PARESHKUMAR RAMESHCHANDRA PATEL,SURAT vs. DCIT, CIRCLE-1(1)(1), SURAT

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ITA 11/SRT/2026Status: DisposedITAT Surat01 September 2026AY 2014-154 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) erred in interpreting the meaning of agricultural land under Section 10(37) and property under Section 56(2) read with Section 2(14). The Tribunal also found fault with the dismissal of the appellant's ground regarding non-reference to the DVO.

What were the facts?

The assessee purchased immovable property for Rs. 11,11,111/- on 05.08.2014. The CIT(A) made an addition of Rs. 29,34,389/- based on the interpretation of agricultural land and property definitions under the Income Tax Act.

What were the issues?

The key issues were the correct interpretation of 'agricultural land' for exemption and 'property' for taxability, and whether the DVO should have been referred for property valuation.

Which sections of the Income-tax Act were involved?

Section 10(37),Section 56(2),Section 2(14),Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

For Appellant: Shri Esmayeel Saherwala, CA
For Respondent: Shri Ashish Kumar, Sr. DR
Hearing: 18.06.2026Pronounced: 01.09.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH, SURAT BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER ITA No.11/SRT/2026 (Assessment Year: 2014-15) Pareshkumar Rameshchandra Patel, DCIT, Circle-1(1)(1), F.P. No.53/2, Plot No.6, 103, Room No.111, J.K. Tower, Near Khatodara Circle, Vs. Aaykar Bhavan, Ring Road, Majura Gate, Surat Surat PAN: ABTPP7414P (Appellant) : (Respondent) Assessee by : Shri Esmayeel Saherwala, CA Respondent by : Shri Ashish Kumar, Sr. DR Date of Hearing : 18.06.2026 Date of Pronouncement : 01.09.2026 O R D E R PER : SUCHITRA KAMBLE, J M: The appeal filed by the assessee is against the order passed by the Learned Commissioner of Income Tax (Appeals) ADDL/JCIT(A)-3, Bengaluru [in short “CIT(A)”] dated 12.11.2025 for the Assessment Year (in short “AY”) 2014- 15.

2.

The assessee has raised the following grounds of appeal: “(1) On the facts of the case and in law, Learned ADDL/JCIT (A)-3 BENGALURU has erred in interpreting meaning of agricultural land U/s.10(37) of the Act and failed to appreciate that: (a) Section 10(37) deals with exemption on sale by the seller, not taxability in hands of buyer.

ITA No.11/SRT/2026 Pareshkumar Rameshchandra Patel (b) The fact that land is "uncultivated" does not automatically make it non-agricultural land. (c) The character of land should be determined as per revenue records and location, not by subsequent use intentions (2) On the facts of the case and in law, Ld. ADDL/JCIT (A)-3 BENGALURU has erred in interpreting meaning of property as defined in explanation to section 56(2) r.w.s.2(14) of the Act and thereby making an addition of Rs.2934389/- (3) On the facts of the case and in law, Ld. ADDL/JCIT (A)-3 BENGALURU has erred in in law by dismissing the appellant's ground regarding non-reference to Department Valuation Officer (DVO) by: (a) Doubting the genuineness of the application dated 01/12/2016 merely due to absence of office stamp (b) Not examining the office records or calling for the assessment records from the AO (c) Concluding that on perusal of the Assessment Order it is observed that no request for valuation of property to valuation officer has been made by appellant. (d) Not giving the appellant an opportunity to prove submission of the application (4) On the facts of the case and in law, Ld. Assessing Officer has erred in applying new provision U/s.56(2)(vii)(b) retrospectively in case of applicant which is introduced to be applicable w.e.f.01.04.2014 (5) The Appellant reserves the right to add, amend, alter, modify, substitute or withdraw any ground(s) on or before conclusion of the appeal. (6) The Appellant prays to quash the addition of Rs.2934389/- made by the Ld. JAO U/s.143(3) of the Act for A.Y.2014-15 and confirmed by CIT(A) in entirety.” 3. The assessee filed return of income showing total income of Rs.39,660/- on 14.11.2014. The case was selected for scrutiny and notice u/s 143(2) of the Income Tax Act, 1961 (in short “the Act”) was issued on 16.09.2015. In response to the statutory notices the assessee filed details. The Assessing Officer (in short “the AO”) observed that the assessee purchased immovable property for a consideration of Rs.11,11,111/- on 05.08.2014. Notice u/s 133(6) of the Act was issued to Sub-Registrar, Mangrol dated 15.07.2016 and requested for copy of Form No.1. The Sub-Registrar vide letter dated

ITA No.11/SRT/2026 Pareshkumar Rameshchandra Patel 19.07.2016 furnished the details thereby assessing the property at Rs.57,79,235/-. The assessee has full share in the said property and the Stamp Valuation Authority had charged stamp duty of Rs.1,98,300/- for the valuation of property at Rs.57,79,235/-. Thus, there is a difference of Rs.46,68,124/- in the value shown by the assessee before the Income Tax Authorities. The show cause notice was issued which was replied by the assessee. The AO made addition of Rs.29,34,389/- under the head “income from other sources”.

4.

Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

5.

The Ld. Authorised Representative (in short “Ld. AR”) for the assessee submitted that the land purchased by the assessee is an agricultural land and thus is a non capital asset as per explanation to section 56(2) of the Act. The assessee has given the copy of population certificate issued by Sarpanch of Palsana gram panchayat as well as the relevant details about the distance of the land purchased from the municipal city. All these details were totally ignored by the AO.

6.

The Ld. Departmental Representative (in the short “Ld. DR”) submitted that the certificate issued by the gram panchayat cannot be the criteria for determining whether the property comes under the agricultural land or not or whether the correct demarcation/calculation of the distance as well as population has been done or not. Therefore, the Ld. AR submitted that the matter may be remanded back for proper verification of the documents. The Ld. DR relied upon the assessment order and the order of the CIT(A).

7.

We have heard both the parties and perused all the relevant materials available on record. The Collector, Stamp Office has confirmed the purchase deed at Rs.57,79,235/- which categorically shows the correct valuation as per the Land Revenue Authorities. The assessee thereby did not give the actual amount mentioned in the document. These documents were not before the AO

ITA No.11/SRT/2026 Pareshkumar Rameshchandra Patel as well as before the CIT(A). Therefore, it will be appropriate to remand back this issue for proper verification of the population as well as the distance and on that basis whether the land is agricultural or not has to be determined. Besides this, the undervaluation given by the assessee has to be verified in consonance with the documents mentioning the actual purchase value of Rs.57,79,235/-. Thus, the matter is remanded back to the file of the AO for proper verification and adjudication as per the Income Tax Act. Needless to say, the assessee be given opportunity of hearing by following principles of natural justice.

8.

In result, the appeal of the assessee is partly allowed for statistical purpose.

Order pronounced in the open court on 01.09.2026

Sd/- Sd/- (B.M. BIYANI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Surat; Dated: 01.09.2026 * Kishore, Sr. P.S. Copy of the Order forwarded to: 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Surat 5. Guard File By order,

Assistant Registrar/Sr.PS/PS ITAT, Surat Bench

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