ORDER

Per: Udayan Dasgupta, J.M.:

This appeal is filed by the assessee against the order of ld. CIT (A), NFAC, Delhi, passed u/s 250 of the Act, 1961 vide order dated 21.03.2025 which has emanated from the order of AO, passed u/s 147 r.w.s. 144B of the Act, vide order dated 28.03.2022.

2. Brief facts emerging from records are that the assessee and has filed his return declaring income at NIL.

2.1 On the basis of information received from ITO/ I & C I, Chandigarh that the assessee has sold land located within the municipal limits of Bhatinda ,on 07th December, 2012, along with five other co-owners, the assessee’s share in the said transaction of sale being Rs.41.67 lakhs, reassessment proceedings has been initiated vide notice u/s 148 of the Act on 30.03.2021 ( as per procedure ) in response to which, the assessee filed his return on 15.07.2021 declaring total income at NIL in respect of which recorded reasons obtained , objections filed and disposed off.

2.2 The assessee has claimed deduction u/s 54B of the Act against the sale of his portion of the land at Bhatinda , on the strength of purchase of two other plots of agricultural land, aggregating to Rs.96 lakhs on 28th December, 2012 and on 2nd January, 2013 , (the purchase being made within two years of sale thereof ), the details of Vasika number and dates of sale and subsequent purchase are duly recorded in the assessment order.

2.3 The AO concluded that the said land sold was capital asset u/s 2(14) of the Act, because the area is comprised within the jurisdiction of a Municipality ignoring the claim of the assessee that the land sold was used for agricultural purpose for the preceding two years before sale, and in support of which he relied upon copies of land records ( girdawari )issued by the Patwari , Patti Mehna, Bhatinda . But the said documentary evidences has not been accepted by the AO due to reasons contained in the assessment order and the assessment has been completed by determining long term capital gain of Rs. 41.14 lakhs, refusing to allow the deduction u/s 54B of the Act.

3. The matter carried in appeal before the ld. first appellate authority has been dismissed by the Ld. CIT (A) by observing as follows:

“5.3.1. The AO found that the assessee does not satisfy all the three conditions provided in Section 548 of the Act and hence deduction claimed by the appellant of Rs.41,14,183/- u/s 548 of the Act was withdrawn. In the course of appellate proceedings, the appellant has submitted that capital gain arises from the sale of urban agricultural land which is situated within the specified limits provided in Section 2(14) of the Act and deduction u/s 548 of the Act is available with respect to the capital gain arising from transfer of such land subject to the fulfilment of conditions specified therein. The appellant further submitted that he satisfies all the conditions prescribed in Section 548 of the Act i.e. the impugned land sold was an agricultural land which was having canal water as the source of irrigation. Further, the land purchased subsequently was also an agricultural land and hence the conditions in Section 54B of the Act are met for claiming deduction. Though the appellant claims that the impugned land sold during the relevant FY and land purchased subsequently, which is claimed as an eligible investment for the purposes of Section 54B of the Act, the appellant is totally silent on the fact regarding agricultural operations in the impugned land during the preceding 2 FYs immediately prior to the date on which the impugned land was transferred. Thus, one of the important conditions for claiming deduction u/s 54B of the Act regarding pursuance of agricultural activities in the impugned land by the assessee or his parents or the HUF is not satisfied. The appellant has not provided any document to substantiate agricultural operations in the impugned land during the preceding 2 years immediately prior to the date of sale of land. The introduction to the