Case Number: ITA 953/DEL/2021
Appellant: Nakli Ram, Panipat
Respondent: ITO, Ward-3, Panipat
Assessment Year: 2011-12
Result: 2011-12
Case Filed on: 2021-08-10
Order Type: Final Tribunal Order
Date of Order: 2022-10-28
Pronounced on: 2022-10-28
Tribunal: IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH ‘SMC’, NEW DELHI
Before: Smt. Diva Singh, Judicial Member
Introduction
This appeal was filed by Nakli Ram against the order of the National Faceless Appeal Centre (NFAC), Delhi, dated 22.06.2021, which pertains to the assessment year 2011-12. The core issue in this case revolves around the taxability of proceeds from the sale of ancestral agricultural land.
Background
The ancestral agricultural land, jointly owned by Nakli Ram and his brother Roshan Lal, was sold. Following Roshan Lal’s death, his widow Bugly Devi represented his share. The Assessing Officer (AO) examined deposits made in Bugly Devi’s bank account and concluded that the proceeds were deposited there. Krishan Kumar, son of Bugly Devi, admitted that the deposits were made in the name of his parents. Consequently, the AO added the amount to Nakli Ram’s income under section 144/147 of the Income Tax Act, 1961.
Appeal to CIT(A)
Nakli Ram appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], arguing lack of opportunity and incorrect jurisdiction assumption. He contended that Krishan Kumar, his nephew, had no authority to make statements on his behalf. The CIT(A) upheld the AO’s decision.
Arguments
The Appellant’s representative, Sh. Jai Bhagwan Sharma, argued that the land’s ownership and sale were undisputed. The proceeds were deposited as per the sale deed. He submitted that the statement made by Krishan Kumar was incorrect and that no proper opportunity was given to contest the addition.
Assessment Proceedings
The AO’s assessment was based on the statement of Krishan Kumar and the returned notice sent by speed post. The AO concluded that the proceeds belonged to Nakli Ram, resulting in the addition to his income.
ITAT’s Decision
The ITAT considered the following points:
The ITAT concluded that the addition made on the assumption of jurisdiction and on merits could not be upheld. The ownership and sale proceeds were clear, and the addition based on unauthorized statements was unjustified.
Conclusion
The ITAT directed the deletion of the addition made by the AO, ruling in favor of Nakli Ram. The substantive addition of the sale proceeds to Nakli Ram’s income was unjustified, given the clear ownership and sale facts.
Final Judgment
Order pronounced in the open court on 28/10/2022.
Signed:
Smt. Diva Singh
Judicial Member
Dated: 28/10/2022
Copy forwarded to:
Assistant Registrar
ITAT, New Delhi
Relevant Legal Provisions and Precedents
The case hinged on sections 144 and 147 of the Income Tax Act regarding the reassessment of income and the procedural aspects of issuing and serving notices. The ITAT emphasized the importance of proper notice and opportunity for the assessee to present their case.
Impact of the Judgment
This judgment highlights the necessity of proper procedural compliance and the importance of authorized statements in tax assessments. It underscores the ITAT’s role in ensuring just and fair assessments based on clear evidence and proper jurisdiction.
Key Takeaways
The case illustrates the critical need for clear evidence and proper procedural adherence in tax assessments. It emphasizes the ITAT’s role in correcting procedural errors and ensuring assessments are based on factual ownership and valid statements.
Nakli Ram vs ITO: Dispute Over Ancestral Land Sale Proceeds for AY 2011-12
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