Suman vs Assistant Commissioner Of Income Tax

PER VIKAS AWASTHY, JM:

These two appeals by two different assessees are taken up together as identical issues are involved in both appeals. For the sake of convenience, facts are narrated from ITA No.59/Del/2026.

This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-30, New Delhi [in short ‘the CIT(A)’] dated 11.11.2025, for Assessment Year 2022-23.

Shri Anil Chopra, appearing on behalf of the assessee submits that a search and seizure action u/s.132 of the Act was conducted on Sudha Gupta, Devendra Gupta and others on 24.08.2022. Office and residential premises of Shri Atul Jain (proprietor, M.B Decco International) were also covered under the search. During the period relevant to the assessment year under appeal, the assessee had sold immovable property to Shri Atul Jain. The immovable property sold by the assessee was agricultural land situated in the revenue estate of Village Farmana, Tehsil Kharkhoda, District Sonipat. Since the agricultural land of the assessee was beyond 8 km from the nearest municipal limits of Tehsil Kharkhoda, the consideration received on sale of agricultural land was exempt from tax. The Assessing Officer (AO), in ex-parte proceedings made addition of Rs.14,07,500/- holding it to be undisclosed capital gain from sale of land. The assessee carried the issue in appeal before the CIT(A) but remained unsuccessful. The CIT(A) upheld the findings of AO that the agricultural land sold by the assessee is a capital asset u/s 2(14) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). Admittedly the assessee could not produce documentary evidence before the lower authorities to substantiate that the agricultural land was beyond 8 km from the municipal limits. The ld. Counsel placed on record a report from Tehsildar, Kharkhoda, to substantiate that the agricultural land of the assessee in Village Farmana is more than 15 km from the nearest municipal limits. The ld. Counsel, in light of the said report, prayed for deleting the addition made by the AO.

Per contra, Shri Manoj Kumar, representing the Department vehemently submitted that no documentary evidence was furnished by the assessee before the AO and the CIT(A) to show that the agricultural land was beyond 8 km from the nearest municipal limits. In absence of any documentary evidence, the CIT(A) upheld the addition.

Both sides heard, orders of the authorities below examined. The short issue for consideration in the present appeal is whether the consideration received by the assessee on sale of agricultural land falling within the revenue estate of Village Farmana, District Sonipat, is a capital asset within the meaning of section 2(14) of the Act or is exempt from tax being beyond 8 km from the nearest municipal limits.

The assessee has placed on record a report from Tehsildar, Kharkhoda dated 19.02.2026. A perusal of the report shows that the land of Village Farmana is approximately 15 km away from Kharkhoda and outside the municipal limits. In light of the aforesaid report placed on record by the assessee, I find merit in the submissions of the assessee. Since the land of the assessee is beyond 8 km from the nearest municipal limits, it does not fall within the meaning of capital asset u/s 2(14) of the Act. Hence, the addition of Rs.14,07,500/- is directed to be deleted.

In the result, impugned order is set aside and appeal of the assessee is allowed.

Both the sides are unanimous in stating that the issue involved in the present appeal is identical to the one raised in ITA No.59/Del/2026. Hence, the submissions made would equally apply to this appeal as well.

A perusal of the impugned order shows that the addition of Rs.52,80,000/- on account of capital gains is sustained by the CIT(A) for parity of reasons, i.e., the assessee had failed to furnish any documentary evidence to show that the agricultural land sold by the assessee does not fall within the definition of capital asset u/s 2(14) of the Act. Undisputedly, the land of assessee also falls in the revenue estate of Village Farmana, District Sonipat. A report from the Tehsildar has been placed on record in ITA No.59/Del/2026, which shows that the revenue estate of Village Farmana, District Sonipat, is beyond 15 km from Kharkhoda, the nearest municipal limits. The findings given while adjudicating the appeal in ITA No.59/Del/2026 would mutatis mutandis apply to the present appeal. For parity of reasons, appeal of the assessee is allowed.

To sum up, ITA Nos. 59 & 122/Del/2026 are allowed.