• Sale of Rural Agricultural Land

We (4 Resident Indian legal heirs) inherited rural agriculture land (first purchased by grandfather nearly 100 years ago). None of us have reported agricultural income as no active agriculture was pursued in the recent past. Neither was the land used for any non-agricultural purpose. However, the land tax has been paid and its classified as rainfed agri land in government records.

In the last FY, we have sold this rural agricultural land for a total consideration of 90lacs. That is 22.5 lacs amount received by each legal heir. No TDS was deducted. We understand that rural agricultural land is not a capital asset and hence is not subject to any tax on sale. I have seen advice that sale proceeds must be reported as exempt income. Some specify 10(37) to be precise https://www.taxfull.com/11453/nri-sale-of-rural-agricultural-land. However, I have also seen advice from some that one should not even declare this exempt income as it will only lead to unnecessary scrutiny. https://www.caclubindia.com/articles/is-it-necessary-to-show-sale-of-agricultural-land-in-itr-full-clarification-53844.asp. The latter advice seems reasonable approach, if not for AIS entry that records the sale.

Also, AIS has reported sale of land/property of Rs90lac on each of us 4 individuals, whereas it was the total consideration for all 4 put together.

My questions are:

1. First, should each individual object to AIS entry and say that the proceeds per seller/PAN is only 22.5lacs and not 90lacs ? Is it possible to also clarify in AIS objection, that it’s rural agricultural land and not regular land/property sale ? if so, how ?
2. Should the exempt income be reported at all or we should only respond if a scrutiny question is raised ? Given the recent blind use of computer assisted scrutiny, a scrutiny seems likely.
3. If we decide to report the income, sec 10(37) seems inappropriate given that its for urban agri land and forcible acquisition by govt. There is no scope to report exempt income on rural agri land under sec 10 in the IT return. so how is this to be reported ?
4. We had obtained a professional opinion that this is rural agricultural land from a CA in 2021, but if scrutiny arises will it be acceptable to IT department or will a certificate be required from a govt authority only? Or will the CA opinion along with land tax receipt and Village administration officer’s land utilisation certificate (vernacular) be sufficient ? Since the land is already sold, it is no longer be in our names and hence we cannot apply for such a certificate now (post-sale / name transfer).

It's clear there is no tax liability. It's all about dealing with a likely AIS triggered computer assisted scrutiny. Since there is no unanimous existing advice, I am looking for a least nuisance approach based on prior experience on this specific topic in the recent past.

thanks!