TaxTMI 
TaxTMI 
2026 (4) TMI 631
X X X X Extracts X X X X
X X X X Extracts X X X X
....gaged a Tax Practitioner at Vijayawada and filed the regular returns. The Tax Consultant in Vijayawada at the time of filing the return of income for the subsequent assessment years has changed the pass word of log in the income tax portal and therefore, the Chartered Accountant at Hyderabad who filed the appeal before the learned CIT(A) could not access the income tax portal to verify the status of the appeal pending before the learned CIT(A). Finally, in the month of July, 2025, the Chartered Accountant in Hyderabad enquired from the assessee about the proceedings before the learned CIT(A) and also informed that he could not verify the status of the case as he was unable to log in in the ITBA portal due to change of credentials. The assessee then obtained the log in pass word from the Tax Consultant at Vijayawada and shared the same with the Chartered Accountant at Hyderabad who found that the appeal of the assessee was dismissed by the learned CIT(A) vide impugned order dated 06.12.2024 and therefore, there is a delay of 159 days in filing the present appeal. The learned Authorised Representative of the Assessee has also referred his own affidavit filed before us and submitted t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....by the Chartered Accountant who was handling the matter before the learned CIT(A) by filing his affidavit. Accordingly, in the facts and circumstances of the case and in the interest of justice the delay of 159 days in filing the present appeal is condoned. 5. The assessee has raised the following grounds of appeal: 1. "The order of the learned Commissioner of Income Tax (A) is not correct either on facts or in law and in both. 2. The Learned CIT(A) is not justified in disposing off the appeal without giving adequate opportunity, considering the fact that all the notices were issued within a period of one month. 3. The Learned CIT(A) is not justified in confirming the addition of Rs. 96,86,686/- towards long-term capital gains, as computed by the Assessing Officer by adopting the deemed consideration under Section 50C of the Income-tax Act, without appreciating that the land was agricultural in nature and the actual consideration received was only Rs. 25,00,000/-, 4. The Leamed CIT(A) is not justified in confirming the addition made by the Assessing officer towards Cash deposits made in the bank account of Rs. 25,29,300/- as unexplained money ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at prior to sale of the land in question vide sale deed dated 17.07.2020 the assessee got converted these lands to non-agriculture use and therefore, at the time of transfer of the land the land was no more agricultural land and therefore, it was rightly valued by the Stamp Duty Authority and assessed to tax by the Assessing Officer. He has referred to the finding of the Assessing Officer and submitted that the assessee himself has converted the agricultural land into non-agriculture land and the Sub- Registrar has considered the stamp duty value of the property considering the status of the land as non-agricultural land then, the profit arising from the sale of the said land is assessable to tax under the Head "Capital Gain" and the same is not falling in the exception Clause of Sec.2(14) of the Act. Hence, the Assessing Officer has rightly assessed the long-term capital gains as per the provisions of sec.50C of the Act. He has relied upon the Orders of the authorities below. 10. We have considered the rival submissions as well as relevant material on record. There is no dispute that the assessee has sold the land in question vide two separate sale deeds dated 17.07.2020 for a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed as agricultural land only. A copy of Form-1B & Adangal in the name of Mr. V Kumaraswamy Naidu (latest owner) downloaded from the website is enclosed (Enclosure-3). Also, copy of Pattadharu Passbook in my name during my ownership enclosed (Enclosure-4). As per these documents the land is 'Nanja' (Wet Agriculture Land i.e., with water source). There is a big well attached to the land and 1/3 cost of the well was also included in the consideration as can be seen from the sale deed. d) It is submitted that the land was an agriculture land when it was purchased and it continued to be agricultural land even on today. The mere application for conversion and sanction thereof cannot be treated as a real conversion into non-agriculture land since the land continued to be used for agriculture purpose only. e) It is therefore, submitted that the gain from the transfer of this land cannot be treated as capital gain under section 45 of Income Tax Act. And it is prayed that the proposal to tax the gain be dropped. 5. Information required as per point number 5 (whether the purchase consideration shown in the IT Return), it is submitted that I am not maintainin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Kamataka High Court in support of my claim (Sn. K.M. Bopanna (HUF) Vs DCIT, ITA No.517 of 2017 of Honorable High Court of Karnataka). I once again submit that the relevant land was used for agricultural purposes at the time of purchase as well as at the time of sale and even now continued to be used for agricultural purposes only. It is, therefore, prayed that the Assessing Officer be pleased to consider my submission that the said land is not a capital asset, being an agricultural land, and drop the further proceedings towards addition under the head capital gains. f) As stated in my earlier submissions, I am working with a Private Organization located at Vijayawada and my family stays at Khammam, about 135 Kms distance from my work place. My working hours are very much more than a regular employee and my job requires always travelling to different places. I didn't check up my mails properly. In these circumstances I didn't see the earlier mails and couldn't respond to the earlier notices." 10.1. Thus, the assessee claimed that though the land was converted into non-agricultural land, however, the assessee continue to carry out the agricultural operations o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d extent were left blank. * The definition of capital asset is defined in section 2(14) of Income tax Act wherein, sub section (iii) specifically excludes the agricultural land in India from the definition of capital asset. The provisions of section 2(14)(iii) of IT Act, starts with words 'agricultural land in India ....... Nowhere in section 2(14) it is mentioned that non-agricultural land is not a capital asset. Therefore, non-agricultural land in India is nothing but a capital asset. * The facts of the present case are distinguishable with the case law relied upon by the assessee. * The Honble High Court of Gujrat in the case of Rasiklal Chimanlal Nagri v. CWT [1965] 56 ITR 608 (Guj.) had held that whether land is agricultural land or not cannot depend on the fluctuating or ambulatory intention of the owner of the land. The criterion must be something more definite, something more objective, something related to the nature or character of the land and not varying with the intention of the owner as to the use to which he wants to put the land at a particular point of time. * The Hon'ble Supreme Court in case of CWT v. Officer-in- Charge....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ricultural land. Even otherwise for the purpose of transferring the land, the value and price is paid by the buyer as per the potential use of the land and not for the activities which were carried out by the assessee before the transfer of the land. Merely carrying out the agricultural activity on a non-agricultural land would not change the character of the land as agricultural land. Therefore, once the land was undisputedly converted into non-agricultural land before transfer by the assessee, then, the same would not fall in the exception Clause of definition of capital asset under sec.2(14) of the Act. For ready reference, sec.2(14)(iii) is reproduced as under: "Capital Asset means- (iii) agricultural land in India, not being land situate- (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand ; or (b) in any area within the distance, measured aerially,- (I) not being more than two kilometres, fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ank accounts. In reply, the assessee explained that the cash available with the wife of the assessee as agricultural income is the source for deposit in the bank account. The Assessing Officer did not accept this explanation of the assessee and made the addition of the said amount of Rs. 25,29,300/- u/sec.69A of the Act. Though the assessee has challenged the action of the Assessing Officer before the learned CIT(A), however, the same was confirmed as the assessee has not responded to the notices issued by the learned CIT(A) and no submissions or any other record was filed. 13. Before the Tribunal, the learned Authorised Representative of the Assessee has reiterated his contentions that the cash was deposited as it was available with the wife of the assessee being agricultural income from the agricultural lands to the extent of 18.24 acres at Nelakondapalli (V) of Khammam District, State of Telangana. He has further submitted that the copies of pattadar passbook were filed before the Assessing Officer to show the agricultural operations on these lands. Thus, the learned Authorised Representative of the Assessee has submitted that ignoring the documentary evidence, the addition m....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s unexplained money u/s 69A r.w.s. 115BBE of the IT Act. Accordingly, Show Cause Notice u/s 1448(1)(xii)(b) of the IT Act was issued to the assessee on 11.12.2022 requesting the assessee to submit response on or before 18.12.2022. In response, the assessee submitted his reply on 17.12.2022. The relevant part of the reply is reproduced as under: These deposits were made out of cash available with my wife, Mrs. R Bhavani Devi. In fact, these amounts were transferred to our close relatives. My wife has fertile agricultural land to the extent of 18.240 Acres at Nelakondapalli Village, Khammam District, Andhra Pradesh. Copies of passbooks are enclosed (Encl-6). Agricultural operations on these lands are being done under our own supervision." The reply furnished by the assessee is carefully perused. However, the same is not acceptable for the following reasons: * The assessee has submitted only some passbook of his wife but the assessee has not submitted any documentary evidences which prove that his wife has offered the agricultural income in her ITR filed. * The assessee has not submitted any documentary evidences to prove that her wife has given the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1,227/- being transfer from friends and relatives towards hand loan obtained and repayment of loans obtained earlier by them. The assessee was not able to reconcile these transactions during the assessment proceedings. However, the assessee may be given one more opportunity to explain these credits in the bank account. 18. On the other hand, the learned DR has submitted that the assessee has failed to explain the nature of these credits in the bank account and therefore, the Assessing Officer has rightly made the addition. He has relied upon the Orders of the authorities below. 19. Having considered the rival submissions as well as relevant material on record, at the outset, we note that the Assessing Officer has considered this issue as under: "(B) As can be seen above in Table-1, the total credits into both the bank accounts of the assessee is totalling to Rs. 70,35,280/-, After reducing sale consideration of immovable property received into bank a/c, Salary credited to bank a/c, Cash Deposits into bank a/c, LIC & GIC receipts into bank a/c, Interest and Balance B/f, it is noticed that still the other credits to the extent of Rs. 1,61,227/- is not getting reconcile....