The Income Tax Appellate Tribunal (ITAT) Chennai bench remanded the matter before the Assessing officer for re adjudication due to nonconsideration of evidence on deduction claimed under Section 54B of the Income Tax Act, 1961 and capital gains exemption on sale of agricultural land.
Assessee, Nagappan Suganthi sold certain agricultural land for Rs.137.60 Lacs. However, in original return of income, no capital gains were shown and accordingly, the case was reopened and notice u/s.148 Income Tax Act
During the course of assessment proceedings, it transpired that the assessee sold vacant land. No capital gain was offered on the ground that agricultural operations were carried out on the said land and the land is situated more than 8 kms away from nearest Tambaram municipality.
As per the report of Census Officer AO determined that land should be situated beyond 6 kms as measured aerially from nearest municipality. From google map, it was ascertained that land was situated within only 5.1 kms. AO held that the land was a capital asset exigible to tax. Accordingly, the AO computed capital gain of Rs.137.18 Lacs.
Further the assessee claimed deduction under Section 54B of Income Tax Act on the ground that sale consideration to the extent of Rs.38.88 Lacs was invested in agricultural land in the name of her son. However, in absence of any documentary evidence the claim was rejected.
Aggrieved by order, the assessee filed an appeal before the Commissioner of Income-tax (Appeals) who dismissed the appeal without considering the additional evidence submitted by the assessee. .Therefore the assessee filed appeal before the tribunal
During the proceedings counsel for assessee submitted that the land as sold by the assessee was agricultural land.Further the lower authority denied the claim of assessee without considering the evidence submitted by the assessee.
Counsel for revenue supported the decision of the lower authorities.
After reviewing the facts and circumstance , the two member bench of Manoj Kumar Aggarwal (Accountant Member) and Mahavir Singh (Vice President) observed that It was wrong for CIT(A) to exclude new evidence since it would have significantly impacted how the assessee’s capital gains were calculated.
Therefore the bench directed re adjudication due to nonconsideration of evidence on deduction claimed under Section 54B of the Income Tax Act and capital gains exemption on sale of agricultural land.
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