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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A” : HYDERABAD
Before: SMT. P. MADHAVI DEVI & SHRI A. MOHAN ALANKAMONY
PER Smt. P. MADHAVI DEVI, J.M. : This is assessee’s appeal for the AY.2011-12, directed against the order of the Commissioner of Income Tax (Appeals)-1, Hyderabad, dated 03-11-2016.
Brief facts of the case are that the assessee, an individual, filed her return of income for the AY.2011-12 on 24-08-2011, declaring a total income of Rs.1,87,900/-. The same was processed u/s.143(1) of the Income Tax Act [Act] on 02-03-2012. Subsequently, the case was selected for scrutiny under CASS and during the assessment proceedings u/s.143(3) of the Act, the AO observed that as per AIR information, the assessee has sold immoveable property valued at Rs.1,06,80,000/- on 17-06-2010. Therefore, the AO required the assessee to furnish information with regard to the immoveable property sold by her. The assessee furnished copies of purchase and sale deeds of the property sold. From the sale deeds, the AO observed that the assessee has transferred land admeasuring 1335.00 Sq. Meters in Nagpur Municipal Corporation in favour of M/s.Swami Samarth Infrastructure Private Limited for a consideration of Rs.51,00,000/- on 17-06-2010, whereas the market value of the property was Rs.1,06,80,000/-. Further, he observed that the assessee had purchased the property for a consideration of Rs.90,000/- only on 19-07-2005.
2(a) Therefore, the AO was of the opinion that though the gain from the transfer is chargeable to income tax under the head ‘Long Term Capital Gain’, the assessee has not declared any capital gain nor he has furnished any computation of capital gain as requested in the notice issued u/s.142(1) of the Act. The AO, therefore issued a notice for hearing of the case on 10-02-2014 and called for assessee’s objections, if any, to the computation of Long Term Capital Gain by him at Rs.1,04,63,238/-. However, there was no response from the assessee nor was any explanation filed by him. Therefore, the AO considered the full value of consideration as Rs.1,06,80,000/- being the market value of the property and after allowing indexed cost of acquisition of Rs.2,16,762/-, he arrived at the Long Term Capital Gain of Rs.1,04,63,238/-.
Aggrieved, the assessee filed an appeal before the CIT(A), contending that the transaction of sale of property, is of agricultural land and therefore, capital gain therefrom is not taxable. The assessee also submitted that the full consideration received by her is only Rs.51,00,000/- and not Rs.1,06,80,000/-. The CIT(A), however, did not accept the contention of assessee on the ground that the assessee has not offered any agricultural income in the previous years. He also observed that at the time of sale in the month of June, 2010, the area comes within the jurisdiction of Nagpur Municipal Corporation and that the property has been sold to a builder, and therefore, it cannot be said to be agricultural land. Thus, the CIT(A) confirmed the order of the AO and the assessee is in second appeal before the Tribunal by raising the following Grounds: “
1. In law, on the facts and in the circumstances of the case, me Ld. CIT(A) has grossly erred in not considering the appellant's submissions made before him as such the order is against principle of natural justice, bad in law and deserves to be cancelled.
2. In law, on the facts and in the circumstances of the case, the Ld. CIT(A) erred in upholding the addition made by the AO of Rs. 1,04,63,238/- towards long term capital gains u/s 50C of the Act.
3. The Ld.CIT(A) erred in upholding the addition of AO without appreciating the fact that the AO has not followed the procedure laid down u/s.50C of the Act.
4. The Ld. CIT(A) ought to have appreciated the fact that the property sold by the assessee is an agricultural land as per section 2(14)(iii) of the act.
5. The Ld. CIT(A) ought to have appreciated the fact that the land sold by the assessee being agricultural in nature cannot be considered to be a capital asset within the meaning of sec. 2(14) of the act., and accordingly no capital gain can be computed on the sale consideration received by the assessee on sale of such land.
6. The Ld. CIT(A) ought to have appreciated the fact the non disclosure of exempt income does not tantamount to withdrawal of exemption.
7. Without prejudice to the above, in law, on facts and circumstances of the case the Ld.CIT(A) erred in confirming the action of the AO towards enhancing the value of land from Rs. 51,00,000/- to Rs. 1,06,80,000/-.
The Ld. CIT(A) ought to have appreciated the fact that merely because for the purpose of stamp duty, property is valued at higher cost, it cannot be said that assesses has made more payment than what is stated in the sale deed.
The Ld. CIT(A) ought to have appreciated the fact that the AO has no evidence on record that the consideration over and above than what has been recorded in the sale deed has been received by the assessee and in the absence of the same, no addition can be made by estimating and substituting the market value.
The Ld.CIT(A) ought to have reduced from the sale consideration, the index cost of acquisition of the fair market value of the land as on 01.04.1981 for determining the capital gain.
The assessee craves space to add, alter, amend any ground or submission made before or at the time of proceedings before the ITAT”.
The case is taken up for hearing on 20-08-2020 through video conferencing and both the parties were heard.
Ld.Counsel for the assessee reiterated that the land sold by the assessee is agricultural land and the details of the same could not be presented before the AO as the assessee did not appear before the AO. He submitted that though the objections were raised before the CIT(A), the CIT(A) has not considered the said contentions of the assessee in a proper perspective and therefore prayed for remanding the issue to the file of AO, so that the assessee can file her objections to the computation of capital gain and also the adoption of the market value u/s. 50C of the Act for computation of capital gain.
Ld.DR was also heard, who defended the orders of the authorities below.
Having regard to the rival contentions and material on record, we find that there was no representation of assessee before the assessing authority and before the CIT(A), the assessee pleaded that the land sold is agricultural land. However, the assessee has not produced any evidence before the CIT(A) to prove the exact nature of the agricultural land and also has not raised any objection as to why the sale consideration should not be adopted at Rs.1,04,63,238/-. Since the assessee pleaded that proper opportunity was not given to the assessee and only in the interest of justice to give an opportunity to the assessee to furnish all the relevant material in support of her claim, we deem it fit and proper to set aside the order of the CIT(A) and remand the issue to the file of AO for Denovo consideration in accordance with law. Needless to mention that the assessee shall be given a fair opportunity of hearing and shall also be permitted to furnish relevant material to prove her case.