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Judgment
PERSHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER:
This appeal is filed by the assessee against the order of Id. Commissioner of Income-tax (Appeals)/ National Faceless Appeal Centre (NFAC), Delhi (hereinafter referred to 'Id. CIT (A)') dated 13.01.2026 for Assessment Year 2016-17.
Brief facts of the case are, as per information available with the Assessing Officer (AO) based on in sight verification portal under non filer-ITR cases, it was noticed that assessee had purchased immovable property and paid/credited Rs.84,10,000/- and also purchased another immovable property of Rs.48,20,000/-. It was further noticed that the assessee had not filed return of income for the AY 2016-17. In the absence of return of income, it was presumed that the above said transaction remained unexplained. Accordingly, show cause notice was issued to the assessee as per the provisions of section 148A(b) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). On 02.03.2023, the assessee was asked why the cost of purchase of immovable property should not be treated as income chargeable to tax which was escaped assessment u/s.147 of the Act for the year under consideration. In response, assessee replied vide letter dated 10.03.2023 stating that the amount received was compulsory compensation which was exempt and property was purchased from the amount received. The AO observed that the assessee did not furnish documentary evidences in support of the above explanation. Accordingly, it was concluded that income had escaped with respect of above transaction. Accordingly, order u/s.148A(d) of the Act was passed on 29.03.2023 after obtaining approval from the Specified Authority and the order was served on the assessee on 29.03.2023. Several notices were issued as detailed at page 2 of the assessment order. The AO prepared a chart indicating two transactions of purchase of property by the assessee from the seller Anis Ahamed (others) and from Mrs. Rajesh Devi. In response to the notice issued u/s.148 of the Act, assessee submitted return of income on 17.04.2023 declaring total income of Rs.2,37,360/- under the head income from other sources. Accordingly, notice u/s.143(2) and 142(1) of the Act were issued and served on the assessee. In response, assessee submitted that he is a farmer deriving income from interest from bank and had received an amount of Rs.2,08,50,000/- from Greater Noida Authority, Government of Uttar Pradesh on account of compensation for compulsory land acquisition on 22.05.2015, out of which he has purchased agricultural land for Rs.30,00,000/- (circle rate of which was Rs.84,10,000/-) on 08.09.2015 and another agricultural land at a cost of Rs.32,00,000/-(circle rate of Rs.48,20,000/-) on 17.10.2015. In support of the same, assessee has submitted bank statement of account no.42290100008781 held with Bank of Baroda, submitted the relevant sale deed of above transactions. The AO, after verification of the documents submitted by the assessee, he observed that Stamp Duty value of the immovable property was exceeded the consideration of the property more than Rs.50,000/- i.e. 48,20,000/-in property no.1 and another property exceeded the value of Rs.12,82,500/- and according to him the above said difference has to be assessed in the hands of the assessee and to be charged under the head income from other sources u/s.56(2)(vii)(b) of the Act for the year under consideration. Accordingly, a show cause notice was issued to the assessee dated 23.01.2024. In response assessee has submitted as under:-
“In response to the show-cause notice dated 23.01.2024, the assessee has replied on 27.01.2024 & 05.02.2024 stating that section 56(2) (vii)(b) of the Act is not applicable on rural agricultural land as it was not a capital asset; that the applicability of the provisions of Section 56(2)(vii)(b) of the Act on purchase of rural agricultural land at less than the stamp duty value arose before Hon'ble Pune ITAT in the case of Mubarak Gafur Korabu vs. ITO (ITA No. 752/PUN/2018) wherein the Hon'ble Pune Tribunal, after considering the order of Hon'ble Jaipur Tribunal, held in favour of the assessee vide its order dated 05.04.2019, as under:
"10.In the totality of above definitions, we hold that agricultural land purchased by assessee is not governed by the provisions of section 56(2)(vii)(b) of the Act being not capital asset and also because of the fact that the assessee was holding it as stock in trade. Hence, it is outside the purview of said section and no addition has to be made in the hands of assessee"
Also, the assessee stated that the above definition of property' was amended vide Finance Act, 2010 and for the words 'property, the words, 'property means the following capital asset of the assessee, namely:- were replaced with retrospective effect from 01.10.2009. Thus, after amendment vide Finance Act, 2010, the definition of property u/s. 56(2)(vii) of the Act reads as under:
"(d)"property" means the following capital asset of the assessee, namely:-
(i)immovable property being land or building or both..."
Thus, in view of the above amendment in the definition of 'property', wherein the word 'capital asset' has been specifically introduced w.r.e.f. so as to keep any asset which is not a capital asset out of the ambit of Section 56(2)(vii)(b)"
Reply on 05.02.2024:
Also, the assessee has again replied on 05.02.2024 stating that reliance is further placed on the judicial precedent of Yogesh Mageswari vs DCIT /2021] 125 taxmann.com 273 (Jaipur-Trib) wherein the Hon’ble tribunal has held that since the land purchased was not a capital asset as defined under section 2(14), the provisions of section 56(2)(vii) (b) were not applicable. Also, the assessee has requested that if the explanation / clarification placed on record is not satisfied, then an opportunity of being heard in person may kindly be granted to the assessee.”
Further assessee requested for hearing through video conferencing and the same was granted. After considering the submissions of the assessee, the AO relied on the decision of ITAT Jaipur in the case of ITO vs. Trilok Chand Sain, 101 taxmann.com 391 and dismissed the point of view submitted by the assessee and proceeded to make the above said addition u/s.56(2)(vii)(b) of the Act.
Aggrieved, with the above order assessee preferred an appeal before the NAFC, Delhi before the CIT(A). Before, ld. CIT(A) assessee has filed grounds of appeal and, however, notices were issued for hearing and non-appeared or any submissions filed before the ld. CIT(A). Accordingly, the ld. CIT(A) after considering the information available on record dismissed the appeal preferred by the assessee by observing as under:-
“9.It is observed that the appellant had raised certain substantive issues including the issue of agricultural land as capital asset before the Assessing Officer, and the Ld. AO completed the assessment after duly considering the contentions put forth by the appellant. It is further noticed that the appellant has contended that, on the facts and circumstances of the case, the Ld. AO erred in not referring the matter to the District Valuation Officer in a situation where ambiguity allegedly existed between the purchase consideration and the stamp duty valuation.
9.2However, the appellant has failed to place on record any documentary evidence to demonstrate that such a request for reference to the District Valuation Officer was ever made during the course of the assessment proceedings. Even during the appellate proceedings, the appellant did not furnish any detailed written submissions or supporting documentary evidence to substantiate the grounds raised in this regard.
9.3On the contrary, it is evident from the assessment records that the Ld. AO examined the issues in detail and passed a reasoned and speaking order after due application of mind. In the absence of any corroborative material or cogent rebuttal brought on record by the appellant, I find no infirmity in the approach adopted by the Assessing Officer. Accordingly, in view of the reasoning recorded by the Ld. AO and in the absence of any contrary material or substantiated submission from the appellant, the findings of the Assessing Officer deserve to be sustained.
9.4In view of the above, addition of Rs.61,02,500/- Income from other sources u/s. 56(2)(vii)(b) during the year under consideration, regarding which the assessee failed to provide any cogent evidences during the appellate proceedings. Considering the above the addition made by the assessing officer is upheld.”
Aggrieved, with the above order assessee is in appeal before us raising following grounds of appeal:-
“1.That the impugned Assessment order passed by the Hon'ble CIT (A) is bad in law, wrong on facts and against the Principal of natural justices hence is unsustainable.
2.That The Ld. AO NFAC has erred in law and on facts no submission was made details but ignored without any justification to the assessee against order passed by the Ld. AO.That the impugned Assessment order passed by the Ld. AO is wrong, having no base and against the circumstance of the case.
3.That on facts and circumstances of the case and in Law, the assessing officer had erred in assessing the income tax of the appellant at Rs. 61,02,500/- please be deleted.
4.The Submission is submitted by by Assesses during Assessment and Ld CIT(A) Had made Ex Part order on 13/01/2026 and all the submission totally ignored by Ld Ao. The Assssee had purchased agriculture land the Assesses has purchase agriculture land which is not Capital Asset as per section 2(14) of the act and being agriculture land Deeming provision of Section 56(2)(x) will not apply. Therefore, there cannot be any tax of Income tax act 1961.
5.That the Id. Assessing officer has not given proper opportunity of being heard to the appellant and has not provided and confronted the appellant with the material collected behind the back of appellant upon which the assessing officer had relied in making additions. The assessment order is therefore illegal being in violation of the principal of natural justice and unsustainable in law.
6.That the impugned assessment order is arbitrary, illegal, bad in law in violation of rudimentary principal of contemporary jurisprudence.
7.That the appellant crave leave to add, alter, amend, delete or modify any or more of the ground of appeal before or at the time of hearing.”
Before us, assessee has filed additional ground of appeal, the same is reproduced below:-
“That the Learned Assessing Officer has erred both in law as well as on facts in assuming jurisdiction to frame the order under section 148A(d) and then notice under section 148 both dated 29-03-2023 without taking mandatory approval under section 151 from the competent Authority (approval u/s 151 is neither signed digitally nor manually), and therefore, the assessment so framed is without jurisdiction and liable to be quashed.”
For raising the above additional ground, assessee has submitted that it is a legal ground and relevant details already available on record and in this regard, he relied on the decision of Hon’ble Supreme Court in the case of NTPC Limited vs. CIT (1998) 229 ITR 383 (SC), after considering the submissions of both parties and relying on the decision of Hon’ble Supreme Court (supra), we proceeded to admit the additional ground of appeal for adjudication.
At the time of hearing, the ld. AR of the assessee submitted as under:-
2.Additional ground raised by the Assessee is against framing of order u/s 148A(d) and then issuance of notice u/s 148 both dated 29-03-2023 without taking mandatory approval u/s 151. In other words, the Approval u/s 151 is not signed by the competent authority either digitally or manually. Copy of the unsigned approval is available at page no. 2 to 4 of the paper book. It is well settled that any document which is not signed by the competent authority is only a piece of paper only.
Ground 1 to 7:
3.Solitary issue involve in all the grounds of appeal is addition on account of difference between the purchase price of agricultural land and circle rate.
4.Neither the Assessing Officer nor the CIT(A) disputed that the impugned land so purchased was not an agricultural land and situated at the distance beyond the prescribed limit from the municipality. Hence, outside the definition of 'capital asset, therefore the deeming provision of section 56(2)(vii) are not applicable.
5.This issue is squarely covered by the decision of this Hon'ble Tribunal in the case of Ramanarayan Vs ITO [ITA No. 767/Del/2024.] Hon'ble Bench held that "8........ Since, the assessee has purchased agricultural land the same is outside the definition of capital asset, therefore, the deeming provision u/s 56(2)(x) cannot be invoked in this case. Accordingly, the addition made by the Assessing Officer is accordingly deleted."
Kindly note that the above decision has authored by Hon'ble Accountant Member of this Bench. Copy of the decision is attached at page no. 8 to 13 of the Case Law Compilation.
6.In another case of Vikas Agrawal Vs ITO [ITA No. 6268/Del/2025l, this Hon 'ble Tribunal held that "5.2 .... We, therefore, hold that the same is an agricultural land eligible to be excluded from the definition of 'Capital Asset' under section 2(14) of the Act. In view of these facts, provisions of section 56(2)(vii)(b) in the light of Explanation (d) are not applicable in respect of impugned transaction. Hence addition of Rs. 59,32,667/- made u/s 56(2)(vii)(b) by the Ld. AO is, hereby, deleted."
Copy of the decision is available at page no. 1 to 7 of the paper book.
7.The Appellant assessee relied on the following other decisions as well :
- Sujata Praksh Jawale Vs ITO |ITAT, Mumbai ITA No. 7572/ Mum/2025] (kindly refer page no. 14-23 of the Case Law Compilation)
- Dipti Garg Vs ITO [Jaipur ITAT, ITA No. 633/Jpr/2023] (Kinldy refer page no. 24-34 of the Case Law Compilation)
- Yogesh Maheshwari Vs DCIT (Jaipur ITAT, ITA No. 300/Jp/2019] (Kindly refer page no. 35-39 of the Case Law Compilation)
- Mubarak Gafur Korabu Vs ITO [Pune ITAT, ITA No. 752/Pun/2018] (Kindly refer page no. 50-56 of the Case Law Compilation)
In view of above facts and in the interest of justice Hon'ble Bench is requested to:
- Quash the assessment being completed without approval u/s 151;
- Delete the addition made u/s 56(2(vii) arbitrarily.
On the other hand, the ld. DR submitted that provisions of the Act does not distinguish between agricultural land or any other property. He brought to our notice detailed findings of the AO and submitted that the findings are reasonable and further submitted the ld. CIT(A) has heavily relied on the findings in the assessment order and he relied on the same.
Considered the rival submissions and material placed on record, we have observed that the order passed by the ld. CIT(A) is ex-parte and non-prosecution. Since, the issue involved is covered and also the assessee is the farmer and the facts in the case of the assessee is already covered by the decision of Coordinate Bench. We proceeded to adjudicate the same here itself. We observed that the assessee has purchased two agricultural land worth Rs.30,00,000/-. However, the Stamp Duty valuation was much higher than the purchased price, assessee has filed relevant detailed supporting documents for the payment of Rs.30,00,000/- each for the both properties and further assessee also filed the relevant information about the source of purchase of the above said properties. The only issue before us is whether the assessee had purchased the agricultural land or not from the findings of the lower authorities. We observed that both the lower authorities have never raised any doubt on the issue of nature of land purchased by the assessee. Therefore, it is fact on record that the land purchased by the assessee is only agricultural land and the facts in the present case are exactly similar to the facts in the case of Ramanarayan (supra). In the above decision Coordinate Bench in which AM is one of the party and held as under:-
“8.Considered the rival submissions and material placed on record, we observed that the assessee purchased agricultural land and paid a sum of Rs.20,00,000/- as purchased consideration. The assessee also filed the relevant information before the Assessing Officer, the same was reproduced by him at page 2 of the order. As per the information available on record, it is clear that assessee has purchased agricultural land of 23 bighas at Village:- Prathvipur, Tehsil:- Jalalabad, Distt:- Shajahnpur. However, the stamp duty value was determined at Rs.44.54 lacs and further assessee also filed a letter from Tehsildar in the hand written form with Tehsil of Jalalabad, Dist Shajahanpur. Since, Tehsildar had issued the relevant certificate with his signature and stamp, even though, it is in written form, the Ld. CIT(A) should not have rejected the same. In our considered view the assessee has submitted the relevant information which shows that assessee has purchased the agricultural land at Jalalabad. Since, the assessee has purchased agricultural land the same is outside the definition of capital asset, therefore, the deeming provision u/s 56(2)(x) cannot be invoked in this case. Accordingly, the addition made by the Assessing Officer is accordingly deleted.”
Respectfully following the above decision, we are inclined to allow the ground raised by the assessee.
In the result, appeal filed by the assessee is allowed.