MUJIBAR RAHAMAN SEKH,SOUTH TWENTY FOUR PGS. vs. I.T.O., WARD - 25(1), KOLKATA

ITA 2544/KOL/2026Status: DisposedITAT Kolkata29 September 2026AY 2023-202410 pages
AI SummaryRemanded

What were the facts?

The assessee, Mujibar Rahaman Sekh, filed an appeal against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi for Assessment Year 2023-24. The assessee had purchased four contiguous plots of land in November 2024 and sold the developed property in December 2024, resulting in short-term capital gains. The Assessing Officer (AO) made additions of Rs. 4,99,952/- under section 56(2)(x) of the Income Tax Act, 1961, due to the difference between the actual purchase consideration and the stamp duty value, and Rs. 28,44,088/- towards short-term capital gain by adopting the stamp duty value at the time of sale. The AO also disallowed expenditure claimed under Chapter VI-A and as deductible expenditure under section 37(1). The CIT(A) upheld these additions and disallowances. The assessee contended that the land was rural agricultural land, not a capital asset, and therefore, sections 50C and 56(2)(x) were not applicable. The assessee also argued that the stamp duty valuation was unreasonably high and that the AO should have referred the matter to the Departmental Valuation Officer. The assessee further claimed disallowance of transfer-related expenditure and Chapter VI-A deductions.

What did the Tribunal hold?

The Tribunal noted that the assessee claimed the land was agricultural, which would exempt it from capital gains tax and potentially render Sections 50C and 56(2)(x) inapplicable. However, the required documents to substantiate this claim were not filed before the Assessing Officer (AO) or the Learned Commissioner of Income Tax (Appeals) [CIT(A)]. The Tribunal observed that while the assessee submitted a Gram Panchayat certificate and deeds claiming the land as 'shali' (agricultural), the revenue pointed out that another deed mentioned the land was proposed for industrial use. Given that these documents were filed before the Tribunal and went to the root of the matter, the Tribunal deemed it necessary for the AO to examine them. Consequently, the Tribunal set aside both the order of the AO and the CIT(A) and remanded the issue back to the AO for de novo assessment. The assessee was directed to file evidence for the claim that the land sold was agricultural, and the AO was instructed to examine this evidence, considering that some development appeared to have been carried out by the assessee. The AO was also to recompute the income after providing the assessee an opportunity of being heard. The grounds of appeal were partly allowed for statistical purposes.

What were the issues?

1. Whether the impugned Appellate Order is without jurisdiction, illegal, invalid, bad-in-law and in violation of Principles of Natural Justice (Section 250 of the Act)? 2. Whether the Learned First Appellate Authority erred in confirming the addition of Rs. 28,44,088/- towards Short-Term Capital Gain by invoking Section 50C of the Act, when the land sold was 'rural agricultural land' and not a capital asset under Section 2(14) of the Act? 3. Whether the Learned First Appellate Authority erred in confirming the addition of Rs. 28,44,088/- towards Short-Term Capital Gain by adopting the stamp duty value as the deemed full value of consideration in substitution of the actual sale consideration? 4. Whether the Learned First Appellate Authority erred in confirming the addition of Rs. 4,99,952/- made under Section 56(2)(x) of the Act, as the provisions do not apply to the purchase of 'rural agricultural land'? 5. Whether the Learned First Appellate Authority erred in confirming the addition of Rs. 4,99,952/- made under Section 56(2)(x) of the Act merely on the basis of stamp duty valuation, without appreciating that the actual purchase consideration represented the fair market value? 6. Whether the Learned First Appellate Authority erred in confirming the additions without the Assessing Officer referring the valuation to the Departmental Valuation Officer under Section 50C(2) of the Act, in view of the judgment in Sunil Kumar Agarwal v. CIT? 7. Whether the Learned First Appellate Authority erred in confirming the disallowance of Rs. 12,44,000/- out of expenditure claimed in connection with the transfer of property? 8. Whether the Learned First Appellate Authority erred in confirming the disallowance of Rs. 1,12,974/- under Chapter VI-A of the Act? 9. Whether the Learned First Appellate Authority erred in confirming the disallowance of Rs. 4,200/- claimed as deductible expenditure under Section 37(1) of the Act? Assessee's Contentions: - The land sold was rural agricultural land, not a capital asset, making Sections 50C and 56(2)(x) inapplicable. - The stamp duty valuation was unreasonably high and the AO should have referred the matter to the Departmental Valuation Officer under Section 50C(2). - The actual purchase consideration represented the fair market value. - Relied on ITAT Patna Bench decision in Abhay Kumar Shroff vs. Income-tax Officer. - Submitted a Gram Panchayat certificate to support the agricultural land claim. Revenue's Contentions: - The sale deed on page 33 mentions the land was proposed for industrial use, contradicting the agricultural land claim. - The sale deed dated 11.11.2022 was not filed before the AO or CIT(A). - These documents need to be examined by the AO.

Which sections of the Income-tax Act were involved?

Section 50C,Section 56(2)(x),Section 2(14),Section 37(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, KOLKATA ‘SMC’ BENCH AT KOLKATA

Before: SHRI YOGESH KUMAR US & SHRI RAKESH MISHRA

PER RAKESH MISHRA, ACCOUNTANT MEMBER:

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 [the 'Act'] for AY 2023-24 dated 07.07.2026. ITA No(s). 2544/KOL/2026 Assessment Year(s) 2023-24 Mujibar Rahaman Sekh.

2.

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