NAGENDRA PRASAD,PATNA vs. ITO WARD -5(3) PATNA, DAK BANGLOW

ITA 362/PAT/2026Status: DisposedITAT Patna29 September 2026AY 2016-179 pages
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What were the facts?

The assessee, Nagendra Prasad, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Patna Bench at Kolkata, challenging the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi for Assessment Year 2016-17. The Assessing Officer (AO) had made additions of Rs. 1,60,19,194/- on account of compensation received for compulsory land acquisition, Rs. 4,70,742/- as undisclosed bank interest, and disallowed Rs. 1,60,000/- under Section 40A(3). The total income was determined at Rs. 1,68,41,566/-. The CIT(A) deleted the Section 40A(3) disallowance and directed verification of interest income, but upheld the addition of Rs. 1,60,19,194/- for failure to provide documentary evidence regarding the applicability of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 (RFCTLARR Act) and the agricultural nature of the land.

What did the Tribunal hold?

The Tribunal noted that the assessee could not provide necessary evidence to the CIT(A) that the land was agricultural in nature, which is crucial for exemption under the RFCTLARR Act. The CIT(A) had observed that the Gazette Notification for the acquisition was dated January 14, 2013, which predates the RFCTLARR Act's applicability (January 1, 2014). The assessee also failed to furnish documentary evidence like land revenue records to prove the agricultural nature of the land. Consequently, the Tribunal was of the view that the order of the CIT(A) on this issue should be set aside. The appeal was restored to the CIT(A) for disposal of the grounds of appeal on merit, after considering the evidence filed before the Tribunal and produced before him. The assessee was to be given a reasonable opportunity of being heard, and Rule 46A of the I.T. Rules, 1962 was to be followed. The AO was to be provided an opportunity of being heard if required. The grounds taken by the assessee in the appeal were partly allowed for statistical purposes.

What were the issues?

1. Whether the compensation received by the assessee for compulsory acquisition of land is exempt from tax under Section 96 of the RFCTLARR Act, 2013, and CBDT Circular No. 36/2016, despite the acquisition proceedings commencing prior to the RFCTLARR Act's effective date and the assessee's failure to provide documentary evidence of the land being agricultural and the acquisition being governed by the RFCTLARR Act? (Mixed law and fact, concerning Section 96 of RFCTLARR Act, 2013, CBDT Circular No. 36/2016, and Section 143(3) of the Income Tax Act, 1961). Assessee's contention: The compensation received is exempt as it pertains to compulsory acquisition of agricultural land under the RFCTLARR Act, 2013, and CBDT Circular No. 36/2016. The claim of deduction under Section 54B was an inadvertent error. The acquisition proceedings, award process, and payment of compensation should be considered holistically, not just the Gazette Notification date. The character of compensation remains exempt irrespective of wrong disclosure in the return. Revenue's contention: The CIT(A) correctly upheld the addition as the assessee failed to furnish documentary evidence demonstrating that the acquisition was governed by the RFCTLARR Act, that the land was agricultural, and that statutory conditions under Section 54B were satisfied. Documents were not filed before the AO or appellate authority.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3),Section 40A(3),Section 54B,Section 96

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PATNA ‘DB’ BENCH AT KOLKATA

Before: SHRI YOGESH KUMAR US & SHRI RAKESH MISHRA

For Appellant: Adv. प्रत्यर्थी के ओर से/

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 2016-17 dated 25.03.2026. ITA No(s). 362/PAT/2026 Assessment Year(s) 2016-17 Nagendra Prasad.

2.

The assessee is in appeal before the Tribunal raising the following grounds of appeal:

"

1.

For that the grounds of appeal hereto a

The order continues below.

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