2023 (10) TMI 701 - AT - Income Tax

Nature of land - deduction u/s 54B denied - AO accepted the sale of agricultural land but denied to allow the claim for purchase of agricultural land with persuasion of section 54B - CIT(A) denied the assessee s claim that the said agricultural land is non functional, so, it cannot be accepted as a nature of agricultural land, hence, the entire claim of deduction u/s 54B was duly rejected - AR placed that the assessee had purchased and sold the land which both are agricultural in nature, there is no dispute that the said land is not an agricultural land. HELD THAT - AR vehemently claimed that the assessee submitted her affidavit before the ld. CIT(A) but the ld. CIT(A) had not confronted or rejected the affidavit. The ld. CIT(A) is silent in appeal order against the affidavit filed by the assessee to substantiate the claim related agricultural land. We respectfully relied on the order Mehta Parikh Co, 1956 (5) TMI 4 - SUPREME COURT wherein held no further scrutiny was made by the Income-tax Officer or the Appellate Assistant Commissioner of the entries in the cash book of the appellants. The cash book of the appellants was accepted and the entries therein were not challenged. No further documents or vouchers in relation to those entries were called for, nor was the presence of the deponents of the three affidavits considered necessary by either party. Thus it was not open to the Revenue to challenge the correctness of the cash book entries or the statements made by those deponents in their affidavits. The revenue has not acted in proper manner to verify the nature of land and had not confronted the affidavit filed by assessee. The ld. DR was unable to submit any contrary judgment against the submission of the assessee. In our considered view, the revenue has not taken any pain to complete the verification or has not confronted the affidavit of the assessee during the appeal stages. So, the ground of the assessee is accepted by the bench. We set aside the appeal order and the addition amount is quashed. Assessee appeal allowed.

Summary

Issues Involved:
The appeal challenges the order passed by the NFAC, Delhi under section 250 of the Income Tax Act 1961 for the assessment year 2016-17, which was based on the order of the Income Tax Officer, Ward 2(1), Udaipur under section 143(3) read with section 147 of the Act.

Issue 1: Jurisdiction and Approval
The appellant contested the legality of the order passed under sections 148/143(3), alleging lack of proper jurisdiction, approval, and satisfaction of higher authorities under section 151 of the Act. The appellant sought to quash the order on various grounds.

Issue 2: Denial of Deduction under Section 54B
The dispute arose from the denial of deduction under section 54B by the Income Tax Officer, concerning the sale and purchase of agricultural land. The appellant argued that the denial of the deduction was contrary to the provisions of law and facts on record, urging for the deletion of the addition made by the Income Tax Officer and upheld by the CIT(A).

Issue 3: Charging of Interest under Section 234
The appellant disputed the charging of interest under sections 234 A, B, C by the Income Tax Officer, denying liability for such interest. The appellant contended that the interest charged was against the provisions of law and facts, seeking its deletion in full.

Judgment Summary:
The appellant, a non-return filler, was issued a notice under section 148, leading to the denial of the claim for deduction under section 54B by the Income Tax Officer. The CIT(A) upheld the denial, stating that the land in question was not used for agricultural purposes. The appellant argued before the ITAT, presenting documents to support the agricultural nature of the land, including affidavits and deeds.

The ITAT found that the revenue authorities did not adequately verify the nature of the land or address the affidavit filed by the appellant. Relying on the precedent of Mehta Parikh & Co. v. Commissioner of Income-tax, the ITAT concluded that the revenue failed to confront the affidavit during the appeal stages. Consequently, the ITAT accepted the appellant's grounds, setting aside the appeal order and quashing the addition amount of Rs. 15,53,112.

The ITAT allowed the appeal of the assessee, emphasizing the lack of proper verification by the revenue authorities and the failure to address the appellant's submissions adequately.