SHASHIDHAR NAGAM,HYDERABAD vs. ACIT, CIRCLE - 6(1), HYDERABAD

ITA 830/HYD/2026Status: DisposedITAT Hyderabad30 September 2026AY 2022-236 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the CIT(A) had dismissed the assessee's appeal for non-prosecution without deciding the grounds raised on merits. This was considered not in accordance with Section 250(6) of the Act. The Tribunal noted that the AO had assessed the income under the head long-term capital gains and denied the claim of deduction under Section 54. The assessee had explained the sale of 6 flats and purchase of a villa, with the cost of acquisition exceeding the sale consideration. The CIT(A)'s dismissal for non-prosecution meant the grounds were not adjudicated. Therefore, in the interest of justice, the Tribunal allowed the assessee one more opportunity to present their case before the CIT(A). The impugned order of the CIT(A) was set aside, and the matter was remanded for fresh adjudication, subject to the assessee paying Rs. 5,000/- to the ITAT Tax Bar Association, Hyderabad, within one month.

What were the facts?

The assessee, Shashidhar Nagam, filed an appeal against the order of the CIT(A)-NFAC, Delhi, for Assessment Year 2022-2023. The Assessing Officer (AO) denied the assessee's claim for exemption under Section 54 of the Income Tax Act, 1961, on the grounds that the assessee was in the business of real estate and the asset sold was not a capital asset. The assessee contended that the submission regarding real estate business was loosely worded and an inadvertent incorrect statement. The AO assessed the gain from the sale of flats as long-term capital gain. The CIT(A) dismissed the assessee's appeal for non-prosecution, as the assessee did not respond to a notice. The assessee had sold 6 flats and purchased a villa, with the cost of acquisition exceeding the sale consideration.

What were the issues?

1. Whether the CIT(A) erred in sustaining the disallowance made by the AO of Rs.4,60,71,911 by denying the claim of exemption under Section 54 of the Act, solely on the alleged ground that the appellant is stated to be in the business of real estate, and therefore not entitled to claim deduction as the asset sold is not a capital asset? The assessee argued that the submission regarding real estate business was loosely worded, inadvertent, and incorrect, and that the AO had assessed the gain as long-term capital gain, implying it was a capital asset. The revenue did not present specific arguments on this point in the Tribunal proceedings. 2. Whether the CIT(A) erred in dismissing the appeal for non-prosecution without deciding the grounds on merits, particularly concerning the claim under Section 54 of the Act? The assessee argued that the grounds were not decided on merits and sought an opportunity to present the case before the CIT(A). The revenue did not seriously object to a remand for fresh adjudication.

Which sections of the Income-tax Act were involved?

Section 54,Section 250(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, HYDERABAD

Before: SHRI VIJAY PAL RAO & SHRI MANJUNATHA G.

Pronounced: 30.09.2026

PER VIJAY PAL RAO, VICE PRESIDENT:

This appeal by the Assessee is directed against the Order dated 19.01.2026 of the learned CIT(A)-National Faceless Appeal Centre [in short "NFAC"], Delhi, for the Assessment Year 2022-2023. 2. The Assessee has raised the following grounds of appeal:

1) “On the facts and in the circumstances of the case, the order of the ld. CIT(A) is erroneous both on facts and in law and is passed in gross violation

The order continues below.

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