Agricultural Land does not convert into Non-Agricultural Land if sold to Non-Agriculturist or Company: ITAT partly allows appeal [Read Order]

The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, partly allowed an appeal and held that agricultural land does not convert into non-agricultural land if sold to a non-agriculturist or a company.

The facts of the case are that the appellant’s case was reopened under Section 147 on the basis of information received from the Investigation Wing regarding alleged unaccounted transactions with Chirpal Group in connection with sale of land at Village Dholi. The assessee, Jignesh Harshadbhai Patel, was one of the co-owners having one-third share in the property and it was alleged that he had received cash which was not disclosed in the return of income.

The Assessing Officer (AO) rejected the explanation furnished by the assessee as to the details regarding the sale transactions. The AO made separate addition for alleged under-reporting and misreporting along with addition under Section 69A of the Income Tax Act, 1961 on account of unexplained cash receipts.

The assessee was aggrieved with the reassessment order and challenged an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] but there was lack of compliance or effective representation on behalf of the assessee after notices were issued for hearing on several dates. The additions were confirmed by the CIT(A) as the assessee did not furnish any material to disprove the findings of the AO.

The counsel for the appellant argued that the land sold did not constitute as a “capital asset” within the meaning of Section 2(14). It was also argued that the AO had erred in invoking provisions of Section 50 by adopting alleged jantri/stamp duty value through reverse calculation method.

The bench of Annapurna Gupta (Accountant Member) and Siddhartha Nautiyal (Judicial Member) partly allowed the appeal as addition under Section 69A were deleted and held that Section 50C was not applicable in the present case. The grounds of appeal were dismissed after deliberation.

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