Harwant Singh Grewal Vs ITO (ITAT Chandigarh)
Conclusion: Matter of capital gains taxation involving assessee-agriculturist was remanded back to AO for a fresh assessment as both AO and CIT(A) had failed to consider foundational legal issues and assessee was a semiliterate person, not well versed with the income tax proceedings, therefore, it was the duty of AO to apprise him the correct position instead of putting an extra tax liability because of his ignorance.
Held: Assessee had filed his income tax return declaring an income of ₹2,13,450. The return was selected for scrutiny after the AO noticed cash deposits totaling ₹77.10 lakhs in his savings account. While initially investigating the source of these funds, AO shifted focus to capital gains allegedly arising from the sale of agricultural land measuring 12 Kanal 4 Marla. According to AO, although the registered sale deed recorded a consideration of ₹23.76 lakhs for 2 Kanal of land, the actual transaction, based on an earlier agreement to sell, was allegedly carried out at ₹1.44 crore, leading to a proposed addition of ₹1.20 crore to assessee’s income as unreported capital gains. Additionally, AO denied deduction under Section 54F amounting to ₹35.87 lakhs, citing a lack of documentation for house construction before the due date for filing the return. It was held that authorities had not taken into consideration the Sale Deeds and the value of land determined in those Sale Deeds as per Section 50C, rather they were relying upon the alleged Sale Agreements for working out the quantum i.e. land was sold @ Rs. 12000/-per sq.yd. but a concrete evidence had not been collected by AO nor any Report u/s 50C sub-clause (2) had been obtained from the DVO. Similarly, the authorities had not examined the claim of the assessee u/s 54B or 54F. It was pertinent to note that assessee was an agriculturist and semiliterate person, not well versed with the income tax proceedings, therefore, it was the duty of AO to apprise him the correct position instead of putting an extra tax liability because of his ignorance. The quasi-judicial authorities were being respected not on account of their power to legalize the injustice on technical grounds but because they were capable of removing injustice and was expected to do so. Therefore, on an analysis of both the impugned orders and the material on record, both the orders deserved to be set aside and issue was required to be relegated to AO for fresh examination. It was needless to say that our observation would not impair or injure the case of the AO and would not affect explanation or defense of assessee. Assessee would be at liberty to submit any detail in support of his defense before AO.
