ITO, KOLAR vs. SMT. NAGAMMA,

There was no return of income filed by these assessees. The AO issued a notice u/s 142(1) on 13/11/2007 which was served on the assessee. However, there was no response from the assessee. Accordingly, the AO framed assessment u/s 144 bring the entire sale consideration of the land of Rs.43,12,050/- to capital gain tax.

Before the CIT(A), the assessee contended that the assessee had 1/3rd share each in the agricultural income in question which was sold for a consideration of Rs.43,12,500/- and therefore, the share of each of the assessees is Rs.14,37,500/-. The assessee further contended that this is an ancestral agricultural land and, & 133/Bang/2014 Smt.Nagamma. & Smt.Jayalakshmamma Page 3 of 5 therefore, does not fall under the definition of the ‘capital asset’ as per sec.2(14)(iii)(a) and (b) of the IT Act. The assessee has also contended before the CIT(A) that the share of the assessee being 1/3rd has been worked out as per the order of the Hon’ble High Court, agreement to sell and Sale Deed, however, which could not be produced before the AO. The CIT(A) allowed the appeals of the assessees by holding that the land in question does not fall under the definition of asset as per the provisions of sec.2(14)(iii) of the Act.

Before us, the learned departmental representative submitted that the assessees did not appear before the AO nor filed any document or an explanation was filed before the AO in support of the claim that the land in question does not fall under the definition of ‘capital asset’ as per the provisions of sec.2(14)(iii). However, the assessee filed additional evidence for the first time before the CIT(A) which was considered by the CIT(A) while deciding the issue without giving an opportunity to the AO to rebut or counter the additional evidence filed by the assessee.

On the other hand, the learned AR of the assessee has supported the orders of the CIT(A) and submitted that the documents filed before the CIT(A) cannot be disputed because these documents are in the public domain being the High Court order, agreement to sell and Sale Deed. & 133/Bang/2014 Smt.Nagamma. & Smt.Jayalakshmamma Page 4 of 5 7. Having considered the rival submissions as well as relevant material on record, we find that the assessees before us did not appear before the AO and even did not file any return of income. The assessments were completed u/s 144 for want of appearance as well as for non-representation on behalf of the assessees. It is clear that before the CIT(A), assessee produced the additional evidence in the shape of agreement to sell, sale deed and High Court order whereby the shares of the assessees were determined. It was further submitted by the assessee that the land in question is an agricultural land and does not fall under the definition of capital asset. The CIT(A) accepted the claim of the assessee being land in question does not fall under the definition of capital asset as per the provisions of sec.2(14))(iii). Thus the documents which were filed before the CIT(A) were not put to the AO for examination and verification as well as for comments of the AO. In the facts and circumstances of the case and in the interests of justice, we are of the view that the additional evidence which was produced before the CIT(A) without giving opportunity to the AO is required to be verified and examined at the level of the AO on the point that the assessees are having only 1/3rd share in the said land and further that the land in question is an agricultural land and does not fall under the definition of capital asset as per the provisions of sec.2(14)(iii) of the Act. Accordingly, we restore the matter in both the appeals to the record of the AO for deciding the issue de novo after considering and examining the relevant record filed by the & 133/Bang/2014 Smt.Nagamma. & Smt.Jayalakshmamma Page 5 of 5 assessee before the CIT(A). Needless to say the assessee shall be given a proper opportunity of hearing.

In the result, the appeal is treated as allowed for statistical purposes.