Case Law Details
ACIT Vs Kamlesh Kumar Rathi (ITAT Delhi)
On-money received on sale of agricultural land, even when not declared, is also exempt & cannot be taxed
The dispute relates to addition made on account of on money/ undisclosed income, arising out of sale of agricultural land.
Search and seizure operation u/s. 132 was conducted in case of the assessee. In response to notices issued u/s. 153A assessee filed his return of income. Subsequently, assessee filed revised returns of income for both the assessment years under dispute, by enhancing the sale consideration received on sale of land. In course of assessment proceedings, AO, referring to 132(4) statement, and a valuation report , called upon him to explain why the on- money received in cash on sale of land should not be treated as his undisclosed income. In response to the show cause notice issued, the assessee submitted that the valuation report found at the time of search and seizure operation, showing the value of land at higher rate cannot be relied upon as said valuation report was obtained for the purpose of obtaining bank loan hence, cannot be considered to be representing the fair market value of the land. Alternatively, assessee submitted that the lands sold are in the nature of agricultural land and the land sold is not in nature of capital asset u/s 2(14). Even assuming that the assessee had received on money on sale of such land, such income will also be exempt from taxation, as it will partake the character of agricultural income.
AO was not convinced with the submissions of assessee & treated the the additional consideration received on sale of land as undisclosed income and brought it to tax.
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