MOHAMMED JUNED SIDDIQUI,LUCKNOW vs. DCIT/ACIT-1, LUCKNOW
Income Tax Appellate Tribunal, LUCKNOW ‘A’ BENCH, LUCKNOW
Before: SH. SUDHANSHU SRIVASTAVA & SH. NIKHIL CHOUDHARYA.Y. 2016-17
PER NIKHIL CHOUDHARY, A.M.:
This is an appeal filed by the assessee against the order of the ld. CIT(A)-3,
Lucknow under section 250 of the Income Tax Act, 1961 on 20.11.2024, dismissing the appeals of the assessee against the order of the ld. AO dated 30.12.2018, passed under section 143(3). The grounds of appeal in both the appeals are as under: -
“1. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad in law and deserves to be quashed being illegal.
2. Because on the facts and in the circumstances of the case the order of Ld. CIT(A) is bad Ld. CIT(A) confirmed the addition of Rs.11,38,70,742/- under the head Capital
Gain, which was exempt u/s 10(37) of the income tax Act, 1961 and not allowing the benefit of provision of RFCTLARR Act, 2013. 3. Because on the facts and in the circumstances of the case the Ld. CIT(A) has confirmed the addition of Rs. 11,38,70,742/- only on the basis of roving enquiries without providing an opportunity of being heard.
4. Because without considering the facts and circumstances of the case the Ld. CIT(A) has confirmed the addition of 6,98,27,344/- under the head Capital Gains being amount
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Mohammed Juned Siddiqui received by the assessee on behalf of Shri Ram Adhar as POA holder which was subsequently given to him.
5. Because without considering the facts and circumstances of the case the Ld. CIT(A) has confirmed the addition of 6,98,27,344/- only on the basis of statement of third party without providing access to cross verification and only on the basis of assumptions and surmises.
6. Because without considering the facts and circumstances of the case, the date of hearing was fixed on the day of Diwali, 2024 and due to which the counsel could not attend the hearing and the appeal of the assessee was dismissed.
7. Because on the facts and in the circumstance of the case, the order of Assessment has been passed in absolute violation of the principles of Natural Justice, without providing adequate opportunity of being heard and therefore deserves to be declared a nullity.
8. The appellant craves for leave to add, modify, amend or delete any other and further grounds of appeal with permission.”
The facts of the case are, that during the year under consideration, the assessee who is a proprietor of M/s M.J. Advertiser, M/s J.S. Poultry Farm and M/s M.J. Motor, made an addition of Rs.11,41,23,338/- in his Capital account. The ld. AO noticed, that sundry creditors of Rs.4,00,25,766/- were outstanding on 31.03.2016 and that exempt income of Rs. 5,60,500/- (being agricultural income), had also been disclosed. Accordingly, the assessee was required to explain the sundry creditors of Rs. 4,00,25,766/-, by furnishing supporting evidences like names and complete postal addresses of the sundry creditors, copies of their ledger accounts, nature of these liabilities and the material/services purchased from them. The assessee was also required to file a copy of his capital account and to substantiate the sources of additions made to the same during the year. In response, the assessee filed the details of sundry creditors along with ledger accounts. It was submitted, with regard to an amount of Rs.3,23,42,062/- which appeared in the name of Sh. Mohd. Arfee Siddiqui, that during the year, the Uttar Pradesh Power Transmission Corporation Limited had compulsorily acquired land for installing a sub-station and the cheque had been received in the name of the assessee. But some area of ownership of the said land was that of Mohd Arfee Siddiqui, which had been shown in sundry creditors in the Income Tax Return, although it was not sundry creditors of the trade. It was submitted that of A.Y. 2016-17
Mohammed Juned Siddiqui the total receipt on account of compulsory acquisition of property of Rs.2.1385
Hectares amounting to Rs.21,50,00,000/-, the share of the assessee was Rs.11,36,57,938/-, (for 1.135 Hectares) that of Mohd Arfee Siddiqui was Rs.4,23,42,062/- (for .312 Hectares) and Rs.5,90,00,000/- was that of Sh. Ram Adhar
(for an area of .696 Hectares). This was also stated to be the major source for the amount transferred to the capital account, besides a receipt of Rs.4,65,400/- from LIC.
It was further submitted, that since the amount had been received as compensation for compulsory acquisition of agricultural land, as per section 10(37) of the Act, it was not a part of total income and was therefore exempt from tax. The assessee also produced evidences in support of the fact of agricultural produce and the location of the land.
Upon receipt of these replies, notice under section 133(6) was issued to the Executive
Engineer UPPTCL, calling for details of land owners whose lands had been acquired during the financial year 2015-16 in respect of Mohammadpur Mazra (Pargana
Mohan) Tehsil. In response, the necessary details were submitted. On perusal of the sale agreement registered on 17.12.2015, the ld. AO noted that in the deed it had been stated, that the lands had been converted into non-agricultural land and that the sellers were selling their non-agricultural lands without any objection, without any pressure, of their will, on the rate fixed by the committee under the Chairmanship of the District
Magistrate, Lucknow and as approved by the Commissioner, Lucknow Zone for a consideration of Rs.21,50,00,000/-. The ld. AO also considered the submission of the assessee, that the capital gains on land was exempt from tax under section 10(37) of the Act and also as per section 96 of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Re-settlement Act, 2013. However, he noted that from the affidavit dated 13.01.2015 of the assessee, it was clear that the land had been converted into non-agricultural land by the assessee on 4.04.2012 and the Khasra
& Khatauni attached with the affidavit, testified to the fact that there were no agricultural activities being carried out on the said land. The ld. AO also noted that the land was situated within eight kilometers from the limit of Lucknow Nagar Nigam
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Mohammed Juned Siddiqui
(arial distance) and therefore, it was not agricultural land and under the definition of capital assets, by virtue of the provisions of section 2(14)(b)(iii) of the Act, it was a capital asset. Thus, the benefit of section 10(37) was not available to the assessee. The ld. AO further noted, that the land had not been acquired under the Right to Fair
Compensation and Transparency in the Land Acquisition, Rehabilitation and Re- settlement Act, 2013. Rather, it was a direct sale / purchase agreement between a public sector undertaking and the District Administration was only there to decide the rate as the representative of the State Government, as the PSU could not purchase directly without rate consent from the District Administration. The ld. AO further noted that the stamp duty of Rs.1,07,50,000/- had been paid by M/s UPPTCL whereas for the purposes of any acquisition under the RFCTLAR&R Act, 2013, no stamp duty was payable. Therefore, in the opinion of the ld. AO, it was clear that this was not an acquisition under the RFCTLAR&R Act, 2013, as claimed by the assessee. Furthermore, the ld. AO noted, that a consolidated sale consideration was paid, without any bifurcation amongst individual co-owners. That sale consideration should therefore, have been apportioned between the co-owners in the ratio of their land holdings.
Therefore, the shares as submitted by the assessee, were found to be inaccurate and the share of Sh. Ram Adhar ought to have been Rs.6,98,27,344/- as per his land holdings, instead of Rs. 5,90,00,000/-, which the assessee claimed to have paid to him.
The assessee was therefore required to explain whether the sale consideration received for the other two persons had been transferred to them. In response, he filed a statement in which he claimed that a sum of Rs.1 Crore had been paid to Mohd Arfee
Siddiqui on 26.02.2016 and Rs.5,90,00,000/- had been paid to Sh. Ram Adhar. On calling for specific information in respect of the amounts paid to the co-owners, the assessee filed a bank account statement and ledger account of the two parties, in which he claimed to have made payments to Sh. Ram Adhar, on various dates through bearer cheques, but perusal of the bank account showed self-withdrawal, which were claimed to have been paid to Sh. Ram Adhar. The ld. AO obtained copies of these self-drawn
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Mohammed Juned Siddiqui cheques and found that on none of these cheques had Sh. Ram Adhar signed at the back. He, therefore, required the assessee to explain the same. In response, the assessee submitted that he had tried giving a cheque to Sh. Ram Adhar, but the said person had denied to take cheque for their compensation and therefore, the cash payment had been made to him after withdrawing the same from the assessee’s bank.
The ld. AO noted the contradiction with an earlier statement, in which cheque / DD number had been indicated. The ld. AO also noted from local enquiries at the site in question, that Sh. Ram Adhar had expired in October, 2018. Summons under section 131(1) were thereafter issued to his elder son and legal heir, Sh. Arun Kumar Rawat.
While Sh. Arun Kumar Rawat confirmed the death of his father on 12.10.2018, he had no knowledge with regard to the ownership of land in question by his late father or about any sale consideration received against sale such land to the U.P. Power
Corporation. It was submitted that the family had had to borrow funds as well as sell their ancestral land at Deva, Barabanki to manage funds for the treatment of his father and no such money had been received by his father in the last few years, as per his knowledge. He also furnished copies of bank accounts held by his father at Indian
Overseas Bank and at Gram Bank, Mati, Deva, which did not show any substantial sums credited to these accounts during the period under consideration. After obtaining this information, the assessee was required to explain these contradictions in his statement, but the assessee did not furnish any reply other than to state that if no payment had been made to Sh. Ram Adhar, he could pursue or claim the same from UPPTCL. Thus, from this entire sequence of events, the ld. AO deduced that by virtue of a power of attorney obtained from the late Sh. Ram Adhar, the assessee had effectively acquired the rights to the property in question and thereafter enjoyed the full benefit from the said property, by retaining the sale consideration received from UPPTCL purportedly on behalf of Sh. Ram Adhar. The ld. AO held that the rights acquired by assessee in such manner through power of attorney, would have been considered, ‘transfer’ within the meaning of section 2(47)(vi) of the Act. Therefore,
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Mohammed Juned Siddiqui since the circumstances indicated that he had retained the share that would normally have been payable to Sh. Ram Adhar, as per his share of the consolidated sale consideration, it was clear that the consideration in respect of such property should be taxed in the hands of assessee as capital gains. Upon being asked to show cause as to why the said sum should not be taxed in his hands, the assessee kept insisting that he had paid a sum of Rs.5,90,00,000/- to Shri Ram Adhar. The ld. AO, thereafter, noted that the compensation received by the assessee was liable to be taxed in his hands as capital gains and since no details had been shown with regard to the cost of acquisition, whether held in his own name or in the name of Sh. Ram Adhar, the cost of acquisition was, therefore, taken to be nil for the purposes of computation of capital gain. The capital gain was worked at Rs.18,36,98,086/- which was brought to tax in the hands of the assessee.
3. Aggrieved with the said assessment order, the assessee filed the appeal before the ld. CIT(A). The ld. CIT(A) noted that she had given eleven opportunities to the assessee to make compliance during the course of appeal. However, the assessee did not respond to any of these opportunities. The first six notices were not complied with and thereafter, the assessee kept on seeking adjournments. Therefore, the ld. CIT(A) held that the assessee was not interested in pursuing this appeal. Relying upon the judgments of the Hon’ble Supreme Court in the case of Titaghur Paper Mills Co. Ltd vs
State of Orissa and Pinaki Sen Gupta vs. State of Orissa (1983) 142 ITR 663 (SC), the case of Vipul Logistic and Warehousing (P.) Ltd., vs. ITO (ITA No.5454/Del/2010 for the A.Y. 2006-07) (Delhi ITAT), the Hon’ble Delhi High Court in the case of CIT vs. Gold
Leaf Capital Corporation (ITA No.798/2009), Hon’ble High Court of Mumbai in the case of Kemi Paul vs. Union of India, Central Excise Appeal No. 62 of 2009 and the Hon’ble
Madhya Pradesh High Court in the case of Tukojirao Holkar vs. Commissioner Of Wealth-Tax (223) ITR 480 (M.P.), she did not deem it necessary to give any further opportunity to the assessee to represent his case and therefore she decided to dispose
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Mohammed Juned Siddiqui it on the basis of information available with regard to the issues. She went into the findings of fact that had been brought on record by the ld. AO and noted that the assessee had not given any evidence to controvert the same with cogent evidence.
Therefore, she dismissed the appeals of the assessee.
4. The assessee is aggrieved with this dismissal of his appeal and has accordingly come in appeal before us. Sh. Samrat Chandra, C.A. (hereinafter referred to as the ld.
AR) filed an affidavit of the assessee dated 22.07.2025 accompanied by a number of medical certificates and reports. In the said affidavit, it was submitted that during the relevant period i.e. A.Y. 2016-17, he was unwell and suffering from Cardiac illness due to which he was unable to attend to the proceedings and respond to the notices issued.
It was further submitted that he was annexing the medical certificates issued by Dr.
Satya Prakash of Eden Hospital dated 11.10.2024 and earlier medical bills, prescriptions, diagnostic reports etc., to prove the same. It was submitted that due to his prolonged illness, he was advised to take bedrest due to which he could not pursue the matter before the ld. CIT(A) and the failure to make compliance was due to genuine health reasons beyond his control. Sh. Samrat Chandra submitted that due to the illness of his client, proper representation could not be made before the ld. CIT(A). He, therefore, prayed for an opportunity for the matter to be restored to the file of the ld.
CIT(A) so that they could furnish the necessary evidences and arguments to demonstrate that the tax that had been levied upon him was unjust and unwarranted.
He undertook to ensure compliance in any proceeding before the ld. CIT(A) that may be ordered by the Tribunal.
5. On the other hand, Sh. R.K. Agarwal, CIT DR (hereinafter referred to as the ld.
CIT DR) submitted that the ld. AO had given a detailed finding of fact, which the assessee had not rebutted with any cogent arguments or evidence. Therefore, unless the assessee could bring materials to show that he had the evidences to rebut the said conclusions drawn by the ld. AO, the additions made by the ld. AO should be confirmed.
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Mohammed Juned Siddiqui
We have duly considered the facts and circumstances of the case. The issue before us is, whether in view of the non-compliance by the assessee before the ld. CIT(A) due to his illness, whether while deciding the issue, the ld. CIT(A) had occasion to appreciate and address all the issues that have been raised by the assessee in his various grounds of appeal. Ongoing through the grounds of appeal filed by the assessee, it is observed that several questions of law have been raised in the said grounds of appeal, including the exceeding of juri iction by the ld. AO as laid down in limited scrutiny matters, making of additions without providing right of cross examination to the assessee, denial of the benefit of the provisions of the RFCTLARR Act, 2013 and improper application of section 2(47) of the Income Tax Act read with section 53A of the Transfer of Property Act. It appears that many of these grounds have been dismissed by the ld. CIT(A), only for want of compliance and submissions by the assessee during the course of assessment proceedings. Thus, it is clear that the ld. CIT(A) has not had occasion to consider any arguments that the assessee may have had in support of his contentions. While it is true that the ld. CIT(A) has allowed a number of opportunities to the assessee, the medical certificate by the Doctor and the medical reports attached with the said certificate indicate that the assessee was not keeping good health during the course of appeal proceedings. Therefore, there do appear reasons that would have inhibited his ability to make effective representation before the ld. CIT(A). After considering the same, we deem it necessary in the interest of justice, that the matter should be restored back to the file of the ld. CIT(A), for a decision on the various grounds raised by the assessee, after giving the due opportunity to make compliance. We would also make it clear to the assessee, as he has specifically sought this opportunity, he is under obligation to make due compliance before the ld. CIT(A) and absence to do so would justify in coming to a conclusion, that he did not have any materials to refute the findings of the ld. AO. Accordingly, as all issues stand reverted back to the file of the ld. CIT(A) for a fresh decision after hearing the assessee, the appeal of the assessee is held to be allowed for statistical purposes. A.Y. 2016-17
Mohammed Juned Siddiqui
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced on 29.08.2025 in the open Court. [SUDHANSHU SRIVASTAVA]
[NIKHIL CHOUDHARY]
JUDICIAL MEMBER
ACCOUNTANT MEMBER
DATED: 29/08/2025
Sh