Loading judgment…
Facts
The assessee filed an appeal against the order of the CIT(A) for AY 2007-08. This is the second round of litigation, with the Tribunal previously remitting the issue for de novo adjudication. The assessee claimed the income from selling agricultural land was not taxable, but the AO treated it as business income.
Held
The Tribunal noted that while there was non-compliance by the assessee, it was partly due to the COVID-19 pandemic and the assessee's unfamiliarity with procedures. The assessee did respond to the final show-cause notice. Therefore, in the interest of substantial justice, the issue was remitted back to the AO for fresh adjudication.
Key Issues
Whether the sale of agricultural land was rightly treated as business income, and whether proper opportunity was given to the assessee.
Sections Cited
147, 144, 254, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Hyderabad ‘SM’ Bench, Hyderabad
Before: SHRI VIJAY PAL RAO & SHRI MADHUSUDAN SAWDIA
आदेश/ORDER PER MADHUSUDAN SAWDIA, A.M. : This appeal is filed by Smt. Nirmala Alla (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), dated 01.04.2025 for the A.Y. 2007-08.
The assessee has raised the following grounds of appeal :
The brief facts of the case are that the present appeal represents the second round of litigation before this Tribunal. In the first round, this Tribunal, vide its order dated 07.04.2021 passed in had remitted the issue to the file of the Learned Assessing Officer (“Ld. AO”) for de novo adjudication in accordance with law. Pursuant thereto, the Ld. AO, after considering submission of the assessee, passed an assessment order under section 144 read with sections 254 and 144B of the Income Tax Act, 1961 (“the Act”) on 27.03.2022, determining the total income of the assessee at Rs.34,13,600/-, by treating the income on sale of land as business income.
Aggrieved by the order of Ld. AO, the assessee carried the matter in appeal before the Ld. CIT(A). However, before the Ld. CIT(A), the assessee could not effectively respond to the notices issued during appellate proceedings. Consequently, the Ld. CIT(A) dismissed the appeal and confirmed the order of the Ld. AO.
Aggrieved with the order of the Ld. CIT(A), the assessee is in further appeal before this Tribunal. The Learned Authorised Representative (“Ld. AR”) submitted that due to certain unavoidable circumstances, the assessee could not respond to the notices issued by the Ld. CIT(A). It was further submitted that the assessee had sold agricultural land during the relevant year, and the consideration received therefrom was not chargeable to tax under the provisions of the Act. The Ld. AR contended that the Ld. AO erroneously treated the sale proceeds of agricultural land as business income, without affording adequate opportunity to the assessee. It was pointed out that during the assessment proceedings, the assessee could not respond to notices at the initial stages due to the COVID-19 pandemic. However, the assessee did file a reply to the final show-cause notice dated 18.03.2022 on 22.03.2022. Despite the same, the Ld. AO passed the assessment order on 27.03.2022, without granting any further opportunity to explain the issue in detail. It was further submitted that the assessee is a lady, who had never been required to file income-tax returns earlier and is not well- acquainted with the procedures of the Income-tax Department. The non-compliance, according to the Ld. AR, was neither intentional nor deliberate, but occurred due to lack of familiarity with the proceedings and circumstances beyond her control. The Ld. AR, therefore, prayed that one more opportunity may be granted to the assessee to explain her case before the Ld. AO and to substantiate that the land sold was agricultural land, the income from which is not taxable under the Act.
Per contra, the Learned Departmental Representative (“Ld. DR”) strongly opposed the prayer for remand. It was submitted that this is the second round of appeal, and even in the remand proceedings, the assessee failed to respond to notices issued by the Ld. AO at the initial stages. Further, the assessee again failed to comply with notices issued by the Ld. CIT(A). Accordingly, the Ld. DR submitted that no further opportunity should be granted to the assessee and the orders passed by the lower authorities deserve to be upheld.
We have considered the rival submissions and perused the material available on record. It is undisputed that this is the second round of proceedings and that there has been non- compliance on the part of the assessee at various stages. At the same time, we find merit in the submission of the Ld. AR that the assessee did file a response to the final show-cause notice issued by the Ld. AO and that the assessment order was passed within a short span thereafter. We further observed that, at the initial stages of proceedings before the Ld. AO the entire country was suffering due to the COVID-19 pandemic. Considering the totality of facts and circumstances of the case, including the nature of the dispute, the claim of the assessee that the land sold was agricultural land, and in the interest of substantial justice, we are of the considered view that the issue deserves to be remitted back to the file of the Ld. AO for fresh adjudication. However, to balance equities and to ensure diligent participation by the assessee, we deem it appropriate to impose a cost of Rs.10,000/-, which shall be deposited by the assessee in the Prime Minister’s National Relief Fund within 30 days from the date of receipt of this order. It is clarified that if the assessee does not sincerely and diligently respond to the notices issued by the revenue authorities during the remand proceedings, the Ld. AO shall be at liberty to proceed in accordance with law. The Ld. AO is also directed to afford reasonable opportunity of being heard to the assessee and to decide the issue afresh in accordance with law.
In the result, the appeal of the assessee is allowed for statistical purposes, subject to the conditions stated above. Order pronounced in the open Court on 16th Jan., 2026.