Pramod Dwivedi Vs ITO (ITAT Raipur)
Additional Receipt on Agricultural Land Sale Requires Proof of Its Character: ITAT Grants Final Opportunity to Substantiate ₹40 Lakh Claim
Background
The Raipur Tribunal restored a dispute concerning an additional receipt of ₹40 lakh connected with the sale of agricultural land to the CIT(A), granting the assessee one final opportunity to furnish supporting evidence.
The assessee claimed that the amount represented compensation for standing crops, trees, permanent improvements and rehabilitation benefits. The Department treated it as an unexplained taxable receipt because it exceeded the consideration recorded in the registered sale deed.
The Tribunal also restored a separate dispute concerning house rent allowance exemption of ₹3,08,544 under Section 10(13A).
Neither claim was allowed on merits. The relief was an opportunity for fresh adjudication after examination of the relevant evidence.
Sale Consideration and Additional Bank Credit
The registered sale deed recorded consideration of ₹1 crore. However, the assessee’s bank account reflected aggregate receipts of ₹1.40 crore from the same purchaser.
The additional ₹40 lakh was received through RTGS on the date of execution of the sale deed. Its receipt was undisputed; the controversy concerned its nature and tax treatment.
The assessee described the amount as solatium or compensation towards standing agricultural crops, trees, permanent improvements and rehabilitation benefits under the State Government’s Rehabilitation and Resettlement Policy.
He argued that the land was rural agricultural land falling outside the definition of a capital asset under Section 2(14)(iii) and that the associated compensation could not be taxed as alleged by the Department.
Why the CIT(A) Rejected the Explanation
The CIT(A) found that the registered deed did not mention compensation beyond ₹1 crore. It also considered that the assessee had not produced documents establishing the additional payment’s character.
The missing material included a supplementary agreement, rehabilitation award, government notification, compensation order, valuation report, certificate from an acquiring authority or purchaser’s document specifying the purpose of the payment.
The CIT(A) distinguished the assessee’s description of the receipt as solatium from the circumstances of the transaction. It observed that the amount had been paid directly by a purchaser under a private sale, without evidence of a statutory acquisition award or legal obligation to pay rehabilitation compensation.
According to the appellate authority, the agricultural character of the land could not automatically establish the claimed character of every associated receipt. The additional amount first required a reliable factual explanation.
It therefore upheld the addition of ₹40 lakh.
Assessee’s Objections Before the Tribunal
The assessee challenged the finding that no documentary evidence had been produced. His revised grounds specifically referred to an undertaking dated 20 March 2024, allegedly forming part of the record but not considered by the CIT(A).
He also disputed the conclusion that the receipt was undisclosed, contending that it appeared in Schedule EI of the return of income.
The grounds further challenged treatment under Section 69A or another deeming provision, argued that the receipt had an identifiable connection with the agricultural land transaction, and sought enquiry from the purchaser under Section 133(6).
Alternatively, the assessee claimed that any portion attributable to standing agricultural produce should be considered agricultural income exempt under Section 10(1).
These remained contentions requiring examination, rather than findings accepted by the Tribunal.
Final Opportunity to Produce Evidence
The Tribunal noted the assessee’s submission concerning the undertaking and disclosure in Schedule EI. At the same time, it acknowledged that the substantive documents supporting the claimed compensation had not been furnished.
Counsel requested a final opportunity to produce the relevant details before the first appellate authority. The Departmental Representative did not object in principle to remand.
In the interests of substantive justice, the Tribunal restored the ₹40 lakh issue to the CIT(A) for de novo adjudication.
It expressly described this as a final opportunity and directed the assessee to comply with hearing notices and furnish all relevant evidence. The remand therefore requires the assessee to substantiate both the asserted disclosure and the precise character of the additional receipt.
HRA Exemption Also Restored
The assessee separately challenged disallowance of ₹3,08,544 claimed under Section 10(13A). His ground stated that the exemption had been computed under Rule 2A and that the landlord had offered the rent to tax in the same assessment year.
For completeness of adjudication, the Tribunal restored this issue to the CIT(A) as well. It did not determine the validity of the exemption or make substantive findings concerning the rent arrangement.
The ground relating to interest under Sections 234A, 234B and 234C was treated as consequential.
Decision
The appeal was partly allowed for statistical purposes. Both the additional-receipt dispute and the HRA claim were restored for fresh examination.
The Tribunal did not delete the ₹40 lakh addition, declare the compensation exempt or allow the HRA exemption.
Author’s Comments
The central practical issue is the difference between identifying the payer and establishing the payment’s character. Receipt from the land purchaser explains where the money came from, but the claimed allocation towards crops, improvements or rehabilitation still requires supporting evidence.
Likewise, disclosure in Schedule EI may rebut an allegation of non-disclosure, but it does not independently establish exemption.
The opportunity on remand should therefore be used to reconcile the deed, undertaking, bank credits, purchaser’s explanation and any applicable compensation documents. This order grants that opportunity; the substantive tax treatment remains open.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
The present appeal preferred by the assessee emanates from the order of the Ld.CIT(Appeals)/NFAC, Delhi dated 01.07.2026 for the assessment year 2024-25 as per the following revised grounds of appeal:
“1. That the order of the learned CIT(A) is bad in law and on facts and is liable to be set aside.
2. That the learned CIT(A) erred in confirming the addition of Rs.40,00,000/- by recording that no documentary evidence was produced, without considering the undertaking dated 20.03.2024 forming part of the record.
3. That the learned CIT(A) erred in holding the receipt If, be undisclosed and in confirming the addition thereof, though the same formed part of the disclosure in Schedule El of the return of income.
4. That the learned CIT(A) erred in holding the nature and source of the receipt to be unexplained and in sustaining the addition under section 69A or any other deeming provision of the Act.
5. That the learned CIT(A) erred in not appreciating the nexus of the receipt with the transfer of rural agricultural land, not being a capital asset under section 2(14)(iii). and with the standing crop and improvements thereon.
6. That the learned CIT(A) erred in sustaining the addition in the absence of any charging provision, no clause of section 56(2) having been invoked.
7. That the learned CIT(A) erred in not directing enquiry under section 133(6) from the purchaser.
8. That without prejudice the learned CIT(A) erred in confirming not holding such part of the receipt as relates to standing agricultural produce to be agricultural in nature and exempt under section 10(1).
Disallowance under section 10(13A)-Rs.3,08,544/-
9. That the learned CIT(A) erred in confirming the disallowance of exemption of Rs.3,08,544 claimed under section 10(13A) though computed in accordance with little 2A and the rent stood offered to tax by the landlord in the same assessment year.
Other
10. That the learned CIT(A) erred in not directing consequential relief in respect of interest charged under sections 234A. 234B and 234C.
11. That the appellant craves leave to add, alter, amend or withdraw any of the above grounds at or before the hearing of the appeal.”
2. At the time of hearing, the Ld. Counsel for the assesee submitted that Ground of appeal No.1 is general and Grounds of appeal Nos. 2 to 8 are inter-linked regarding addition of Rs.40 lakhs and Ground of appeal No.9 is with regard to disallowance of exemption of Rs.3,08,544/- claimed u/s. 10(13A) of the Income Tax Act, 1961 (for short ‘the Act’).
3. Regarding addition of Rs.40 lakhs on account of undisclosed credit/income from other sources, the Ld. CIT(Appeals)/NFAC has held and observed as follows:
“The appellant has challenged the addition of 40,00,000 made by the Assessing Officer.
The appellant has contended that although the sale deed mentions sale consideration of 1 crore, an additional amount of 40 lakh received from the purchaser represented solatium/compensation towards standing agricultural crop, trees, permanent improvements and rehabilitation benefits payable under the Rehabilitation and Resettlement Policy of the State Government. It has been argued that since the land transferred was rural agricultural land falling outside the definition of “capital asset”, the compensation also retained the same character and could not be brought to tax.
The submissions have been carefully examined.
The assessment records clearly establish that the registered sale deed records consideration of only 1 crore. However, the bank account of the appellant reflected aggregate credits of 1.40 crore received from the very same purchaser, including one additional RTGS credit of 40 lakh on the very date of execution of the sale deed. The existence of the excess receipt is not disputed by the appellant himself.
Therefore, the only question requiring adjudication is the true character of the additional receipt of 40 lakh. The appellant has described the receipt as “solatium”. However, apart from this assertion, absolutely no documentary evidence has been produced.
No supplementary agreement.
No rehabilitation award.
No Government notification.
No compensation order.
No valuation report.
No certificate issued by the acquiring authority.
No document from the purchaser specifying that 40 latch represented compensation towards standing crops, trees or rehabilitation benefits.
The registered sale deed itself is completely silent regarding payment of any additional compensation beyond 1 crore. If substantial compensation amounting to 40% of the recorded consideration had in fact been agreed upon, such payment would ordinarily find place either in the sale deed itself or in an independent legally enforceable document executed contemporaneously.
Solatium ordinarily arises under statutory acquisition proceedings where compensation is awarded under the governing acquisition law. In the present case. the amount has admittedly been received directly from the purchaser under a private sale transaction. The appellant has not produced any statutory award, acquisition proceedings or rehabilitation order demonstrating that the purchaser was under any legal obligation to pay such solatium.
The burden of proving exemption squarely rests upon the assessee. Once an amount exceeding the documented sale consideration is found credited in the bank account, it becomes incumbent upon the assessee to establish, through cogent evidence, the precise nature and taxability of such receipt. Mere explanation unsupported by documentary evidence cannot be accepted.
The appellant has also argued that the compensation relates to agricultural land and therefore inherits the exempt character of the land itself. This argument overlooks the fundamental principle that exemption cannot be granted merely on assumptions The character of every receipt must first be established through reliable evidence. Since the appellant has failed to establish that the receipt actually represented compensation of the nature claimed, the question of extending exemption does not arise.
The Assessing Officer has rightly observed that the additional receipt remained completely undisclosed in the return of income despite being reflected in the appellant’s bank account. Even during assessment proceedings, satisfactory evidence explaining the nature of the receipt was not furnished. The appellant has therefore failed to discharge the burden cast upon him under the Act.
Accordingly, I find no infirmity in the action of the Assessing Officer in treating the unexplained receipt of 40,00,000 as taxable income and bringing the same to tax.”
4. At the time of hearing, the Ld. Counsel for the assessee submitted that the assessee had submitted on 20.03.2024 forming part of record which was not considered by the Ld. CIT(Appeals)/NFAC and at the same time, the Ld. CIT(Appeals)/NFAC erred in holding receipt to be undisclosed and in confirming addition though the same formed part of the disclosure in Schedule EI of the return of income. However, it is also the matter of fact on record that the assessee had not submitted documentary evidences viz. no supplementary agreement, no rehabilitation award, no government notification, no compensation order, no valuation report and no certificates issued by the acquiring authority etc. In this regard, it was submitted by the Ld. Counsel for the assessee that if one final opportunity is provided in the interest of natural justice, the assessee would be able to furnish all the relevant details before the First Appellate Authority, hence, prayed that the matter may be remanded to the file of the Ld.CIT(Appeals)/NFAC.
5. The Ld. Sr. DR on principle did not raise any objection for remanding the matter back to the file of the Ld. CIT(Appeals)/NFAC.
6. Considering the submissions of the parties herein as well as facts on record, we are of the considered view that in the interest of substantive justice, one final opportunity may be provided to the asessee to furnish details before the First Appellate Authority. Accordingly, this issue is restored to the file of the Ld. CIT(Appeals)/NFAC for denovo adjudication. This being final opportunity, the assesee shall duly comply with the hearing notices and furnish all the relevant evidences before the First Appellate Authority. Thus, Ground of appeal Nos. 2 to 8 are allowed for statistical purposes.
7. That for the sake of completeness of adjudication of issues by the Ld. CIT(Appeals)/NFAC, Ground of appeal No.9 is also restored to the file of the Ld. CIT(Appeals)/NFAC. Thus, Ground of appeal No.9 is also allowed for statistical purposes.
8. Ground of appeal No.10 is consequential. Ground of appeal No.1 & 11 are general.
9. As per above terms, appeal of the assessee is partly allowed for statistical purposes.
10. In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 7th October, 2026.
