The Jodhpur Bench of Income Tax Appellate Tribunal ( ITAT ) set aside the addition of Rs. 72,14,060 to the assessee’s income and the capital gains tax levied due to the failure of the authorities to consider key evidence regarding the land’s municipal status.
Shanaj,appellant-assessee,filed an appeal challenging the addition of Rs. 72,14,060/- to her income by the Assessing Officer (AO) and the subsequent confirmation of this addition by the Commissioner of Income Tax (Appeals) [CIT(A)]. The main issue in the appeal revolves around the classification of the land in question, with the appellant asserting that the land was situated beyond the municipal limits of Sardarsahar, which would affect the tax implications associated with it.
Transform GST Learning: Master Sections Faster with Memory Power- Click here to know more
The AO had primarily relied on a letter dated 24.08.2016 issued by the Office of Nagar Parishad, Sardarsahar, confirming that the land in question was within the municipal limits. However, the assessee contested this by presenting another letter, dated 04.04.2019, from the same office, which clarified that the land was located outside the municipal limits.
This letter also referenced the Rajasthan State Gazette (dated 14.07.1988), which outlined the boundary limits under the Rajasthan Nagar Palika Act, 1959. According to the assessee, this letter should have been given proper consideration to determine the correct tax treatment of the land.
The CIT(A) acknowledged the existence of the 2019 letter but discredited it, stating that the assessee had failed to provide sufficient documentary evidence to prove the land was beyond the municipal limits. The CIT(A) stated that the burden of proof lay with the assessee to demonstrate that the land was located outside the municipal limits. Since the assessee could not substantiate this claim, the addition to her income and the capital gains tax were upheld.
Transform GST Learning: Master Sections Faster with Memory Power- Click here to know more
The two member bench comprising Dr. S Seethalakshmi (Judicial Member) and Mitha Lal Meena (Accountant Member) noted that it was the responsibility of the Revenue Authorities to substantiate the addition of income or tax liability, but the assessee had already provided credible evidence, such as the 2019 letter and the Rajasthan Gazette. The authorities failed to disprove this evidence. The AO had not properly verified the land’s location or addressed the 2019 letter, which referred to the Rajasthan Gazette and was overlooked.
The appellate tribunal also found that the CIT(A) unjustifiably discredited the 2019 letter without proper explanation. This letter referred to the Gazette, which defined the municipal boundaries, and its omission was a significant error.
Ultimately, the tribunal set aside the orders of the AO and CIT(A), which included the addition of Rs. 72,14,060 to the assessee’s income and the capital gains tax levied. The appeal was allowed, as the authorities failed to properly assess the evidence and apply the correct legal principles.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
