Muniswamappa Ananda Vs Income Tax Officer (ITAT Bangalore)
Section 2(14): Rural Land Stays Outside the Capital Gains Fence-₹1.28 Crore Addition Deleted Despite TDS u/s 194-IA
Background of the Case
Based on specific information flagged under the Risk Management Strategy, the Revenue noticed that the assessee had sold agricultural land during FY 2015-16. Consequently, the assessment was reopened & notice u/s 148 was issued.
In response, the assessee filed his return on 24.04.2023, declaring sale consideration of ₹1,28,00,000 as exempt income on the ground that it arose from the sale of rural agricultural land.
The AO thereafter issued notices u/s 142(1), a show-cause notice & also a notice u/s 133(6) to the purchaser, Ms Vandana Gupta. Since the assessee failed to produce supporting documents establishing that the land was rural agricultural land, the AO completed the assessment ex parte u/s 144.
The entire sale consideration of ₹1.28 crore was treated as undisclosed short-term capital gain, resulting in the total income being determined at the same amount.
First Appeal Dismissed for Non-Compliance
Aggrieved, the assessee filed an appeal before the CIT(A). However, he failed to comply with the notices issued during the appellate proceedings. The CIT(A), therefore, dismissed the appeal without granting any relief.
