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Facts
The assessee sold land for Rs. 1,77,63,000/- but did not disclose capital gains. The AO assessed a long-term capital gain of Rs. 1,53,27,967/-, which the CIT(A) confirmed ex-parte due to the assessee's non-appearance despite multiple notices. The assessee claims the land was agricultural and thus exempt from capital gains, and challenged the ex-parte order, the quantum of capital gains, cost of improvement, and interest charges.
Held
The Tribunal noted the assessee's plea that the land was agricultural and that they were not cautious in pursuing the matter previously. In the interest of substantive justice, the Tribunal remanded the case back to the CIT(A) to allow the assessee to present facts and fresh evidence, and for the CIT(A) to call for a remand report if required.
Key Issues
Whether the CIT(A) was justified in passing an ex-parte order confirming capital gains on the sale of land; whether the land sold was agricultural and thus exempt under Section 10(37); whether the cost of improvement allowed by the AO was adequate; whether the assessee is entitled to benefit under Section 54F; and whether interest charged under Sections 234A and 234B is justified.
Sections Cited
u/s 250, section 10(37), u/s 54F, u/s 234A, u/s 234B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “PATNA BENCH” PATNA
Appearances by: Assessee represented by : Shri K N Prasad, Advocate Department represented by : Shri Ashwani Kr. Singal, JCIT Date of concluding the hearing : 20.01.2025 Date of pronouncing the order : 04.02.2025
ORDER PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
In this case, the present appeal emanates from order u/s 250 of the Income Tax Act, 1961 (hereafter “the Act”) passed by the Ld. Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 30.09.2022 for the AY 2014-15. 1.1 In this matter, the Ld. AO has passed an order dated 26.12.2016 in which the AO has recorded that land worth Rs. 1,77,63,000/- was sold by the assessee during the year under consideration. However, the Ld. AO 1.2 Aggrieved with this order, the assessee approached the Ld. CIT(A), who has disposed of the appeal based on the findings of the Ld. AO and statement of facts etc. submitted by the assessee. It has been recorded in the impugned order that in spite of several notices issued fixing the dates for hearing, the assessee did not utilise any of the opportunities for presenting the facts. Needless to say, the Ld. CIT(A) confirmed the additions made by the Ld. AO.
1.3 Further, aggrieved with this action, the assessee is in appeal before the ITAT through the following grounds:
“1. For that the grounds of appeal hereto are without prejudice to each other.
2. For that in the facts and circumstances of the case, the learned CIT(A) is not justified in passing the order ex-parte and in dismissing the appeal. The case of the assessee has not been considered in proper perspective. 3.1 For that in the facts and circumstances of the case, the learned CIT(A) has erred in confirming the addition of Rs. 1,53,27,967/- as made by learned Assessing Officer on account of Long Term Capital Gains. Capital Gains arising on sale of agriculture land has wrongly been taxed. 3.2 For that the assessee had purchased agricultural land in year 1987 not forming the part of definition of capital assets. The assessee sold the same after assignment. It is pertinent to mention here that in order to avoid complication in future with regard to use of agricultural land in future so purchased by the purchaser the purchaser intended to pay court fee and stamp duty on rate specified by government being residential. Inspite of the aforesaid facts the learned Department levied the capital gains on presumption and surmises. The case of the assessee has not been considered in proper perspective. The assessee duly apprised to the department that the property sold was agricultural land and any gains on the same was exempt under provision of section 10(37) of the L. T. Act, 1961. Before the department the assessee duly filed copy of impugned sale deed. Without prejudice to above, the learned Assessing Officer has erred in allowing cost of improvement at the rate of Rs. 7500/- per katha only ignoring the material on record. The cost of improvement as allowed by Assessing Officer is very meager and it should be at least Rs. 65,000/- per katha. 3.3 For that in view of the above, the addition of Rs. 1,53,27,967/- as made by the department is arbitrary, unjustified, void ab-initio and bad in law. In any case, the addition as made is fit to be deleted/modified. 2
4. For that the learned CIT(A) has failed to adjudicate the following grounds:-
(a) For that since out of the sale consideration, amount has been invested in Residential House and as such the assessee is entitled to get benefit u/s 54F of the Act. (b) For that the charge of interest u/s 234A at Rs. 6,94,560/- and 234B at Rs. 11,46,024/- is arbitrary and unjustified. The interest as charged and included in the Demand Notice is fit to be deleted.
5. For that the appellant reserves his right to file detailed submission at the time of hearing
6. For that the appellant craves leave to urge, add or alter any other ground or grounds at the time of hearing.”
Right at the outset, the Ld. AR pleaded that the assessee was under the impression that sale of agricultural land would not attract the provision of capital gain and therefore, he was not cautious and careful in pursuing his matter before the authorities below. The Ld. AR pleaded that given a chance the assessee would prove that the said land was agricultural even though the stamp duty etc. was paid on rates applicable to residential land.
2.1 The Ld. DR on the other hand, supported the orders of authorities below and stated that the assessee had ample opportunity to prove his case before the Ld. AO, if not the Ld. CIT(A) as well, since an authorised representative presented the case before the Ld. AO.
We have carefully considered the rival submissions and gone through the records. We feel that in the interests of substantive justice, this matter deserves to be remanded back to the file of Ld. CIT(A) so that the assessee can present the facts before him. The Ld. CIT(A) would also accept any fresh evidence filed by the assessee and call for a remand report as per law, if so required.
In the result, the appeal of the assessee is allowed for statistical purposes. 3
Order pronounced in the court on 04.02.2025