RATILAL PATEL,ANKLESHWAR vs. ITO WARD 2(2), BHARUCH

ITA 637/SRT/2025Status: DisposedITAT Surat09 October 2026AY 2015-166 pages
AI SummaryRemanded

What were the facts?

The assessee, Ratilal Patel, filed his return of income for Assessment Year 2015-16 declaring an income of Rs. 2,48,950. The case was selected for scrutiny. The Assessing Officer (AO) observed that the assessee sold two lands, Survey No. 235 and 270, in village Jitali, Ankleshwar, for sale considerations of Rs. 2,19,37,600 and Rs. 90,00,000 respectively. The assessee had not offered income from these sales. The AO treated these lands as non-agricultural and made an addition to the assessee's income. The Commissioner of Income-Tax (Appeals)-NFAC upheld the AO's order. The assessee is aggrieved by the order of the Ld. CIT(A) and has filed this appeal before the ITAT.

What did the Tribunal hold?

The Tribunal noted that the assessee's grounds of appeal primarily concern the classification of the land as agricultural or non-agricultural and the consequent denial of deduction under Section 54B. The assessee's argument hinges on the fact that the land should have been treated as agricultural, and if it were treated as non-agricultural, the benefit of Section 54B should have been allowed. The Tribunal observed that the Ld. NFAC's order seems to have relied on a statement made by the assessee regarding the allowance of deduction u/s 54B if the land was treated as non-agricultural. The Tribunal found this reasoning to be contrary to the rule of law, as assessment should be based on statutory provisions and facts, not on such conditional statements. The Tribunal also noted the reliance on the Goetz (India) Ltd. case by the Ld. NFAC. The Tribunal decided to set aside the order of the Ld. CIT(A) and restore the issue to the file of the Ld. AO for fresh adjudication after considering the nature of the land and the applicability of Section 54B. The Tribunal directed the AO to decide the issue afresh after providing an opportunity of being heard to the assessee.

What were the issues?

1. Whether the Ld. NFAC erred in holding the agricultural land as non-agricultural land and confirming the addition made by the AO, thereby assessing the returned income of Rs. 2,48,950 to Rs. 30,18,37,89? 2. Whether the Ld. NFAC erred in confirming the addition by treating the land as non-agricultural, stating that the appellant himself had stated that if the AO treated the land as non-agricultural, deduction u/s 54B should be allowed, which is contrary to the rule of law? 3. Whether the Ld. NFAC erred in invoking the decision of the Supreme Court in the case of Goetz (India) Ltd. 284 ITR 323 to deny the benefit of Section 54B of the Act? Assessee's Contentions: The assessee argued that the Ld. NFAC erred in treating the land as non-agricultural and confirming the AO's addition. The assessee contended that the Ld. NFAC's reasoning, based on the assessee's statement regarding Section 54B deduction, was contrary to the rule of law, as income must be assessed according to statutory provisions applicable to the facts. The assessee also argued that the Ld. NFAC wrongly invoked the decision of Goetz (India) Ltd. to deny the benefit of Section 54B. Revenue's Contentions: The judgment does not record any specific contentions made by the revenue.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 54B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT BENCH, SURAT

Before: MS. SUCHITRA KAMBLE & SHRI B.M. BIYANI

For Appellant: Shri Anil K. Shah, Advocate
For Respondent: Shri Ashish Kumar, Sr. DR
Hearing: 06.10.2026Pronounced: 09.10.2026

Per B.M. Biyani, A.M.: Feeling aggrieved by the order of first appeal dated 02.04.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“Ld. CIT(A)”], which in turn arises out of the assessment-order dated 28.12.2017 passed by learned ITO, Ward-2(2), Bharuch [“Ld. AO”] u/s 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2015-16, the assessee has filed this appeal on following grounds: Ratilal Patel

“1. Ld. NFAC (APPEAL) is erred to hold agricultural land as non agricultural land and confirmed the order of AO and thereby erred to a

The order continues below.

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