Agricultural land exemption u/s 54B allowed based on revenue records, subsidies, and prior income declarations despite lack of direct operation proofs.

ORDER

PER MANJUNATHA G., A.M :

This appeal filed by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [in short “NFAC”], Delhi, dated 08.07.2025, pertaining to the assessment year 2022-23.

2. The grounds raised by the assessee read as under:

“1. The order of the Learned First Appellate Authority in not correct either on facts or in law and in both.

2. The Learned First Appellate Authority is not justified in confirming the action of assessing officer disallowing a sum of Rs. 9,72,68,001/- being the exemption claimed by the appellant under section 54B of the Income- tax Act.

3. The Learned First Appellate Authority failed to appreciate the fact that the land sold by the appellant is agricultural in nature evidenced by the relevant documents filed and the investment made is in agricultural land supported by evidences and hence the appellant's claim for deduction u/s 54B is proper and disallowance of the same is unjustified.

4. The Learned First Appellate Authority and assessing officer failed to appreciate the fact that the assessee was in receipt of Rythu Bandhu Scheme subsidy from the State Government and the basic requirement for getting such subsidy on land is agricultural operations on the lands in question.

5. a) The Learned First Appellate Authority and assessing officer failed to appreciate the fact that the assessee is consistently admitting agricultural income in his returns from the very same land for several years and hence us eligible for exemption u/s 54B of the Income-tax Act.

b) The Learned First Appellate Authority and assessing officer are not justified in disregarding the certificates issued by the Government authority filed by the appellant in support of his claim that the lands sold and purchased were agricultural in nature and in fact agricultural operations were carried out thereon.

6. The Appellant prays for leave to add or amend or alter any of the grounds at the time of hearing of appeal.”

3. The brief facts of the case are that, the assessee, Shri Ashok Manshukla Doshi (HUF), has filed its original return of income for A.Y. 2022-23 on 28.07.2022 declaring total income of Rs. 20,77,890/- and agricultural income of Rs. 3,70,160/-. The case was selected for scrutiny and during the course of assessment proceedings, the A.O. noticed that, the assessee had sold agricultural lands and claimed exemption under Section 54B of the Income-tax Act, 1961, for purchase of another agricultural land. Therefore, the A.O. called upon the assessee to furnish relevant evidences, including details of agricultural land sold by the assessee, agricultural activities carried out for last three financial years, details of agricultural land purchased by the assessee and its nature, details of bills/invoices for the sale of agricultural crops and documentary evidence for incurring various agricultural expenditure. In response, the assessee submitted that, it has sold agricultural land situated at Bhulkapur Village, Shankarpally Mandal, Rangareddy District admeasuring Ac. 6-15 Guntas for a total consideration of Rs. 9,75,01,500/- and purchased agricultural lands situated at Chinna Shivnoor Village, Chegunta Mandal, Medak District for a consideration of Rs. 9,72,68,001/- and claimed exemption under Section 54B of the Income-tax Act, 1961. To support its arguments, the assessee has furnished pattadar passbooks, details of financial assistance received from Government of Telangana and also claimed that, the agricultural land owned by the assessee is consisting of mango orchids and also it has carried out agricultural operations through local villagers and e