Neelam Singh Vs ITO (ITAT Agra)
Land Under Water, Addition Above Water—ITAT Orders a Fresh Look!
The background: A property purchase triggers reopening
The dispute arose from the purchase of immovable property situated at Abdulnavipur Khadar, Tehsil Mahavan, District Mathura, on 18 May 2018.
The Department initially received information describing the transaction as a purchase for ₹17,72,000. Based on this information, the assessment for AY 2019-20 was reopened through notice under section 148 dated 24 March 2023.
During assessment, however, the Assessing Officer obtained the purchase agreement and found that the actual consideration was ₹8 lakh, with stamp duty of ₹1,14,100. The figure of ₹17,72,000 represented the property’s stamp duty valuation, rather than the actual purchase consideration.
This distinction became important because the Assessing Officer proceeded to make two separate additions concerning the same acquisition.
Two additions: Source of investment and stamp-value difference
The Assessing Officer recorded that the assessee had been given several opportunities to furnish her explanation but had failed to respond.
In the absence of a reply, he added ₹9,14,100 under section 69, comprising the purchase consideration of ₹8 lakh and stamp duty of ₹1,14,100, treating the investment as unexplained.
He separately added ₹9,72,000 under section 56(2)(x)(b)(B), representing the difference between the stamp duty value of ₹17,72,000 and the actual consideration of ₹8 lakh.
The aggregate disputed addition thus amounted to ₹18,86,100. The first addition concerned where the purchase money came from; the second concerned whether the property had been acquired below its stamp duty value. These required distinct factual explanations.
The first appeal also ended without the assessee’s participation
The assessee challenged the assessment before the CIT(A), NFAC. However, she again failed to appear, and the appeal was dismissed ex parte by order dated 21 February 2026.
She then approached the Tribunal. There was a two-day delay in filing the appeal. Considering the delay nominal, the Tribunal condoned it and admitted the appeal for adjudication.
The matter therefore reached the Tribunal without the factual explanations having been adequately examined by either of the lower authorities.
The source explanation: A schoolteacher’s savings
In her grounds before the Tribunal, the assessee stated that she was a salaried schoolteacher and that the property investment had been made from known sources and past savings.
This explanation directly addressed the addition under section 69. Her case was that the purchase consideration and related expenditure represented accumulated funds, rather than unexplained investment.
However, the Tribunal did not itself verify the salary receipts, savings or availability of funds on the purchase date. It treated the contention as one requiring factual verification, for which another opportunity should be provided.
Accordingly, the order does not contain a finding that the source stood proved merely because the assessee was employed as a teacher.
The valuation explanation: Khadar land is not ordinary agricultural land
The assessee also disputed the assumption underlying the stamp-value addition. She stated that the property was “Khadar land,” perpetually under water, and could not be equated with regular agricultural land.
According to her grounds, the land could neither be physically possessed nor cultivated in the ordinary manner. She argued that a generic circle rate could not be applied blindly without considering these characteristics.
This was a factual challenge to the suitability of the benchmark valuation. The assessee’s position was that the property’s actual condition materially affected its value.
The Tribunal did not declare the circle rate incorrect or accept the claimed condition of the land as established. It held that these assertions also needed verification and supporting evidence.
The decision: Another opportunity, followed by a fresh assessment
In the interest of justice, the Tribunal decided to give the assessee one more opportunity to substantiate her claims and produce evidence.
It set aside the CIT(A)’s order and restored the matter to the Assessing Officer for a fresh assessment, after providing a reasonable opportunity of hearing and proceeding in accordance with law.
All grounds were allowed for statistical purposes. Consequently, neither the section 69 addition nor the section 56(2)(x) addition was finally deleted on merits. Both issues remained open for fresh examination.
Author’s comments: Prove the money and prove the land’s condition
The case illustrates why a property-purchase dispute should address both the source of funds and the valuation issue. Salary records, bank statements and a credible savings reconciliation can support the first explanation. Evidence of inundation, physical condition, cultivability and comparable transactions can support the second.
But the limits of this ruling matter. It is a remand order, not a precedent holding that all Khadar land must be valued below circle rates. Nor does salaried employment automatically explain an investment.
The assessee has secured a fresh opportunity. The result will now depend on evidence supporting her savings and the property’s claimed limitations.
FULL TEXT OF THE ORDER OF ITAT AGRA
1. This appeal is directed against the impugned order dated 21.02.2026 passed in appeal No. NFAC/2018-19/10380266 by the ld. Commissioner of Income Tax/ National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as the “CIT(A)] u/s. 250 of the Income Tax Act, 1961 (hereinafter referred to as the “Act”) for the A.Y. 2019-20, wherein ld. CIT(A) has dismissed assessee’s appeal ex-parte.
2. At the outset, the learned AR submits that there is a delay of 2 days in filing the present appeal. Considering the nominal delay of two days, the same is condoned and the appeal is admitted for adjudication.
3. In this case, the assessment was reopened vide notice u/s. 148 of the Act dated 24.03.2023 on the basis of information that the assessee had purchased an immovable property situated Abdulnavipur Khadar Tehsil Mahavan, Distt.-Mathura for a sale consideration of Rs.17,72,000/- on 18.05.2018. The Assessing Officer noted in the assessment order that the assessee was given ample opportunities to file her submissions, which the assessee failed to do so. During the course of assessment proceedings, the AO received copy of the purchase agreement from JAO wherein, the immovable property was purchased for a sum of Rs.8,00,000/- and stamp duty of Rs.1,14,100/- was paid. The AO also noted that the stamp valuation of this property was Rs.17,72,000/-. In absence of any reply filed by the assessee, the AO made an addition of Rs.9,14,100/- on account of actual purchase value u/s. 69 of the Act and further a sum of Rs.9,72,000/- u/s. 56(2)(x)(b)(B) of the Act.
3.1. Aggrieved with the assessment order, the assessee filed an appeal before the learned CIT(A) wherein the appeal was dismissed ex-parte, as the assessee failed to appear before the learned CIT(A).
4. In the grounds of appeal, it is submitted that the appellant was a salaried employee (School Teacher) and investment was made out of her known sources and past savings. Further it is also stated that the land purchased was a “Khadar Land”, which is perpetually under water and cannot be equated with the regular agricultural land. It is further stated in the grounds of appeal that the circle rate is a generic benchmark and cannot be applied blindly to land that cannot be physically possessed or cultivated. These facts stated in the grounds of appeal require factual verification. Therefore, in the interest of justice and to give one more opportunity to the assessee to substantiate her claims made in the grounds of appeal and to adduce any evidence in support of above claim, we set aside the order of learned CIT(A) and the matter is restored to the file of Assessing Officer for fresh assessment after giving reasonable opportunity of being heard to the assessee and in accordance with law. All the grounds of appeal filed by assessee are allowed for statistical purposes.
5. In the result, appeal is allowed for statistical purposes.
Order pronounced in the open court on 28 /09/2026.
