, or 7 per cent Gold Bonds, 1980, or National Defence Gold Bonds, 1980, issued by the Central Government.
(v)		Special Bearer Bonds, 1991, issued by the Central Government;
(vi)		Gold Deposit Bonds issued under the Gold Deposit Scheme, 1999 notified by the Central Government.

(Explanation,) – For the removal of doubts, it is hereby clarified that “property” includes and shall be deemed to have always included any rights in or in relation to an Indian company, including rights of management or control or any other rights whatsoever;’

11. Under section 45 of the Act, there cannot be any levy of capital gains unless the asset transferred is a capital asset. The only question to be considered in the present appeal is whether the land in question is “capital asset” within the meaning of section 2(14) of the Act. It is not the case of the Revenue that the assessee falls within the exceptions contained u/s. 2(14) (iii) of the Act. Therefore, what is to be decided is whether the land in question is an ‘agricultural land’ or not. It is pertinent to mention here that the term “agricultural land” or “agricultural purpose” are not expressly defined under the Act. In the case of Officer-in-charge (Court of Wards) (supra), the Hon’ble Supreme Court held that the agricultural land must be a land which could be said to be either actually used or ordinarily used or meant to be used for agricultural purpose, that is to say, it must have a connection with an agricultural user or purpose and mere potentiality of agricultural use is not enough. In view of the aforesaid judgment it is to be seen whether the land in question was used for agricultural purposes or had any connection with the agricultural purpose.

12. It is the admitted case of both the parties that the State Government had not maintained any records for cultivation of the land. The assessee has submitted that the land was used for the coconut plantation and for the same he has relied upon the certificate of the Village Officer certifying that the subject land was used for coconut plantation and for growing other agricultural crops from 1981 onwards and the assessee was earning agricultural income out of it. In the absence of any record maintained by the State Government, we see no reason to disbelieve the certificate of the Village Officer and the same cannot be rejected solely on the basis that it was issued post the sale of land by the assessee. The certificate is clear and unambiguously states that the said land was used for coconut plantation, which leaves no manner of doubt that the land was used for agricultural purposes.

13. The Cochin Bench of the ITAT in the case of M.J. Joseph (supra) held in favour of the assessee by relying upon the certificate of the Village Officer certifying that the land was used for agriculture only The ITAT, Cochin Bench has considered the fact that the State Government did not maintain any record for cultivation in the State and also the fact that agriculture as an entity was largely unorganised and held as under:

“26. Now the question arises for consideration is in the absence of records maintained by the state government for cultivation whether the material filed by the assessees would be sufficient to prove to show that the assessees were using the land for agricultural purpose/and the land in question has any connection with agricultural purpose. All the assessees are individual assessees. Agriculture in this country is unorganised. Normally illiterate citizens of this country are engaged in agricultural activities. Though the respective state governments are taking steps to sell the agricultural produce in the markets, still, the sale of agricultural produce is not regulated properly. The agricultural labourers, who are engaged for cultivation, are also illiterate. In those circumstances, expecting material evidences from the agriculturists for cultivation may be far-fetched. In respect of corporate companies that are engaged in cultivation, may maintain evidence for purchase of fertilizers, payment of wages to labourers and in respect of sale of agricultural produces. However, such kind of evidence may not be expected from individual farmers so long as the government does not regulate the cultivation of land and sale of agricultural produce in this country. This ground reality cannot be ignored by judicial authorities while adjudicating the dispute with regard to cultivation. Therefore, this Tribunal cannot blame the assessees for not maintaining records for cultivation.

27. The state government is expected to maintain cultivation account for the purpose of estimation of food production of the state and possible excess or deficit in the food production so as to make necessary arrangement for supply of food to the people. In spite of best efforts taken by this Tribunal, no evidence is coming forward from the revenue to show that the state government was maintaining any record. In fact, the assessing officer, after examining the Village Administrative Officer, Additional Tahsildar and Agricultural Officer, found that the Village Administrative Officer and Tahsildar are not maintaining any record for the purpose of cultivation. Even the Agricultural Officer is not maintaining any records for cultivation. The records available with the state government are only the register for collection of contribution towards Kerala Agricultural Workers’ Welfare Fund, Basic Tax Register and the classification of land as agricultural land. Apart from these, there is no other material available with the state government. If that is so, it is not known how the food production of the state was estimated so as to ensure sufficient supply of food to the people of the state. The fact remains is that the revenue could not produce any evidence for cultivation of land maintained by Government of Kerala. From the remand report filed by the assessing officer the food production of the state appears to have been estimated on the basis of the farmers, who were registered on the records of paddy field without considering the actual cultivation. Therefore, the state government for the purpose of food production considers the paddy fields and the agriculturists as a basis for food production. In those situations, the assessee has produced certificates from the village officer to show that the subject lands were under cultivation. This Tribunal is of the considered opinion that in the absence of any other record maintained by the state government for cultivation of the land, the certificate given by the Village Administrative Officer, who is personally acquainted with the land may be one of the factors to be taken into consideration. This Tribunal cannot ignore the certificate given by the Village Administrative Officer on the basis of his acquaintance with the field certifying that the subject lands were subjected to cultivation.

28. We have carefully gone through the judgment of the apex court in the case of Sarifabibi Mohmed Ibrahim And Others v. CIT (1993) 204 ITR 631 (SC). In the case before the Apex Court, the assessee sold a piece of land situated within the revenue limits of Navagaon village in the municipal limits of Surat municipality. In the year 1967, the assessee agreed to sell the land to a housing society. The assessee claimed the gain on transfer of such land as exempt u/s 2(14) of the Act. The Apex Court found that the assessee applying for permission to sell the land for non agricultural purpose and immediately after application for conversion of land, the land was not cultivated for a period of four year. In those factual circumstances, the Apex court found that the land in question is not an agricultural land. In the case before us, the assessee has not applied for conversion of land for non agricultural purpose. The land in question is classified as agricultural land and the village officer certified that the land was subjected to cultivation. The assessee is contributing to the Agricultural Labourer’s Welfare Fund and also paying revenue tax as agricultural land which is evidence from Basic Tax Register. In view of the material available on record disclosing the cultivation of land, this Tribunal is of the considered opinion that judgment of the Apex Court in the case of Sarifabibi Mohmed Ibrahim And Others (supra) may not be applicable to the facts of the case.

29. We have also carefully gone through the judgment of the Kerala High Court in the case of Smt. Asha George(supra). In the case before the Kerala High Court in the case of Smt. Asha George (supra), the question arose for consideration was exemptions u/s 54B and 54F of the Act. One of the pre-conditions for grant of exemptions u/s 54B and 54F is that the land should be used for cultivation immediately two years before the date of transaction. Such a condition is not available for treating the land as capital asset u/s 2(14) of the Act. Therefore, as observed earlier, what is required is the connection between the land and the agricultural purpose and if the land is cultivated in any of the earlier years, this Tribunal is of the considered opinion that the land has to be treated as agricultural land. The material evidence produced by the assessees are – (i) the certificate issued by the Village Officer; (ii) certificate issued by the Agricultural Officer; (iii) classification of land by state government as agricultural land; (iv) receipt for payment of contribution to agricultural workers’ welfare fund; and (v) Basic Tax Register. From these materials, it appears that the state government has classified the subject land as agricultural land. The government is collecting tax as agricultural land which is evident from the Basic Tax Register. The assessees are also contributing towards Agricultural Workers’ Welfare Fund. The Village Officer certified that the subject lands were subjected to cultivation. In those circumstances, this Tribunal is of the considered opinion that the subject lands were agricultural lands beyond the municipal limits or beyond 8 kms radius of the notified municipality. Therefore, the subject land cannot be treated as capital asset within the meaning of section 2(14) of the Act; hence not liable for capital gain tax under the Income-tax Act.”

14. The Ld. DR has tried to distinguish the aforesaid judgment relied upon by the assessee by submitting that in the present case, the assessee had not returned any agricultural income from the transferred property in the earlier assessment years. The Ld. AR has rebutted the same by stating that the agricultural income was meagre and was below Rs. 5000 and therefore, the same was not declared in the return. We see no reason to disbelieve the submission of the assessee in view of the certificate of the Village Officer that actual agricultural operations were carried out by the assessee.

15. The reliance placed by the Assessing officer on the report of the Inspector of Income Tax to come to the conclusion that the land was not an agricultural land is misplaced. The Inspection was done by the Inspector after the transferee had constructed the building on the land. Even in the report of the Inspector, it is observed that there were some coconut trees on the land. Just because the transferee had not used the land for agricultural purposes, the land does not loose its character of being an agricultural land when the same is sold by the assessee. Moreover, the said inspection was done behind the back of the assessee and the assessee was not given any opportunity to rebut the same. In any case, it is settled law that evidence collected behind the back of the assessee can be used as evidence against the assessee. In the case of Hitesh S. Mehta v.ACIT [IT Appeal No. 8023 (Mum.) of 2011], the ITAT Bench, Mumbai deleted the addition based on evidences collected behind the back of the assessee and held as under:—

“Per contra, the Ld. Departmental Representative submitted that since the assessee was shareholders in various companies. The assessee himself should have obtained the letter from the company directly. We do not agree with the submission of the Ld. DR. One of the basic principles of natural justice is that no evidence collected behind the back of the assessee could be used against the assessee unless an opportunity is given to the assessee to rebut the same. As the Revenue authorities have grossly erred in relying upon the evidences collected behind the back of the assessee, the additions based on such materials deserves to be deleted. We, accordingly reverse the findings of the Ld. CIT (A) and direct the Assessing officer to delete the addition of Rs. 3,79,42,133/- which have been made on the basis of the information collected from various companies behind the back of the assessee. This ground of the assessee is accordingly allowed.”

16. The nearness of the land to highway also does not alter the character of the land and appreciation in the price of land cannot be seen in isolation and if agricultural operations were carried out by the assessee, the appreciation in the price of land alone would not lead to the conclusion that the land is not an agricultural land. The objection of the Revenue that coconut plantation could not have been carried out on the soil which was present on the said land and the reliance placed on the letter of the Gram Panchayat Secretary cannot be accepted in view of the clear report of the Village Officer. The judgment of the Hon’ble High Court of Kerala in the case of Kalpetta Estate Ltd. (supra) does not help the case of the Revenue as the facts in the present case are distinguishable, more particularly the fact of the availability of the certificate of the Village Officer in the present case. Also, the land in the aforesaid judgment was forest land.

17. Thus, in view of the aforesaid, we hold that the land in question cannot be treated as capital asset u/s. 2(14) of the Act and therefore, capital gains cannot be assessed on the sale of the land. Accordingly, Ground Nos. 2 to 4 raised by the Revenue are dismissed.

18. Ground Nos. 1 and 5 are general in nature and therefore, do not require any adjudication. Thus, in view of the aforesaid findings, the appeal of the Revenue in I.T.A. No. 456/Coch/2015 is dismissed.

19. In the result, the appeal of the Revenue is dismissed.

ANTONY DOMINIC AND SHAJI P. CHALY, JJ.

Anil D. Nair, Sreejith R. Nair, Smt. C.S. Sulekha Beevi and Smt. Rosie Athulya Joseph for the Appellant. P.K.R. Menon, Sr. Counsel, GOI (Taxes) for the Respondent.

JUDGMENT

Shaji P. Chaly, J. – These appeals are preferred by the assesses against the order passed by the Income Tax Appellate Tribunal, Cochin Bench in I.T.A. No.265/2012 dated 27.12.2013 for the assessment year 2008-2009 and ITA No.266/2012 dated 27.12.2013 for the assessment year 2009-2010. Even though the learned Appellate Tribunal has disposed of the appeals vide separate orders, since the issues raised in these appeals and materials relied on by the Assessing Authority are common, these appeals are disposed of by this common judgment.

2. As per the orders referred above, the Appellate Tribunal has confirmed the order of the First Appellate Authority and held that the additions made by the Assessing Authority in the order of assessment are justified.

3. Brief facts leading to the case are as follows:

4. The assessee in ITA No.125 of 2014 has purchased an extent of 944.43 cents of rubber plantation in Amballur Village, Thrissur District on 9.5.2007 and 7.7.2007 along with the appellant in ITA No.127 of 2014. The said property was later sold to E.P. Antony and A.A. Davis and others. A person named Sri. P.T. Pavunni was the middle man or broker in the deal. A search was conducted at the residence of Sri. P.T. Pavunni and during the search a sale agreement relating to the above said transaction of sale was seized. From the said seized agreement, it was noticed by the Assessing Authority that the selling price of the land was Rs.25,000/- per cent which was found to be higher than the value shown in the sale deeds. The buyer, A.A. Davis and the appellant in ITA No.125 of 2014 confirmed that the transaction was effected at the rate of Rs.25,000/- per cent. Accordingly, the Assessing Officer determined the sale consideration of the land by adopting Rs.25,000/- per cent.

5. The Assessing Authority has arrived at such a finding after overruling the objections raised by the appellants that the property sold was an agricultural land and hence the profit arising on its sale is exempted from payment of tax. The Assessing Authority found that the appellants did not carry out any agricultural operations and further that the land was sold within a short period of its purchase. Apart from the same, the appellant in ITA No.125 of 2014 had confirmed that he did not carry on any agricultural activity on the said land. Added to this, the Assessing Authority has found that the nature of the property at the time of registration was converted into a barren land by removal of earth upto the rock bottom. Accordingly the Assessing Authority took the view that the transactions can only be considered as an adventure in the nature of trade and accordingly after providing sufficient opportunity to the appellants and complying with the procedures, finalised the assessment, taking into account the actual sale value shown in the seized agreement during the search operations.

6. Even though the appellants have taken up the matter in appeal, the First Appellate Authority confirmed the order of the Assessing Authority and it is aggrieved by the said order, the appellants preferred 2^nd appeal before the Income Tax Appellate Tribunal, which affirmed the order of the Commissioner of Income Tax Appeals. It is thus aggrieved, these appeals are filed.

7. Questions of law raised in ITA No.125 of 2014:

“(i)		In the facts and circumstances of the case, ought not the Tribunal have held that the appellant was entitled for exemption from the capital gains.
(ii)		In the facts and circumstances of the case, ought not the Tribunal have held that what was transferred to buyer was a rubber plantation and that transaction would come under Sub Clause 5 of Sub Sec.47 under Sec.2 of the Act.
(iii)		In the facts and circumstances of the case, ought not the Tribunal have held that the purchase value for the purpose of computation of capital gains has to be reckoned as per Annexure C Agreement and on the basis of Statement recorded under Sec.132(4) of the Act.
(iv)		In the facts and circumstances of the case, ought not the Tribunal have held that the transactions does not partake the characteristic of adventure in the nature of trade.”

8. Question of law raised in ITA No.127 of 2014:

(i)

In the facts and circumstances of the case, ought not the Tribunal have held that the purchase value for the purpose of computation of capital gains has to be reckoned as per Annexure C Agreement and on the basis of Statement recorded under Sec.132 (4) of the Act.

9. Heard the learned counsel for the appellants and the learned Senior Counsel for the Revenue.

10. The learned counsel for the appellants contended that the appellants have actually purchased the property for Rs.10,250/- and Rs.10,500/- respectively per cent while the documented value was only Rs.1,000/- and therefore, they were entitled to set off the entire purchase value for the purpose of computation of tax while computing the tax against them in accordance with the agreement unearthed during the search operation. So also the learned counsel contended that the property sold by the appellants was agricultural property having rubber plantation and on executing the agreements for sale of the said property, the prospective purchasers were put in possession and they were permitted to cut and remove the rubber trees and to remove soil from the said property. Therefore, in the facts and circumstances of the case, the assesses are entitled to get the benefit of tax exemption provided under the provisions of the Act, treating it as agricultural property.

11. Learned counsel for the appellants also contended that in view of Section 53A of the Transfer of Property Act and the agreement executed by the appellants with the prospective purchasers who were put in possession of the property and were allowed to carry out slaughter taping, cutting and removal of rubber trees and to remove soil from the property, there is substantial proof to show that the property transferred by the appellant was an agricultural property and that therefore he is not liable to pay any tax under the Act.

12. As stated earlier, appeals are relating to the assessment years 2008-2009 and 2009-2010. To answer the above contention of the appellants, we think it only appropriate to refer to sub-section 1A of Section 17 of the Registration Act, which is extracted hereunder:

“(1A) The documents containing contracts to transfer for consideration, any immovable property for the purpose of Section 53A of the Transfer of Property Act, 1882 ( 4 of 1882), shall be registered if they have been executed on or after the commencement of the Registration and other related laws (Amendment) Act, 2001, and if such documents are not registered on or after such commencement, then, they shall have no effect for the purposes of the said Section 53A.”

13. Sub-section (1A) was introduced as per the Amendment Act 2001 and therefore, any agreement for transfer of property after introduction of sub-section (1A) require mandatory registration in order to have effect for the purpose of Section 53A of the Transfer of Property Act. Admittedly the appellants have not registered the agreements for sale and therefore, as provided under sub-section (1A) of Section 17 of the Registration Act, the same can only be deemed as an ineffective document for considering the question of part performance of the contract as contended by the appellants. In that circumstances, the appellants shall be deemed to have possessed the property till the sale deed was executed. Therefore the appellants are not entitled to get any advantage out of Section 53A of the Transfer of Property Act, and cannot contend that they had transferred possession of an agricultural property entitling them to get exemption from payment of tax.

14. On the other hand, the learned Senior Counsel for the Revenue has taken us through the orders of the Assessing Authority and contended that the Assessing Authority has categorically found that when the property in question was sold, the same was barren land and there was no evidence to establish that the appellants have sold agricultural property to the buyers at the time of execution of sale deeds. It was the further contention of the learned Senior Counsel that at the time of execution of the sale deed, in accordance with the investigation and verification conducted by the Assessing Authority, the property in question was barren land and not agricultural property. Further more it was contended that on an enquiry by the Assessing Authority, it was found that no agricultural operations were carried on in the property after the land was purchased by the appellants. Apart from this, it was contended that since the sale carried out by the appellants was within a short period of its purchase, it was clear that the appellants carried out adventure in the nature of trade and therefore, the profit derived from such sale is liable to be assessed under the Act.

15. The learned Senior Counsel for the Revenue also contended that the Assessing Authority could unearth the actual sale price from the agreement seized on search from aforesaid Pavunni and thereby the assessing authority could ascertain the tax evaded by the appellants truly and correctly. Learned Senior Counsel also argued that there is no proof to establish that the appellants have paid the purchase price of Rs.10,250/- and Rs.10,500/- respectively per cent for the property against the documented value of Rs.1,000/- per cent and therefore, the Assessing Authority was right in holding so in the order of assessment which was confirmed by the authorities below.

16. Taking into account the rival contentions of the learned counsels, we are of the considered opinion that the Appellate Tribunal has discussed the entire issues put forth by the appellants and has arrived at a reasonable conclusion that the basis for adoption of sales price of Rs.25,000/- per cent was the sale agreement seized during search and also confirmation of the same by the appellant in ITA No.125 of 2014 and the purchaser of property, Sri. A.A. Davis in their sworn statements. It is therefore clear that the sale price of Rs.25,000/- per cent was arrived at basically relying on the sale agreement and not the sworn statement alone. Further the Tribunal has found that the claim that the appellants have purchased the property for Rs.10,250/- and Rs.10,500/-respectively per cent made in the sworn statement of the appellant in ITA No.125 of 2014, was not corroborated by any proof or materials and therefore the Assessing Authority was left with no other alternative than to decline the claims so raised by the appellants. Further the Tribunal has found that the responsibility to substantiate the purchase consideration was on the appellants and appellants have not adduced any evidence or put forth any material to substantiate the case advanced by them and therefore, the claim of the appellants that they were entitled to seek reckoning of the amount allegedly paid by them when they effected purchase of the property cannot be considered to be real at all. The Appellate Tribunal has thereupon declined to interfere with the orders passed by the First Appellate Authority.

17. We have perused the entire materials on record. According to us, the circumstances which led to the addition of amounts in the assessment order was based fully upon the facts unearthed during the search operations at the residence of one Pavunni. Further the authorities below have found that there was no evidence at all to prove that while the property was conveyed by executing sale deed, the same was an agricultural land. But on the other hand, the assessing officer has clearly found that the property in question was barren land and further it was revealed that after purchase of the property, no agricultural operations were carried on by the appellants and further that the property was sold within a short period which discloses nothing but an adventure in the nature of trade liable to be taxed under the Act. These are all circumstances based on facts and the authorities below have appreciated the contentions put forth by the appellants and arrived at a fair and reasonable conclusion that the agreement relating to the sale deed was a crucial document showing the exact price of the property, which was also not denied by the appellants. We do not think that in view of the factual situations referred above there are any substantial questions of law for us to consider the same invoking the powers conferred under Section 260A of the Act.

In the circumstances appeals fail and accordingly they are dismissed.