ITO Vs Nitinbhai Kanubhai Patel (ITAT Ahmedabad)
CIT(A) Copied Co-owner’s Case – ITAT Says: Check the Facts First- 54B Exemption Denied? Allowed? ITAT Says: Start Again – Facts Matter
Background:
Assessee, a lawyer with agricultural income, sold agricultural land & claimed Section 54B exemption of ₹2.95 crore on long-term capital gains. Originally, the assessment was completed u/s 143(3) accepting the return. Later, based on information from the case of his co-owner/brother (Ashok Patel) where 54B was disallowed (but later allowed by ITAT), the assessment was reopened u/s 147.
AO’s Findings:
- Land was sold on 20.05.2015.
- For AY 2014-15 Form 7/12 showed castor crop.
- For AY 2015-16, no crop recorded, no irrigation, no evidence of farming.
- Bills produced by assessee were undated / unverifiable.
- Agricultural income declared was very low compared to land size.
- Therefore, land was not used for agriculture in two years preceding transfer – 54B disallowed.
CIT(A) allowed deduction u/s 54B solely relying on the ITAT order in co-owner’s case (Ashok Patel) where 54B was allowed. Held facts were identical and Revenue failed to disprove agricultural use.
Revenue argued before ITAT:
- Facts in assessee’s case not identical to co-owner.
- Assessee himself admitted before AO that his case was different.
- CIT(A) ignored AO’s detailed findings & Supreme Court ruling in CWT v. Officer-in-Charge (Court of Wards) 105 ITR 133 (onus on assessee to prove agricultural use).
- CIT(A) did not analyze evidence, simply copied co-owner’s order.
ITAT’s Key Observations:
- Assessee did not appear at hearing; matter decided ex parte.
- AO made specific factual findings: no crop in FY 2015-16, no irrigation, weak evidence.
- CIT(A) failed to rebut AO’s findings, nor examined whether assessee proved agricultural use.
- Assessee’s own submission before AO said facts were different from co-owner’s case.
- CIT(A) blindly relied on co-owner’s ITAT order without verifying parity of facts.
- Principle: 54B burden lies on the assessee, as per Supreme Court.
- CIT(A) ignored mandatory factual examination, passed a non-speaking order.
ITAT Decision:
- Order of CIT(A) set aside.
- Matter remanded back to CIT(A) for fresh adjudication.
- CIT(A) directed to:
- independently verify agricultural use with revenue records, crop details, irrigation, bills, affidavits, etc.
- Address AO’s findings.
- Consider assessee’s admission that facts differ from co-owner.
- Apply judicial precedents correctly.
- Pass a reasoned, speaking order.
- Give assessee proper opportunity to furnish evidence.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
