AI Structured Summary
Not yet generated for this judgment
Judgment
PER BRAJESH KUMAR SINGH, AM,
This appeal by the assessee is directed against the order of National Faceless Appeal Centre (NFAC) [hereinafter referred to as the ‘Ld. CIT(A)] dated 13.06.2025 arising out of the assessment order dated 24.12.2018 passed u/s 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as the ‘the Act’) by the Income Tax Officer, Ward 3(3), Gurugram (hereinafter referred to as the ‘AO’) pertaining to Assessment Year (A.Y.) 2011-12.
The assessee had filed his return of income declaring income of Rs. 10,44,290/-on 30.07.2011. As per information available with the AO, the assessee had purchased 3 immovable properties on 28.10.2010 alongwith other co-owners, in which the share of the assessee was Rs. 1,30,06,796/-(Rs5,20,859/- + Rs12,50,000 /-+ Rs1,12,35,937/-). The assessee explained the source of investment in these immovable properties from the sale consideration of R.s 4,75,00,000/- received by the assessee on sale of his agriculture land situated at Village -Ullawas Tehsil Sohna, Gurugram sold through "Agreement to Sale". It was submitted by the assessee that vide agreement to sale, the assessee had received full sale consideration and had also given possession of the land to the purchaser of property. The AO noted that as per certification submitted by the assessee, the land was situated beyond 8 KMs from the Municipal Limits of Tehsil Sohna, Distt. - Gurugram. However, on verification by the AO, it was noted by him that in this case the land in question was within the limits of 8KMs from the Municipal Limit of Gurugram and therefore qualified to be a capital asset u/s 2(14) of the Act, and the same was liable for capital gains as per provisions of section 45 of the Act.
The AO noted that the assessee had not disclosed any capital gains earned on the above transaction. Accordingly, notice u/s 148 of the Act was issued to the assessee on 21.03.2018, which as noted by the AO was served upon the assessee through registered post / speed post. Thereafter, the assessee filed his return of income declaring income of Rs. 10,44,290/- on 01.09.2018 in response of notice u/s 148. According to the AO, the assessee was not complying to the notices issued during the course of assessment proceedings and issued a show cause notice to the assessee as to why the whole of the capital gains amounting to Rs. 2,94,93,204/- may not be brought to tax under the head capital gains.
The assessee filed a reply through e-mail on 05.12.2018 in response to the show cause notice and reiterated its earlier submissions that the land sold was situated beyond 8 KMs (nearly 15 Kms) from the municipal limit of Tehsil Sohna and therefore, was not chargeable to capital gains. The AO was not satisfied with this explanation and issued another show cause notice with notice u/s 142(1) of the Act to the assessee on 09.12.2018 about the chargeability of LTCG on the land sold by the assessee during the year under consideration and asked the assessee to submit fresh computation of LTCG alongwith supportive documents as the land sold was a capital asset as it fell within 8 kms. of 'Gurgaon Municipal limit'.
The assessee submitted its reply, which was noted by the AO that it was on the similar lines as submitted earlier by the assessee. The relevant extract of the said reply as reproduced in the assessment order is reproduced as under:
“That I have submitted distance certificate issued by Tehsildar wherein it is That categorically certified by revenue authority (Tehsildar) that the distance of subject land in question was 20 kms away from the municipal limits. Copy of the same is annexed herewith. Therefore, the land is not subject to taxation being agriculture and beyond 20 kms. from Municipal limits. Hence no capital gain is due on sale of subject land. Your attention is also invited to our submission dated 14.12.2018 copy of cover letter is annexed wherein it was submitted that assessee has invested the proceed from sale of land in purchase of further agricultural lands to the extent of Rs. 2,79,05,0617. Copies of deeds for purchase of lands and bank statements reflecting payments specified in these deeds were also submitted........” (emphasis supplied by us)
However, the above plea of the assessee was not accepted by it and the AO observed that while the assessee was claiming distance from 'Sohna' but on verification it was noted that the land in question was situated within 8KMs (in fact 2 kms.) from the municipal limit of 'Gurgaon' and in support of this, placed the Inspector’s Report and distance certificate from Naib Tehsildar, Gurgaon and affixed it in the assessment order, which are reproduced a under:
Here, we note that as per Inspector’s report the distance of the land sold was around 2 Kms, away from Gurugram Municipal limits and the land was situated in the Tehsil Sohna, whereas the Naib Tehsildar in his report states that the land sold was about 15 Kms. from Sohna Municipal limits and 2 Kms. from Gurugram Municipal limits (Ghata).
On the basis of the above reports, the AO considered the land within the 8 KMs of the municipal limits of Gurugram and held that the sales receipts on the sale of the land in consideration were liable for capital gains. After allowing Rs. 15,00,000/- towards the cost of acquisition on estimate basis and allowing the cost towards acquisition of three properties as an investment in purchase of land post sale of the said land for Rs. 4,75,00,000/- the AO assessed capital gains at Rs. 1,80,94,939/-. The relevant discussion in the assessment order is reproduced as under:
“ As mention above Inspector Reports and Distance Certificate from Tehsildar Wazirabad, Gurgaon, it is noted that the land in question was situated within 2 kms. from the municipal limit of 'Gurgaon is confirmed. As no details of cost of acquisition for the above mentioned properties has been provided by the assessee, for natural justice an amount of Rs. 15,00,000/- is allowed in this case as cost of acquisition of the above mention properties. Furthermore, assessee has neither submitted calculation of LTCG nor claimed any exemption. However, assessee has furnished copy of conveyance deed vide which he has purchased agriculture land. So without claiming the exemption but document available on record, the investment made in purchase agriculture land is allowed as exemption u/s 54B to the tune of Rs 2,79,05,061/-accordingly, computation of LTCG is made as under:-
The details of Capital Gain are under:
Full Consideration: Rs. 4,75,00,000/-Less: Indexed Cost of Acquisition: Rs. 15,00,000/-Less: Exemption u/s 54B: Rs. 2,79,05,061/-Net Long Term Capital Gain: Rs. 1,80,94,939/-“
Aggrieved with the said order, the assessee filed an appeal before the Ld. CIT(A).
The Ld. CIT(A) dismissed the appeal of the assessee. The relevant extracts of the order of the Ld. CIT(A) are reproduced as under:
“6.7It is found that the assessing officer has carried out enquiries and third-party enquiries. The assessing officer has obtained a report from the inspector by carrying out for enquiries wherein it is confirmed that the impugned that is situated within 2 km of the municipal limits of Wazirabad. Gurugram. Further, the assessing officer has reproduced the report of the inspector as well as the distance certificate received from Deputy Tahshildar, Wazirabad, Gurugram dated 24th of December, 2018. It is found that the inspector and the municipal limits of Wazirabad, Gurugram, has certified that the impugned land was situated within 2 km of the municipal limit of the Wazirabad, Gurugram As far as the contention of the assessee that such report was submitted by the Nayab Tahshildar, Wazirabad, Gurugram on 24th December 2018 and the inspector has submitted the report on 21st December, 2018 and that the Nayab Tahshildar, Wazirabad, Gurugram came into existence in October, 2016, it is found that the deputy Tahasildar, Wazirabad Gurugram has clearly mentioned in its report that the distance of the impugned land in 2010-11 was less than 2 commenters from the municipal limits of the Gurugram The assessee has not submitted any contrary evidence to dispute these specific findings that the impugned land was situated within 2 km of the municipal limits of the Gurugram in FY 2010-11 as has been found and certified by the Dy Tahasildar in his report
6.8Further, as per as the contention of the assessee that the assessing officer has not considered the distance of the assessee from municipal limits of Sohna in which Tahasil the impugned land situated it may be appreciated the distance of the agricultural and is to be considered from any nearest municipal limits and not from the municipal limits in which Tahasil or land revenue village such land situated at in the case of the assessee the nearest municipal limit pertains to the that of Gurugram which is taken by the assessing officer on the certificate issued by the deputy Tahsildar
6.9It may be appreciated that when there is a dispute with respect to the distance of transacted land, the certificate issued by the competent authority administering the land records cannot be set aside and ignore to determine whether the impugned land falls within the distance prescribed in the provisions of section 2 (14). The reliance is placed on the decision of Hon'ble Madras High Court in the case of Commissioner of Income-tax, Coimbatore Commissioner of Income-tax. Coimbatore Vs K.R.N. Prabhakaran (HUF) [2016] 73 taxmann.com 305 (Madras) wherein it is found that Assessee claimed exemption in respect of agricultural land sold by it during relevant assessment year on ground that same was situated beyond 8 kms of municipal limit. Assessing Officer, however, relying on report of investigation wing held that land was situated within 8 kms of municipal limit and assessee was liable to capital gain tax and accordingly, assessed long term capital gains. Survey Department of State government and Tahsildar of relevant zone, had consistently certified that land was situated beyond 8 kms from Corporation limits of Coimbatore The Hon'ble High Court held that revenue department and survey authorities were competent to measure land and issue appropriate certificates, and same could not have been ignored by Assessing Officer, by relying on report of investigation wing It is also held that amongst report of departmental inspector vis-a-vis certificates of revenue authorities, produced before Assessing Officer latter should be given weightage and accepted, unless contrary is proved. For the sake of reference the relevant para from the order of the Hon'ble High Court is reproduced as under-
"26.In the light of the decisions of the Courts, considered in the foregoing paragraphs and the question called upon to decide, as to whether, both the fact finding authorities, are right in accepting the reports of the Tahsildar and on the aspect, as to how, the distance between the agricultural land and the nearest Municipality has to be measured, vis-a-vis, the report of the departmental inspector, we are of the view that the decision of the fact finding authorities that there cannot be any justifiable reason to reject the certificates produced, is correct. Our view is also fortified by the decision of the Punjab and Haryana High Court in Lal Singh (supra)
27.As rightly contended by the respondent, revenue department and survey authorities are competent to measure the land and issue appropriate certificates, and the same cannot be ignored by the assessing officer, by relying on the report of the investigation wing in such matters, it would be appropriate, to take the assistance of the survey authorities, to arrive at the conclusion. On the facts and circumstances of this case: we also wish to state that in the matter giving weightage to the evidence adduced in this regard report of the departmental inspector vis-a-vis certificates of the revenue authorities, produced before the assessing officer the latter should be given weightage and accepted, unless the contrary is proved
6.10.Therefore, considering the facts and circumstance of the case and finding of the fact recorded by the assessing officer that the impugned land is situated within 2 km of the municipal limits of the Gurugram on the basis of the certificate issued by the deputy Tahsildar, there is no infirmity in the order of the assessing officer Therefore, the grounds of appeal contested by the assessee at serial No. 1 to 3 are dismissed.
7.As per as the assertion of the assessee that no benefit was given by the assessing officer while framing the assessment order for the purchase of the other agricultural land, it is found that the assessee was granted exemption under section 54B of the IT Act amounting to Rs. 2,79.05.061/- Therefore, such assertion of the assessee is factually incorrect, hence dismissed.
8.In result, the appeal of the assessee is dismissed.” (emphasis supplied by us)
Aggrieved with the said order, the assessee filed an appeal before the us, with the following prayer:
“ i. to delete the above addition and pass favorable order by presence in person so that explanation be made
ii.to pass interim order by staying the demand and penalty orders initiated till the pendency of the appeal
iii.to pass such other orders and further orders as may be deemed necessary on the facts and in the circumstances of the case.”
The assessee also filed concise grounds of appeal and the same are reproduced as under:
“1.That the learned NFAC/CIT(A) has erred in facts and in law in upholding the assessment order and confirming an addition of Rs. 1,80,94,939/- to the total income of the appellant. The impugned order dated 16.08.2024 is arbitrary. perverse, contrary to the record, and liable to be quashed in limine.
2.That the learned authorities below failed to appreciate that the appellant is a bona fide agriculturist and a displaced person rehabilitated post-Partition in 1947 by allotment of agricultural land, which has remained ancestral/coparcenary in nature under the Mitakshara Law. The property sold constituted ancestral/coparcenary land, as recognized in CWT v. Chander Sen (161 ITR 370, SC) and CIT v PL Karuppan Chettiar (197 ITR 646, SC), and the computation of capital gains, if any, ought to have been made accordingly
3.That the learned NFAC gravely erred in passing the appellate order dated 13.06.2025 even before the expiry of the time allowed for filing the reply in notices dated 06.06.2025, which permitted the appellant time until 16.06 2025. The order is void ab initio, having been passed in gross violation of the principles of natural justice and fair opportunity.
4.That the learned Assessing Officer and CIT(A) erred both in law and on facts in treating the agricultural land as a 'capital asset under section 2(14) despite the appellant producing valid distance certificates proving that the land is situated beyond 8 km from municipal limits as per CBDT Notification No. 9447 dated 06.01.1994 The authorities ignored correct certificates and relied on an incorrect certificate issued by Wazirabad Tehsil, which itself was notified only in 2016. Judicial precedents such as Subha Tripathi v DCIT (58 SOT 139, Jaipur) and Narayan v ITO (2024 ITAT Delhi) clearly hold that the relevant distance is to be reckoned as on 06.01.1994.
5 That the learned authorities misinterpreted the appellant's post-sale investment as implying knowledge of capital asset status. The investment was made solely for the family's future welfare and cannot be construed as an admission of capital gains liability.
6.Without prejudice, that the learned authorities erred in denying exemption under Section 54F despite the appellant satisfying all statutory conditions and having invested the net consideration in a residential plot intended for construction of a residential house within the prescribed time The denial is contrary to the settled legal position that purchase of land for constructing a residential house qualifies for Section 54F relief
7.That the impugned assessment and appellate orders are bad in law, non-speaking. and violative of natural justice, as the detailed submissions, documentary evidence, and certificates furnished by the appellant were not considered or dealt with
8 That the learned authority further erred in law and on facts in holding that initiation of penalty proceedings under Section 271(1)(c) was premature and required no adjudication. The finding is untenable and deserves to be set aside.
9.That each of the above grounds is without prejudice to the others.
10 That the appellant craves leave to add, alter, amend, or withdraw any of the above grounds at any time before the final hearing of the appeal, including after inspection of records which have not yet been provided.”
The Ld. Counsel for the assessee reiterated its submission made before the AO / CIT(A) and also filed a legible copy of the certificate dated 24.12.2018 issued by Naib Tehsildar, Wazirabad (GGM), both in Hindi and English which are reproduced as under:
Respected sir,
This is certified that the information demanded by the department as detailed for requirement. This area/place given is situated in Allawas/Wazirabad District Gurugram in the year 2010-2011 in tehsil Sohna, district Gurugram. The detailed in the detail in letter area/khasra number is within Municipal council Sohna Limits in the year 2010-11, it is around at 15 km (Fifteen Kilometer) and 2 km from Municipal Corporation Gurugram limits (from Ghata).
Report is presented for necessary action and service please.
Sd/- PATWARI C/S NAIB TEHSILDAR
24.12.18WAZIRABAD (GGM)
Translated & Verified Sultan Singh Jaiman Notary 41.02.26. Gurgaon (Hr.) India
सेवा में,
तसदीक की जाती है कि विभाग द्वारा मांगी गई सूचना पत्र में वर्णित रकबा/क्षेत्र सीमा उल्लावास तहसील वजीराबाद जिला गुरुग्राम वर्ष 2010-11 व तहसील सोहना जिला गुरुग्राम के अन्दर आता है जो पत्र में वर्णित क्षेत्र/खसरा न0 नगर पालिका सोहना की सीमा से वर्ष 2010-11 में लगभग 15 किलो मीटर (पन्द्रह किलो मीटर) पर स्थित है व नगर निगम गुरुग्राम की सीमा से (घाटा से) लगभग 2 किलो मीटर(दो किलो मीटर) वर्ष 2010-11 में है। रिपोर्ट आगामी कार्यवाही हेतु सेवा में पेश है।
हस्ताक्षर पटवारी सी./एस नायब तहसीलदार 24.12.18 वजीराबाद (गुरुग्राम)
Translated & Verified Sultan Singh Jaiman Notary 41.02.26. Gurgaon (Hr.) India
It was further submitted by the Ld AR that Ghata was notified as a municipality vide notification dated 03.10.2016 and therefore, by virtue of certificate dated 24.12.2018 issued by the Naib Tehsildar that the land sold was within 2 Kms of Municipal limits of Ghata will not support the case of the AO as Ghata was not a municipality in F.Y. 2010-11 and therefore the order of the AO/CIT(A) were not sustainable as the order of the AO was based on an incorrect certificate issued by Wazirabad Tehsil, which itself was notified only in 2016 and could not have been relied for the land sold by the assessee in F.Y. 2010-11 relevant to A.Y. 2011-12. In this regard the assessee relying upon judicial precedents such as Subha Tripathi v DCIT (58 SOT 139, Jaipur) and Narayan v ITO (2024 ITAT Delhi) submitted that the relevant distance for computing distance for a land to qualify as capital asset within the meaning of section 2(14)(iii)(b) of the Act is to be reckoned as on 06.01.1994 when the Board Notification No.- 9447 for calculating the 8 KMs from a municipality was notified
On the other hand, the ld. Sr. DR supported the orders of the AO /CIT(A).
We have heard both the parities and perused the material available on record. In this case, the assessee had sold the land situated at Village -Ullawas Tehsil Sohna, Gurugram for Rs. 4.75 crores and had also purchased three plots of lands for consideration as per the details mentioned in para 2 of this order. The assessee had not offered any capital gains on the sale of the land on the ground that the land sold was beyond 8 kms. of municipal units of Sohana Municipality. However, the AO did not accept the above claim of the assessee on the ground that the land sold was within 8 Kms of the Municipal limits of Gurugram and it was liable to capital gains. Thereafter, the AO computed capital gains and allowed deduction u/s 54B of the Act as against 54F of the Act as claimed by the assessee, on the total investment of land amounting to Rs. 2,79,05,061/-. The first dispute in this case is as to what will be the criterion for determining the distance of 8 KMs of a land from the municipal limits to consider it as a capital asset within the meaning of section 2(14)(iii)(b) of the Act i.e. whether the land sold will be a capital asset by virtue of it being within 8 Kms of municipal limits of Gurugram in this case as per the AO or whether it will not be capital asset as it being beyond 15 Kms from the municipal limits of Sohana, the tehsil in which the land was situated as claimed by the assessee In this regard, we agree with the findings of the Ld. CIT(A) in para 6.8 on page no. 6 of the order wherein it was held that the distance of the agricultural land was to be considered from any nearest municipal limits of the land sold in consideration and not from the municipal limits in which Tahsil or land revenue village in which such land situated. In the case of the assessee according to the AO the nearest municipal limit pertains to the that of Gurugram which is taken by the assessing officer on the certificate issued by the deputy Tahsildar, Wazirabad, Gurugram and on the basis of his Inspector’s report which are reproduced earlier on page nos. 4 in this order. Further, we note that the assessee in his reply (as reproduced on page no. 5 of this order) only stated that that the distance of subject land in question was 20 kms away from the municipal limits in its submissions before the AO during the assessment proceeding but remained silent from which municipality the land was beyond 20 Kms. Similarly, in ground no. 4 the assessee submitted that assessee produced valid distance certificates proving that the land was situated beyond 8 KMs from municipal limits but remained silent that from which municipality the land was beyond 8 kms.
On the other hand, as discussed above, the AO has placed evidence by way of Inspector’s report dated 21.12.2018 and Naib Tehsildar’s report dated 24.12.2018 to support his contention that the land sold was within 2 Kms. from Municipal Corporation, Gurugram limits from Ghata.
The assessee has further contented in ground no. 4 that judicial precedents such as Subha Tripathi v DCIT (58 SOT 139, Jaipur) and Narayan v ITO (ITA 268/Del/2024 for AY 2011-12, Delhi) clearly hold that the relevant distance is to be reckoned as on 06.01.1994 when the Board Notification No.- 9447 was notified. In this regard it was submitted by the assessee that Ghata was notified as a municipality vide notification dated 03.10.2016 and therefore, by virtue of certificate dated 24.12.2018 issued by the Naib Tehsildar that the land sold was within 2 Kms of Municipal limits of Ghata will not support the case of the AO as Ghata was not a municipality in F.Y. 2010-11 and therefore the order of the AO/CIT(A) were not sustainable as the order of the AO was based on an incorrect certificate issued by Wazirabad Tehsil, which itself was notified only in 2016 and could not have been relied for the land sold by the assessee in F.Y. 2010-11 relevant to A.Y. 2011-12.
In this regard the relevant extracts of the orders of the Tribunals relied upon by the assessee are reproduced as under:
Subha Tripathi v DCIT (supra) Jaipur Tribunal for A.Y. 2008-09
“We have considered the rival submissions as well as the materials on record. The question arises for our consideration and adjudication is whether the land in question though located beyond 8 kms from the Municipal Limits of Jaipur Municipality as on the date of notification dated 06-01-1994 but subsequently it falls within the distance of 8 kms from the Municipal Limits due to the expansion of the Municipal Limits would still be regarded as agricultural land not falling in the definition of capital asset in terms of Section 2(14)(iii)(b) of the Act. There is no dispute that Jaipur Municipality has been duly notified vide said notification dated 6-01-1994 and as on the date of said notification, the land in question was beyond 8 kms from the Municipal Limits exists at that point of time. The dispute arises because of the expansion of Municipal Limits and thereby the said distance from the Municipal Limits as on the date of sale of the land in question is only 2 kms and thereby the authorities below have treated the land in question as not falling under the exclusion clause of Section 2(14)(iii)(b) of the Act. There is no quarrel on the point that as per sub-clause (b) of clause (iii) of Section 2(14), the notification of the Central Govt. is mandatory to bring the land in the definition of capital asset which is not located within the limits of the Municipality but located within the distance of 8 kms from the local limits. So far, the agricultural land which is located in the limits of Municipal Limits, the same will be treated as capital asset and no further requirement is to be examined. Since the land in question is located outside the local limits of Municipality, therefore, in order to determine whether the land in question falls under mischief of sub-clause (b) of Section 2(14(iii) of the Act, the distance of 8 kms has to be taken into account in terms of notification dated 6-01-1994. As per explanation 2 of the said notification dated 6-01-1994, the Municipal Limits is to be the limits as existing on the date on which the notification is published in the official gazette. We quote the explanation 2 of the notification (supra) as under: "(2) The reference to the municipal limits or the limit of Cantonment Board in the Schedule to this notification is to the limits as existing on the date on which on which the notification is published in the official gazette." If the stand of the Revenue is accepted that the distance of 8 kms should be considered from the Municipal Limit exists as on the date of the sale of land then it would render the notification issued by the Central Govt. as ineffective and unworkable/otios. As it is made clear by explanation 2 of the said notification that Municipal Limits is to be considered as existing on the date on which notification is published in the official gazette, therefore, the date of notification is relevant and material point to determine the distance of 8 kms from Municipal Limits. There is no amendment or withdrawal of the said notification except a recent amendment has been brought in the statute by the Finance Act 2013 whereby the requirement of said notification has been dispensed with for invoking sub-clause (b) of clause (iii) of Section 2(14) of the Act w.e.f. 01-04-2014. Thus it is discernible from the notification dated 06-01-1994 and the recent amendment in the statute whereby the said notification has been dispensed with that the distance of 8 kms has to be considered from the Municipal Limits as exists on the date of notification for the purpose of invoking sub clause (b) of clause (iii) of Section 2(14) of the Act. Accordingly we hold that the land in question which was located beyond 8 kms from the Municipal Limits as on 6-01-1994 when the notification was published in the official gazette, the same would fall under the exclusion clause of the term 'capital asset' as per provisions of 2(14)(iii)(b) of the Act.
Narayan v ITO (supra) Delhi Tribunal for A.Y. 2011-12
“7.The present appeal is to be decided solely on one point that the agricultural land sold by assessee was within the municipal limit of Gurgaon. The Ld. counsel for the assessee has submitted that as per the notification No. 9447 Dt. 6-1-1994 the land situated within 8 KM will be deemed in Gurgaon municipal area. The land is situated outside the eight kilometer and will not be considered in the municipal limit of Gurgaon. Assessee has also stated that agricultural land sold in question was outside the municipal limits of eight kilometer which was also mentioned in the sale deed. Perusal of the order of Ld. CIT(A) reveals that the Ld. CIT(A) has not mentioned the date when the municipal limit of Gurgaon was extended. There was no other notification of CBDT after the date of 6-1-1994 by which the limits were extended. Assessee has sold agricultural land which was not situated within the municipal limit of Gurgaon. Due to the expansion of the municipal limit the area of agricultural land would still as agricultural land not filing definition of the capital assets.
8.The AO and Ld. CIT(A) has wrongly held that sold agricultural land was within the prescribed limit of the municipal area of Gurgaon.
9.The assessee has sold the agricultural land which has not come to the preview of the capital asset in term of section 2(14)(iii)(b) of the Act. Assessment Order made by the AO regarding the income of assessee was not sustainable.
10.From the above discussion the appeal is liable to be allowed and allowed accordingly. The order passed by the CIT(A) and the AO are set aside.”
We relying upon the order of the coordinate bench of the Tribunal in the case of Narayan Vs ITO (supra) for AY 2011-12 and the order of the Tribunal Jaipur in the case of Subha Tripathi Vs DCIT (supra) hold that the relevant distance of the land sold has to reckoned from the nearest municipal limits as per the Board Notification No.- 9447 dated 06.01.1994. Further, the coordinate bench of the Tribunal in the case of Narayan v ITO (supra) has held that there was no other notification of CBDT after the date of 6-1-1994 by which the limits were extended. Therefore, in light of this finding, in the present case, the material date to determine the relevant distance of the land sold has to reckoned from the nearest municipal limits as on 06.01.1994. However, this aspect that whether the land sold by the assessee was within 8 kms of the Gurugram municipality or any other nearest municipality on 06.01.1994 has not been examined either by the AO or Ld. CIT (A). In this regard the assessee has also not produced any evidence in support of his claim that the land sold was beyond the 8 Kms limits of the Gurugram Municipality or any other nearest municipality as on 06.01.1994.
Therefore, in view of the above facts, the order of the AO cannot be sustained. However, the claim of the assessee that the land sold was beyond 8 kms of the municipal limits as on 06.01.1994 requires factual verification. Similarly, the claim of the assessee that it was entitled for deduction under section 54 F of the Act as against deduction under section 54 B of the Act as allowed by the AO in the event of the land sold is considered as capital asset by the AO also requires factual verification.
Further, in ground no. 3 the assessee submits that the learned NFAC gravely erred in passing the appellate order dated 13.06.2025 even before the expiry of the time allowed for filing the reply in notices dated 06.06.2025, which permitted the assessee time until 16.06 2025 to submit its reply and therefore , the order passed was void ab initio, having been passed in gross violation of the principles of natural justice and fair opportunity. Vide this ground, the assessee has a grievance of denial of reasonable opportunity of being heard by the Ld. CIT(A) before dismissing the appeal of the assessee.
Therefore, considering all the above facts, we set aside the orders of the AO and Ld. CIT (A) and remand the matter back to the file of the AO for the de novo assessment in accordance with the law keeping in view our above observations after giving reasonable opportunity of being heard to the assessee. Therefore, all the grounds of the appeal filed by the assessee are allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.