Addition of income or levy of taxes or denial of exemption would be a burden of the Revenue Authority – ITAT
In a recent judgment, ITAT Jodhpur while holding that the land was not situated within municipal limits, observed that under the present statutory scheme, it is the best judgment of the assessee on the basis of which the return is filed and anything contrary to the effect of addition of income or levy of taxes or denial of exemption would be a burden of the Revenue Authority.
ABCAUS Case Law Citation:
4369 (2025) (01) abcaus.in ITAT
In the instant case, the assessee had challenged the order passed by the CIT(A), National Faceless Appeal Centre in confirming tax the sale of land even though the agricultural land was situated beyond the Municipal Limits.
Before the CIT(A), the appellant assessee had challenged the action of Assessing Officer (AO) in treating the alleged agricultural land as capital asset and applying the provision of section 50C of the Act.
The AO had relied on the letter issued by the Office of Nagar Parishad confirming that the alleged land was situated within the Municipal Limits. The CIT(A) observed that the Office of Municipality had confirmed vide a letter that the alleged land was situated inside the municipal limits. However, during the appellate proceedings, the appellant submitted another a letter from Municipality Office wherein it had been stated that the alleged land is not situated in the municipal limits. Subsequently, during remand proceedings, the Municipal Office again vide letter conveyed to the AO that the alleged land was situated outside the municipal limits of but had not conveyed the distance of alleged land from the municipal limits.
After receipt of appeal in faceless mode the remand report received in faceless mode was shared with the appellant. The appellant submitted reply arguing that the alleged land was not situated in Municipal area notified as per Notification and submitted that the alleged land was situated beyond 6 Km from the Municipal Limits.
However, the CIT(A) was not satisfied and he observed that the appellant had not filed any documentary evidence in this regard. The CIT(A) held that in the absence of any documentary evidence about exact location of the alleged land, it cannot be treated as agricultural land and therefore, the AO was justified in invoking provisions of section 50C of the Act treating the land as capital asset.
The Tribunal observed that the Assessing Authorities had relied on the first letter issued by the Office of Nagar Parishad confirming that the alleged land was situated within the Municipal Limits. Further, the Tribunal observed that the CIT(A) had noted that though the subsequent letter stood received by the Assessing Officer yet the land being not situated at a distance beyond the 6 km of municipal limit is a burden to be discharged by the Assessee.
The Tribunal opined that under the present statutory scheme, it is the best judgment of the assessee on the basis of which the return is filed and anything contrary to the effect of addition of income or to the levy of taxes or to the denial of exemption would be a burden of the Revenue Authority, laying the burden on the assessee which already stands discharged, only thing that was probable was the rebuttal of such evidence.
The Tribunal opined that the finding arrived at by the CIT(A) to the effect of the assessee was unable to prove it, had come in the absence of any documentary evidence and it could not be said to be correct view. It was in the light of the aforementioned burden being discharged and the matter was remanded to the appropriate Assessing Officer by means of calling remand report in detail.
The Tribunal opined that it was within the ambit of AO that it was required to ascertain the distance of land as against the letter issued which was against the very letter relied upon by the Revenue Authority. In fact the subsequent letter clearly mentioned the State Gazette date which set the boundary limits under the Nagar Palika Act. Further, it was from the same letter which clearly specified that the letter relied by the AO, i.e. was issued without considering the aforementioned Gazette and hence, as to why this letter from the same dis-credibility was not part to the discussion or reason given by the CIT(A). Hence, on this count the burden which is required to be discharged by the Assessing Authorities simply remained absent.
The Tribunal further observed that in view of the subsequent letter which clearly established that the land in question was not situated within the municipal limits, the basis of the State Gazette could not be ignored. It arrived at a conclusion that while issuing the previous letter, the Gazette was ignored and on realizing the same, the effect of the State Gazette could not have been ignored.
Accordingly, the Tribunal set aside the order passed by the Assessing Officer as well as the order upholding the same which passed by the CIT(A) and the addition of the income and the capital gain Tax levied thereon was also set aside.
As a result, appeal of the assessee was allowed.
Download Full Judgment Click Here >>
- High Court grants bail to accused of alleged GST evasion of Rs. 120 crores
- TDS u/s 194IC is applicable for payment under JDA to transferor holding leasehold rights
- On invoking Section 69A burden of proof lies on AO to establish source of unexplained money
- When order u/s 263 is quashed, assessment order u/s 143(3) r.w.s. 263 has no legs to stand
- When interest income offered on accrual basis, TDS on maturity can not be disallowed
