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Facts
For A.Y. 2011-12, the assessee sold immovable property but did not declare the gain. The case was reopened, and the AO added Rs. 7,46,000/- as Short Term Capital Gain, rejecting the assessee's claim that the property was agricultural land and not a capital asset. The CIT(A) upheld the AO's order.
Held
The Tribunal noted that the AO could have verified the nature of the land himself. It set aside the lower authorities' orders, restoring the matter to the AO for fresh assessment to verify the assessee's claim and afford adequate opportunity of being heard, in the interest of natural justice.
Key Issues
Whether the property sold was agricultural land, exempt from capital gains, or a capital asset liable for Short Term Capital Gain, and whether the AO erred in rejecting the assessee's explanation without proper verification.
Sections Cited
143(1), 147, 148, 147/144, 2(14)(iii)(b)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “SMC”: NEW DELHI
Before: SHRI KUL BHARAT
O R D E R PER KUL BHARAT, JM:
This appeal, by the assessee, is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 19.12.2023, pertaining to the assessment year 2011-12. The assessee has raised following grounds of appeal:
1. Under the facts and circumstances of the case, the Ld. CIT (Appelas), NFAC-Delhi has erred in sustaining the addition of Rs. 746000/- made by the A.O. under the head Short Term Capital Gain.
2. Under the facts and circumstances of the case, the Ld. CIT (Appelas), NFAC-Delhi has erred in not considering the assessee's explanation filed before him during the course of appeal proceedings and ignored the vital evidence i.e. Google Map for ascertaining the distance between the Land in question and nearby Tehsil Mawana, Distt-Meerut.
Under the facts and circumstances of the case, the Ld. CIT (Appelas), NFAC-Delhi has completely ignored the provisions of section 2(14)(iii) (b) of the I.T Act, which is applicable in the case of the assessee.
4. Under the facts and circumstances of the case, the Ld. CIT (Appelas), NFAC- Delhi has erred in disallowing the expenses viz. Stamp Duty cost etc. for an amount of Rs. which is Rs. 146000/-, which is depicted clearly on the Sale Deed.
5. The assessee may crave to add, delete or modify any grounds of appeal during the course of appeal proceedings.
Facts, in brief, are that for A.Y. 2011-12 the assessee filed its return of income on 30.08.2011 at Rs. 3,00,824/- which was processed u/s 143(1) of the Income-tax Act, 1961 (the “Act”) at the returned income. Subsequently, on receipt of information that during A.Y. 2011-12 the assessee had sold immovable property for Rs.34,46,000/-, which was not shown in the return filed by the assessee, the case was reopened u/s 147 of the Act. In response to notice issued u/s 148 the assessee filed its return at the same figure of Rs.3,00,824/-. In response to statutory notices issued, it was submitted on behalf of assessee that the sold property was agricultural land situated beyond ten kilometers from Mawana. The AO rejected the assessee’s contention by observing that assessee was not able to produce the required certificate from Tehsildar, certifying that the sold property was agricultural land and not a capital asset. The AO completed the assessment u/s gain on sale of immovable property to the returned income. Aggrieved against it the assessee preferred appeal to the learned CIT(A) who also dismissed the appeal and upheld action of the AO. Aggrieved against it the assessee is in appeal before this Tribunal.
3. Learned Counsel for the assessee vehemently argued that assessee’s explanation before authorities below was that the impugned immovable property was agricultural land, beyond municipal limits, and was not a capital asset, therefore, the assessee was not required to declare short term capital gain received on sale of this agricultural land in his return of income. He submitted that without verifying the veracity of assessee’s explanation from the concerned authorities the authorities below were not justified in rejecting the assessee’s claim. Learned counsel prayed that orders passed by the authorities below may be set aside and the matter may be restored to the file of Assessing Officer for decision afresh after verifying the veracity of assessee’s claim and affording reasonable opportunity of being heard to the assessee.
On the other hand, learned DR supported the orders of authorities below.
I have heard rival submissions and perused the material available on record.
It is noticed that the Assessing Officer has rejected the assessee’s explanation solely on the ground that he could not produce the certificate from Tehsildar capital asset. In my considered view this fact could be verified by the AO himself from the concerned authority. Therefore, considering the totality of facts of the present case and to be fair to both the parties and in order to sub serve the interests of natural justice, I hereby set aside the orders of authorities below and restore the matter to the file of Assessing Officer for afresh assessment, after verifying the veracity of assessee’s stand and affording adequate opportunity of being heard to the assessee. Grounds are allowed for statistical purposes.
Assessee’s appeal is allowed for statistical purposes.
Order pronounced in open court on 22nd August, 2024.