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Facts
The assessee sold agricultural land, which he claimed was not a capital asset as it was situated more than 8 kms from the municipal limits of Gurgaon. The Assessing Officer (AO) reopened the case under Section 147 and treated the land as a capital asset, making an addition to the assessee's income. The Commissioner (Appeals) upheld the AO's order.
Held
The Tribunal held that the facts of the assessee's case were similar to that of a co-owner, where a similar distance certificate was accepted by the AO. The Tribunal noted that there cannot be two different treatments for the same transaction and decided to follow the coordinate bench's decision. The Tribunal allowed the grounds raised by the assessee.
Key Issues
Whether the agricultural land sold by the assessee is a capital asset as defined under Section 2(14) of the Income Tax Act, 1961, based on its distance from the municipal limits.
Sections Cited
147, 148, 143(2), 142(1), 2(14), 2(14)(iii)(b), 271(1)(c), 54B, 54
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘C’: NEW DELHI
(Assessment Year: 2012-13) Balbir Singh Saini, vs. ITO, Ward 1 (3), 85/6/22, Bank Street, Gandhi Nagar, Gurgaon. Gurgaon – 122 001 (Haryana). (PAN : BIAPS7596E) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Jai Bhagwan Saini, Advocate REVENUE BY : Shri Om Prakash, Sr. DR Date of Hearing : 03.06.2025 Date of Order : 09.07.2025 O R D E R
PER S.RIFAUR RAHMAN, ACCOUNTANT MEMBER :
This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘ld. CIT (A)] dated 08.07.2022 for Assessment Year 2012-13.
Brief facts of the case are, the case of the assessee was reopened under section 147 of the Income-tax Act, 1961 (for short ‘the Act’) for AY 2012-13 by issue of notice under section 148 of the Act, after recording the reasons and prior approval of the Pr.CIT, Gurgaon, notice was duly served on the assessee. In response to the above notice, assessee filed his return of income declaring an income of Rs.5,87,660/- on 26.04.2019. Accordingly, notices u/s 143(2) and 142(1) along with questionnaire were issued and served on the assessee. During assessment proceedings, the AO observed that based on the information available with him, the assessee along with his other relatives have sold their land for consideration of Rs.8,75,40,000/- to S.A. Infra Developers Pvt. Ltd.. Out of the above sale consideration, assessee had share of Rs.2,91,80,000/- i.e. 1/3rd share. Based on the above information, a show- cause notice was issued to the assessee to produce the relevant information and the relevant notice was reproduced at page 2 of the assessment order. In response, assessee submitted that the abovesaid land is not a capital asset u/s 2(14)(b) of the Act and further submitted that the land is situated outside 8 kms. from the nearest municipal limit by relying on certain case laws and certificate issued by the Nayab Tehsildar, Municipal Corporation, Gurgaon. After considering the above submissions, AO observed that the assessee was having 1/3rd share in sale consideration of Rs.2,91,80,000/-, however assessee in his reply submitted that he has received Rs.4,34,69,990/-out of the sale consideration, the same was queried to the assessee and assessee has not submitted any reply or furnished any evidence. After considering the information available with him, he treated the above agricultural land as capital assets u/s 2(14) of the Act and held that the distance to be calculated 2(14)(iiib) of the Act, accordingly, he rejected the submissions of the assessee and proceeded to determine the capital gain earned by the assessee in this transaction and determined the same at Rs.4,33,39,960/-. Accordingly, he assessed the income of the assessee at Rs.4,39,27,620/-.
3. Aggrieved assessee preferred an appeal before the ld. CIT (A) and filed detailed submissions. After considering the submissions of the assessee, ld. CIT (A) dismissed the appeal filed by the assessee and sustained the addition made by the AO.
4. Aggrieved assessee is in appeal before us raising following grounds of appeal:-
1. The order of learned AO/CIT (A) is unjust and arbitrary. Assessee is a very simple villager. Assessee sold an agriculture land for Rs.43469990/-. Copy of sate deed of agriculture land is already submitted before Ld. A.O. No capital gain is attracted on sale of this agriculture land as land is situated more than 8 k.m. from the last municipal limit of Gurgaon according to notification no.9447 dt. 06.01.1994. 1.(a) Rs.43339960/- This amount has wrongly been added by the learned A.O. in the income of assessee. This land was in possession of assessee and his father since 1975-1983. Copy of purchase deed produced before the ld. A.O. A distance certificate of this rural agriculture land was produced before Ld A O. This agriculture land is beyond 8.5 k.m. from last municipal limit of Gurgaon which is exempt from capital gain. The said agricultural land is not a capital assets. So same is exempt from capital again. Agricultural land of assessee is not falling within the definition of capital asset in terms of section 2(14)(iii)(b) of the IT Act. At the time of making assessment in the show cause notice the Ld A.O. has wrongly been taken stand of the limitation in the notice. As. per show cause notice definition of distance as taken by Ld. A.O is as under :- 2(14) b) in any area within the distance, measured aerially - (iii not being more than eight Kitometers, from the local limits of any municipality or cantonment board referred to in item (a) and which has a population of more than 10 lakhs. So the distance will be calculated from outer limit of municipality. Therefore, documents furnished by you are not acceptable. Above mentioned amendment in section 2(14)(iii)(b) is substituted by the Finance Act, 2013, w.e.f. 01.04.2014. Same is applicable from AY: 2014-15. So the question of department is irrelevant to the AY 2012-13. So the addition as made in income of assessee needs to be deleted from the addition as made by learned AO.
2. Assessee purchased agriculture land during the year which is allowable under section 54B of Income Tax Act, 1961. This amount of investment made in purchase of agriculture land is allowable which needs to be allowed. Assessee invested in residential house during the year. Assessee purchased plot and invested in construction of residential house during the year same is allowable under section 54 of Income tax act, 1961. It is prayed that this amount of investment of agriculture land and investment made in residential house may be allowed.
The learned AO has wrongly been issued penalty notice u/s 271(1) (c). The Ld AO has not recorded his satisfaction in issuance of penalty notices to the assessee. The Ld AO issued penalty notice to assessee without his satisfaction. So penalty notice issued u/s 271 (1) (c) is needs to be set aside.
The appellant reserve his right to raise any other ground of appeal
if needed at the time of arguments with the permission of your honor.
5. That each and every addition in all point referred to in order against the assessee is fully contested even if it is not covered in any other ground.
6. Recovery of Demand may be stayed till the decision of appeal.
7. It is prayed that assessment order be set aside and appeal should be accepted in full.”
5. At the time of hearing, ld. AR of the assessee brought to our notice relevant facts available on record and submitted that the subject agricultural land was not a capital asset being situated more than 8 kms. away from the last municipal limit of Gurgaon city, Haryana at the time of its sale. Further he submitted that the case of the assessee was reopened by issue of notice u/s 148 of the Act. He also submitted that joint co-owner of the property Shri Jitender Saini, whose case was also reopened by issue of notice u/s 148 of the Act. The issue under consideration in the case of Shri Jitender Saini is exactly similar to the case of the assessee considering the same piece of land which was sold by the assessee along with the co-owner, Shri Jintender Saini. He also submitted the similar certificate of distance issued by Nayab Tehsildar, Municipal Corporation, Gurgaon, was submitted before AO for the reason that the same is exempt from levy of income-tax u/s 2(14) of the Act. In the case of Shri Jitender Saini, the same certificate was accepted by the AO while processing the reassessment proceedings in his case. He brought to our notice assessment order passed in the case of Shri Jitender Saini dated 13.12.2019 passed u/s 143(3) r.w.s. 147 of the Act, the relevant assessment order was placed on record wherein the returned income filed by him was accepted. Ld. AR submitted that the similar certificate of distance produced by the assessee was rejected by the AO. He submitted certificate of distance produced in the case of Surender Saini dated 22.07.2017 and certificate of distance issued by Tehsildar/ Halka Patwari, Gurgaon on 10.10.2019 of the said agriculture land. He further submitted that the Tehsildar/ Halka Patwari, Gurgaon on 10.10.2019, it certified that same agriculture land is situated more than 8 k.m. and is situated at 10 k.m. from last municipal limit of Gurgaon. The copy of the said distance certificate is also submitted. He also submitted copy of a GPS distance (aerially) measured distance certificate Vision Engineering Consultant, Gurgaon certifying that the distance of the subject agriculture land from municipal limit of Gurgaon City, Gurgaon (Hr.). is 8.7 k.m. and such certificate from this entity has already been admitted by the ITAT, Delhi Bench ‘E’ in accepting the report of Vision Engineering Consultant, Gurgaon as evidence, accordingly ITAT accepted the appeal of assessee. In this regard he also placed reliance on the following favourable decisions on this issue given by the coordinate benches of the ITAT on identical facts :- (i) NY 2013~14 in the case of Amar Singh vs ITO Ward-1, Rewari (Hr.) decided on 25/04/2023 ITAT Delhi Bench "A", New Delhi. (ii) ITA NO. 2802/De1/2015 NY 2010~11 in the case of DCIT Circle- 14(2), New Delhi vs Khusahl Infraproject Industries India Ltd., decided on 30/12/2019 ITAT Delhi Bench "D", New Delhi. (iii) ITA NO. 13/Del/2020 A/Y 2013-14 in the case of Ashish Gupta Vs. ITO, Ward-1(1), Ghaziabad decided on 13/06/2024 ITAT Delhi Bench "A", New Delhi. (iv) ITA NO.4201/De1/2014 A/Y 2010-11 in the case of M/s Buniyad Developers Pvt. Ltd. , New Delhi VIs Income Tax Officer, Ward-3(1), New Delhi decided on 10/03/2015 ITAT Delhi Bench "A", New Delhi. He therefore, prayed that considering the above submission the order of the A.O. as well as order of Ld CIT(A) be set aside and appeal of assessee may be allowed.
On the other hand, ld. DR of the Revenue relied on the findings of the lower authorities.
7. Considered the rival submissions and material placed on record. We observe that assessee has sold an agricultural land along with other co-owners of the property, namely, Surender Saini and Jitender Saini, s/o late Shri Kanwal Singh Saini. The case of Shri Jitender Saini and assessee’s case were selected for reassessment proceedings by issue of notice u/s 148 and both the assessees filed a certificate from the Nayab Tehsildar, Municipal Corporation, Gurgaon with the certificate of distance as per which the land was situated 8 kms. outside the last municipality of the Gurgaon region. It is brought to our notice that in the case of Shri Jitender Saini, the same certificate of distance was accepted by the AO and completed the assessment in his case whereas in the case of assessee, the same certificate was rejected and held that the case of the assessee falls within 8 kms. from the last municipality of Gurgaon. There cannot be two reasons to evaluate the same set of facts of the same transaction in the hands of two assessees. We observe that the coordinate Bench in the case of Ashish Gupta vs. ITO in order dated 13.06.2024 has held as under :- “8. Upon careful consideration, we find that assessee’s arguments have sufficient cogency. It is correct that the distance of 5 kms. from Dasna flyover, Govindpuram confirmed by Inspectors of Income-tax Department and Tehsildar were on the date of their respective inspections i.e. February 8 and March 2016. On the other hand, assessee’s plea that the distance of land in question should be reckoned as existed on the date of Notification No.9447 dated 06.01.1994 when the municipal limits were upto Hapur Chungi and from where the distance was 8.7 kms. approx. as per IT Inspector’s report. The basis of submission is that for the purpose of exemption u/s 2(14)(iii)(b) of Act, the notification by Central Government is mandatory and there was no notification after 06.01.1994. Hence, the expansion of municipal limits from Hapur Chungi to Dasna Flyover on 41.08.1994 should be irrelevant in absence of any further notification. Therefore, the land in question at Village Masuri is not a capital asset. The above proposition is duly supported by the case laws relied upon by the ld. counsel for the assessee. Hence, in the background of aforesaid discussion and precedent, we set aside the orders of the authorities below and decide the issue in favour of the assessee.”
Respectfully following the aforesaid, we are inclined to adjudicate that the facts in the case of Shri Jatinder Saini is exactly same and it is established that it is situated beyond 8 kms. from the municipality and supported by the certificate issued by Tehsildar. The above certificate was accepted by the other Assessing Officer, reaches the finality. There cannot be two views for the same transaction and accordingly, we allow the grounds raised
by the assessee.
9. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on this 9th day of July, 2025.