2024 (2) TMI 213 - AT - Income Tax

Addition as long term capital gains and addition as agricultural income - eligibility of exemption u/s 54 - co-ownership in land - HELD THAT - What we understand is that the family sold the impugned land. Being the daughter of the family, the assessee also received 1/5th share, but out of sheer love and affection, she gave her share to her brother The fact of payment to Brother has also been mentioned by the AO in the assessment order. Rs. 47 lakhs was given to Anshu. The lady says that her brother has since deceased and, therefore, she has no evidence with her, as her sister-in-law does not allow her to enter the house. Although the Assessing Officer has mentioned the names of all the co-owners and has computed the capital gains on the total land holding and attributed 1/5th share to the assessee, but nowhere he has mentioned the status of assessment in the hands of the co-owners. The appellant lady before us stated that her brother has purchased some agricultural land out of the consideration given by her but showed her inability to furnish documents as the same are available with her sister-in-law who does not allow her to enter into the house. On such peculiar facts of the case, bank account of the assessee has been freezed by the officers, making her life more miserable. We do not want the illiterate lady to suffer in the hands of the revenue but at the same time we also feel helpless as we cannot do anything for this illiterate lady. In the interest of justice and humanity, we restore the issue to the file of AO to verify the status of the assessment/appeal of the co-owners as mentioned by him in his assessment order. AO is also directed to verify from the sister in law wife of the deceased brother of the assessee whether the deceased had purchased agricultural land out of consideration received from the assessee. AO must exercise all his powers to get information from that lady and if he finds that the brother had purchased agricultural land from the sale consideration given by the assessee, then allow claim of exemption u/s 54.

Summary

Issues Involved:
The judgment involves issues related to assessment of long term capital gains and agricultural income, determination of fair market value of land, principles of natural justice, and entitlement to deduction under section 54 of the Income Tax Act.

Assessment of Long Term Capital Gains and Agricultural Income:
The appellant contested the addition of Rs. 30,18,4566/- as long term capital gains and Rs. 30,43,0210/- as agricultural income, arguing that the Assessing Officer erred in making these additions without proper application of mind. The appellant further claimed that the market value of the land sold was not determined correctly, and the principles for valuation were not followed. The Tribunal noted that the appellant, an illiterate villager, inherited a share of agricultural land in New Delhi, which was subsequently sold. The Assessing Officer computed the capital gains for the entire land holding, attributing 1/5th share to the appellant. Despite the appellant's inability to provide necessary documents due to family circumstances, the Tribunal directed the Assessing Officer to verify the status of assessment/appeal of co-owners and investigate whether the deceased brother had purchased agricultural land with the consideration received from the appellant. The Tribunal emphasized the importance of fairness and humanity in dealing with the appellant's case, ultimately allowing the appeal for statistical purposes.

Determination of Fair Market Value of Land:
The appellant argued that the Assessing Officer and CIT(A) erred in determining the long term capital gains by adopting a miniscule market value of the land sold, without considering the fair market value as of 01.04.1981. The Tribunal acknowledged the appellant's challenges in providing documentation and the freezing of her bank account, leading to a situation where she was unable to access necessary information. In light of these difficulties, the Tribunal decided to restore the issue to the Assessing Officer, directing a thorough investigation into the status of co-owners' assessments and the possibility of the deceased brother purchasing agricultural land with the consideration received from the appellant. The Tribunal emphasized the need for the Assessing Officer to exercise all available powers to gather relevant information and to act with sympathy and understanding towards the appellant's circumstances.

Principles of Natural Justice and Entitlement to Deduction:
The appellant raised concerns about the Assessing Officer and CIT(A) not following the principles of natural justice and failing to consider the appellant's entitlement to deduction under section 54 of the Income Tax Act. The Tribunal, after considering the appellant's personal appearance and the challenges she faced in presenting her case, decided to intervene in the interest of justice and humanity. By directing the Assessing Officer to reevaluate the case with compassion and thorough investigation, the Tribunal aimed to ensure a fair and just outcome for the appellant, despite the complexities and limitations she encountered during the assessment process.