DCIT, CIRCLE 52(1), NEW DELHI vs. BHUPINDER SINGH BHALLA, NEW DELHI

ITA 2964/DEL/2023Status: DisposedITAT Delhi13 February 2026AY 2016-1743 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal, through the majority opinion of the Judicial Member and the Third Member, held that the assessee is entitled to the claim of deduction under Section 54B of the Act. The Tribunal found that the character of the land sold by the assessee on December 7, 2015, was agricultural land, as supported by revenue records and consistent declaration of agricultural income for at least 10 years. The Tribunal also noted that the lands purchased by the assessee were also agricultural lands as per revenue records and sale deeds, and agricultural income was declared from these purchased lands in subsequent assessment years. The Tribunal disregarded the Inspector's report and photographs as they were dated three years after the transfer of land and were collected without informing the assessee. The Tribunal concluded that the Revenue had not discharged its onus of disproving the agricultural nature and use of the land. Therefore, the order of the CIT(A) deleting the disallowance was confirmed. The appeal of the Revenue was dismissed.

What were the facts?

The Revenue (DCIT) appealed against the order of the CIT(A) dated August 25, 2023, which had allowed the assessee's (Bhupinder Singh Bhalla) appeal against an assessment order dated December 30, 2018, passed by the AO. The assessment year in question is 2016-17. The AO had made an addition of Rs. 41,71,72,652/-. The assessee had claimed a deduction under Section 54B of Rs. 78,54,42,491/- on the purchase of land, after accounting for an unutilized amount of Rs. 36,82,69,839/-. The AO's addition was based on the grounds of substantial increase in capital, large deductions claimed under various sections including 54B, and large long-term capital gains. The CIT(A) had allowed the assessee's appeal, leading to the present appeal by the Revenue.

What were the issues?

1. Whether the deduction claimed by the assessee under Section 54B of the Income Tax Act, 1961, on the purchase of land, amounting to Rs. 41,71,72,652/-, is admissible, considering the Revenue's contention that it does not fall within the ambit of the section and the CIT(A) wrongly held that no evidence of film shooting etc. by the AO was collected. Assessee's Contentions: - The order passed by the AO is bad in law, violating Section 142(3) of the Act due to non-confrontation with the Inspector's report. - Relied on ITAT orders in M K Chabbra vs. ITO and Kamla Devi Sharma v/s ITO, and ITO v/s Babita Gupta, arguing that GPA and agreement to sell were allowed for Section 54B exemption in those cases, and the assessee's documents are more reliable. - Placed reliance on the Madras High Court judgment in S. Sundaramurthy vs. Principal Commissioner of Income-tax, Chennai, which emphasized the need to consider factual aspects regarding the use of land for agricultural purposes. Revenue's Contentions: - The CIT(A) failed to consider that the addition of Rs. 41,71,72,652/- on account of deduction under Section 54B does not fall within the ambit of Section 54B, ignoring basic facts. - The CIT(A) wrongly held that no evidence of film shooting etc. by the AO was collected, and the Inspector visited the place without notice to the assessee.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3),Section 143(1),Section 143(2),Section 142(1),Section 142(3),Section 45,Section 54B,Section 54C,Section 54D,Section 54G,Section 54GA,Section 55B,Section 264,Section 255(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “A”, DELHI

Before: SHRI MAHAVIR SINGH, VICE PRESDIENT, SHRI VIMAL KUMAR & SHRI BRAJESH KUMAR SINGH

For Respondent: Dr Rakesh Gupta, Adv. (Virtual) S/Shri
Hearing: 13.02.2026Pronounced: 13.02.2026

PER VIMAL KUMAR, JUDICIAL MEMBER:

The appeal filed by the Revenue is against order dated 25.08.2023 of Learned Commissioner of Income-Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi (hereafter referred to as “Ld. CIT(A)’”) under Section 250 of the Income-Tax Act,1961 (hereinafter referred to as “the Act”) arising out of assessment order dated 30.12.2018 under Section 143(3) of the Act by the Assistant Commissioner of Income Tax, Circle 53(1), Delhi (hereinafter referred

to as “the AO”) for assessment year 2016-17. 2. Brief facts of case are that assessee having incom

The order continues below.

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