2024 (11) TMI 385 - AT - Income Tax

Validity of the assessment order u/s 144/147 - addition made by the AO on account of Long Term Capital Gain invoking S.50C on Agricultural lands - HELD THAT - Assessee has furnished the details but the same has not been considered merely the same was filed late on 02.11.2023 by the assessee but before the decision is rendered on 29.11.2023. The bench also noted that the ld. CIT(A) has not dealt with the fact that the addition was made in the case of the mother of the assessee for the full amount of consideration and the property was sold by the father of the assessee. These facts are narrated of the assessment order thus cannot be disputed by the revenue. Therefore, the contention of the CIT(A) is not correct and prejudicial to the interest of the assessee and the revenue has to tax the correct income and in correct hand. As is also evident that the order of the assessment in fact passed u/s 144 of the Act and the contention raised by the assessee needs to be appreciated based on the evidence placed on record by the assessee before the ld. CIT(A). Considering that peculiar aspect of the matter we deem it fit to remand the matter to the file of the ld. AO who will considered the factual aspect of the matter as raised by the assessee after due verification of the facts and charge the correct income in hands of the assessee after affording due opportunity to the assessee. However, the assessee will not seek any adjournment on frivolous ground and remain cooperative during proceedings before the ld. AO. Restore the matter back to the file of the ld. AO shall in no way be construed as having any reflection or expression on the merits of the dispute.

Summary

Issues Involved:

1. Jurisdiction and validity of the assessment order under sections 144/147.
2. Addition of Long Term Capital Gain invoking Section 50C on agricultural lands.
3. Non-grant of benefit of the Cost of Acquisition (COA) for capital gains.
4. Disallowance of deduction under Section 54B.
5. Interest charged under sections 234A and 234B.
6. Procedural lapses, including non-issuance of mandatory notice under Section 143(2).

Detailed Analysis:

1. Jurisdiction and Validity of the Assessment Order:

The assessee challenged the jurisdiction and validity of the assessment order passed under sections 144/147, asserting that the action was void ab-initio and lacked proper jurisdiction. The assessee argued that the assessment was not in conformity with CBDT Circular No. 19/2019 and was passed without issuing the mandatory notice under Section 143(2). The Tribunal noted that the procedural lapses, particularly the non-issuance of the mandatory notice, called into question the legality of the assessment order. The Tribunal decided to remand the matter back to the Assessing Officer for reconsideration, emphasizing the need for adherence to procedural requirements.

2. Addition of Long Term Capital Gain Invoking Section 50C:

The assessee contested the addition of Rs. 92,33,878/- as Long Term Capital Gain, arguing that agricultural lands do not qualify as capital assets under Section 2(14) of the Act. The Tribunal observed that the assessee failed to provide irrefutable evidence that the land was beyond the 8 km radius from municipal limits as per the CBDT Notification. The Tribunal highlighted the necessity for the assessee to substantiate claims with certified documentation from municipal authorities, which was not adequately done.

3. Non-Grant of Benefit of Cost of Acquisition (COA):

The assessee alternatively argued against the addition of capital gains without granting the benefit of the cost of acquisition. The Tribunal noted that the assessee had not provided sufficient evidence to support the claimed COA. The Tribunal emphasized the importance of presenting proper valuation reports and documentation to substantiate such claims.

4. Disallowance of Deduction under Section 54B:

The assessee's claim for deduction under Section 54B was denied by the AO on grounds that the land was not used for agricultural purposes, and part of the land was purchased in the name of the assessee's wife. The Tribunal noted that the assessee failed to furnish necessary evidence, such as the Khasra Girdawari, to prove agricultural use. Moreover, the Tribunal reiterated that the benefit under Section 54B is applicable only when the new asset is purchased in the name of the assessee, not a third party. The Tribunal directed the AO to reassess the claim, ensuring compliance with statutory conditions.

5. Interest Charged under Sections 234A and 234B:

The assessee challenged the interest charged under sections 234A and 234B, asserting it was contrary to law and facts. The Tribunal did not provide a detailed discussion on this issue but included it in the remand for comprehensive reassessment by the AO.

6. Procedural Lapses:

The Tribunal acknowledged the procedural lapse regarding the non-issuance of the mandatory notice under Section 143(2), which is crucial for the validity of the assessment proceedings. The Tribunal emphasized that such procedural requirements must be strictly adhered to, and the absence of compliance warranted a remand for rectification and reassessment.

Conclusion:

The Tribunal decided to remand the case back to the Assessing Officer for a fresh assessment, emphasizing the need for the assessee to provide all necessary documentation and for the AO to ensure compliance with procedural and substantive legal requirements. The decision to remand was made without expressing any opinion on the merits of the case, leaving the issues open for independent adjudication by the AO in accordance with the law.