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Facts
The assessee sold agricultural land for Rs. 16,60,000/- in AY 2013-14 and did not file a return. The AO initiated proceedings u/s 147, alleging escapement of income and made an addition for Long Term Capital Gain. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal held that the assessment proceedings were initiated by a non-jurisdictional AO and were therefore quashed. Additionally, the land was confirmed to be rural agricultural land, outside the definition of a capital asset, thus capital gains could not be taxed.
Key Issues
Whether assessment proceedings initiated by a non-jurisdictional AO are valid and whether rural agricultural land outside municipal limits can be treated as a capital asset for taxation of capital gains.
Sections Cited
147, 148, 151, 142(1), 144, 250, 2(14)
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Income Tax Appellate Tribunal, JAIPUR BENCHES,”SMC” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI GAGAN GOYAL, AM vk;dj vihy la-@ITA No. 1115/JPR/2024
Date of Hearing: 06/01/2025 Date of Pronouncement: 22/01/2025 ORDER PER DR. S. SEETHALAKSHMI, J.M. This is an appeal filed by the assessee against the order of ld. CIT (Appeals), National Faceless Appeal Centre (NFAC) Delhi dated 24.07.2024 passed under section 250 of the I.T. Act, 1961, for the assessment year 2013-14. The assessee has raised the following grounds of appeal :-
1. That the order dated 27.09.2021 is against the law and material available on record.
2. Under the facts and circumstances of the case the assessment proceedings u/s 147 has been done by non-jurisdictional AO. Proceedings under section 147 was concluded Ved Prakash Sharma, Alwar. by non-jurisdictional AO ward Bhiwadi, however, assessee’s jurisdiction falls with ITO 5(3), Jaipur.
Under the facts and circumstances of the case, the learned Assessing Officer and learned CIT Appeals has seriously erred in making addition of Rs. 16,60,000/- as Long Term capital gain. It is respectfully submitted that the said land was Rural Agriculture land and not a capital asset, therefore, capital gain can not be arise on sale of such land.
4. The ld. AO grossly erred in completing the assessment proceeding without providing reasonable opportunity of being heard. During the period from 1.4.2020 to 27.09.2021, there are several months in lock down period due to COVID 19. Therefore, the order passed by the learned AO is against the natural justice and deserves to be quashed and set aside.
5. That the learned assessing officer has seriously erred in making assessment without following the procedure and instructions issued for making faceless assessment and also the same was passed without mentioning PAN number. Therefore, the order passed by the learned AO is against the law and deserves to be quashed and set aside.
That the learned CIT(A) further gravely erred in upholding the validity of the assessment order despite the fact that the proceedings had not been conducted in th4e manner prescribed by the department instructions from time to time which were mandatory for compliance by the learned Assessing Officer since the impugned order was not uploaded on the e-filing portal of the appellant and was served only through courier and also the same was passed without mentioning DIN on the assessment order.
That the appellant craves leave of this Honourable Court to argue other grounds at the time of hearing.”
The brief facts of the case are that the AO, on the basis of information available with the Department, noticed that assessee has sold his immovable property for a consideration of Rs. 16,60,000/- during the relevant year. Assessee did not filehis return of income for Assessment Year 2013-14 despite having sold Ved Prakash Sharma, Alwar. his immovable property for a sum of Rs. 16,60,000/-. The AO, therefore, after recording reasons in writing that assessee’s income to the extent of Rs. 16,60,000/- which is chargeable to tax, has escaped assessment, issued notice under section 148 of the I.T. Act, 1961 dated 19.03.2020 after obtaining approval under section 151(1) from the competent authority. The assessee did not respond to the said notice. Therefore, noticeunder section 142(1) dated 09.09.2021 was issued requiring the assessee to furnish return of income and other details/documents. No compliance was made by the assessee to this notice also. Since no compliance was made from the side of the assessee, a final opportunity was given to the assessee by issuing a notice under section 142(1) dated 14.09.2021 requiring the assessee to show cause as to why the case should not be completed under section 144 of the IT Act, 1961, but to this notice also no compliance was made by the assessee. Thus, the AO completed the assessment vide his order dated 27.09.2021 under section 147 read with section 144 of the Act, 1961 at an income of Rs. 16,60,000/- on account of income from Long Term Capital Gain. Aggrieved by the order of AO, the assessee challenged the matter in appeal before the ld. CIT (A). The ld. CIT (A) observing that the assessee did not furnish any evidence in support of his case, dismissed the appeal of the assessee.
The next ground pertains to lack of opportunities provided to respond during the assessment proceedings. It is seen in the assessment order, the AO provided adequate opportunities to the assessee by way of issue of notices. A show cause notice was also issued prior to completing the assessment u/s 144. Therefore, the contention of the assessee is not acceptable. Even during the appellate proceedings, the assessee failed to submit the relevant records depiste affording adequate opportunities to upload the requisite details in support of his grounds. Ground No. 2 is therefore dismissed. In ground no. 3, the assessee challenged the addition on the basis that the property sold was agricultueral land and outside the scope of capital asset. The assessee has filed only the copy of the khata of the land in support of his claim. It is pertinent here to note that mere classification of property as agricultueral land in the records is not sufficient to exclude the property from the purview of capital asset. The onus is on the assessee to prove that the property was not within the municipal limits or similar exceptions provided in Section 2(14) of the Act. The assessee did not submit any explanation during the appellate proceedings. Therefore, I am constrained to uphold the addition ground No. 3 is dismissed. In result, the appeal is dismissed.
We have heard the rival contentions, perused the material on record and gone through the orders of the lower authorities.In the first ground of appeal the appellant has challenged the proceedings u/s 148 on ground of lack of jurisdiction with AO,Bhiwadi who undertook all the proceedings right from issuing notice u/s Ved Prakash Sharma, Alwar. 148 to passing of final assessment order, as he resides in Jaipur and has been filing ITR by quoting address of Jaipur and his PAN lies with ITO, Ward 5(2), Jaipur and hence all the proceedings have been undertaken by non jurisdictional AO and has accordingly requested to quash the proceedings. It has been stated by the ld. AR that during the relevant period i.e. FY 2012-13 the appellant was residing at Bhiwadi but since last 3-4 years prior to issuing notice u/s 148 he has migrated to Jaipur and has been residing at A-184, Sindhi Colony, Adarsh Nagar, Jaipur only. In support of this contention he has submitted copy of jurisdiction detail as per which PAN of the appellant lies with ITO, Ward 5(2), Jaipur. Further from the notice u/s 148 issued by AO, Bhiwadi, it is observed that the same was issued without mentioning PAN of the assessee. Under such circumstances the AO was bound to enquire about the correct address of the assessee prior to issue of notice under section 148 in which he failed.
4.1 Therefore considering the documents as filed by the appellant, we hold that the instant proceedings were undertaken by non jurisdictional AO and hence the same are quashed. The instant notice u/s 148 and the consequential order passed by AO, Bhiwadiand confirmed by the ld. CIT (A) are quashed.
Ved Prakash Sharma, Alwar. 4.2. In respect of agricultural land sold by the assessee, the ld. A/R of the assessee has submitted that the lower authorities have not disputed the fact that the land in question was recorded as agricultural land in the revenue record. Thus the land being agricultural land cannot be considered for the purpose capital gain as it is excluded from the definition of capital asset as per provisions of section 2(14) of the IT Act. The character and the nature of the land is recorded in the revenue record as agricultural land. In support of assessee’s contention, the ld. AR has filed the Khasra Girdawari report of Tehsil Sanganer, wherein agricultural land of the assessee being Khasra No.681 is mentioned. Further we note that the ld. AR has also submitted evidence that the agricultural land of the assessee is situated at village Kishanpura (Khatipura), Panchayat Samiti Kapurawala, Tehsil Sanganer and the distance of the agricultural land sold by the assessee is about 8.5 KM from Municipal Limits of Sanganer Nagar Nigam as per the letter dated 20.08.2024 written by Panchayat Kapurawala to the Tesildar Sanganer in reply to his letter and copy to the assessee. We note from the submission made by the ld. AR that since the agricultural land sold by the assessee is beyond 8 kms of the Municipal limits of Sanganer, it cannot be assessed to tax as capital gain, as the land was rural agricultural land and out of purview of capital gain provisions. On contra the ld. DR has not placed any document/evidence contradicting the submissions of the ld. AR. Thus keeping in view circumstances narrated above and in absence of any Ved Prakash Sharma, Alwar. material furnished by the revenue, we are of the view that the order of the ld. CIT (A) deserves to be quashed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 22/01/2025.