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Judgment
PER KRINWANT SAHAY AM
Appeal in this case has been filed by the Assessee against the order dated 29.09.2025 passed by the CIT(A)/NFAC, Delhi for the A.Y. 2020-21. Grounds of appeal are as under :-
1.That the Lower Authorities have erred in passing an order which is bad in law, contrary to facts and deserves to be quashed as the Lower Authorities have failed to appreciate the facts, evidences, and submissions placed on record.
2.That the Lower Authorities have erred both in law and on facts in confirming the addition of Rs. 37,64,978/-received as enhanced compensation on compulsory acquisition of agricultural land by Govt. of Haryana, by wrongly applying section 56(2)(vii) of the Act.
2.1That the Lower Authorities have failed to appreciate that the land compulsorily acquired was rural agricultural land, not a "capital asset" u/s 2(14); hence, no capital gains arise and the compensation/enhanced compensation is not taxable.
2.2That the Lower Authorities have erred in holding that exemption u/s 10(37) is not available to the appellant-company without appreciating that the appellant never claimed exemption under section 10(37); the receipt is outside the charging provisions altogether.
2.3That the Lower Authorities have erred in law in confirming taxation us 56(2)(vii) provision applicable only to Individuals and HUFs, and not applicable to companies
3.That the Lower Authorities have erred in confirming the addition of Rs. 76,73,353/-as business income by treating the rural agricultural land as "stock-in-trade," ignoring that the land is inherently agricultural, evidenced by Girdawari, Jamabandi, certificates of Sub-Registrar, Tehsildar, and sale deeds.
3.1That the Lower Authorities have failed to appreciate that the agricultural land sold was rural agricultural land situated in a village with population < 10,000 and more than 8 km from municipal limits, as certified by Govt. authorities therefore it is not a capital asset u/s 2(14) and any surplus from its sale is not taxable.
3.2That the Lower Authorities have erred in holding that book treatment as "stock-in-trade" changes the intrinsic character of land; whereas agricultural land continues to remain agricultural until lawfully converted.
3.3That the Lower Authorities below failed to provide any finding to contradict the evidences filed, and the addition is based on presumptions rather than facts.
4.That the Lower Authorities upheld additions without considering the detailed submissions, Certificates sale deeds, land records, and other evidences filed by the appellant, thereby violating the principles of natural justice.”
During proceedings before us the Ld. Counsel of the assessee submitted before the Bench that both the AO in the assessment order and Ld. CIT(A) in the appellate order have not considered the detailed submissions filed by the assessee before them. They have also not taken into consideration the certificate issued by the Government of India and other documents like sale deed, records etc. filed as evidences by the appellant before them. Accordingly, the Ld. Counsel argued that it is a gross violation of natural justice that lower authorities have decided the case without considering submissions filed by the appellant. Even record which were filed have not been considered and accordingly made a prayer that the matter may be remanded back to the file of the AO for reconsideration of all the submissions and documents filed by the assessee.
Per contra the ld. DR relied on the order of the AO and the ld. CIT(A) in the appellate order.
We have considered the findings given in the assessment order and the Ld. CIT(A) in the appellate order. We have also considered the paper book brought on record by the Counsel of the assessee which he certified that these papers were filed before lower authorities.
We find that all the documents and certificate which have been filed by the appellant have not been considered properly by lower authorities. Accordingly, we are of this considered view that natural justice demands that the matter should once again be looked into by the AO. Thus, the case is remanded back to the file of the AO with the direction to give adequate opportunity to the assessee of being heard and the appellant is also directed to file all details certificates and papers before the AO in time so that the case may be assessed at the earliest.
In the result, the appeal filed by the assessee is allowed for statistical purpose.