Swaran Kaur Vs ITO (ITAT Chandigarh)
The appeal was filed by the assessee against the order dated 03.12.2024 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, for Assessment Year 2021–22. The assessee contended that there was no mala fide intention in failing to comply with hearing notices and explained the substantive grounds raised against the assessment.
The assessee stated that she had sold rural agricultural land situated approximately 8 kilometers away from the municipal corporation limits. Relying on section 2(14) of the Income Tax Act, 1961, it was contended that agricultural land situated in a rural area beyond the prescribed aerial distances from municipal limits does not constitute a “capital asset” and therefore its sale is not liable to capital gains tax. The assessee also submitted that out of total cash deposits, ₹10,00,000 represented exempt agricultural income under section 10(1), and ₹3,00,000 related to income from dairy farming, claimed to be an allied agricultural activity. It was further pleaded that business income should be assessed on taxable income and not gross receipts, considering routine expenses, and that no penalty should be imposed.
The assessment for the year was completed ex parte under section 144 of the Act. The Assessing Officer treated the sale consideration of land as short-term capital gain and treated the cash deposits in the bank account as taxable income. The assessee filed an appeal before the Commissioner (Appeals). However, the appeal was dismissed in limine on the ground of non-compliance with notices and presumed lack of interest in prosecuting the appeal, without adjudicating the issues on merits.
