SH. SHANKAR LAL S/O SH. BASTIRAM THROUGH LEGAL HEIR SMT. SUDARSHANA DEVI,CHANDIGARH V. INCOME TAX OFFICER, WARD-4, PANCHKULA

ITA 1234/CHANDI/2025

AI Insights

The case involves an appeal by the legal heirs of the late Shri Shankar Lal against the orders of the Assessing Officer and the Commissioner of Income Tax (Appeals) for the assessment year 2012-13. The primary contention was regarding the incorrect treatment of the consideration received from the sale of agricultural land as taxable capital gain. The legal heirs argued that the land was agricultural and thus outside the definition of 'capital asset' under section 2(14)(iii) of the Income Tax Act, 1961. Additionally, they claimed that the proceeds from the sale were reinvested in another agricultural land within seven months, which should exempt them from capital gains tax. The Tribunal found that the matter required further examination of the facts and directed the Assessing Officer to consider the submissions and documents provided by the legal heirs.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 833425 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 26-09-2025
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Keywords: Set aside; Capital asset; Cost of acquisition
• Section: 2(14)

Judgement Text

"आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL ‘SMC’ BENCH ,CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT आयकर अपील सं./ ITA No. 1234/CHD/2025 Ǔनधा[रण वष[ / Assessment Year: 2012-13 Shri Shankar Lal S/o Shri Bastiram, Through L/H Smt. Sudershana Devi, Village – Kaimbwala, Chandigarh. Vs The ITO, Ward-4, Panchkula. èथायी लेखा सं./PAN NO: ABGPL9378P अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Assessee by : None Revenue by : Dr. Ranjit Kaur, Addl. CIT Sr.DR Date of Hearing : 22.01.2026 Date of Pronouncement : 02.02.2026 PHYSICAL HEARING O R D E R The assessee is in appeal before the Tribunal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 30.03.2022 passed for assessment year 2012-13. 2. The notice of service issued to the assessee returned back. Ultimately it was sent with the help of Assessing Officer. 3. It emerges out from the record that Shri Shankar Lal S/o Shri Bastiram has expired on 12.07.2020 i.e. after passing of the assessment order. Smt. Sudershana Devi W/o Shri Printed from counselvise.com ITA No.1234/CHD/2025 A.Y.2012-13 2 Shankar Lal has filed an affidavit pleading therein that she is the lawful Legal Heir of the deceased and therefore, she be impleaded as Legal Heir and be permitted to prosecute this appeal. She has also annexed affidavits of Shri Vipin Kumar, aged 30 years and Shri Uttam Kumar, aged 27 years, sons of late Shri Shankar Lal who have deposed that they have no objection if their mother would prosecute the litigation exclusively. They have also submitted that they have no objection if their mother represents the assets of the deceased assessee. 4. I have considered these affidavits and I am of the view that all the Legal Heirs deserve to be impleaded as party to the litigation. The simple reason is that u/s 159(2), whosoever Legal Heir has inherited the property of deceased, Shri Shankar Lal, then taxes could be recovered from those Legal Heirs of Shri Shankar Lal. For example, if both the sons have inherited the property from Late Shri Shankar Lal and I implead only Smt. Sudershana Devi, who did not inherit any property, then in case additions are confirmed, no taxes could be recovered from her and both the sons would raise an Printed from counselvise.com ITA No.1234/CHD/2025 A.Y.2012-13 3 objection that they have not been given opportunity to defend themselves. Therefore, following Legal Heirs are impleaded : 1. Smt. Sudershana Devi, Wife of late Shri Shankar Lal 2. Shri Vipin Kumar, Son ( Aged 30 years) 3. Shri Uttam Kumar, Son (Aged 27 years) 5. Faced with the situation, I have gone through the record carefully with the help of ld. Sr.DR. A perusal of the statement of facts filed before me as well as before ld.CIT (Appeals) would reveal the following facts and circumstances : 1. That the appellant is the Legal heir and wife of the deceased assessee Late Sh. Shankar lal who was an individual residing in Village Kaimbwala, Chandigarh having Pan Card no.ABGPL9378P. 2. That the deceased assessee along with his co-sharers owned agricultural land situated at Village Bitna, Tehsil Kalka, District Panchkula, which was sold on 10.08.2011 for a total consideration of Rs. 1,08,00,000/-. The sale deed is also annexed. 3. That the deceased assessee was only a co-sharer to the extent of Rs. 16,00,000 in the said land and accordingly his share of consideration Rs. 16,00,000 was duly credited in his bank account. The Bank statement also annexed. 4. That the Learned Assessing Officer (AO), without appreciating the correct facts, treated the consideration of Rs. 16,00,000 as taxable capital gain and created a demand of Rs.8,80,627/- for A.Y.2012-2013. The assessment order is annexed herewith. 5. That the land sold was certified to be agricultural land by the Tehsildar, Zone Pinjore, Distt. Panchula and accordingly, falls outside the definition of \"capital asset\" under section 2(14) (iii) of the Income Tax Act, 1961. The Report of Tehsildar and Population Census is also annexed. 6. That further, on 29.03.2012, within 7 months of sale, the deceased assessee utilized the very same sale proceeds of Rs. 16,00,000/- (as Printed from counselvise.com ITA No.1234/CHD/2025 A.Y.2012-13 4 reflected in his bank statement) towards the purchase of another agricultural land situated at Village Nangoli, Tehsil Naraingarh, District Ambala, in the joint names of his wife Smt. Sudarshaha Devi and his brother's wife Smt. Savitri Devi. The Purchase deed is also annexed. 7. That the deceased assessee contributed his share of consideration for the said purchase from the very sale proceeds received that he received by selling the land on which the Ld. AO wrongly levied tax demand of Rs. 8,80,627/-. The bank statement of the deceased assessee is also annexed which shows the receipt and withdrawal of said funds. 8. That the deceased assessee preferred the appeal against the assessment order within time before the CIT (A). But unfortunately, he died on 12.07.2020, during pendency of the appeal. The legal heir of the deceased, Uttam (Son of deceased) filed a set of documents along with information of the death of the original assessee on the portal before the Learned CIT (A) on 19.03.2022. 9. However the Ld. CIT (A) proceeded ex parte and passed an order dated 30th March 2022, dismissing the appeal without taking on record the documents filed by the legal heir of the deceased and afterwards neither the appellant (being deceased) nor his legal heirs were ever informed or made aware of the passing of the said order.The order of CIT (A) is annexed herewith and Death certificate of the Assessee is also annexed. 6. Both the orders of Revenue Authorities i.e. AO as well as CIT (Appeals) are ex-parte. A perusal of the above would indicate that according to the assessee, his share in the total land was only of Rs.16 lacs. This whole amount could not be added by the AO. He has to give credit of acquisition cost. The AO has to determine whether it actually falls within the ambit of capital asset or not mentioned in Section 2(14)(iii) of the Income Tax Act because it was a rural agricultural land and if it falls outside the municipal limit at a distance of more than 2 kms. of municipality having population not less than Printed from counselvise.com ITA No.1234/CHD/2025 A.Y.2012-13 5 10000, then it will not fall in the definition of Capital Assets. All these aspects are required to be examined by the AO. The assessee has also pointed out that he has purchased agricultural land within 7 months of the sale. These facts are required to be collected. 7. After considering the totality of facts and circumstances, I deem it appropriate to set aside both the orders and restore this issue to the file of AO with the direction and ld. AO shall issue notice to all the Legal Heirs. The AO would also examine the claim of the assessee for purchase of agricultural land whose details have been placed in the Paper Book. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced on 02.02.2026. Sd/- (RAJPAL YADAV) VICE PRESIDENT “Poonam” आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 5. गाडŊ फाईल/ Guard File Assistant Registrar Printed from counselvise.com "