Income Tax Appellate Tribunal - Bangalore
Syed Meer,Bangalore vs The Income Tax Officer, Ward - 4(2)(1), ... on 17 October, 2025
IN THE INCOME TAX APPELLATE TRIBUNAL
"B" BENCH : BANGALORE
BEFORE SHRI. LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
AND SHRI. KESHAV DUBEY, JUDICIAL MEMBER
ITA No.1549/Bang/2025
Assessment Year : 2016-17
Mr. Syed Meer, Vs. ITO,
123, Ganagalur Village, Ward - 4(2)(1),
Hosakote, Bangalore.
Bangalore - 560 067.
PAN : FFJPS 3664 M
APPELLANT RESPONDENT
Assessee by : Shri. Rajeev Nulvi, CA
Revenue by : Shri. Subramanian S, JCIT(DR)(ITAT), Bangalore.
Date of hearing : 08.10.2025
Date of Pronouncement : 17.10.2025
ORDER
Per Laxmi Prasad Sahu, Accountant Member :
This appeal is filed by the assessee against the Order passed by the NFAC, CIT(A)under section 250 of the Act, vide DIN & Order No. ITBA/NFAC/S/250/2025-26/1075623956(1) dated 15.04.2025, on the following grounds:
1. The order of Assessing Officer is bad in law and against the facts and circumstances of the case and against the judicial precedence.
2. On the fact and circumstances of the case, & under the provision of law, the Assessing Officer erred in denying the claim of the Appellant in the return filed in response to notice u/s 148 that sale consideration received on sale of Immovable Property which is undeveloped converted agriculture land, exempt from tax as Agriculture income u/s 10(1) of the Income Tax Act, 1961.
3. The order of the Assessing Officer, on question of law as well as fact, is against the jurisdictional ITAT, jurisdictional High Court and Supreme Court judgement relied on by the Appellant; such decision ITA No.1549/Bang/2025 Page 2 of 16 of the Assessing Officer is against the principle of judicial binding force and contempt of court.
4. On the fact and circumstances of the case, & under the provision of law, the Assessing Officer erred in appreciating the fact in prospective manner that, the land was converted into non-agriculture land only with the intention to overcome the state law i.e., Karnataka Land Reform Act, wherein buying of agriculture land by corporate entity was barred by the said Act.
5. On the fact and circumstances of the case, & under the provision of law, the Assessing Officer erred in appreciating the fact that, even after the conversion of said land, the land was used for agriculture activity up to F.Y 2019-20, though the land was sold in the year 2015-
16.
6. On the facts and circumstances of the case, & under the provision of law, the Hon'ble CIT(A) dismissed the appeal only on the reason that the Appellant had not responded to the notices issued u/s 250 on various dates. The Hon'ble CIT(A), without ensuring the service of notices u/s 250 by other modes of service, enumerated under Rule 127 of the Income Tax Rules, 1962, when the notices were uploaded in the portal with intimation in the mobile not been responded by the Appellant.
7. For these and other reasons which may be adduced at the time of hearing, Your Honour is requested to set aside the order before the Hon'ble CIT(A) NFAC for reconsideration afresh by providing an opportunity by sending the hearing notice u/s 250.
8. The Appellant craves leaves, to add, to alter, to modify or to delete any grounds or other grounds at the time of hearing.
2. Briefly stated the facts of the case are that ITO received information from investigation department that the assessee along with 8 others have sold properties for a consideration of Rs.7,25,62,500/- during the previous year. After following due procedure for issue of notice under section 148 of the Act, notice was issued to the assessee on 29.07.2022. It was noticed that assessee has claimed index cost of acquisition for the Assessment Years 1981-82 and 2012-13 though the property was purchased in 1981-82 and claimed deduction under section 54B of the Act and declared income of Rs.2,43,350/- after claiming exemption under section 54 of the Act of Rs.39,28,571/-. The details were called for and from the documents the AO observed that transferred ITA No.1549/Bang/2025 Page 3 of 16 property was neither residential house property nor agricultural land as all the lands were converted from agricultural purposes to residential purpose to bring the capital gains below exemption limit chargeable to tax as per Act. The property bearing Survey Nos.32 and 33 is agricultural land though it was converted from agricultural to non-agricultural land in 2007 but still said agricultural land was for cultivation of agricultural produce until Financial Year 2019-20. Even on the date of sale on 03.03.2016 land was for agricultural purpose. As per RTC and Village Accountant certification dated 05.07.2017 survey No.32 measuring 5 acres 39 guntas and survey No.33 measuring 4 acres 28 guntas held in the name of Ubedulla bin Akbar Shariff. The said land is cultivated with Nilgiri plants (Eucalyptus). The AO noted that assessee himself accepted that property was non agricultural from 2007. Therefore mere agricultural activity carried out does not make it agricultural land for the purpose of income tax. Therefore the claim of assessee to treat the same is exempt from the definition of capital asset as per section 2(14)(a)((iii)(b)(i) of The Act and added Rs.95,15,739/- as capital gain and passed Assessment Order on 25.05.2023.
3. Aggrieved from the above Order, assessee filed appeal before the learned CIT(A). The learned CIT(A) issued various notices to the assessee on different dates but there was no response from the assessee's side. Therefore he decided the issue on the basis of material available on record and dismissed appeal of the assessee.
4. Aggrieved from the above Order, assessee is in appeal before the Tribunal. The learned Counsel explained the reason for not responding to the notice before the learned CIT(A) and stated that assessee is illiterate person and he puts thumb impression. He cannot read notices documents. While filing return of income some others email was provided and notice was sent ITA No.1549/Bang/2025 Page 4 of 16 on that email. Therefore assessee could not respond to the notice. When the penalty notice was issued then assessee came to know that learned CIT(A) has passed Order and had dismissed the appeal of the assessee. He fled appeal before the Tribunal and he also strongly supported the statement of facts submitted before us.
5. The learned DR relied on the Order of lower authorities and submitted that several chances were given by the learned CIT(A) but assessee could not notice and on merits he relied on the Order of AO and submitted that agricultural land was got converted for residential purpose therefore it cannot be said that land is agricultural land. Even it is used for agricultural purpose and nilgiri plants were grown. These plants are planted thereafter it takes lot of time to grow and the assessee has also not shown any agricultural income in return of income. Therefore Order of the AO is correct. The statement of facts are as under:
"In the case of the above-named Appellant, there was an order u/s 147 r.w.s144B of the Income Tax Act, 1961, dated 25-05-2023 bearing DIN:
ITBA/AST/S/117/1053180741(1) passed by the Assessing Officer of the Assessment unit. In the said order, the A.O made the addition of Rs.95,15,739/- on account of Long-Term Capital Gain on sale of immovable property along with other family members. The said addition was made to the return of income of Rs.98,500/-.
Against the said order, the Appellant preferred an appeal before the Hon'ble CIT(A), NFAC on 22-06-2023.
The Hon'ble CIT(A), NFAC passed the order u/s 250 dated 15-04-2025 bearing DIN: ITBA/NFAC/S/250/2025-26/1075623956(1), by dismissing the appeal of the Appellant on the reason that "the Appellant has not replied any of the notices issued u/s 250 on various dates Viz., 08-07-2024, 05-08-2024. 21-08-2024 and 12-03-2025." Wherein such notices, it was directed by the Hon'ble CIT(A) to furnish submission and evidence(s) in support of the grounds of appeal filed. As the Appellant is an illiterate person and residing in a remote village of the Bangalore district. And while filing the return of income, and in the portal, he ITA No.1549/Bang/2025 Page 5 of 16 provided, mobile number and e-mail of his relative. Unfortunately, the relative has not brought to the notice of the Appellant or Authorised Representative of the Appellant i.e., ourselves only.
That is the reason the Appellant or the Authorised Representative has not responded to the notices issued u/s 250, which led the Hon'ble CIT(A), NFAC, dismissing the appeal for non-prosecution by the Appellant.
The passing of the order u/s 250 has come to the knowledge of the Appellant only when the show-cause notice for levying the penalty u/s 271(1)(c) dated 26-06-2025, was informed by the relative of the Appellant. Then only he came to know about the passing of the order u/s 250 by the Hon'ble CIT(A), NFAC. For such show-cause notice for penalty, we replied vide our letter dated 27-06-2025, where we requested the Assessing Officer of the Assessment Unit to keep the penalty proceedings under abeyance as we intend to file the appeal before the Hon'ble I.T.A.T. As mentioned in the reply to the penalty proceedings, and aggrieved by the order of the Hon'ble CIT(A) u/s 250, we are preferring this appeal before this Hon'ble I.T.A.T. Bench for seeking justice by way of another opportunity being heard before the Hon'ble CIT(A).
Accordingly, it is prayed before this Hon'ble Bench to set aside the order for reconsideration to comply with the principle of natural justice and to meet the justice end.
Regarding the facts of the case, the grievances of the Appellant, we are herewith submitting a statement of facts, which were submitted before the Hon'ble CIT(A), NFAC as under:
"The Appellant belongs to the OBAIDULLA Family, for the A.Y 2016- 17, the Appellant filed the return of income on 20/09/2016 u/s 139(4) of the Income Tax Act,1961 by declaring the capital gain of Rs.2,43,350/- and claimed exemption u/s 54B of the Income Tax Act, 1961 amounting to Rs. 39,28,571/-. Thus, declaring the total income of Rs.2,43,350/-. The said return of income filed by the Appellant was accepted by the department u/s 143(1)(a) of the Income Tax Act,1961.
I. Before submitting the facts or events led to the issue of 148 notice and subsequent proceedings of reassessment u/s 143(3) r.w.s147 ITA No.1549/Bang/2025 Page 6 of 16 r.w.s144B, the Appellant wants to bring to your kind notice about the facts of the case as under:-
1. Three families sold the property to M/s JAWASA CITY DEVELOPERS, a partnership represented by its partner, Mr IQBAL KHAN. The families are (1) MrOBAIDULLA's Family, (2) Mrs MUNEERA BEGUM's Family and (3) MrRAHMATHULLA's Family.
2. The property sold is immovable agricultural land bearing survey Nos 23, 24, 32, 33 and 34 situated at BagurSonnenahalli Village, LakkurHobli, Malur Taluk, Kolar District.
3. The said properties were undeveloped and converted from agricultural to residential purposes during the year 2007. But up to the financial year 2019-20, the said lands were cultivated for agricultural purposes as certified by the Village accountant of the Revenue Circle, Malur Taluk, vide certificate dated 05-07-2019.
4. Survey No.23 measuring 5 Acres and 14 Guntas of agricultural land Survey No.24 measuring 5 Acres and 34 Guntas of agricultural land Survey No.32 measuring 5 Acres and 39 Guntas of agricultural land Survey No.33 measuring 4 Acres and 28 Guntas of agricultural land Survey No.34 measuring 5 Acres and 18 Guntas of agricultural land All the above-said properties were sold by the above-said three families for consideration of Rs.12,29,62,500/-.
5. MrOBAIDULLA was the absolute owner of the immovable property bearing survey No.32 measuring 5 Acres and 39 Guntas, survey No.33 measuring 4 Acres and 28 Guntas and survey No.34 measuring 5 Acres and 18 Guntas. The said survey numbers 32, 33 and 34 belong to MrOBAIDULLA's group of families. Survey No.32 belongs to Schedule C', Survey No.33 belongs to Schedule D', and Survey No.34 belongs to Schedule E'.
The said MrOBAIDULLA's group of families sold the property for a consideration of Rs.7,25,62,500/-.
6. Survey No.23 measuring 5 Acres and 14 Guntas belongs to Mrs MUNEERA BEGUM and her children, namely (1) MrsROOHINAG, (2) Mrs FARAHA BEGUM (3) Miss ARSHIYA BEGUM and, (4) Mr ARFATH. Survey No.23 belongs to Schedule 'A'.
7. Survey No.24 measuring 5 Acres and 34 Guntas belongs to the share of MrRAHMATHULLA is the vendor serial No.3 i.e., Schedule 'B' property.
ITA No.1549/Bang/2025 Page 7 of 168. Schedules 'C,' 'D' and 'E' belonged to MrOBAIDULLA and his family. MrOBAIDULLA was alive at the time of the sale of the property on the day of 3rd March 2016. Late MrOBAIDULLA has the following legal heirs.
(1) Shaheen Taj (Daughter) (2) Nasreen Taj (Daughter) (3) Shahajabeen (Daughter) (4) Syed Meer [Assessee] (Son) (5) Ghouse Peer [Son]
9. Under the Mohammedan law Sunni sect, the grandchildren don't have the legal right over the properties of the grandfather. Only the children of the person are the legal heirs for the inheritance of the property.
10. In the case of MrOBAIDULLA, who was alive at the time of the sale of the property, the consideration received by him, amounting to Rs.7,25,62,500/-has been/legally entitled to distribution/apportioned among his legal heirs, as stated in Para No.8.
11. Under the Mohammedan law in the Sunni sect, the father is entitled to 25% of the share of the property, and the remaining 75% divided among the children of the person, wherein the male child will get 2 shares and the female child will get 1 share.
In view of such legal entitlement of sale consideration, MrOBAIDULLA got 1/4th of the sale consideration amounting to Rs.1,81,40,625/-, and the remaining amount of Rs.5,43,91,875/- divided among the legal heirs for the female child got 1/7th of Rs.5,43,91,875/-, and the male child got 2/7th of Rs.5,43,91,875/-.
Likewise, MrOBEDULLA share Rs.1,81,40,625/-
Shaheen Taj share Rs.77,70,268/-
Nasreen Taj share Rs.77,70,268/-
Ghouse Peer share Rs.1,55,40,536/-
Shahajabeen share Rs.77,70,268/-
Syed Meer share Rs.1,55,40,536/-
II.Events led to the issue of notice u/s 148 dated 27/07/2022 In the Appellant case, originally notice u/s 148 was issued on 31/05/2021 vide DIN No. ITBA/AST/S/148/2021-22/1033207224(1) for the A.Y 2016-17, subsequently in view of Supreme Court judgement dated 04/05/2022 in case of Union of India V/s Ashish Agarwal notice u/s ITA No.1549/Bang/2025 Page 8 of 16 148A(b) of Income Tax Act,1961 on 18/05/2022, in response to the said notice u/s 148A(b) the Appellant filed the reply vide letter dated 18/06/2022, [the said reply in enclosed herewith.] The Assessing Officer, Ward 3(2)(1), Bangalore, after considering the reply of the Appellant dated 18/06/2022 passed the order u/s 148A(d) of the Income Tax Act, 1961 on 29/07/2022 and served the same along with notice u/s 148 of the Income Tax Act, 1961.
In response to the said notice u/s 148, the Appellant filed return of income on 27/08/2022, by claiming the consideration received on sale of Immovable Property as legal heir of Late Mr. OBAIDULLA to the extent of his share amounting Rs. 1,55,40,536/- as exempt income as the consideration received was on sale of Agriculture land as defined u/s 2(14)(ii)(b) of the Income Tax Act, 1961 and also the Appellant vide his submission dated 04/04/2023 to the show cause notice dated 25/03/2023, narrated the fact, Why the said sale of Immovable Property in the form of Agriculture land is claimed as exempt income?
The submission of Appellant for above said contention was as under: -
1. The property under consideration bearing Sy. No. 32 measuring 5 Acres 39 Guntas and Sy. No. 33 measuring 4 Acres 28 Guntas was sold for a consideration of Rs. 7,25,62,500/-. The said property bearing Sy No. 32 & 33 is agricultural land though it was converted from agricultural to non-agricultural land on 09/10/2007 and 13/10/2007 respectively, but the use of the said agricultural land was for the cultivation of agricultural produce until F.Y 2019-20, that to even after the sale of the said property on 03/03/2016. It means that up to the date of sale, the land was used for agricultural purposes. The RTC and the village accountant certificate dated 05/07/2019 state that Sy. No. 32 measuring 5 Acres 39 Guntas and Sy. No. 33 measuring 4 Acres 28 Guntas held in the name of Ubedulla bin Akbar Shariff. The said land is cultivated with Nilgiri plants.
2. The Bangalore Tribunal in the case of K. Leelavathy Vs ITO in I.T.A No. 997/BANG/2010 held that "Though the land is converted into non-agricultural, in view of cultivation of the land till the date of sale.
The land should be treated as agricultural land, the same is exempt from Capital Gain in view of Sec 2(14) r.w.s 45 and 48 of the Income Tax Act, 1961."
ITA No.1549/Bang/2025 Page 9 of 16The said order of the ITAT was upheld by the Karnataka High Court in 341 ITR 287 by holding that "there was no illegality in the order of the tribunal and dismissed the appeal of the revenue."
3. The Bangalore ITAT, in case of M. R. Seetharam (HUF) Vs ACIT in I.T.A No. 1654/BANG/2012 held that "Where it was observed that it is in compliance with the state laws that the Assessee is forced to convert his agricultural land to non-agricultural land before selling it to a corporate. Had the state Land Reform Act permitted the Assessee to sell his agricultural land without conversion to a corporate as in the case of other state, it would not than be required to get the land converted, and the gain arising from such sale could not have been exigible to Capital Gain tax. Even after conversion of the land, cultivation of land till the date of sale was continued unabated and as such, the land should have been treated as agricultural land, thus exempt from Capital Gain in view of Sec. 2(14) of the Income Tax Act, 1961."
4. The Bangalore Tribunal in case of ASSISTANT COMMISSIONER OF INCOME TAX Vs SHRI M.R. ANANDARAM (HUF), SHRI M.R. KODANDARAM (HUF), SHRI M.R. PATTABHIRAM (HUF), SHRI M.R. SEETHARAM (HUF) in I.T.A No. 1169 to 1172 at para 7.3.9 and 7.3.10 held that "It is evident from the fact that the agriculturists in other States can sell their agricultural lands without getting the same converted, whereas the agriculturists in Karnataka cannot do so due to the Land Reforms Act prevailing in the State. As such, an agriculturist in Karnataka is on a different footing from his counterparts in other States. If one were to conclude that since the present Assessee had obtained a conversion order to enable it to sell its lands to a non-agriculturist (a Corporate), the subject land ceased to be a non-agricultural and, thus, become a Capital asset, though the subject land remains an agricultural land, the Assessee then stands discriminated in the eyes of law vis-a-vis its counter-parts in other States. Had the State Reforms Act permitted the Assessee to sell its agricultural lands without conversion to a Corporate as in the case of other States (supra), the Assessee would not then be required to get the land converted merely to facilitate its sale to a corporate and the gains arising from such sale would not have been exigible to Capital Gains tax which is the subject of a Central Act (Income-tax Act).In the instant case, as mentioned earlier, even after conversion, the Assessee was carrying on an agricultural operation and conversion was done only to facilitate the sale of subject property to a corporate entity/non agriculturist. In substance, the Income-tax Act - a Central Act - is to be administered in ITA No.1549/Bang/2025 Page 10 of 16 such a manner to ensure that an Assessee IS not subjected to suffer due to different State laws.
The said judgement of jurisdictional ITAT Bangalore Bench, Bangalore in case of M R Seetharam V/s CIT in I.T.ANo.1654/BANG/2012, and M R Anandaram, M R Kodandaram & M R Seetharam in I.T.ANo.1169 to 1172 were upheld by the Karnataka High Court in ITA No.520 of 2014, vide 450 ITR 94.
The said judgement of the Karnataka High Court affirmed by the Supreme Court on the reason that there was no good ground to interfere with the decision of the High Court, 453 ITR 757 Supreme Court. Taking into account all the aspects as discussed in the foregoing paragraphs and also in conformity with the judicial pronouncements on the issue (supra), we are of the view that though the subject land was converted into non-agricultural purposes, cultivation of the land for agricultural purposes till the date of sale was continued unabated and as such, the land should have been treated as agricultural land and, thus, exempt from capital gains in view of s. 2(14) of the Act. It is ordered accordingly."
5. After the conversion of land from agricultural land to non- agricultural land, the use of the land continued to be for agricultural purposes till the date of sale and even 3 years after the sale also.
6. The land was sold on an Acre basis, not on sq. ft basis.
7. After the conversion of the land, the land was not developed by plotting and providing roads and other facilities.
8. In view of Section 2(14)(A)(iii)(b)(i) of the Income Tax Act, 1961, the land sold by you is not a capital asset as it is situated more than 2 kms away from the local limits of any municipality, cantonment board, town area committee wherein population is more than 10,000 and less than 1,00,000.
9. In Karnataka due to the Land Reform Act, agriculturalists in Karnataka cannot sell agricultural land to non-agriculturalist and industrial companies as it is prohibited. In other words, non- agriculturalists and industrialists are prohibited from purchasing the land, which is classified as agricultural land in the revenue record. To ITA No.1549/Bang/2025 Page 11 of 16 affect the sale to a non-agriculturalist, it is compulsion on the part of the seller to convert the agricultural land to non-agricultural land. In view of the above judicial pronouncement and facts, the land sold by Late Mr. Obaidulla Shariff and his legal heirs bearing Sy. No. 32 measuring 5 Acres 39 Guntas and Sy. No. 33 measuring 4 Acres 28 Guntas situated at Begur Sonnenahalli village, LakkurHobli, Malur Taluk, Kolar District, Karnataka was not a capital asset as it is situated beyond more than 10 Kilometres away form Malur Town, where the population is between 1 lakh to 10 lakhs.
The Appellant, with a misconception of fact and law, wrongly offered the income under the head Capital Gain for the actual amount received by her by claiming inflated cost of acquisition and improvement cost, which was not true. But in fact, the sale consideration received on the sale of said land was not at all taxable. Hence, if the Appellant with misconception of law and fact, offered the income for taxation which was not at all taxable, the department should not take undue advantage of the Appellant's mistakes; otherwise, it amounts to unjust enrichment on the part of the department.
In view of the above fact matrix of the case, the income received by the Appellant on sale of an immovable property was not liable for capital gain tax for the A.Y 2016-17, the said immovable property is agricultural land and exempt u/s 10(1) of the Income Tax Act, 1961. As per payment received as stated on Pages No.9,10,11,12,13 and 14 of the sale deed Mr SYED MEER the Assessee, received Rs. 94,00,000/-. The receipt of the amount stated at Page No.12 from (dd) to (kk), at (mm) & (nn) of Page No. 13 and at (aaa) of Page No. 14. Though the Assessee received Rs. 94,00,000/- but his legal entitlement in the sale consideration was only Rs.1,55,40,536/-. The receipt of the amount is not conclusive proof of entitlement to the share. The land sold under the consideration was the land undeveloped converted land but used for agricultural purposes until the financial year 2019-20, wherein the Nilgiris plantation was cultivated at survey No.32, 33 and 34, as per the certificate issued by the Revenue authorities of the Government of ITA No.1549/Bang/2025 Page 12 of 16 Karnataka of Malur Taluk. The said certificates are in the vernacular language in Kannada, the translated copy from the Kannada language to the English language is herewith enclosed for your perusal. Hence, in the Return of Income filed in response to notice u/s 148 of the Income Tax Act, 1961. The Assessee claimed the portion of his share in the sale consideration on the sale of land bearing Sy. No. 32 & 33 of Begur Sonnenahalli village, LakkurHobli, Malur Taluk, Kolar District, Karnataka, as exempted income.
In spite of above said submission the Assessing Officer of the assessment unit issued a notice u/s 143(2) of the Income Tax Act, 1961 on 28/04/2023 for such a Show cause notice. The Appellant replied on 24/04/2023 as under:-
In the Assessee case for the assessment year 2016-17, there was a notice u/s 148 dated 31-05-2021. In response to the said notice, the Assessee filed a return of income on 27-08-2022. In the said return of income, the assessee offered Rs.98,500/- income from other sources and claimed agricultural income of Rs.2,30,000/- and claimed exempted income of Rs.1,55,40,536/- consideration received on the sale of immovable property, which is not a capital asset (agricultural land).
After the return is filed on 27-08-2022, an intimation u/s 144B was received by the Assessee on 02-11-2022.
Further, a notice u/s 143(2) dated 29-12-2022 was received by the Assessee. Subsequently, notices u/s 142(1) dated 29-12-2022 and 13-02- 2023 were issued.
On 19-01-2023, a communication was issued to the Assessee for non- compliance with the earlier notices u/s 142(1).
A show-cause notice u/s 144 dated 16-03-2023, and notice u/s 142(1) dated 22-03-2023, and once again a show-cause notice dated 25-03- 2023 was issued to the Assessee.
For all the above-said notices, the Assessee belatedly filed his reply through his A/R on 04-04-2023, which was uploaded in the income tax portal, wherein the Assesseeapologised for non-compliance for the ITA No.1549/Bang/2025 Page 13 of 16 notices u/s 142(1) and show-cause notice u/s 144 and reason for non- compliance. But vide his submission dated 04-04-2023, the Assessee has made an exhaustive submission in reply to the notices u/s 142(1) and show-cause notice and also the reason for non-taxability of sale consideration in view of jurisdictional Hon'ble I.T.A.T and Hon'ble High Court judgments.
In spite of such detailed submission, the Assessing Officer of the assessment unit vide his letter dated 10-04-2023 communicated to the Assessee that there was no response to the notices issued u/s 142(1) for the assessment year 2016-17, in the proceedings u/s 144B.
But for such communication, the assesseevide his letter dated 11-04- 2023, strongly objected to the findings of the assessment unit vide letter dated 10-04-2023 and brought to the notice of the assessment unit that there was an exhaustive submission made on 04-04-2023 in response to all the notice issued u/s 143(2), notices u/s 142(1) and show-cause notice u/s 144.
In spite of such submission made by the Assessee, to the dismay of the Assessee, he has received once again the notice u/s 143(2) dated 28-04- 2023 for the same assessment year 2016-17. Wherein, the Assessee has been directed to file the reply on 28-04-2023 by 01:00 PM. It is highly impossible to upload the reply for the notices on the same day on which the notice was issued, which is a gross violation of the principle of natural justice and against the principle/practice of providing the opportunity of being heard to the person for whom the notices were issued.
Without prejudice to the above, the Assessee fails to understand the necessity of issuing the notice u/s 143(2) dated 28-04-2023, when the notice u/s 143(2) was already issued after the return is being filed in response to the notice u/s 148 on 27-08-2022. When there was no change in the incumbent, and also there was no transfer of case u/s 129 of the Income Tax Act, 1961.
Once again for your perusal, our submission dated 04-04-2023 is uploading along with the family tree and village accountant certificate ITA No.1549/Bang/2025 Page 14 of 16 in survey No.32,33 and 34 in the vernacular Kannada language and its translated copy of the village accountant and RTC.
And also, herewith submitting the submission made in the case of Mr GHOUSE PEER, who is the brother of the Assessee, who has also received the same amount of consideration of Rs.1,55,40,536/- as a joint legal heir of the said scheduled property for your kind perusal. In spite of the said detailed submission the Assessing Officer of the Assessment unit passed the order u/s 147 r.w.s144B on 25/05/2023 by denying the claim of Agriculture income and computed the long-term capital gain from the amount received by the Appellant Rs. 95,38,000/- deducted the Indexed cost of acquisition computed on the Assessee's share Rs. 22,261/-. Hence made an addition of Rs. 95,15,739/- to return income of Rs. 2,43,350/- on the following grounds as stated in the para 4.5 of the Assessment order, which are as under: -
In view of the above, the Assessee himself has admitted that the property was non-agricultural from 2007, therefore, merely the carrying out of agricultural activity does not make it agricultural land for the purpose of the Income Tax Act. Therefore, the claim of the Assessee to treat the same as exempt from the definition of capital asset as per section 2(14)(a) (iii)(b)(i) of the IT Act, is not acceptable. The Assessee vide reply dated 22.05.2023 has given submission in respect of GHOUSE PEER as additional evidence. However, the same is not found acceptable in view of the facts of the case stated above.
The Appellant hereby rebuts the reason adduced by the Assessing Officer at para 4.5 of the Assessment order for denying the claim of the Assessee. Hereby, the Appellant, on the following grounds, agitates/rejects the said reason.
1. After the Bangalore Municipal Corporation became Bruhat Bengaluru MahanagaraPalike (BBMP) in the year 2007 by the Government of Karnataka, the said land situated at Sonnenahalli became by location-wise wise just 20 kms away from the BBMP limit.
During that period, so many corporate entities, including JAWASA CITY DEVELOPERS, approached the sellers for getting the land converted so as to purchase the said land by a corporate entity, will become law compliant. But, unfortunately, after the land was converted, their ITA No.1549/Bang/2025 Page 15 of 16 negotiation failed. Again, in the year 2012, the said JAWASA CITY DEVELOPERS approached the sellers for the purchase of said land. Accordingly, the buyers JAWASA CITY DEVELOPERS issuing a cheque to seller from 06/09/2013 only, which is evident from the sale deed. Though the buyers went on paying the sellers from the year 2013, ultimately the sale deed was executed on 03/03/2016. Hence, the sale of said land by seller after conversion was only with the intention to get higher price and to overcome the legal restriction imposed under the Karnataka Land Reform Act. Hence, there was a necessity to convert the land for selling to a corporate entity.
2. Here, the agricultural land was sold after conversion as stated supra, only to get a higher price from the corporate entity, that is the reason, converted agricultural land was sold instead of the agricultural land.
3. During the course of Assessment proceedings only, the Appellant admitted the fact that, with a misconception of fact and law, wrongly declared the capital gain, subsequently came to know about the non-taxability of said income. Hence, claimed the exempted income in the return filed in response to Notice u/s 148."
In view of the above facts and the position of law and the Hon'ble jurisdictional High Court, and the Hon'ble I.T.A.T, the Appellant relied on Para 2,3, and 4 of Page No.4 of the statement of facts submitted before the Hon'ble CIT(A), which is highlighted as supra. There is a delay of 30 days in filing the appeal before this Hon'ble Bench in preferring this appeal. Herewith, we are enclosing the affidavit for the reason for the delay in filing the appeal, along with the application for condonation of delay.
In view of the above submission, it is prayed before this Hon'ble Bench to set aside the order of the Hon'ble CIT(A) for reconsideration afresh after providing due opportunity by sending the hearing notice u/s 250 to the Authorised Representative of the Appellant, whose mobile No.9972183551, and e-mail ID: [email protected]. It is prayed before this Hon'ble Bench to direct for the same to the Hon'ble CIT(A), NFAC.
ITA No.1549/Bang/2025 Page 16 of 166. Considering the rival submissions and on perusal of entire material available on record and Orders of authorities below, we noted that here the dispute is whether land sold is a capital asset or not. As per the provisions of Income Tax Act, Order passed by the CIT(A) is ex-parte Order without going into the merits of the case. Assessee has furnished statement of facts noted supra since there is no reason on merits of the case. Therefore considering the facts of the case and in the interest of justice, we are remitting this issue back to the file of CIT(A) for fresh consideration and decide as per law after giving reasonable opportunity of being heard to the assessee.
7. In the result, appeal filed by the assessee is allowed for statistical purposes.
Pronounced in the open court on the date mentioned on the caption page.
Sd/- Sd/-
(KESHAV DUBEY) (LAXMI PRASAD SAHU)
Judicial Member Accountant Member
Bangalore.
Dated: 17.10.2025.
/NS/*
Copy to:
1. Appellants 2. Respondent
3. DRP 4. CIT
5. CIT(A) 6. DR,ITAT, Bangalore.
7. Guard file
By order
Assistant Registrar,
ITAT, Bangalore.