Tribunal grants appeal, affirms exemption under section 54B, recognizes Rs. 2 lacs as agricultural income.

The Tribunal allowed the appeal, determining the assessee's eligibility for exemption u/s 54B and recognizing the receipt of Rs. 2 lacs as agricultural income. The appeal was successful, with the order issued on 03/03/2023.

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Issues Involved:
1. Legality of the order passed u/s 250 of the Income Tax Act, 1961.
2. Admission of additional grounds u/s 250(5).
3. Sustaining the addition of Rs. 2,00,000/- on account of agricultural income.
4. Enhancement of income by Rs. 7,32,79,132/- being long-term capital gain and disallowance of exemption u/s 54B.
5. Principles of natural justice.
6. Award of suitable cost of appeal u/s 254(2B).

Summary:

1. Legality of the Order Passed u/s 250:
The assessee challenged the order of the CIT(A) passed u/s 250 of the Income Tax Act, 1961, claiming it to be bad in law and on facts.

2. Admission of Additional Grounds u/s 250(5):
The CIT(A) erred in not admitting the additional grounds taken u/s 250(5) of the Act. The assessee cited the Hon'ble Apex Court's decision in NTPC 229 ITR 383, which allows legal grounds to be raised at any stage of the proceedings.

3. Sustaining the Addition of Rs. 2,00,000/- on Account of Agricultural Income:
The CIT(A) sustained the addition of Rs. 2,00,000/- on account of agricultural income, despite the assessee providing certified Khasra Girdawari and a farmer's certificate to establish the agricultural income. The CIT(A) overlooked the fact that the appellant had been disclosing agricultural income in her returns for past years and no show cause notice was issued before making the addition.

4. Enhancement of Income by Rs. 7,32,79,132/- and Disallowance of Exemption u/s 54B:
The CIT(A) directed the AO to enhance the income by Rs. 7,32,79,132/- by disallowing the exemption claimed u/s 54B. The CIT(A) held that the land purchased was non-agricultural and the conditions laid in section 54B were not met. The CIT(A) also noted that the appellant failed to provide the sale/purchase deeds and the land was not used for agricultural purposes. The Tribunal, however, found that the land sold was used for agricultural purposes in the preceding two years and the land purchased was agricultural land, thus making the assessee eligible for exemption u/s 54B.

5. Principles of Natural Justice:
The assessee argued that the order passed by the CIT(A) violated the principles of natural justice.

6. Award of Suitable Cost of Appeal u/s 254(2B):
The appellant prayed for the Tribunal to award suitable costs of the appeal u/s 254(2B) of the Income Tax Act, 1961.

Conclusion:
The Tribunal allowed the appeal, holding that the assessee is eligible for the exemption u/s 54B and the receipt of Rs. 2 lacs should be treated as agricultural income. The appeal of the assessee was allowed, and the order was pronounced in the open court on 03/03/2023.

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