SURYA DEO SINGH,PATNA vs. INCOME TAX OFFICER, PATNA

Per Sonjoy Sarma, Judicial Member: The present appeal filed by the assessee is directed against the order dated 19.01.2026 passed by the Commissioner of Income Tax (Appeal) [hereinafter referred to as the ‘Ld. CIT(A)] u/s 250 of the Income Tax Act, 1961 (the ‘Act’) for the assessment year 2014-15. 2. Brief facts of the case are that, assessee is an individual who owned a piece of land. During the relevant period, assessee entered into registration development agreement with M/s Agrani Homes Private Limited, Patna. As per the terms of the agreement, the assessee being the land owner was entitled to receive a proportional share in Super Build

I.T.A. No.117/Pat/2026 Surya Deo Singh; AY: 2014-15 Area, to be constructed by the developer. Subsequently, proceedings were initiated u/s 148 of the Act. The assessment was completed u/s 143(3) r.w.s 147 of the Act, wherein the Assessing Officer computed the Long - Term Capital Gain at Rs.1,19,44,003/- by invoking provisions of section 53C of the Act, the value of the land mentioned in the development agreement. During the assessment proceedings, the assessee contended that no capital gain arose as no construction activities had been undertaken and the assessee had not received constructed area as per the terms of the development agreement. However, the Assessing Officer did not accept the contention and proceeded to complete the assessment by making the addition. 3. Dissatisfied with the above order, assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), after considering the submission dismissed the appeal and sustained the addition made by the Assessing Officer. 4. Aggrieved by the above order, assessee is in appeal before this Tribunal. At the time of hearing, the Ld. AR stated that during the intervening period, dispute arose between the assessee and the developer and assessee filed a Civil Suit against the developer in the Court of Civil Judge, Senior Division, Danapur, and the Civil Judge has passed an order dated 09.01.2026 in Title Suit No.140/2023, whereby cancel the development agreement and restore the land to the assessee. Therefore, the development agreement never materialized and no capital gain can said to have been arising. It was further submitted that after the cancel development agreement order could not be placed before the Ld. CIT(A) and the order of the Ld. CIT(A) was passed around the same time. 5. On the other hand, the Ld. DR supported the decision of the authorities below and contended that the order of the Ld. CIT(A) dated

I.T.A. No.117/Pat/2026 Surya Deo Singh; AY: 2014-15 19.01.2026 and Civil Court judgment dated 09.01.2026, which was not brought on record before the Ld. CIT(A). Therefore, the development agreement was executed during the relevant previous year and taxability of the capital gain arise in that year itself. Any subsequent cancellation or dispute may have implication in a different assessment year and appropriate relief if any may be claimed therein, therefore, the additional evidence has no value in instant case. 6. We have heard the rival submission of the parties and perused the material available on record, we notice that assessee had produced before us a new piece of evidence namely, the judgment of the Civil Court dated 09.01.2026, whereby development agreement has been declared cancelled and the land restored to the assessee. This fact goes to the route of the matter, as vary basis of the computation of capital gain is the existence of the development agreement. However, we also note that a document was not examined by the lower authorities and the impact of the cancel of the agreement and taxability of the capital gain has not been verified by the authorities below. It is also not clear whether the assessee has accounted for any gain or loss in the subsequent year of such cancellation. In these circumstances, we are of the view that the matter requires fresh examination at the level of the Assessing Officer. Accordingly, in the interest of justice and fair play, the order of the Ld. CIT(A) is set aside and the matter restored to the Assessing Officer with a direction to examine the issue afresh in the light of Civil Court judgment dated 09.01.2026 and the Assessing Officer shall also verify whether the development agreement has effectively stood cancelled, and he also examine the year of taxability of the capital gain, whether corresponding claim of loss adjustments have been made by the assessee in the subsequent year or not. The assessee is also directed to place all

I.T.A. No.117/Pat/2026 Surya Deo Singh; AY: 2014-15 relevant documents including the Court order and related evidence and cooperate in the remand proceedings. 7. In the result, the appeal of the assessee is allowed for statistical purposes.

Kolkata, the 24th April, 2026.

Sd/- Sd/- [Laxmi Prasad Sahu] [Sonjoy Sarma] Accountant Member Judicial Member Dated: 24.04.2026. DP, PS Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- 5. CIT(DR)

//True copy// By order Assistant Registrar, Kolkata Benches