2022 (6) TMI 728 - AT - Income Tax

Exemption u/s. 54B - capital gain on sale of ancestral land in the hands of appellant - assessee explained specific asset sold was HUF property and the land was purchased in the name of the wife as the stamp duty to be paid for women was much less and since his wife was also a co-parcener, hence the claim may be allowed. - Assessee filed a copy of the 'Jamabandi' and copy of the Purchase Deed with a submission that these documents were available before the CIT(A) and the AO, however, they failed to consider or discuss them - also there is no finding on record about the status of the land whether it is HUF or not. HELD THAT - We find on a consideration of the material available on record that the issue on facts needs to be addressed. Parties were required to argue whether the remand be made to the AO or the CIT(A). Both the parties agreed that the remand be made to the AO. Accordingly, on a consideration of the facts, circumstances and submissions of the parties before the Bench, it is deemed appropriate to set aside the impugned orders and restore the issues back to the file of the AO to ascertain the status of the, and which was sold and then decide the issue in accordance with law after giving the assessee a reasonable opportunity of being heard. The assessee in its own interests is directed to ensure full and proper participation before the AO and not abuse the trust reposed. It is made clear that in the eventuality of abuse of the trust reposed, the AO shall be at liberty to pass an order on the basis of the material available on record. Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
1. Correctness of the order dated 27.06.2019 of CIT(A) Karnal regarding the addition of capital gain on the sale of ancestral land.
2. Disallowance of exemption claimed under section 54B of Income Tax Act.
3. Disallowance of deduction under section 54B against the sale of ancestral agricultural land.
4. Invocation of provisions of section 147/148 of income tax Act.

Analysis:

Issue 1:
The assessee's appeal challenges the order of CIT(A) upholding the addition of capital gain on the sale of ancestral land. The assessing officer invoked sections 147/148 of the Income Tax Act due to unexplained cash deposits in the assessee's bank account. The assessee claimed the cash deposits were from the sale of agricultural land and produce. The AO disallowed the exemption under section 54B as the land was purchased jointly by the assessee's wife, not in his name. The CIT(A) dismissed the claim, leading to the appeal before ITAT.

Issue 2:
The second ground of appeal pertains to the disallowance of the exemption claimed under section 54B of the Income Tax Act. The assessee argued that the specific asset sold was Hindu Undivided Family (HUF) property, and the land was purchased in the wife's name due to lower stamp duty for women. However, the CIT(A) rejected this claim. The ITAT considered the submissions and decided to remand the issue back to the AO for further verification of the status of the land and subsequent decision in accordance with the law.

Issue 3:
The third ground of appeal concerns the disallowance of deduction under section 54B against the sale of ancestral agricultural land. The ITAT noted that there was no finding on record about the status of the land being HUF or not. Both parties agreed to remand the issue to the AO for clarification on the status of the land. The ITAT set aside the impugned orders and directed the AO to decide the issue after giving the assessee a reasonable opportunity to be heard.

Issue 4:
The final ground of appeal challenges the assessing officer's invocation of the provisions of section 147/148 of the Income Tax Act. The ITAT's decision to remand the issues back to the AO for further examination implies a review of the AO's actions under sections 147/148. The ITAT allowed the appeal for statistical purposes, emphasizing the need for the assessee's full and proper participation before the AO to ensure a fair decision-making process.

In conclusion, the ITAT's judgment remands the issues back to the AO for detailed examination and decision-making, emphasizing the importance of the assessee's active participation in the process.