SURENDRA NATH SHARMA,HAZARIGABH V. ITO WARD-2(2), HAZARIBAGH

ITA 95/RAN/2019

AI Insights

The case involves Surendra Nath Sharma, the appellant, who appealed against the order of the Commissioner of Income Tax (Appeals), Hazaribagh, which had upheld the Assessing Officer's decision to tax long-term capital gains on the sale of immovable properties. The properties were sold for a substantial amount, and the Assessing Officer had revalued them, leading to a significant tax liability. The primary contention in the appeal was that the properties were agricultural land, which is exempt from capital gains tax. The Tribunal, after reviewing the evidence, including a report from the Circle Officer confirming the agricultural status of the land, ruled in favor of the appellant.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 668831 (ITAT-RANCHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2015-2016
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Cost of acquisition; Capital Gains; Valuation report
• Section: 142(1); 271(1)(c)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “RANCHI” BENCH, RANCHI VIRTUAL HEARING AT KOLKATA Before Shri Sonjoy Sarma, Judicial Member and Shri Ratnesh Nandan Sahay, Accountant Member I.T.A. No.95/Ran/2019 Assessment Year: 2015-16 Surendra Nath Sharma.................................…...........................……….……Appellant H. No.1108, Patna-Ranchi Road, NH-33, Old Check Post, Hazaribagh, Jharkhand-825301. [PAN: AIMPS7439M] vs. CIT(Appeal), Hazaribagh.............…..….…..….........……........……...…..…..Respondent Appearances by: Shri Devesh Poddar, Advocate appeared on behalf of the appellant. Shri Khubchand T. Pandya, Sr. DR, appeared on behalf of the Respondent. Date of concluding the hearing : June 17, 2025 Date of pronouncing the order : June 26 , 2025 ORDER Per Sonjoy Sarma, Judicial Member: The present appeal has been preferred by the assessee against an order dated 30.11.2018 of the Commissioner of Income Tax (Appeals), Hazaribagh, Jharkhand [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’). 2. Brief facts of the case are that the assessee filed his return of income by showing total income of Rs.2,93,924/-. In the case of the assessee, notices u/s 143(2) and 142(1) were issued along with questionnaire in order to verify the sale of immovable properties on which long-term capital gains attracted in addition to the income shown by the assessee. In response to the notices, the assessee himself appeared before the Assessing Officer and submitted requisite details as asked for. Thereafter, the assessee’s case was heard and discussed along with documents furnished by the assessee. After examining the same, the Assessing Officer viewed that the assessee has sold immovable I.T.A. No.95/Ran/2019 Surendra Nath Sharma 2 properties. In the return of income, actual transaction value of the property shown during the at Rs.63,00,000/- and stamp duty valuation shown at Rs.84,00,000/-. The immoveable properties sold during the year were purchased in the year 1964 incurring cost of Rs. 2,267/-, therefore, the value of the immoveable properties deserved to be adopted as on 01/04/1981 in view of the relevant provisions of the I.T. Act. During the course of scrutiny proceedings, the assessee produced valuation reports of these immoveable properties prepared by a Private Valuer and the cost of the immoveable properties sold were shown at Rs. 10,00,029/- as on 01/04/1981. However, doing so, in the said valuation reports, the valuer did not attach any material on the basis of which the value was adopted which was a pre-condition as mentioned in Sl. No. 03 of Part A of the valuation reports that \"Guideline rate obtained from the Registrar's Office (an evidence thereof be enclosed)\", which the Private Valuer did not enclose with his valuation reports. Therefore, the Assessing Officer did not accept the private valuer’s report as submitted by the assessee. Accordingly, the Assessing Officer considered the valuation of the property at Rs.24,125/- as on 01.04.1981 estimated by Assistant Valuation Officer-II, Valuation Cell, I.T. Department, Patna in his report dated 01.12.2017 and allowed the benefit of the indexation and allowed the indexed cost of acquisition at Rs.2,47,040/-. Accordingly, the total long-term capital gains comes to Rs.81,52,960/- (Rs.84,46,884/- - Rs.2,93,924/-) and added the same to the total income of the assessee under the head long-term capital gains and also penalty proceedings u/s 271(1)(c) of the Act was initiated for concealment of income at Rs.81,52,960/-. 3. Aggrieved by the order passed by the Assessing Officer, the assessee preferred an appeal before the ld. CIT(A). However, the appeal of the assessee was dismissed by the ld. CIT(A) after considering the submission made by the assessee. I.T.A. No.95/Ran/2019 Surendra Nath Sharma 3 4. Dissatisfied with the above order, the assessee is in appeal before this Tribunal raising various grounds. However, the primary contention of the assessee is that no capital gains is applicable on the sale of agricultural land. It is submitted that if the cost of the acquisition as on 01/04/1981 is deducted from the sale consideration, the result of capital gains would be negative in figure. In this regard, the ld. AR made a reference of a letter dated 13.05.2025 issued by Circle Officer, Sahebpur Kamal, Begusarai which was obtained during the pendency of this proceedings and the Tribunal has also directed for verification of the status of the land sold. The contents of the said letter are reproduced as under: I.T.A. No.95/Ran/2019 Surendra Nath Sharma 4 4.1 It was submitted by the ld. AR that the property in question was in fact was an agricultural land which is clearly reflected from the report dated 13.05.2025 as was received by ld. DR from Circle Officer. He, therefore, argued that there is no question of taxing of capital gains arise on sale of any agricultural land and the alleged addition made by the Assessing Officer and upheld by the ld. CIT(A) is liable to be set aside. 5. On the other hand, the ld. DR supported the findings of the lower authorities. 6. We have heard the rival submissions and gone through the materials on record and considering the report dated 13.05.2025 furnished by the ld. DR, we note that it is clear that the alleged land sold was in fact an agricultural land which is clearly reflected in the report dated 13.05.2025 furnished by Circle Officer forwarded by the Assessing Officer in connection with this matter and therefore, no capital gain arose on such transactions. In terms of the above, we allow the appeal of the assessee and direct the Assessing Officer to delete the addition of long-term capital gains in present case of the assessee. 7. In the result, the appeal of the assessee is allowed. Kolkata, the 26th June, 2025. SD/- Sd/- [Ratnesh Nandan Sahay] [Sonjoy Sarma] Accountant Member Judicial Member Dated: 26.06.2025. RS Copy of the order forwarded to: 1. Appellant 2. Respondent 3. CIT(A)- 4. CIT- , 5. CIT(DR), I.T.A. No.95/Ran/2019 Surendra Nath Sharma 5 //True copy// By order Assistant Registrar, Kolkata Benches "