Section 69A Addition of ₹4.86 crores: ITAT directs de novo Assessment

Jasvant Baraiya Vs ITO (ITAT Ahmedabad)

In the case of Jasvant Baraiya vs. Income Tax Officer (ITO), the Income Tax Appellate Tribunal (ITAT), Ahmedabad, addressed a dispute over the treatment of sale consideration under Section 69A of the Income Tax Act, 1961. The appellant, an agriculturist, sold ancestral agricultural land for ₹4.86 crores, with his share amounting to ₹1.21 crores. Believing no tax applied to the sale of ancestral land, the appellant did not report the transaction or file returns for the relevant assessment year. Following multiple non-compliances with notices from the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)], an order under Sections 147 and 144 of the Act was passed, adding the entire sale consideration as unexplained income under Section 69A. The CIT(A) subsequently upheld the AO’s decision.

The ITAT considered the appellant’s claim that procedural lapses and non-compliance were due to a misunderstanding, emphasizing the need for due process. The appellant offered to rectify the default and agreed to pay a cost of ₹5,000 to the Prime Minister’s National Relief Fund as a goodwill gesture. The ITAT set aside the previous orders, allowing the appeal for statistical purposes. It directed the AO to reassess the case de novo, ensuring the appellant receives an opportunity for compliance. This decision underlines the importance of procedural adherence and offers the appellant a fresh chance to present his case.

FULL TEXT OF THE ORDER OF ITAT AHMEDABAD

This is an appeal filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals) [CITA[, National Faceless Appeal Centre, Delhi in proceeding u/s.250 of the Income Tax Act, 1961 vide order dated 25/06/2024 passed for the Assessment Year (AY) 2016-17.

2. The grounds of appeal taken by the assessee are as under:-

1. The order passed by the Ld. CIT(A) is against law equity & justice.

2. The Ld.CIT(A) has erred in law and on facts in upholding validity of order passed by the Ld.AO, when reopening of assessment is bad and illegal.

3. CIT(A) has erred in law and on facts in upholding addition made u/s.69A of the Act of sale consideration of agriculture land of Rs.4,86, 00,000/- when share of appellant is 1/4^th.

4. The appellant craves liberty to add, amend, alter or modify all or any grounds of appeal before final appeal.

3. Brief facts of the case are that the assessee is an agriculturist and engaged in agriculture activities on his ancestral land nearby Ahmedabad. The assessee has no other income and, therefore, did not file the return for the year under consideration. During the year, the assessee sold joint property being ancestral land for total consideration of Rs.4,86,00,000/-. The assessee was joint owner having 1/4^th share and has received his share of 1,21,50,000/-. The assessee did not file return of income on Long Term Capital Gain (LTCG) on sale of land as he was under the impression that no tax is applicable on ancestral land as he is an agriculturist.

3.1. The assessee did not attend for the hearing on 11/12/2021, 10/01/2022, 24/01/2022 and 28/02/2022 before the AO which led to passing of an order dated 23/03/2022 u/s.147 r.w.s.144 of the Act making addition of whole amount of total consideration of Rs.4,86,00,000/- u/s.69A of the Act. The assessee has also failed to comply with the notices issued by the Ld.CIT(A) which led to passing of an ex-parte order rejecting the appeal of the assessee.

4. We have heard both the parties and perused the material available on Before us, Ld.Counsel for the assessee submitted that given opportunity due compliance would be made before the AO, where the preliminary default has occurred. The Counsel has also agreed to pay an amount of Rs.5,000/- towards the cost, which shall be deposited in the Prime Minister’s National Relief Fund and the copy of proof to the AO, who shall issue the notice to the assessee and pass an assessment order De novo.

5. In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the Court on 22^nd November, 2024 at Ahmedabad.