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Facts
The assessee, an uneducated farmer from a rural area, sold two immovable properties (claimed as rural agricultural land) for Rs. 63,67,500/- but failed to file an Income Tax Return. The AO reopened the case, framed an ex parte assessment, and added the entire sale consideration as long-term capital gains, which was subsequently upheld by the CIT(A). The assessee filed an appeal before the ITAT with a delay of 165 days, citing lack of legal knowledge and inability to participate in prior proceedings.
Held
The Tribunal condoned the delay in filing the appeal, accepting the assessee's claim of illiteracy and rural background as sufficient cause. It restored the issue of long-term capital gains to the Assessing Officer for re-consideration, directing the AO to determine whether the land sold was indeed rural agricultural land and thus not a capital asset under Section 2(14), and to provide the assessee with a due opportunity of hearing.
Key Issues
Whether there was sufficient cause to condone the 165-day delay in filing the appeal and whether the land sold by the assessee qualified as rural agricultural land, exempting the resulting capital gains from taxation.
Sections Cited
250, 148, 142(1), 2(14)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI T.R. SENTHIL KUMAR
The present appeal has been filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals), (hereinafter referred to as “CIT(A)”), National Faceless Appeal Centre (hereinafter referred to as “NFAC”), Delhi dated 15.04.2024 passed under Section 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) and relates to Assessment Year (A.Y.) 2018-19.
M. Bhoi vs. ITO] A.Y. 2018-19 - 2 – 2. Orders of the authorities below reveal that both before the AO & Ld. CIT(A) the assessee remained unrepresented. The AO was in possession of information that the assessee had sold two immovable properties during the year for substantial sums but had not filed any return of income for the impugned year i.e. A.Y. 2018-19. Accordingly, he proceeded to reopen the case of the assesee following the procedure as prescribed under law, but, no response of the assessee was received and accordingly, he assumed jurisdiction to reopen the case of the assessee and, thereafter, framed assessment on the assessee ex parte to the best of his judgment on the basis of information available on record. Noting that the assessee had sold two properties for a consideration of Rs.63,67,500/-, he added the entire amount as income of the assessee under the head ‘long term capital gains’. The assessee though filed an appeal before the Ld. CIT(A), however, in the absence of any representation on behalf of the assessee before him, he upheld the order of the AO.
The present appeal, therefore, has been filed before us against the order passed by the Ld. CIT(A). The registry has marked the appeal to be delayed for filing of 165 days. The statement of facts filed by the assessee before the Ld. CIT(A) in Form No.35 reveals the assessee to have stated that he is an individual engaged in the activity of farming. He alongwith his brother had sold two agricultural lands during the year. They had no other income other than agricultural income and since they M. Bhoi vs. ITO] A.Y. 2018-19 - 3 – were non-filer of return of income living in rural areas and were uneducated, they had no knowledge of the intricacy of law and therefore did not understand the various notices issued u/s.148 & 142(1) of the Act and, therefore, the assessment proceedings remained completely uncomplied with. The Ld. Counsel for the assessee stated that the reasons for non-compliance of proceedings by the assessee before the AO also attributed to the delay in filing of the present appeal before us as also to the non-participation of the assessee in appellate proceedings. He contended that the assessee was uneducated, illiterate and living in rural area and, therefore, being unaware of the intricacy of law and the technology used therein, he was unable to participate both in the assessment proceedings and the First Appellate proceedings and as a consequence, delayed filing of the present appeal before us by 165 days. Ld. Counsel for the assessee pleaded that being a poor farmer with the only source of income being agricultural income, the assessee would be greatly prejudiced against if the delay is not condoned and addition made to his income by the AO of Rs.63,67,500/- confirmed. He pleaded that this would result in great financial distress to the assessee and requested, therefore, for the condonation of delay. Ld. DR vehemently objected to the same.
We have noted the aforestated pleadings of the assessee being illiterate, living in rural area not familiar with tax laws and its intricacies, being mentioned in the Statement of facts filed to M. Bhoi vs. ITO] A.Y. 2018-19 - 4 – the Ld. CIT(A) in Form No.35. We are inclined therefore to take a view that there was sufficient and reasonable cause with the assessee for the delay in filing the present appeal before us. The Ld. DR has been unable to point out any factual infirmity in the pleadings of the assessee that he was an uneducated, illiterate farmer living in a rural area and, therefore, could neither participate in the assessment nor First Appellate proceedings. It is a fact on record that no other source of income has been identified by the AO except capital gain from sale of two immovable properties i.e. land owned by the assessee which he himself admits too, but contends that due to non-participation in the proceedings before the authorities below, he was unable to demonstrate that the capital gains earned by him was not liable to tax since the lands were rural agricultural lands. In view of the same, we consider it to be a fit case to condone the delay of 165 days in filing of present appeal before us, in the interest of justice, accordingly, condone the delay.
Further, as noted above in the facts of the case, the assessee has been held amenable to pay tax on capital gain earned by him on the sale of land. The case of the assessee is that the land is rural agricultural land and thus not a capital asset as defined u/s 2(1$) of the Act. That therefore there was no question of any capital gain accruing to the assessee on the sale of the said asset. Further, we find that in the absence of any assistance to the authorities below, they were unable to arrive at a finding of the nature of the land sold, whether rural agricultural land or not. In the light of the same, we consider it fit to restore the issue back to the file of the AO for re-considering the issue of capital gain earned by the assessee. The AO is directed to give due opportunity of hearing to the assessee before passing the order. The Ld. Counsel for the assessee has given his oral undertaking that the assessee will not abuse the process of law anymore.
In the result, appeal filed by the assessee is allowed for statistical purposes.
This Order pronounced on 20/08/2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 20/08/2025 S. K. SINHA True Copy आदेश क� �ितिल�प अ�े�षत/Copy of the Order forwarded to : अपीलाथ� / The Appellant 1. 2. ��यथ� / The Respondent. संबंिधत आयकर आयु� / Concerned CIT 3. 4. आयकर आयु�(अपील) / The CIT(A)- �वभागीय �ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,