Bhavnesh Saini, J.M.: This order shall dispose of both appeals filed by Revenue and assessee for asst. yrs. 1995-96 and 1996-97 on common questions/grounds of appeal. We have heard learned representatives of both parties and gone through observations of authorities below and details submitted in paper book. ITA No. 441/Asr/2003 (Departmental appeal Asst. yr. 1995-96): This appeal by Revenue is directed against order of CIT(A), Jalandhar dt. 29th Aug., 2003 for asst. yr. 1995-96 challenging deletion of addition of Rs. 16,58,155 made by AO under head "Capital gains". facts are that return was filed by assessee on 31st Aug., 1995 declaring income of Rs. 8,29,513 plus agriculture income of Rs. 25,000. Assessment was completed under s. 143(3) and returned income was accepted. Subsequently, case was reopened by AO after recording reasons and notice under s. 148 was issued on 30th May, 2001 after obtaining approval of CIT, Jalandhar. assessee in response thereof filed return of income and filed various replies before AO. During year, assessee received enhanced compensation of Rs. 16,58,155 on various dates i.e. on 14th Feb., 1995, 19th Sept., 1994 and 19th Nov., 1994 in respect of his land situated in village Afghan Patti, which had been acquired by HUDA. compensation for acquisition of this land was first awarded on 4th Jan., 1988. assessee claimed this receipt to be exempt from capital gain tax on ground that land in question, was situated more than 8 kms. away from municipal limits of Panipat. To this effect, affidavit was also filed by assessee in support of his contention during asst. yr. 1992-93. In later years also, no capital gains tax has been paid by assessee on enhanced compensation received by him on similar grounds. During appellate proceedings for asst. yr. 1996-97, CIT(A) directed to make enquiries to determine fact about distance of land in question, about municipal limits of Panipat. Accordingly, Shri Vinod Kumar, Inspector was deputed to make enquiry, who has submitted his report dt. 28th May, 2001 and submitted that land in question is situated well within 8 kms. of municipal limits. On receipt of this information, AO was of view that capital gains was chargeable to tax which had escaped assessment and, therefore, assessment proceedings were reopened. AO has mentioned that assessee was asked to produce certificate from Tehsildar, Panipat. In this regard, no such certificate has been filed. assessee has objected to levy of capital gains tax on ground that land acquired by Government is outside municipal limits and is not covered in notification issued by CBDT. Therefore, under s. 2(14) this is not capital asset and no capital gain arises thereon. assessee s attention was drawn to notification dt. 6th Jan., 1994 whereby land of assessee outside municipal limit (within 8 kms.) is covered and is liable to capital gains tax. assessee submitted that above notification will be of no use since land in question, was acquired in years 1987 and 1991 and not on or after 6th Jan., 1994. AO considering reply of assessee and considering notification dt. 6th Jan., 1994 was of view that land was situated within 8 kms. from municipal limits of Afghan Patti, Panipat, which was acquired by HUDA under Land Acquisition Act and accordingly directed to charge capital gains on such income. addition was challenged before CIT(A) and detailed written submissions were filed and it was submitted that land involved was agricultural land, which stood transferred during asst. yrs. 1988-89 and 1992- 93 as same was acquired by HUDA in those years. It was mentioned that capital gains tax was not leviable on transfer of said land in those years as it was not capital asset at relevant time during period of transfer. It was argued that asset which is not capital asset at relevant time of transfer will not become capital asset at time of receipt of payment of enhanced compensation in respect of same asset. It was further argued that compensation got merged with original awards acquiring agricultural land by HUDA in years 1987 and 1991 and due to this fact right of assessee over land acquired by HUDA ceased to exist except to receive value/compensation thereof. It was submitted that certificate dt. 8th June, 2001 duly signed by Tehsildar, Panipat confirming that agricultural land of assessee acquired by HUDA was outside municipal limits of Panipat stands furnished before AO. It was further submitted that from asst. yr. 1970-71, new sub-cl. (iii)(a) and (b) of s. 2(14) was substituted bringing within term "capital asset" agricultural land situated within limit of any municipality and in exercise under said section for urbanisation of areas for income-tax. Instruction was issued vide No. S.O. 77(E), dt. 6th Feb., 1973 available in (1973) 83 ITR (St) 145-160 and name of Panipat was not included therein. It was pointed out that said notification was in force till 6th Jan., 1994 when fresh Notification No. 9447, dt. 6th Jan., 1994 available at (1994) 116 CTR (St) 13: (1994) 205 ITR (St.) 121-163 for extended limit was issued for urbanisation of areas for income-tax purposes under s. 2(14)(iii)(b) of IT Act. It was further pointed out that prior to second notification agricultural land situated outside municipal limits of Panipat were not within definition of capital asset when acquisition was effected by HUDA during 1988-89 and 1992-93 and in view of this same AO for asst. yr. 1992-93 in reassessment proceedings has not levied capital gains tax on agricultural land acquired by HUDA accepting same to be outside municipal limits of Panipat but wrongly assessed enhanced compensation received during assessment year under consideration in respect of same agricultural lands which were considered as exempt by him during year of acquisition. assessee s counsel made reference to definition of transfer under s. 2(14) [sic- 2(47)] of IT Act and also relied on decision of Hon ble apex Court in case cited at Mrs. Khorshed Shapoor Chenai vs. Asstt. CED (1980) 14 CTR (SC) 356: (1980) 122 ITR 21 (SC) and Pandit Lakshmi Kant Jha vs. CWT 1973 CTR (SC) 260: (1973) 90 ITR 97 (SC) and mentioned that there cannot be any taxable capital gains on amounts in respect of same land received during relevant year as only amount was due but transfer and possession of land had already been completed. Reliance was also placed on decision of Hon ble apex Court in case reported as K.M. Sharma vs. ITO (2002) 174 CTR (SC) 210: (2002) 254 ITR 772 (SC) and mentioned that judgment is squarely applicable to case of assessee as enhanced compensation received later in respect of same land is not taxable. CIT(A) considering above submissions and material on record deleted entire addition under head "Capital gains". His findings in para 2.2 are reproduced as under: "2.2 I have considered submissions of appellant in light of details on record. question of taxability under head Capital gains is in turn dependent on decision whether asset, i.e., agricultural lands which were acquired by HUDA in years 1987 and 1991 constituted capital asset because asset which is not capital asset at relevant time of transfer will not become capital asset at time of receipt of payment of enhanced compensation in respect of same asset. subject lands being acquired in years 1987 and 1991 were not specified assets because of s. 2(14)(iii)(b) of IT Act. AO admitted in asst. yr. 1992-93 that agricultural lands acquired by HUDA were outside municipal limits and accordingly did not charge capital gains tax. Prior to notification dt. 6th Jan., 1994, said lands being within 8 kms. could have represented capital asset but town of Panipat was not specified in this behalf vide earlier notification in Official Gazette. later notification dt. 6th Jan., 1994 became effective after lands were acquired and town Panipat was also included therein but lands were acquired prior to date from which later notification became effective. Therefore, component of enhanced compensation received by appellant did not get covered by definition of term transfer as per s. 2(47) of IT Act and appellant instead of compensation amount rightly accounted interest received on enhanced compensation amount for taxation. Accordingly, I agree with appellant that enhanced amount received later in respect of same lands were not taxable and find that judicial pronouncement relied upon in this regard support case of appellant. Therefore, addition of Rs. 16,58,155 made by AO under head Capital gains is deleted." learned Departmental Representative relied upon order of AO and also relied upon notification dt. 6th Jan., 1994 referred to by AO and submitted that assessee has not furnished certificate of Tehsildar and that Inspector had submitted report against assessee on 28th May, 2001 and that land of assessee is within 8 kms. of municipal limits and as and that land of assessee is within 8 kms. of municipal limits and as such AO was justified in charging capital gains tax. learned Departmental Representative relied upon decision of Hon ble Punjab & Haryana High Court in matter of CIT vs. Shiv Chand Satnam Paul (1998) 145 CTR (P&H) 246: (1998) 229 ITR 745 (P&H). learned Departmental Representative, however, admitted that in asst. yr. 1992-93, AO did not charge capital gains tax on same land vide order dt. 24th June, 2002. On other hand, learned counsel for assessee relied upon submissions made before CIT(A). He has referred to pp. 17 and 18 of paper book, which is certificate issued by Tehsildar, Panipat dt. 8th June, 2001 in which it was certified that land situated in village Afghan Patti during 1987 and 1991 were outside municipal committee limit and now also area is outside municipal limit. He has submitted that on same facts AO did not charge capital gains tax in preceding asst. yr. 1992-93. He has submitted that since land was acquired earlier in years 1987 and 1991, land of assessee did not fall in municipal limits and notification with regard to distance of 8 kms., etc., and since in year of acquisition of land, land of assessee was not in municipal limit, therefore, agricultural land of assessee could not have been treated as capital asset. Therefore, on enhanced compensation on same facts AO is not justified in charging capital gains tax on agricultural land which is not capital asset. He has submitted that issue is squarely covered by decision of Hon ble Punjab and Haryana High Court in matter of A.R. Dahiya vs. Asstt. CIT (2004) 192 CTR (P&H) 37: (2004) 269 ITR 542 (P&H). learned counsel for assessee further submitted that certificate of Tehsildar was filed before AO and that report of Inspector does not give any exact location, which was also not confronted to different (sic). We have considered rival submissions and material available on record. It is not in dispute that land in question, was acquired in year 1987 and 1991. assessee for first time received compensation for acquisition of land on 4th Jan., 1988. certificate of Tehsildar, Panipat dt. 8th June, 2001 clearly proved statement of assessee that his land in village Afghan Patti, Panipat, during year 1987 and 1991 was outside municipal limits and even at time of issue of certificate it was also situated outside municipal limits. Sec. 45 provides charging of capital gain on profits or gains arising from transfer of capital asset. Sec. 45(5) deals with transfer of capital asset being transferred by way of compulsory acquisition under any law and rule as under: "45(5) Notwithstanding anything contained in sub-s. (1), where capital gain arises from transfer of capital asset, being transfer by way of compulsory acquisition under any law, or transfer consideration for which was determined or approved by Central Government or RBI, and compensation or consideration for such transfer is enhanced or further enhanced by any Court, Tribunal or other authority, capital gain shall be dealt with in following manner, namely: (a) capital gain computed with reference to compensation awarded i n first instance or, as case may be, consideration determined or approved in first instance by Central Government or RBI shall be chargeable as income under head "Capital gains" or previous year in which such compensation or part thereof, or such consideration or part thereof, was first received; and (b) amount by which compensation or consideration is enhanced or further enhanced by Court, Tribunal or other authority shall be deemed to be income chargeable under head "Capital gains" of previous year in which such amount is received by assessee." Sec. 2(14)(iii)(a) and (b) deals with definition of "capital asset" means property of any kind held by assessee, whether or not connected with his business or profession, but does not include agricultural land in India, not being land situated in (a) and (b). CIT(A) on consideration of material on record was of view that land in question which was acquired in year 1987 and 1991 was not specified asset because of s. 2(14)(iii)(b) of IT Act. AO admitted in asst. yr. 1992-93 that agricultural land acquired by HUDA was outside municipal limit and did not charge capital gain tax. CIT(A), therefore, was of view that prior to notification dt. 6th Jan., 1994, said land being within 8 kms. could have represented capital asset but town of Panipat was not specified in this behalf vide earlier notification of Official Gazette. This finding of CIT(A) has not been disputed by learned Departmental Representative. CIT(A) further mentioned that later notification dt. 6th Jan., 1994 became effective after lands were acquired and town of Panipat was also included therein. When lands were acquired prior to date from which later notification became effective, crux of findings of CIT(A) would be that when earlier notification was in force, name of Panipat area was not included in notification and as such at time of acquiring land in question, land of assessee would not fall within capital asset because agricultural land was situated outside municipal limits. contention of learned counsel for assessee had been that since agricultural land of assessee was not capital asset within meaning of s. 2(14) of IT Act at time of acquisition, therefore, at time of receiving enhanced compensation same land would not fall in definition of capital assets. We find force in his submissions. earlier notification did not specify town of Panipat in specified list and even Tehsildar confirmed this fact that land of assessee did not fall within municipal limit. capital gains could be charged on transfer of capital asset. However, there was no transfer of capital asset in year under appeal because it had already been transferred earlier and at time it did not fall within definition of capital asset. Therefore, component of s. 45 r/w s. 45(5) of IT Act were not specified in this case. Hon ble Punjab and Haryana High Court dealing with identical question in matter of A.R. Dahiya (supra) held as under: "Where Revenue has accepted claim that land in question was agricultural land not falling within definition of capital asset in year when land was compulsorily acquired, it cannot be permitted to treat it as capital asset in year in which enhanced compensation is received. Once land in question is held to be not capital asset, question of additional compensation being assessed as capital gains under s. 45(5) of IT Act, 1961 does not arise." case of assessee is, therefore, covered by aforesaid decision o f Hon ble Punjab and Haryana High Court. We may also mention that though Inspector of IT Department, Shri Vinod Khanna was deputed to make enquiry but he has not given any specific report. His report is based upon assumption of certain facts without actually going into actual measurement. Even otherwise in view of above facts when earlier agricultural land of assessee was not treated as capital asset, therefore, report of Inspector loses its significance, which is otherwise not based upon actual measurement. learned Departmental Representative relied on decision of Hon ble Punjab and Haryana High Court in matter of CIT vs. Shiv Chand Satnam Paul (supra) but in this case issue was whether in fact and circumstances of case, Tribunal was right in law in holding that capital gains arose in asst. yr. 1971-72 and not in asst. yr. 1972-73. This case is, therefore, not directly applicable to present case. Considering above facts and circumstances of case and finding of CIT(A), we do not find any merit in appeal of Revenue. same is accordingly dismissed. ITA No. 278/Asr/2005 (Assessee s appeal Asst. yr. 1996-97): In this appeal, following effective issues have been raised which we shall discuss as under: Issue No. 1: On this issue, assessee challenged addition of Rs. 1,50,000 received on account of sale of old car. AO has made addition of Rs. 1,50,000 invested in purchase of car firstly disbelieving that assessee sold old car for Rs. 1,50,000. assessee had old Maruti car bearing No. PB-08-G-9010 which he sold on 21st Feb., 1994 for Rs. 1,50,000. On enquiry by AO, assessee contacted broker through whom car was sold and receipt which he gave him was produced before AO. However, this was wrong receipt bearing wrong chassis number and wrong engine number and wrong signatures. On being pointed out assessee again contacted broker and made deep probe and came to know that car was sold to M/s Sumitra Industries, G.T. Road, Bye Pass, Jalandhar. mistake occurred because car was purchased by Shri Ashok Kumar, partner of M/s Sumitra Industries and other receipt earlier produced was also in name of Shri Ashok Kumar. T h e letter from M/s Sumitra Industries, was also filed before AO. mistake was detected during course of assessment itself and assessee vide his letter dt. 16th Dec., 1998 brought true facts before AO supported b y documentary evidence. It was also submitted that in case there was any doubt with AO he could have made enquiry from District Transport Officer (DTO), Jalandhar. It was also submitted that assessee made application before DTO confirming this fact with regard to transfer of car of assessee in name of M/s Sumitra Industries, Jalandhar. It was, therefore, submitted that aforesaid amount was available to assessee on sale of old car for purchase of new car. As such, addition is unjustified. T h e learned counsel for assessee submitted before CIT(A) that amount of Rs. 1,50,000 received on sale of old car was not utilised anywhere and as such it was available for purchase of new car for Rs. 2,50,000. assessee relied on decision of Hon ble Punjab and Haryana High Court in matter of Shivcharan Dass vs. CIT (1980) 18 CTR (P&H) 86: (1980) 126 ITR 263 (P&H) where cash was kept by assessee from October, 1951 to 1956, i.e., for about 4/5 years and deposited in bank thereafter. It was held that i n absence of any evidence to effect that sum was utilised by assessee in any other manner, default was not justified in unreasonably rejecting good explanation. AO submitted his comments before CIT(A) stating therein that details of transfer of ownership as submitted by assessee have been verified from DTO, Jalandhar and as per which car was transferred from assessee s name to M/s Sumitra Industries, Jalandhar on 18th March, 1994 whereas new car was purchased in June, 1995, which is stated to be utilised for purchase of new car. Therefore, such amount would not b e available to assessee. CIT(A) considering above facts did not accept explanation of assessee because of difference in explanation of assessee with regard to sale of car. CIT(A) also did not accept explanation of assessee that cash was kept with assessee on sale of car which was utilised after 15 months. It was also held that assessee kept cash of Rs. 1,50,000 at home and at same time he was withdrawing money for purpose of household expenses. assessee s explanation was not accepted, therefore, addition was confirmed. learned counsel for assessee reiterated submissions made before CIT(A) and submitted that old car was sold to M/s Sumitra Industries, which had given certificate and certificate is corroborated with certificate of DTO. He has submitted that assessee kept cash with him. He has submitted that earlier mistake in giving number is rectified, therefore, amount was available to assessee for purchase of new car. He has relied upon decision of Hon ble Punjab and Haryana High Court in case of Shivcharan Dass vs. CIT (supra). On other hand, learned Departmental Representative relied upon orders of authorities below and submitted that assessee kept cash for about 15 months for which no explanation is given and assessee was withdrawing cash from bank for purpose but he must have spent amount for another purpose and cash was not available to assessee. On consideration of above facts and submissions, we are of view that addition is clearly unjustified wherein ownership of assessee of old car is not in dispute. Only source of income is agricultural income and others. assessee has sold car to M/s Sumitra Industries who have confirmed this fact by giving certificate before AO and same is also available in file. This fact is supported by certificate issued by District Transport Authority. Therefore, sale of car is not in dispute in sum of Rs. 1,50,000. earlier explanation of assessee might have some wrong facts that car was sold through one of partners of M/s Sumitra Industries and in this regard assessee might have given some wrong explanation but on making inquiry into matter all correct facts were brought to notice of AO, therefore, such facts could not have been disbelieved by AO. only question, therefore, left for consideration is whether this amount was available to assessee for purchase of new car after 15 months. learned counsel for assessee relied upon decision of Hon ble Punjab and Haryana High Court in matter of Shivcharan Dass (supra) in which cash was kept by assessee for more than 4/5 years and it was deposited thereafter. Still no addition was made and it was held that amount was available to assessee. It was held by Hon ble High Court in this case that in absence of any evidence to effect that said sum was utilised by assessee in any other manner, Department was not justified in rejecting good explanation of assessee. In aforesaid case, Revenue Department held that assessee utilised amount on sale of car for some other purpose, therefore, burden was upon assessee (sic-Revenue) to prove that assessee utilised same somewhere else but no such fact have been brought on record, therefore, explanation of assessee should not have been rejected in matter. AO has not brought any evidence on record to show that assessee spent this amount somewhere else. assessee being agriculturist has been able to prove that amount was kept at home, therefore, this explanation could not have been rejected by AO. Merely because assessee made withdrawal from bank during this period would not prove that amount in question received by assessee on sale of old car was spent somewhere else. In this view of matter and in absence of any material on record and on believing submissions of assessee, we are of view that addition is highly unjustified. We accordingly delete same and this ground of appeal of assessee is allowed. Issue No. 2: On this issue, assessee challenged addition of Rs. 50,000. Briefly, facts are that assessee purchased second-hand car for Rs. 2,50,000. Rs. 1,50,000 is stated to be invested on sale of old car and Rs. 1,00,000 is stated to have been invested out of withdrawal from bank account. However, AO was of view that car was originally purchased by seller on 9th May, 1995 and same was sold to assessee on 30th June, 1995, i.e., after more than 1-1/2 months. AO, therefore, was of view that since new car of 1-1/2 months old purchased by assessee which bears cost of new car at Rs. 3 lakhs, therefore, there is no justification for purchase of car in sum of Rs. 2,50,000. assessee submitted before authorities below that it was second-hand car, therefore, it was purchased at reduced value. However, submissions of assessee did not find favour and AO made addition of Rs. 50,000. CIT(A) also confirmed addition. learned counsel for assessee submitted that receipt of seller learned counsel for assessee submitted that receipt of seller was filed before AO along with affidavit, copies of same are filed in paper book. He has submitted that no enquiry is made by AO with regard to value of second-hand car. On other hand, learned Departmental Representative relied upon orders of authorities below. We have considered rival submissions and material available on record. assessee explained before AO that second-hand car was purchased for sum of Rs. 2,50,000. receipt of owner and affidavit was filed, therefore, AO should have made certain enquiries from seller instead of estimating value of car in sum of Rs. 3 lakhs. Nobody will purchase new car from seller at same amount at which it is available on show-room. difference is very nominal i.e. of Rs. 50,000 which according to assessee had been because of certain dents and damages on one side of car. It is matter of common knowledge that once car comes out of show-room, its value decreases day by day. AO has not made any investigation of fact from owner and also no material has been brought on record to justify finding. AO should have made certain enquiries from market with regard to value of car but no such details have been brought in assessment order with regard to prevailing market price. Therefore, AO has not made any enquiry with regard to Rs. 50,000. We accordingly delete this addition and allow this ground of appeal of assessee. Issue No. 3: On this issue, assessee challenged addition of Rs. 13,91,164 on account of capital gains taxable under s. 45(5) on account of enhanced compensation received during year under assessment. facts are same as have been recorded in asst. yr. 1995-96 in which we have dismissed Departmental appeal. In this year, AO did not make any addition with regard to amount of enhanced compensation. CIT(A) at appellate proceedings noticed that enhanced compensation amounting to Rs. 13,91,164 was not offered for taxation. same facts were considered as having been considered in asst. yr. 1995-96 and CIT(A) was of view that he has power under s. 251(1) of IT Act to make addition and after giving notice to assessee and considering submissions, made addition and held that Rs. 13,91,164 is taxable as capital gains under s. 45(5) and should be taxed accordingly. learned counsel for assessee submitted that facts are same, therefore, order in Departmental appeal may be followed in this year. He has further submitted that power of enhancement of AO [CIT(A)] is restricted to subject-matter of assessment or source of income which have been considered by AO from point of view of taxability. He has further submitted that CIT(A) has no power to enhance assessment by discovering new source of income which is not considered by AO in order appealed against. In support of contention, he has relied upon CIT vs. Rai Bahadur Hardutroy Motilal Chamaria (1967) 66 ITR 443 (SC), Abdul Wahid Gehlot vs. ITO (2005) 93 TTJ (Jd) 232, CIT vs. Sardari Lal & Co. (2001) 170 CTR (Del)(FB) 431: (2001) 251 ITR 864 (Del)(FB), CIT vs. Chaganlal Kailas & Co. (1984) 38 CTR (Mad) 336: (1984) 148 ITR 7 (Mad) and Pennzol Investment & Trading Co. (P) Ltd. vs. Asstt. CIT (1994) 49 TTJ (Hyd) 322: (1994) 49 ITD 534 (Hyd). On other hand, learned Departmental Representative submitted that AO was aware of receipt of enhanced compensation and as such on same facts CIT(A) was justified in enhancing income by making addition on account of enhanced compensation received by assessee on account of acquisition of property by HUDA. He has further submitted that powers of CIT(A) are coterminus to that of AO. Therefore, CIT(A) rightly made addition in matter. He has relied upon CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC), Jute Corporation of India Ltd. vs. CIT (1990) 88 CTR (SC) 66: (1991) 187 ITR 688 (SC), CIT vs. McMillan & Co. (1958) 33 ITR 182 (SC) and CIT vs. Scindia Steam Navigation Co. Ltd. (1971) 80 ITR 589 (Bom). We have considered rival submissions and material available on record. This issue has already been considered by us in Departmental appeal in ITA No. 441/Asr/2003 for asst. yr. 1995-96 and Departmental appeal has been dismissed. By following same order enhanced compensation received by assessee in respect of land in question is not capital gains. By following same order, we set-aside order of CIT(A) capital gains. By following same order, we set-aside order of CIT(A) and delete entire addition. In view of above findings, there is no need to deal with powers of CIT(A) to make addition. However, we would like to mention that Hon ble Allahabad High Court in recent judgment in matter of CIT vs. Kashi Nath Chandiwala (2006) 280 ITR 318 (All) by considering decision of Hon ble Supreme Court has held "The Tribunal was not justified in holding that CIT(A) had no power of enhancement in respect of issue which was not subject-matter of appeal". Since we have deleted addition on merits, therefore, this point is of academic interest only. We accordingly delete addition in matter. No other issue is argued or pressed. As result, appeal of assessee is allowed. As result, Departmental appeal in ITA No. 441/Asr/2003 is dismissed and assessee s appeal in ITA No. 278/Asr/2005 is allowed. *** INCOME TAX OFFICER v. CHAMAN LAL NAGPAL