Radheshyam Chandak Vs ITO (ITAT Raipur)
TDS on Land Purchase: Raipur ITAT Orders Fresh Examination of Agricultural Land Claim
Summary: The Raipur Bench of the Income Tax Appellate Tribunal (ITAT) has restored a dispute concerning TDS under Section 194-IA for fresh examination of whether the purchased land qualified as agricultural land excluded from the provision.
In Radheshyam Chandak v. ITO, TDS, Ward-Bhilai, ITA No. 660/RPR/2026, pronounced on 4 November 2026, the Tribunal granted the assessee a final opportunity to furnish supporting documents before the first appellate authority.
The case concerned Assessment Year 2015-16 and purchase of land for ₹2.73 crore. The Tribunal did not finally hold that TDS was inapplicable or cancel the liability on merits.
Background: ₹5.24 Lakh Demand for Non-Deduction of TDS
During financial year 2014-15, the assessee purchased approximately 11.49 hectares of land at Godhi and Kutesr villages in Aarang tehsil, Raipur district.
The two purchases involved consideration of ₹1.55 crore and ₹1.18 crore, aggregating to ₹2.73 crore.
The assessee treated the properties as rural agricultural land and did not deduct tax under Section 194-IA.
The Income Tax Officer subsequently initiated proceedings under Sections 201(1) and 201(1A) for non-deduction of tax. An order dated 31 March 2022 raised a total demand of ₹5,24,160.
The assessee challenged that order before the Additional/Joint Commissioner of Income Tax (Appeals), who dismissed the appeal on 11 June 2026.
Assessee Objected to Extremely Short Response Time
The assessee submitted that the notice under Section 201 was delivered to an alternate email address at 9:10 p.m. on 29 March 2022, requiring compliance by the following day.
According to him, this allowed less than 24 hours to collect and submit the requested information.
He also pointed out that the notice arrived during the final days of the financial year, when he and his consultants were occupied with year-end work.
The order was communicated on 31 March 2022. The assessee argued that the proceedings had therefore concluded without a reasonable opportunity to explain the transactions and establish the land’s character.
Registered Deeds Relied Upon to Support Agricultural Character
The assessee maintained that the properties were rural agricultural land and therefore outside the relevant TDS requirement.
He submitted that registered purchase deeds describing the properties had been furnished during the earlier scrutiny assessment. That assessment had accepted his returned income.
He also referred to submissions made in separate Section 271C penalty proceedings, explaining why he considered Section 194-IA inapplicable.
His position was that the transaction value exceeding ₹50 lakh did not, by itself, create a deduction obligation where the land fell within the statutory agricultural-land exclusion.
However, whether the properties actually satisfied that exclusion remained disputed.
First Appellate Authority Found Evidence Insufficient
The first appellate authority observed that the assessee had not supplied adequate evidence establishing the land’s nature and location.
It sought a certificate from the Tehsildar or another competent revenue authority, addressing the land’s distance from the nearest municipality and its classification in revenue records on the transfer date.
Maps and other official documents supporting those facts were also required.
Despite repeated opportunities, the authority found that the necessary material had not been furnished.
It further referred to findings in the separate penalty proceedings suggesting that the land was used for red-sand extraction, rather than agriculture. A local Kotwal’s report was also cited as indicating absence of agricultural activity.
On that record, the first appeal was dismissed.
Land Character and Location Required Substantive Examination
The dispute involved more than the description appearing in the purchase deeds.
The relevant questions included whether the land was agricultural in character and whether its location placed it outside the statutory category of urban agricultural land.
The assessee’s submissions referred to the population and aerial-distance criteria associated with Section 2(14)(iii).
These factual matters were central to determining the applicability of Section 194-IA to the purchases.
The Tribunal’s task was therefore to consider whether those questions had been adequately examined with supporting evidence, rather than simply accept either party’s characterisation of the property.
Tribunal Granted One Final Opportunity
Before the ITAT, the Departmental Representative acknowledged that the core questions concerning the land’s character and Section 194-IA applicability had not been substantively determined because of the assessee’s non-compliance.
The assessee’s counsel requested a final opportunity and undertook to furnish all relevant documents.
The Tribunal held that the parties’ substantive rights and liabilities remained to be determined.
It therefore set aside the first appellate order and restored the matter for de novo adjudication, subject to compliance with natural justice.
Remand Does Not Establish TDS Exemption
The Tribunal expressly directed the assessee to respond to hearing notices and present the case on merits, describing the remand as a final opportunity.
The appeal was allowed for statistical purposes.
The order provides a renewed hearing, while leaving the agricultural-land claim and consequential TDS liability open. The assessee must substantiate the claim through relevant records, and the appellate authority must determine the issue afresh.
FULL TEXT OF THE ORIGINAL ORDER OF ITAT RAIPUR
The present appeal preferred by the assessee emanates from the order of the Ld.ADDL/JCIT(A)-2, Nagpur dated 11.06.2026 for the assessment year 2015-16 as per the grounds of appeal on record.
2. Brief facts in this case are as follows:
“2.1 The Assessee had purchase agricultural land during F.Y. 2014-15 at Godhi & Kutesr village-Tehsil-Aarang. District-Raipur (Total Area of 11.49 Hectare) for consideration of Rs.2,73,00,000/-. On the basis of the record available with the 0/o Addl. CIT/JCIT TDS Range, about the purchase of above said land and notice u/s 201 dated 29.03.2022 was issued for F.Y. 2014-15 vide DIN & Notice no. ITBA/COM/F/17/2021-22/1041940647(1) through the email and same is delivered to assessee’s alternate email id on 29th March, 2022 at 9.10 P.M. and ask to furnished various information and documents in compliance of the same by 30th March, 2022. As in the short span of the time provided in the notice sent through the email, the assessee not able to response the same in time provided in the notice and AO passed order u/s.201 and raise total demand of Rs.5,24,160/- without providing proper opportunity to being heard with in just 40 hrs in all (comprises 2 night). The learned Assessing officer observed that the in land purchased by the assessee is required to deduct tax u/s 1941A of the act without any basis, whether the provision of section 194IA applicable or not.”
3. That before the Ld.ADDL/JCIT(A), the assessee has furnished the following submissions:
“4.1 The appellant is engaged in a business of Brokerage and Commission and filed Return of Income regularly, the assessment order u/s.143(3) was passed on 15.12.2017. In the above said assessment order the Return Income was accepted.
4.2 The following are the 1st Para of order passed by the learned Income Tax Officer (TDS):
Information was received regarding non deduction of TDS by the assessee on the transactions made by the assessee, on the basis of which the notice u/s.201(1)/201(1A) of the I.T.Act.1961 was issued and served upon the assessee. The said notice was issued on 29/03/2022. The assessee was requested to make compliance by 30/03/2022. However, no compliance of the above notice has been made.
4.3 The above said notice was posted in the email on 9.10 P.M. 29th March,2022 and asked to make compliance by 30th March,2022. There was time allowed to make compliance is less than the 24 hrs. The last 2 days of financial year was left and assessee as well assessee’s consultants are already pre-occupied with closing of yearly accounts / compliance and not supposed to access the mail on minute to minute basis and after the end of financial year, when pending mails were accessed on 1st Apri1,2022, there was another mail of order u/s 201(1) / 201(1A) of the Act. The mail of order was posted on 1.13 P.M. on 31st March,2022. As in the short span of the time provided in the notice sent through the email, the assessee not able to response the same in time provided in the notice and AO passed order u/s 201 and raise total demand of Rs. 5,24,160/- without providing proper opportunity to being heard with in just 40 hrs in all (comprises 2 night).
4.4 As mentioned in Para iii above the act of the Learned Income Tax Officer (TDS) was against the natural justice.
v. The another order of Penalty u/s 271C was also passed by The Learned Addl. CIT/ JCIT TDS, Raipur vide DIN & Letter. No. TBA/COM/F/17/2021-22/1042359715(1) dated 31st March,2022. The appeal for the same is separately done vide —Appeal No. NFAC/2014-15/10136587.
vi. Both the order are without any basis and against the natural justice and contrary to the record available with the learned officers. The assessee assumes that the Income Tax Officer (TDS) getting information form the Addl. CIT/ JCIT TDS, Raipur. Therefore, the facts relating to case of penalty levied u/s 271C is also reproduced here for the further evidence for assessee was not supposed to liable to deduct tax u/s 194IA of the Act for the purchase of Agriculture Land.
vii. The basis of the material available for .1enalty u/s 271C is the order u/s 143(3) of the Act for the A.Y. 2015-16. During the assessment year under consideration the issue of selection of case was the “Purchase of Property”. The assessee was purchased 2 Agriculture land valued of Rs. 1,55,00,000/- & Rs. 1,18,00,000/- at Kuteshwar, Tehsil — Aarng District — Raipur. During the above said assessment proceeding registered Purchase deed of property purchase was submitted in the registered Purchase deed the nature of property clear mentioned (Page 5 of attachment) and AO accepted the same.
viii. As mentioned in order of Learned Addl. CIT/ JCIT TDS that ” The case record was received in this office from the AO for imposition of penalty u/s 271C of the I.T Act, 1961 for non deduction of TDS in the F.Y. 2014-15 ” The liability of deduction of TDS on purchase of above said Agriculture Land was not arises u/s 194IA , as the deduction of Tax not required in case of purchase of rural agriculture land even the consideration of the same is more than Rs.50.00 Lakhs and accordingly the tax was not deducted.
ix. The show cause notice dated 26.07.2021 in this respect issued by Learned Addl. CIT/ JCIT TDS and the response of the same the following reply was submitted by assessee on 6th August, 2021
The reference of assessment order dated 17.12.2017 for the AY 2015-16 is given in above show cause notice, the land purchase during the financial year 2014-2015 w.r.t. assessment year 2015-2016 for consideration of Rs. 1,18,00,000/- situated at KuteshwarTahsil — Aarang and another property for consideration of Rs.1,55,00,000/- situated at Godi Tahsil — Aarangas mentioned in the assessment order. The both the properties were rural agriculture land and the provision of section 194lA to deduct tax on purchase of immovable properties not attaracted in the above said properties.
Scope of section 194-IA narrated as under:
a. Section 194-IA, provides that any person, being a transferee, responsible for paying (other than the person referred to in section 194LA) to a resident transferor any sum by way of consideration for transfer of any immovable property (other than agricultural land) shall deduct an amount equal to one per cent of such sum as income-tax at the time of credit of such sum to the account of the transferor or at the time of payment of such sum in cash or by issue of cheque or draft or by any other mode, whichever is earlier.
b. No deduction shall be made where consideration for the transfer of an immovable property is less than fifty lakh rupees
c. What payment is covered by section 194-IA:
Any sum paid by way of consideration for transfer of any immovable property (other than agricultural land) is covered under section 194-IA, provided the consideration for transfer of an immovable property is not less than Rs.50 lakhs.
Agricultural Land: Agricultural land means agricultural lands in India, not being a land situated in any area referred to in section 2(14)(iii)(a)/(b). A land shall not be treated as Agriculture Land, if:
a) It is situated within jurisdiction of Municipality or Cantonment Board which has a population of not less than 10,000; or
b) It is situated in any area within below given distance measured aerially:
| Population of the Municipality | Distance from municipality limit |
|---|---|
| More than 10,000 but does not exceed 1,00,000 | within 2 K.M. |
| More than 1,00,000 but does not exceed 10,00,000 | within 6 K.M. |
| Exceeding 10,00,000 | within 8 K.M. |
The land sold were not covered within the 3 area as mentioned above, therefore the land sold during the year under consideration were falls as agriculture land as per the section 2(14)(iii)(a)/(b) of the Income Tax Act,1961 and hence the provision of Section 1941A is also not applicable.”
4. In this regard, the Ld.ADDL/JCIT(A) has held and observed as follows:
“5.6 The sole issue involved in the present appeal is the applicability of the provisions of section 194-IA of the Income-tax Act, 1961, in respect of the purchase of the impugned land, as held by the Assessing Officer in the order passed under section 201 dated 31.03.2022. The Assessing Officer observed that the appellant failed to furnish any documentary evidence establishing the nature and character of the land as agricultural land. Specifically, no evidence was produced to demonstrate that the land fell outside the ambit of a “capital asset” with reference to the prescribed population criteria and the distance from the nearest municipality.
During the course of appellate proceedings, the appellant was afforded sufficient and repeated opportunities to substantiate the claim that the land in question was agricultural land as on the date of transfer. The appellant was specifically required to furnish a certificate from the Tehsildar or other competent revenue authority confirming (i) the exact distance of the land from the limits of the nearest municipality, (ii) that the land was recorded as agricultural land in the revenue records on the date of transfer, and (iii) relevant maps or official documents evidencing such distance and classification. However, despite the opportunities granted, the appellant failed to furnish any such evidence or supporting documentation.
It is further noticed that penalty proceedings under section 271C of the Act were separately initiated and adjudicated by the Additional/Joint Commissioner of Income. Tax (TDS) in respect of the same transaction. In the said penalty order, the issue regarding the applicability of tax deduction at source under section 194-IA was examined in detail. Upon verification of the facts and available records, it was concluded that the appellant had failed to deduct the requisite tax at source and, accordingly, penalty was imposed. The findings recorded therein reveal that the land was being utilized for extraction of red sand and was not being used for agricultural purposes. It was further reported by the local Kotwal that no agricultural activities were being carried out on or around the said land. In the absence of any contrary evidence from the appellant, the land was not accepted as agricultural land for the purposes of the act.
Considering the totality of facts and circumstances, the appellant has failed to discharge the burden of proving that the land in question qualified as agricultural land excluded from the definition of documentary evidence and in capital asset”. In the absence of any supporting view of the findings recorded in the penalty proceedings under section 271C, which have direct bearing on the issue under consideration, no infirmity is found in the order passed by the Assessing Officer under section 201 of the Act. Accordingly, the grounds raised by the appellant are dismissed and the order of the Assessing Officer is hereby upheld.
6. In the end, the appeal of the assessee is “DISMISSED”.
5. The Ld. Sr. DR fairly submitted that this is a case where the core issue regarding applicability of the provisions of Section 194IA of the Act in respect of purchase of land and whether the said provision would apply or not and what exactly is the character of the land whether it falls outside the ambit of capital asset, these things were not substantively determined by the Ld. ADDL/JCIT(A) since there was no compliance by the assessee.
6. Per contra, the Ld. Counsel for the assessee submitted that the assessee was not provided reasonable opportunity and time to furnish relevant documents. However, he prayed that if one final opportunity is provided, then, the assessee shall furnish all the relevant documents before the First Appellate Authority and represent the matter on merits.
7. Having heard the submissions of the parties herein, we are of the considered view that the substantive rights and liabilities of the parties herein are yet to be determined by the First Appellate Authority since at the first appellate stage, in spite of repeated opportunities, there was no substantive compliance by the assessee and therefore, for determining the applicability of Section 194IA and whether the said land falls outside the ambit of the capital asset or not has to be denovo adjudicated by the Ld. ADDL/JCIT(A) while complying with the principles of natural justice as per law. Accordingly, we set aside the order of the Ld.ADDL/JCIT(A) and restore the matter back to its file as per afore-stated observations. Since this being final opportunity, the assessee shall duly comply with the hearing notices issued from the First Appellate Authority and represent the matter on merits.
8. As per afore-stated terms, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on 4 th November, 2026.
