MAHADEVAIAH MDABAL KEMPAIAH ,BENGALURU vs. INCOME TAX OFFICER, WARD-3(3)(1), BENGALURU
Facts
The assessee, an individual, sold agricultural land for Rs. 1.6 crores during the assessment year 2016-17, claiming it as exempt income. The AO treated the land as non-agricultural and computed long-term capital gains at Rs. 1,52,55,923/-.
Held
The Tribunal held that the assessee's failure to appear before the NFAC was due to a lack of familiarity with the ITBA portal, which constitutes a valid reason. Therefore, the matter was remitted back to the NFAC for a fresh hearing.
Key Issues
Whether the land sold was agricultural or non-agricultural, and whether capital gains tax and related interest are leviable. Also, the validity of ex-parte assessment proceedings due to non-appearance before the NFAC.
Sections Cited
250, 54B, 234B, 234D
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “A’’ BENCH: BANGALORE
Before: SHRI GEORGE GEORGE K. & SHRI CHANDRA POOJARI
ITA No.1173/Bang/2023 Mahadevaiah Madabal Kempaiah, Bengaluru
IN THE INCOME TAX APPELLATE TRIBUNAL “A’’ BENCH: BANGALORE BEFORE SHRI GEORGE GEORGE K., VICE PRESIDENT AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
ITA No.1173/Bang/2023 Assessment Year: 2016-17 Mahadevaiah Madabal Kempaiah No.139, “Nemmadi” 2nd Main road Health Layout ITO Annapoorneshwarinagar Ward-3(3)(1) Vs. Bengaluru 560 091 Bengaluru Karnataka PAN NO.ANGPK1135M ASSESSEE RESPONDENT Assessee by : Smt. Suman Lunkar, A.R. Revenue by : Smt. Akta Jain B., D.R. Date of Hearing : 29.02.2024 Date of Pronouncement : 29.02.2024 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal by assessee is directed against order of NFAC dated 24.11.2023 for the assessment year 2016-17 passed u/s 250 of the Income Tax Act, 1961 (in short “The Act”). The assessee has raised following grounds of appeal: 1. “The learned Assessing Officer has erred in passing the assessment order in the manner passed. And the impugned order as passed being bad in law is required to be quashed. 2. The learned Commissioner of Income-tax (Appeals)-NFAC, DELHI has erred in passing the impugned order in the manner passed. The impugned order having been passed without hearing the appellant and in total violation of principles of natural justice is bad in law and void ab-initio and is liable to be quashed.
ITA No.1173/Bang/2023 Mahadevaiah Madabal Kempaiah, Bengaluru Page 2 of 4 3. In any case, the learned Commissioner of Income tax (Appeals) has erred in confirming the order as passed by Income Tax Officer in taxing a sum of Rs. 1,52,55,923/- as income from capital gains by holding that the appellant had sold not an agricultural land but an industrially converted land. The facts and circumstances of the case have not been appreciated by the lower authorities. On proper appreciation, it would be clear that what was transferred by the appellant was an agricultural land which was not a capital asset and therefore, gain on such land not assessable to capital gains.
The appellant had correctly claimed that the land sold being not a capital asset, the gain thereon correctly is not taxable as per Income Tax Act, 1961 and this claim of the appellant should have been accepted.
5.1 The learned Commissioner of Income tax (Appeals) has erred in confirming the non allowance of deduction u/s. 54B of the Act as passed by the Assessing Officer.
5.2 In any case the appellant is entitled to exemption u/s. 54B of the Income Tax Act, 1961 and the same is to be allowed. 6. The appellant denies the liability to pay interest u/s. 234B & 234D of the Act. The interest having been levied erroneously is to be deleted. 7. In view of the above and other grounds to be adduced at the time of hearing, it is requested that the impugned order should be quashed or atleast it be held that what was transferred by the appellant was a land which was not a capital asset and therefore, no capital gains is taxable or atleast in the alternative it be held that the appellant is eligible for exemption u/s. 54B of the Act and interest levied be also deleted.” 2. Facts of the case are that the assessee is an individual earning income from salary, agriculture and other sources. The assessee filed his return of income for the AY under dispute offering a total income of Rs.5,33,315/- and exempt income of Rs.1.6 crores. During the AY under dispute the assessee has sold some agricultural lands for a consideration of Rs.1.6 crores and claimed as exempted income. The ld. AO concluded the assessment by holding that the said land was non-agricultural and computed the long-term capital gains at Rs.1,52,55,923/-.
ITA No.1173/Bang/2023 Mahadevaiah Madabal Kempaiah, Bengaluru Page 3 of 4 2.1 On appeal, NFAC/CIT(A) has given notices to the assessee on following dates: Sl.No. Date of Date of Remarks Notice issued hearing 1. 08.07.2019 17.07.2019 Notice was sent through ITBA but proceedings remained un- complied with 2. 23.07.2019 07.08.2019 -do- 3. 30.12.2020 14.01.2021 -do- 4. 20.06.2022 05.07.2022 -do- 5. 12.10.2023 Appellant filed part reply requesting for VC 6. 18.10.2023 25.10.2023 Notice with specific query allowing final opportunity was sent through ITB but proceedings remained un- complied till date. 7. 08.11.2023 13.11.2023 Notice allowing opportunity for VC was sent through ITBA but proceedings remained un- complied till date.
2.2 Since there was no response from the assessee, the NFAC has confirmed the addition made by ld. AO by deciding the appeal of the assessee ex-parte for non-prosecution. Against this assessee is in appeal before us. 4. We have heard the rival submissions and perused the materials available on record. The ld. A.R. pleaded that the assessee has not noticed the various mails sent by the NFAC and failed to take corrective measures in replying to the notices issued by the NFAC as the assessee is not well versed with the ITBA portal and he failed to take note of the various notices sent by NFAC. Hence, the order passed by NFAC is ex-parte without participation of the assessee for hearing. Considering the facts and circumstances of the case, in our opinion, there is a good and sufficient reason in not participating for first appellate proceedings before NFAC since the assessee was not well versed with ITBA portal. Accordingly, in the interest of justice, we remit the entire issue in dispute to the file of NFAC for giving a
ITA No.1173/Bang/2023 Mahadevaiah Madabal Kempaiah, Bengaluru Page 4 of 4 fair opportunity of hearing to the assessee. As such, the assessee shall cooperate with the department and file necessary documents in support of the claim of the assessee. Even in second round also, if he is not cooperating with the department, the AO/NFAC is at liberty to take decision in accordance with law. 5. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 29th Feb, 2024
Sd/- Sd/- (George George K.) (Chandra Poojari) Vice President Accountant Member Bangalore, Dated 29th Feb, 2024. VG/SPS Copy to: 1. The Applicant 2. The Respondent 3. The CIT 4. The DR, ITAT, Bangalore. 5 Guard file By order
Asst. Registrar, ITAT, Bangalore.
