A man was a shareholder of his family's ancestral agricultural land in the Delhi-NCR region. This land was sold for approximately Rs 48 crore. He got approximately Rs 8 crore in that deal. But, the person did not file this income in his individual return (ITR). Due to this the tax department took action and notices were sent to him.
The tax department first issued a notice under section 148. Then when the person did not give the return, a two-line notice was received under Section 142(1). After the second notice, the person filed the return on 11 February 2015. After this the AO (Assessing Officer) sent a questionnaire under section 143(2) and on 27 February 2015, assessment order under section 143(3)/147 was issued.
The Assessing Officer was of the view that this profit was received by the person in his personal capacity. He added long term capital gains (LTCG) income of about ₹ 8.89 crore in the hands of that person and ₹ 75,000 was added as agricultural income which he considered undisclosed. The person appealed against this order, but the first Commissioner of Income Tax (Appeals) rejected the appeal on 17 February 2016.
Then the matter reached Income Tax Appellate Tribunal, Delhi Bench (ITAT Delhi) where the person got victory on 18 August 2025. The tribunal found that the ownership of this ancestral land was actually in the name of the Hindu Undivided Family (HUF) and not in the individual name of the person.
This land was in the family for many generations. Under Hindu law, unless it is divided separately, the property is considered to belong to an 'undivided joint family'. The money received from that sale appeared in the financial records of the HUF and there was no evidence that the individual used the entire amount personally. Therefore ITAT said that this income was the income of HUF and not of the individual.
Taxing the same transaction first on the HUF and then on the individual constitutes double taxation, which is not legal. Therefore ITAT considered the order imposing tax in the hands of the individual as wrong. However, the portion of agricultural income of ₹75,000 considered undisclosed was not rejected because the person did not provide sufficient proof of that portion. This decision made it clear that if the land is ancestral and has not been divided, then the profit from its sale can be considered not in the hands of the individual but in the hands of HUF.
