ASHA BHARGAVA L/H OF DEVENDRA KUMAR BHARGAVA,JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, JAIPUR

MA 26/JPR/2025

AI Insights

The case revolves around a dispute concerning the taxability of long-term capital gains arising from the sale of agricultural land by the assessee, Asha Bhargava. Initially, the AO assessed a long-term capital gain of Rs. 1,15,77,722, which was contested by the assessee. The ITAT, in its earlier ruling, exempted the gains from tax, recognizing the land as agricultural and outside the scope of Section 2(14) of the Income Tax Act. However, the AO later issued a notice under Section 154, proposing a rectification and reversing the earlier relief granted to the assessee, which led to the filing of this miscellaneous application and a contempt application by the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711614 (ITAT-JAIPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANITA RINES H; LD
• Assessee Lawyers: ASHOK KUMAR GUPTA; SHRAWAN KUMAR GUPTA; LD. ARS
• Keywords: Fair market value; Earning of tax free income; Value adopted by valuation officer
• Section: 143(3); 154; 2(14)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH “A”, JAIPUR BEFORE Dr. S. SEETHALAKSHMI, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER MA No. 26/JPR/2025 (A.Y. 2014-15) (Arising out of ITA No. 654/JPR/2018) Asha Bhargava, L/R of Devendra Kumar Bhargava, E-81, Devanshish, Radha Marg, Ambabari, Jaipur 302 016 PAN No. ABSPB 6891R ...... Appellant Vs. DCIT, Circle-02, Jaipur …...Respondent Appellant by : Mr. Ashok Kumar Gupta, Adv. & Mr. Shrawan Kumar Gupta, Adv., Ld. ARs Respondent by : Mrs. Anita Rinesh, JCIT, Ld. DR Date of hearing : 27/05/2025 Date of pronouncement : 21/07/2025 O R D E R PER GAGAN GOYAL, A.M: The present miscellaneous application has been filed by the assessee against the order passed by the Co-ordinate Bench in ITA No. 654/JPR/2018 dated 18/03/2021. The Petitioner above named submits the present Miscellaneous Application Printed from counselvise.com 2 as under: 1. That the petitioner being an assessee was preferred an appeal before your honour having no. ITA/654/JP/2018 against the order of Ld. CIT(A)-1 dated 05.03.2018 for A.Y. 2014-15, wherein following grounds have been taken; “1. That on the facts and under the circumstances of case, ld. CIT(A) grossly erred and was arbitrary in not treating the impugned land as rural agricultural land and outside the scope of section 2(14) of the act and not accepting the gain from sale of such land as exempt from tax. 2. That the ld. CIT(A) was wrong, illegal and arbitrary in confirming the addition of Rs. 1,15,77,722/- under long term capital gain by approving the action of AO in taking up fair market value of property as on 01/04/1981 on basis of DVO report.” 2. That while deciding the appeal Hon’ble ITAT vide order dated 18/03/2021 held that :- “15 Since now before us, the assessee has successfully proved by placing on record the documentary evidences that the land in question at village Machhwa is 17 KM away from Jaipur and this village is having population of 2453 and land of the assessee is used for agriculture purposes as discussed by us in the preceding para of this order, therefore, keeping in view the totality of facts and circumstances and also keeping in view all the documentary evidences placed on record, we are of the view that the land in question of the assessee was situated beyond 8 KM from the municipal limits of Jaipur and was being used for agricultural Printed from counselvise.com 3 purposes and was thus outside the scope of Section 2(14) of the Act and therefore, any gain on sale of the said land is exempted from tax. Thus, we allow these grounds of appeal and directed to delete the addition. 16. In the result, this appeal of the assessee is allowed.” Copy of the order of Hon’ble ITAT is being attached as Annexure- 1. 3. That vide above order dated 18.03.2021 the Hon’ble ITAT manifestly held that any gain on sale of the said land is exempted from tax, whether it was voluntary declared by the assessee or added by the Ld. A.O. and allowed both grounds of appeal and directed to delete the addition made by the AO. 4. That the same contention had been favored by the department while passing the order dated 26/10/2021 and accordingly issued the refund of deposited tax, copy of appeal effect order dated 26/10/2021 is being annexed marked as Annexure-2. 5. That thereafter, regardless the clear direction of the bench, any gain on sale of the said land is exempted from tax, the AO (Respondent) issued a notice on 05/12/2023 u/s. 154 of the act proposing rectification in the order passed earlier by the department on 26.10.2021 Printed from counselvise.com 4 and has passed an order on 28/12/2023. Copy of Notice issued u/s. 154 of the Act and order passed under same are being attached as Annexure-3 & 4. Relevant para of notice u/s. 154 of the act is reproduced hereunder for your kind perusal 6. That department passed the impugned order u/s 154 of the Act by taking an isolated and incomplete sentence, stating that “The Hon’ble Bench ITAT, Jaipur bench held that “directed to delete the addition” in concluded para 15 of its order in ITA No. 654/JP/2018 dated 18.03.2021.” Whereas, the Hon’ble ITAT, Jaipur Bench had categorically held that “Thus, we allow these grounds and directed to delete the addition”. 7. it is observed that the department is arbitrary in giving effect to the incomplete line of the ITAT order i.e. “directed to delete the addition” and not giving effect to the “Thus, we allow these Printed from counselvise.com 5 grounds” by which Hon’ble ITAT allowed both the grounds as raised by the petitioner in the ITA No. 654/JP/2018 and expressed its intentions for not charging any of Tax on Profit as earned out of sale of such land by specifically mentioned; “any gain on sale of the said land is exempted from the tax”. Both the grounds are being reproduced in the point no. 1 of this application. 8. That though the petitioner has replied sufficiently referring the order of the bench and along with the interpretation of the order but the AO (Respondent) passed the impugned order in arbitrary manner interpreting the order passed by the bench without appreciating the fact that the Assessing Officer is bound to follow the judgments of bench in its true letter and spirit. Copy of reply dated 08/12/2023 is being annexed as Annexure-5. 9. That the AO (Respondent) interpreting the order of the bench prejudicially, in favour of the department and finding ambiguity in the language of the order of the bench, which is otherwise not there and giving colour of his thoughts to the order of bench. 10. That department very well knows and did not dispute the fact that the land sold by the assessee was declared as agriculture land and any profits and gains arising out of it declared as exempt income, hence, department is aware of the fact that the tax deposited by the assessee on the same is not recoverable or collectable under the provisions of Act and it is assessee’s money, which is wrongly and without any authority with Printed from counselvise.com 6 income tax department. 11. Through this application the appellant requested the Bench to express the intention of the Bench in the order passed in ITA No. 654/JP/2018 by removing the ambiguity as raised by the AO and direct him to construe the order of the Hon’ble bench in its true perspective and sense. 12. It is submitted by the appellant that this order may be rectified u/s. 254(2) of the I.T. Act. Hence suitable rectification may kindly be carried out by expressing clear instruction to the AO in the order dated 18/03/2021 passed in ITA No. 654/JP/2018. 13. A challan of Rs. 50/- is enclosed. In this matter the assessee filed a Contempt Application against the order passed by ITO Ward 4(2), Jaipur dated 28/12/2023 u/s. 254/154/143(3) and in same matter also filed the Misc. Applications against the order passed by the Coordinate Bench of the ITAT Jaipur dated 18/03/2021 in ITA No. 654/2018 A.Y. 2014-15 whereby the Coordinate Bench of the ITAT has allowed the appeal of the assessee. Firstly the brief facts of the case are that the assessee was a Sr. Citizen and had filed her return of income declaring taxable income of Rs. 2,44,75,010/-. The source of income were pension, income from business, other sources and long term capital gain (in short, LTCG) on sale of agriculture land and building thereon. Printed from counselvise.com 7 The case of the assessee was selected for scrutiny and after providing due opportunity of hearing and seeking report of DVO, the assessment was finalized U/s, 143(3) of the Income Tax Act, 1961 (in short, the Act) by taking fair market value of property as on 01/04/1981 at Rs. 91,900/- as determined by the DVO. A LTCG was accordingly computed at Rs. 3,46,43,290/- as against declared gain of Rs. 2,30,65,568/- resulting in an addition of Rs. 1,15,77,722/- under LTCG. Aggrieved by the order of A.O., the assessee preferred appeal before the Id. CIT (A) and the assessee apart from challenging the valuation carried out by the DVO, the assessee also challenged the entire additions of LTCG by pleading that the land of the assessee was outside the scope of Section 2(14) of the Act and thus any gain on sale of the said land was exempted from taxes. However, the Id. CIT (A) after considering the case of both the parties, dismissed the appeal filed by the assessee by holding that the assessee has neither brought on record any evidence which may establish that the land was of the assessee was more than 8 KM from the municipal limit of Jaipur nor produced any evidence to suggest that the land was used for agricultural purposes. Aggrieved by the order of the Id. CIT (A), the assessee has preferred the appeal before coordinate bench of the ITAT on the grounds as mentioned in form 36. During the course of hearing before the coordinate bench the assessee filed the detailed written submission, paper books and evidences. The coordinate bench after considering all the facts and documents and legal position has held as under \"15 Since now before us, the assessee has successfully proved by placing on record the documentary evidences that the land in question at village Machhwa is 17 KM away from Jaipur and this village is having population of 2453 and land of the assessee is used for agriculture purposes as discussed by us in the preceding para of this order, therefore, keeping in view the totality of facts and circumstances and also keeping in view all the Printed from counselvise.com 8 documentary evidences placed on record, we are of the view that the land in question of the assessee was situated beyond 8 KM from the municipal limits of Jaipur and was being used for agricultural purposes and was thus outside the scope of Section 2(14) of the Act and therefore, any gain on sale of the said land is exempted from tax. Thus, we allow these grounds of appeal and directed to delete the addition. 16. In the result, this appeal of the assessee is allowed.” After passing this order the AO has given the appeal effects of the order passed by coordinate bench dated 26/10/2021 and while giving the appeal affects the AO the then has deleted complete Long Term Capital Gain from the computation of the Total Income of the assessee and issued resultant refund to the assessee. However after more than 2 years he issued a notice u/s. 154 to the assessee on dated 05/12/2023 where he has stated that you filed second appeal before the ITAT Jaipur Bench Jaipur against the order of the Ld. CIT (A) dated 05/03/2018 regarding confirmation the addition by the Ld. CIT (A) as made by the AO on account of Long Term Capital Gain of Rs. 1, 15, 77,722/-. The ITAT Jaipur Bench Jaipur held that 'directed to delete the addition'. Thus the ITAT deleted the addition of Rs. 1, 15, 77,722/-. This office has given effect of the order of the ITAT by wrongly allowed relief Rs. 3,46,43,290.00 on account of Long Term Capital Gain as against actual addition of Rs. 1,15,77,722/- as made by the AO and deleted by the ITAT. As the mistake is apparent on record therefore the order u/s 254 of the IT Act, dated 26/10/2021 is required to be rectified u/s 154. In response thereto the assessee had filed the reply to the AO dated 08/12/2023 clarifying the contentions and view of the order of the ITAT however the AO has not accepted the contentions of the assessee rather misinterpreted of the order of the ITAT and passed the order u/s 154/254/143(3) on dated 28/12/2023 where he has reversed his earlier appeal effect order dated 26/10/2021 and allowed Printed from counselvise.com 9 relief to the assessee only of Rs. 1,15,77,722/ in place of Rs. 3,46,43,290/-and raised a demand. For this wrong order passed by the AO and for the disobey of the order of the coordinate bench of ITAT the assessee has filed a contempt application before this bench as well as he also filed this Miscellaneous application for clarification on the relief given by the coordinate bench of ITAT as the AO had not followed the order of the coordinate bench. We heard both the parties and both the matters i.e. Contempt application and MA. After hearing the matters and looking to the facts of the case, the order passed by the AO u/s 154/254/143(3) and on also perusal of the order of the coordinate bench. It is cleared that the coordinate bench was of the view that the entire capital gain is exempted from the tax meaning thereby whether assessee has wrongly offered tax on such exempted income in the ITR. If an assessee has paid any tax on the exempted income inadvertently, is entitled to receive back as the Article 265 of Constitution of India itself provides that no tax shall levied or collected except authority of law. And in the present case the AO has violated the thrust of the Constitution of India as well as also not followed the order of the ITAT which is a serious flaw in the order of AO which should not be permitted. When the AO first time has given full relief by reading the order of the ITAT in their true perspective and sense and after more than 2 years he has misinterpreted the order of the ITAT by taking part finding of the order isolated in place of full finding and full meaning and intention of the ITAT without any reason. Printed from counselvise.com 10 By anticipating the situation under consideration the CBDT has also issued a circular vide No.014 (XL-35) dated 11.04.1955 has held; \"The intention of this circular is not that tax due should not be charged or that any favour should be shown to anybody in the matter of assessment, or where investigations are called for, they should not be made. Whatever the legitimate tax it must be assessed and must be collected. The purpose of this circular is merely to emphasize that we should not take advantage of an assessee's ignorance to collect more tax out of him than is legitimately due from him.\" Thus in view of the above facts circumstances and legal position the AO is directed to read the order of the ITAT as not to tax any capital gain arisen from the sale of Agriculture Land which is exempted. And the entire capital gain of Rs. 3, 46, 43,290/- should be excluded from the total income of the assessee. And re calculate the assessed income of the assessee as per original appeal order dated 26/10/2021. And this effect of order shall be given within 15 days from the date of receipt of this order. Further during the course of hearing the AR of the assessee has given his consent that if the effect of the order of this ITAT is given within 15 days from the receipt of this order he shall not proceed further on his contempt application filed by the assessee. Printed from counselvise.com 11 Similarly the DR has also given their consent that the department after giving the effect of the order as above shall not proceed, for further proceeding against this order. Thus we also held that the department is not proceed and give the effect as above the assessee shall be free to proceed for reviving his contempt application. Accordingly both the applications are disposed off. 4. In view of this, the M.A. filed by the assessee is allowed in above terms. Order is pronounced in the open court on the 21st Day of July 2025. Sd/- Sd/- (Dr. S. SEETHALAKSHMI) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Jaipur, िदनांक/Dated: 21/07/2025 Copy of the Order forwarded to: 1. अपीलाथ /The Appellant , 2. \u000eितवादी/ The Respondent. 3. आयकर आयु\u0015 CIT 4. िवभागीय \u000eितिनिध, आय.अपी.अिध., Sr.DR., ITAT, 5. गाड फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar) Printed from counselvise.com 12 Details Date Initials Designation 1 Draft dictated on PC on 21.07.2025 Sr.PS/PS 2 Draft Placed before author 21.07.2025 Sr.PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member JM/AM 5. Approved Draft comes to the Sr.PS/PS Sr.PS/PS 6. Kept for pronouncement on Sr.PS/PS 7. File sent to the Bench Clerk Sr.PS/PS 8 Date on which the file goes to the Head clerk 9 Date of Dispatch of order Printed from counselvise.com "