SITARAM MUCHHALA,MARDANA V. ITO KHARGONE, KHARGONE

ITA 661/IND/2025

AI Insights

The case involves Sitaram Muchhala, the appellant, who appealed against the order of the Ld. CIT(A) which upheld the additions made under sections 45 and 56 of the Income Tax Act, 1961, to his income for the assessment year 2018-19. The additions were related to capital gains from compulsory land acquisition and interest income on delayed compensation payments, which were not fully disclosed in the original tax return. The Tribunal found that the CIT(A) had not considered the appellant's replies and requests for more time to gather necessary documents, which were crucial for substantiating his claims. The Tribunal noted that the assessment order was passed under section 144 of the Act, which allows for ex parte proceedings, and acknowledged the appellant's lack of awareness and understanding of the tax laws, attributing this to his background as a villager and agriculturist.

• Counselvise Citation: [2026] 140 COUNSELVISE.COM (IT) 842048 (ITAT-INDORE)
• Duration Of Justice: 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2026
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 30-07-2025
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FORTHEREVENUECONTENDEDTHATINSOFARAS; FORTHEREVENUEHASLEFTTHE; SHRIASHISHPORWAL
• Assessee Lawyers: SHRIMILINDWADHWANI
• Keywords: Condonation of delay; Set aside; Corroborative evidences; Cost of acquisition; Capital Gains; Principle of natural justice; Tangible material
• Section: 147; 148; 144; 56

Judgement Text

"Page 1 of 13 आयकरअपीलीयअिधकरण,इंदौरɊायपीठ,इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI B.M. BIYANI, ACCOUNTANT MEMBER AND SHRI PARESH M JOSHI, JUDICIAL MEMBER ITA No.661 /Ind/2025 (AY: 2018-19) Sitaram Muchhala Village Mardana Tehsil Barwaha , District Khandwa, Sanawad (PAN: BESPM5263D) बनाम/ Vs. Income Tax Officer Khargone (Appellant) (Respondent) Assessee by Shri Milind Wadhwani, CA Revenue by Shri Ashish Porwal, Sr. DR Date of Hearing 18.02.2026 Date of Pronouncement 27.02.2026 आदेश/ O R D E R Per Paresh M Joshi, J.M.: This is an Appeal filed by the Assessee under section 253 of the income tax Act 1961,[ herein after referred to as the Act for the sake of brevity] before this Tribunal as & by way of second appeal. The Assessee is aggrieved by the order bearing Number:- ITBA/NFAC/S/250/2024-25/1074463840(1) dated 13.03.2025 passed by the Ld. CIT(A) u/s 250 of the Act, which is herein after Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 2 of 13 referred to as the “Impugned order”. The relevant assessment year is 2018-19 and the corresponding previous year period is from 01.04.2017 to 31.03.2018. 2. Factual Matrix 2.1 That as and by way of an “ Assessment order” made u/s 147 r.w.s. 144/144B of the Act, the total income of the assessee was computed & assessed at Rs. 31,92,474/-. Variation in respect of addition u/s 45 was at Rs. 24,79,657/- & variation in respect of addition u/s 56 was at Rs. 7,12,817/-. That the aforesaid “Assessment order” bears No. ITBA/AST/S/147/2022- 23/1050379287(1) & that the same is dated 03.03.2023 which is herein after referred to as the “Impugned Assessment Order”. 2.2 That the assessee being aggrieved by the aforesaid “Impugned Assessment Order” prefers the first appeal u/s 246A of the Act before the Ld. CIT(A) who by the “Impugned Order” has dismissed the 1st appeal of the Assessee on the grounds & reasons specified therein. The core grounds & reasons for the dismissal of the 1st appeal was as under:- Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 3 of 13 “5.1 During the course of appeal proceedings, the appeal was posted giving an opportunity for making written submission on various dates, the details of which are as follows: S.No. Date of Notice Date of Hearing Remarks 1. 13.03.2024 20.03.2024 No response 2. 21.02.2025 27.02.2025 No response 3. 03.03.2025 10.03.2025 No response 5.2 There was no response from the appellant to the above notices of hearing and also no application for adjournment or written submissions were submitted till the date of disposal of this appeal. Hence, it has been decided to discuss the subject matter of appeal on the material available on record. 6. The issues were considered. Relevant assessment order, statement of facts and grounds of appeal were carefully perused so as to decide the subject matter of appeal on the material available on record. Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 4 of 13 6.1 The assessment order pertains to the appellant, who filed a return of income for AY 2018-19 on 22.05.2018, declaring a total income of Rs.1,75,380 and claiming a refund of Rs.3,90,530. Based on information received from the Land Acquisition Officer, Maheshwar Hydro Electric Project, it was found that the appellant received compensation of Rs.24,79,657 for the compulsory acquisition of land and interest of Rs. 14,25,633 for delayed payment of compensation. However, these amounts were not fully disclosed in the return, leading to the issuance of a notice under Section 148, followed by multiple notices under Section 142(1), none of which were responded to by the appellant 6.2 A show-cause notice was issued proposing an addition of Rs.24,79,657 under Section 45, treating it as long-term capital gain, and Rs.7,12,816 under Section 56 as taxable interest income, after allowing a 50% deduction under Section 57(iv). As the appellant failed to furnish any supporting documents, the assessing officer computed the Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 5 of 13 capital gains with the cost of acquisition and Improvement taken as nil and added Rs.24,79,657 to total income under Section 45. 1. The final assessed income was determined at Rs.33,67,853, including: 1. Addition under Section 45 (Capital Gains on Compulsory Acquisition) -Rs 24,79,657 2.Addition under Section 56 (Interest Income on Compensation) Rs.7,12,816 3. Income originally declared by the appellant-Rs. 1,75,380 6.4 After due consideration of all the facts available on record, the additions of Rs 31,92,473 are upheld as the appellant has failed to explain the nature and source of the credits and hence did not discharge the burden casted upon him. The appellant's grounds are found to be untenable due to the fact that specific findings in the assessment order have not been controverted by the appellant along with corroborative evidences. The arguments advanced by the appellant in his statement of Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 6 of 13 facts and grounds of appeal are also not supported by tangible materials. 6.5 The appellant's contentions are not acceptable in the absence of written submission to substantiate its contentions made in the grounds of appeal and non- submission of any material in the course of the appellate proceedings to controvert the findings in the assessment order by the AO to arrive at his decision on the issues. 6.6 Based on the facts mentioned above, and detailed discussion in the assessment order by the AO, I am not inclined to interfere with the decision of the AO on the issues raised in the grounds of appeal. 7. The appellant craves leave to add, alter, amend and/or delete all or any of the foregoing grounds of appeal. However, No such option was exercised by the appellant during appellate proceedings. Hence, this ground of appeal is considered dismissed for statistical purposes. 8. In the result, the appeal is Dismissed.” Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 7 of 13 2.3 That the assessee being aggrieved by the “Impugned Order” has preferred the instant second appeal before this Tribunal & has raised the following grounds of appeal in the Form No. 36 against the “Impugned Order” which are as under:- “1. On the facts and circumstances of the case and in law, the Ld. NFAC erred in upholding the addition of Rs. 24,79,657/-under section 45, made to the income of the appellant. 2. On the facts and circumstances of the case and in law, the Ld. NFAC erred in upholding the addition of Rs. 7,12,817/- under section 56, made to the income of the appellant. 3. On the facts and circumstances of the case and in law, the NFAC Order dated 13.03.2025 is contrary to law, facts and circumstances of the case and in any case is opposed to the principles of equity, natural justice and fair play. Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 8 of 13 4. On the facts and circumstances of the case and in law, the reassessment order dated 03.03.2023 is bad in law, without jurisdiction, and liable to be quashed. 5. On the facts and circumstances of the case and in law, the reassessment was completed without complying with the statutory requirements of law. 6. On the facts and circumstances of the case and in law, the notice under section 148 dated 24.03.2022 is void and illegal hence liable to quashed. 7. For that the appellant craves leave to add, amend, alter vary and OR withdraw any OR all the above grounds of appeal. 8. For that the appellant craves leave to add, amend, alter vary and OR withdraw any OR all the above grounds of appeal.” 3. Record of Hearing 3.1 The hearing in the matter took place before this Tribunal on 18.02.2026 when the Ld. AR for & on behalf of the Assessee Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 9 of 13 appeared before us & inter alia contended that the “Impugned Order” is bad in law, illegal & not Proper. It is passed in the violation of the principles of natural justice. It therefore deserves to be set aside. The Ld. AR then contended that the registry of this Tribunal has pointed out the delay of 60 days in presenting the instant second appeal & in this regard, it was submitted that an application for the condonation of delay is placed on record of this Tribunal with a prayer that the delay be condoned. It was submitted that the “Impugned Order” is dated 13.03.2025 whereas the instant second appeal is filed on 30.07.2025 resulting in the delay. It was submitted that the assessee was not aware of the “Impugned Order” dated 13.03.2025. The assessee came to know of the passing of the “Impugned Order” in the month of July, 2025 when the Income Tax Dept. made a case for recovery of the tax amount. Immediately thereafter the instant second appeal was filed. The delay in filling occurred due to unawareness about passing of the “Impugned Order”. The delay was neither intentional nor due to any negligence or mala fide intention. Prima facie the assessee has a arguable case on merit. A prayer was made for condonation of delay. Per Contra Ld. Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 10 of 13 DR appearing for the revenue contended that in so far as condonation of delay aspect is concerned, he leaves the issue to the wisdom of this Tribunal. After hearing & perusing the application for condonation of delay, we are of the considered opinion that the delay should be condoned as sufficient cause is shown as discussed & recorded above. Accordingly, the delay is condoned. Appeal is admitted & taken up for hearing. 3.2 The Ld. AR then submitted that the assessee is not much aware of the tax laws & proceedings connected with it. The assessee is villager. The “Impugned Order” of the Ld.CIT(A) is an ex-parte order. The Ld. CIT(A) had fixed total three hearings in the matter on 20.03.2024, 27.02.2025 & 10.03.2025. Our attention was invited to the paper book page 44 wherein a reply dt. 20.03.2024 was placed on record requesting for extension of time by 12 weeks as an RTI application is /was submitted to the Land Acquisition Officer seeking documents as same were of important for first appellate proceedings. Our attention was then invited to page 45 of the paper book which was a reply dated 27.02.2025 wherein a request was made to set aside the Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 11 of 13 “Impugned Assessment Order” as the same was u/s 144 of the Act & in view of amendment made by Finance Bill 2024 the Ld. CIT(A) are now empowered to remand those assessment order which are passed u/s 144 of the Act. It was therefore requested that since the “Impugned Assessment Order” is u/s 144, same should be set aside & matter should be remanded to Ld.AO. It was also submitted basis page 47 of the PB that on 11.03.2025 a request was again made for remand of the case back to the file of the Ld. AO basis earlier reply dt. 27.02.2025. The Ld. CIT (A) however on 13.03.2025 passed impugned order ignoring submissions (supra). The Ld AR also submitted that the assessee is an agriculturist & village. Cost of acquisition benefit has not given. Cost of improvement has been taken as NIL. 50% of the amount has been allowed u/s 57(iv) as compensation is taxable u/s 53(2)(viii). It was stated that issue of non-taxability of amount would be made before the Ld. AO if one last chance is given to the assessee. The Ld. DR for the revenue has left the issue to the wisdom of the Bench in so far as revenue is concerned. Hearing was concluded. Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 12 of 13 4. Observations Findings & conclusions 4.1 We have to decide the legality, validity and proprietary of the “impugned order” basis records of the case & the rival submission canvassed before us. 4.2 We have carefully perused the records of the case and have heard the submissions. 4.3 We basis records of the case & after hearing & upon examining the rival contentions of the Ld. AR & the Ld. DR canvassed before us, are of the considered view that the “Impugned Order” of the Ld. CIT(A) is an ex-parte order & replies of the assessee has not been considered. The assessee wanted time to produce documents on land acquisition & for which RTI application was filed before concerned authorities. The “Impugned Assessment Order” is u/s 144 of the Act too. The Ld. AR has undertaken on behalf of the assessee that all necessary reply, submissions, evidence, material would be filed before the AO if an opportunity is given as last chance. Under these facts & circumstances, we set aside the “Impugned Order” & remand the case back to the file of Ld. AO on denovo basis. We Printed from counselvise.com Sitaram Muchhala ITA No. 661/Ind/2025 - A.Y.2018-19 Page 13 of 13 direct assessee to co-operate with the Dept. & to file all necessary material details before Ld. AO so that the Ld. AO can pass suitable speaking order basis merit of the case. 5 Order 5.1 In the premises drawn up by us, the impugned order is set aside as & by way of remand back to the file of the Ld. AO on denovo basis. 5.2. In result, appeal of Assessee is allowed for statistical purpose. Pronounced in open court on 27.02.2026. Sd/- Sd/- (BHAGIRATH MAL BIYANI) (PARESH M JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore Dated : 27/02 /2026 SN Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Senior Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore Printed from counselvise.com "