Loading judgment…
Facts
The assessee filed an ITR for AY 2017-18, and the case was selected for scrutiny due to claims related to depreciation and capital gains exemptions. The Assessing Officer (AO) made additions totaling Rs. 1,38,51,002/- for capital gains on the sale of agricultural land and Rs. 2,62,512/- for disallowance of depreciation on a vehicle. The assessee's appeal against the AO's order was subsequently dismissed by the Ld. CIT(A).
Held
The Tribunal observed that the CIT(A) failed to consider the assessee's documentary evidence regarding the agricultural nature of the land, relying on the Goetze India Ltd. judgment to reject new claims made without a revised return. The Tribunal found this problematic, set aside the orders of both the CIT(A) and the AO, and restored the matter to the AO for a fresh decision after providing the assessee a fair opportunity to be heard.
Key Issues
1. Whether the sale of agricultural land constitutes a 'capital asset' under Section 2(14) of the Income Tax Act, 1961, making it subject to capital gains tax. 2. Whether new claims can be entertained by appellate authorities without the assessee filing a revised return of income. 3. Justification for the disallowance of depreciation on a vehicle due to alleged personal use.
Sections Cited
250, 143(3), 143(2), 142(1), 2(14)(iii)(b), 2(14), 254
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI S RIFAUR RAHMAN & SHRI VIMAL KUMAR
PER VIMAL KUMAR, JUDICIAL MEMBER:
The appeal filed by the assessee is against the order dated 19.03.2025 of Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre(NFAC), Delhi [hereinafter referred to as ‘Ld. CIT(A)] under Section 250 of the Income-Tax Act, 1961 (hereinafter referred to as ‘the Act’) arising out of order dated 27.12.2019 of Learned Income Tax Officer, Ward-2(5), Gurgaon (hereinafter referred to as “Ld. AO") passed under section 143(3) of the Act pertaining to assessment year 2017-18.
Brief facts of the case are that assessee e-filed his return of income on 21.02.2018 declaring total income of Rs.7,57,540/-. The case of assessee was selected for limited scrutiny through CASS having reason "Depreciation claimed and deduction/exemption from capital gains". Subsequently, notice under Section 143(2) of the Act was issued on 24.08.2018 and duly served upon the assessee. Further, various notices issued under Section 142(1) dated 24.10.2019, 05.11.2019 and as on various other dates were issued to the assessee and served through e-mail as well as through e-filing portal. In response, assessee furnished reply on ITBA Portal. On completion of assessment proceedings, Ld. AO vide order dated 27.12.2019, made additions of Rs.1,38,51,002/- and Rs.2,62,512/-.
Against order dated 27.12.2019 of Ld. AO, the appellant/assessee filed appeal before Ld. CIT(A) which was dismissed vide order dated 19.03.2025.
Being aggrieved, the appellant/applicant filed present appeal with following grounds of appeal:
“1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts in upholding the Assessment Order passed by the Ld. Assessing Officer, which is bad in law, is based on conjectures and surmises, is violative of the principles of natural justice and deserves to be quashed.
2. That the Ld. Commissioner of Income Tax (Appeals) has erred in sustaining the addition of Rs. 1,38,51,002 under the head "capital gains" arising out of sale of agricultural land, ignoring the fact that the said land is situated beyond 8 kilometers from the nearest municipal corporation (Municipal Corporation of Gurgaon), and therefore does not fall within the definition of "capital asset" as per Section 2(14)(iii) (b) of the Income Tax Act, 1961.
3. That the Ld. CIT(A) has erred in law and on facts in ignoring the various documentary evidences filed during the assessment and appellate proceedings, including Fard, Girdawari, distance certificate issued by competent authority, and sale deed, which clearly establish that the land sold was agricultural in nature and situated beyond the notified limits.
4. That the Ld. CIT(A) has erred in upholding the action of the Assessing Officer in treating the sale consideration of agricultural land as taxable capital gain, even when the Assessee had made a valid claim, supported by evidence, that the land was not a capital asset within the meaning of Section 2(14) of the Act.
That the Ld. CIT(A) has erred in confirming the finding of the Assessing Officer that the plot purchased by the Appellant from his mother was a gift, ignoring the fact that the said plot was purchased through banking channels, and that relevant bank proof and sale deed evidencing payment were duly submitted.
6. That the Ld. CIT(A) has further erred in sustaining the disallowance of 25% of depreciation on vehicle amounting to Rs.2,62,512 on account of alleged personal use, without bringing on record any cogent evidence or basis to justify such high disallowance.
7. That the authorities below have failed to appreciate the factual and legal matrix of the case in a proper perspective, and have passed orders which are arbitrary, unjustified and not sustainable in the eyes of law.
8. That the Appellant craves leave to add, alter, amend, or withdraw any of the grounds of appeal
at the time of hearing.”
5. Learned Authorized Representative for the appellant/assessee submitted that Ld. CIT(A) erred in passing the order ignoring various documentary evidence filed during assessment and appellate proceedings including Fard, Girdawari, distance certificate issued by competent authority and sale deed which clearly establish that the land sold was agricultural in nature and situated beyond the notified limits.
Learned Authorised Representative for the Revenue relied on orders of Learned Departmental Authorities.
From examination of record in the light of aforesaid rival contentions, it is crystal clear that Ld. CIT(A) in para nos.7 & 7.1 observed that;
“7. The appellant has also argued that the Assessing Officer has erred in not ascertaining real income of the appellant by not considering the facts, documents like Fard and Girdhawri of agricultural Land, distance certificate from MC Gurgaon, purchase deed of agriculture land sold. It is seen that the appellant is making an alternative claim before the appellate authority, which was not made in the original return of income. In this regard, it is held that the appellant 4 cannot file any alternate or substantial claim of exemption or deduction other than filing the revised return of income. The reliance is placed on the judgement of Hon'ble Supreme Court of India in the case of Goetze (India) Ltd. vs CIT on 24 March, 2006, which was pronounced as: "The decision does not in any way relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of the Income Tax Appellate Tribunal under section 254 of the Income Tax Act, 1961. There shall be no order as to costs." Since the appellant has not filed the revised return of income furnishing his claim that the purported sale is of agricultural land, the AO is right in considering the land sold as a capital asset as declared by the appellant in his original return of income. “7.1. From the above judgement of the Apex Court, it is clear that any new claim of the appellant is to be allowed only if the appellant has filed the revised return of income to substantiate the claim. In the instant case, it is clear that the appellant has not filed revised return of income till date. So the claim of the appellant to consider the so called land as agricultural land is rejected without heeding to the verification of appellant's claim and documents furnished by the appellant. Hence, the Ground Nos. 2 and 3 of appeal raised by the appellant are hereby dismissed.”
From above discussion and observations, it is evident that Ld. CIT(A) had not considered the claim of the appellant/assessee on basis of documents. In view of above material facts in interest of substantial justice impugned orders dated 19.03.2025 of Ld. CIT(A) and 27.12.2019 of Ld. AO are set aside and the matter is restored to the file of Ld. AO for fresh decision in accordance with law after affording fair opportunity of hearing to the appellant/assessee.