LAXMINARAYAN,INDORE vs. THE ITO-3(3), INDORE, INDORE

ITA 8/IND/2025Status: DisposedITAT Indore13 July 2026AY 2011-1234 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal allowed grounds 5 and 6 raised by the assessee on merits and deleted the addition sustained by the CIT(A). The Tribunal found that the agricultural land situated at Gram Talawali Chanda, admeasuring 4.048 Hectare (10 Acres), was used for agriculture purposes for many years and during the relevant financial year. The sale was agreed upon in FY 2010-11, with registries executed in two parts on 30-09-2010 and 31-03-2011 due to payment issues. The Tribunal held that the land was sold on 30-09-2010, at the time of the first registry, and was considered agriculture land only till the date of registry, even though it was diverted to non-agriculture purposes prior to the second registry at the buyer's request. The assessee continued agriculture activities until the date of registry. The Tribunal noted that the assessee offered agricultural income of Rs. 8,61,550/- which was accepted by the Assessing Officer. Consequently, the addition sustained by the CIT(A) was deleted. As the appeal was allowed on merit, all other issues, including technical grounds of reopening and other grounds on merits, were rendered academic and infructuous. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The assessee, Laxminarayan, filed an appeal against the order of the CIT(A) dated 07.11.2024, which upheld the assessment order dated 29/12/2018 passed under section 147/143(3) for Assessment Year 2011-12. The reopening of assessment was based on information from the Dy. Director of Income Tax (Inv.)-2, Indore, indicating that the assessee sold agricultural land in FY 2010-11, earning capital gains not offered for taxation. Further, the assessee made investments in immovable property of Rs. 2,09,06,150/- with unexplained sources for the balance amount after bank withdrawals of Rs. 1,48,03,000/-. The assessee had not filed a return for AY 2011-12, and a notice under section 148 was issued on 28.03.2018. The assessee later filed a return on 04.12.2018. The Assessing Officer calculated total cash investment for land procurement at Rs. 2,33,37,650/-, and after accounting for cash withdrawals of Rs. 1,41,00,000/-, treated the balance of Rs. 92,37,650/- as unexplained investment under section 69.

What were the issues?

1. Whether the reopening of the assessee's case under section 147 was legal and valid, considering the absence of tangible material and a live link to income escaping assessment, and whether the CIT(A) erred in upholding it (mixed law and fact). 2. Whether the CIT(A) erred in maintaining the legality of reopening based on a borrowed opinion without independent application of mind (mixed law and fact). 3. Whether the CIT(A) erred in maintaining the legality of reopening when the assessee's only income source was agricultural activities and rural agricultural lands were sold, as per Notification No. 9447 dated 06-01-1994 (mixed law and fact). 4. Whether the CIT(A) erred in sustaining the addition of Rs. 66,56,650/- out of Rs. 92,37,650/- as unexplained investment under section 69, without appreciating the facts and submissions (mixed law and fact). 5. Whether the CIT(A) erred in taxing long-term capital gains on the sale of rural agricultural lands as taxable income, despite them being rural agricultural lands as per Notification No 9447 dated 06-01-1994 (mixed law and fact). 6. Whether the CIT(A) erred in adopting the registrar's guideline value under section 50C without referring to the Departmental Valuation Officer and ignoring that sale agreements were executed in prior years (mixed law and fact). 7. Whether the CIT(A) erred in arbitrarily adopting the Fair Market Value as on 1-4-1981 without using the Reverse Indexation Method (mixed law and fact). 8. Whether the CIT(A) erred in not allowing deduction under section 54F for a residential house purchased/constructed (mixed law and fact). Assessee's Contentions: The reopening was illegal due to lack of tangible material and independent application of mind. The lands sold were rural agricultural lands, not capital assets. Additions under section 69 and capital gains tax were wrongly sustained. Section 50C was misapplied, and FMV was wrongly determined. Deduction under section 54F was wrongly denied. Revenue's Contentions: Not recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3),Section 2(14),Section 69,Section 50C,Section 54F

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, Indore Bench, Indore

Before: Dr. Arjun Lal Saini & Paresh M. Joshi

For Appellant: CA. Sh. S. N. Agarwal
Hearing: 10/06/2026Pronounced: 13/07/2026

Per, Bench:

The present appeal has been filed by the assessee, against the order passed by the Learned Commissioner of Income Tax (Appeal), National Faceless Appeal, Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)’”] dated 07.11.2024, which in turn arises out of an assessment order dated 29/12/2018, passed u/s 147/143(3) of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2011-12. 2. Grievances raised by the assessee,

The order continues below.

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