The Income Tax Appellate Tribunal (ITAT) Raipur Bench while upheld the revision order held that the share of substantial profit earned from sale of agricultural land to National Rural Development Authority (NRDA) is eligible to tax.
The assessee Anand Surana e-filed his return of income for assessment year 2016-17 on declaring an income of Rs.8,46,640/- a/w. agricultural income of Rs.6,30,349/- Accordingly assessment was completed by AO.
After the proceedings, the Principle commissioner of IncomeTax (Pr.CIT) called for the records of Assessment and observed that assessee sale a land during the year under consideration a/w. another person had sold agricultural land situated at Village: Baroda to NRDA in lieu of compensation of Rs.5,60,05,400/- and also assess contented that which was not capital asset therefore no need to pay tax.
After considering the observation Pr.CIT issued notice under section 263 of the Income Tax Act, 1961 and observed that land sold by the assessee was a capital asset, therefore, his share of profit earned on the sale of the same was liable to be brought to tax in his hands under the head long term capital gain (LTCG).
Thus the Pr.CIT held that the Assessment order passed by the Assessing Officer was erroneous and prejudicial to the revenue.Then set aside the assessment order and passed revision order.
Aggrieved by the order, the assessee filed an appeal before the tribunal.
S.R. Rao, counsel for the assessee submitted that Pr. CIT had merely on the basis of an “audit objection” dislodged the well-reasoned order of the A.O in exercise of his revisional jurisdiction under Section 263 of the Income Tax Act.
Further, the land under consideration was not a capital asset which was situated beyond the municipal limits of Raipur.
S.K Meena, Departmental representatives contented that A.O had failed to verify the maintainability of the assessee’s claim that the transaction of sale of land at Village: Baroda to NRDA was exempt from tax and in absence of any supporting material had summarily accepted his claim.
It was observed by the tribunal that the AO had failed to verify the maintainability of the assessee’s claim that the transaction of sale of land at Village: Baroda to NRDA was exempt from tax and in absence of any supporting material had summarily accepted assessee’s claim.
The tribunal after reviewing the facts and submissions of the both parties the two member bench of Ravish Sood,( Judicial Member) and Arun Khodpia,(Accountant Member) observed that the order passed by the A.O under section 143(3) Income Tax Act as erroneous in so far it was prejudicial to the interest of the revenue under section 263 of the Income Tax Act.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
