Smt. Lalitaben Govindbhai Patel, Ahmedabad V. The CIT, A'bad-I, Ahmedabad

ITA 1175/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5881 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-03-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L MEENA
• Keywords: Capital asset; Principle of natural justice; Question of law; Cost of acquisition; Corroborative evidences; Avoidance of tax; Assessment record; Revenue expenditure
• Section: 143(3); 2(14); 142(1); 263; 63

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI S.S. GODARA, JM, AND SHRI MANISH BORAD, AM ./ITA.NO.1175/AHD/2014 ( / ASSTT YEAR :2009-10) SMT. LALITABEN GOVINDBHAI PATEL, GANESH HOUSE, NR. DHARNIDHAR DERASAR, PALDI, BHATTA, AHD.- 380007 VS. THE COMMISSIONER OF INCOME TAX, AHMEDABAD-I, PAN : AEAPP9516L (APPELLANT) (RESPONDENT) / APPELLANT BY: SHRI DHIREN SHAH, A.R. / RESPONDENT BY: SHRI S.L. MEENA,, SR. D.R / DATE OF HEARING 24-03-2017 /DATE OF PRONOUNCEMENT 17-05-2017 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER THIS APPEAL FOR ASSESSMENT YEAR 2009-10 IS DIRECT ED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX -I DATED 05.03.2014 P ASSED U/S. 263 OF INCOME TAX ACT. THE ASSESSEE HAS CHALLENGED THE VAL IDITY OF THE ORDER PASSED U/S. 263 OF THE ACT LEARNED COMMISSIONER OF INCOME TAX BY RAISING FOLLOWING GROUNDS:- 1. THE LD. CIT HAS ERRED IN LAW AND ON FACTS IN PASSING THE ORDER U/S . 263 OF THE ACT BY HOLDING THAT THE ASSESSMENT ORDER PASSED U/S. 143(3) DATED 28-12-2011 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE THE SAID ASSESSM ENT FOR A.Y. 2009-10 DATED 28-12-2011 IS CANCELLED AND THE AO IS DIRECTED TO MAKE FRESH ASSESSMENT OF THE TO TAL ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 2 INCOME OF THE ASSESSEE FOR THE SAID ASSESSMENT YEAR, AFTER ALLOW ING OPPORTUNITY TO THE ASSESSEE AS PER LAW. 2. THE LD. CIT HAS ERRED IN LAW AND ON FACTS IN MAKING AN OBSERVATION THAT ' IN VIEW OF THE ABOVE FACTS AND APPLICABLE PROVISIONS OF LAW, IT IS AMPLY CL EAR THAT STCG ON SALE OF LAND WAS REQUIRED TO BE CONSIDERED AT RS. 4,09,82,337/- AND NOT RS. 5,04,668/- AS SHOWN IN THE RETURN OF INCOME. UNDER THE CIRCUMSTANCES, IT IS EVIDENT T HAT THE AO HAS ERRED IN ACCEPTING THE FIGURE OF STCG OF RS. 5,04,668/- SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME AND AS A RESULT THEREOF, THERE WAS SUBSTANTIAL LOSS OF REVE NUE TO THE EXCHEQUER SINCE THE INCOME OF THE ASSESSEE WAS ASSESSED AT A LOWER FIGURE'. 3. THE LD. C1T HAS ERRED IN LAW AND ON FACTS IN FAILING TO CONSIDER THE F ACT THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO HAS VERIFIED AL L THE DETAILS FILED BEFORE THE LD. A.O IN RESPECT OF SALE OF LAND AND HENCE THE ASSESS MENT ORDER PASSED U/S. 143(3) OF THE ACT CANNOT BE CONSIDERED AS ERRONEOUS AND PREJUDICIAL TO THE IN TEREST OF REVENUE. 4. THE LD. CIT HAS ERRED IN LAW AND ON FACTS IN FAILING TO PROPERLY CONSIDE R THE VARIOUS CASE LAWS RELIED UPON BY THE APPELLANT. 2. BRIEFLY STATED FACTS AS CALLED OUT IN THE RECORDS A RE THAT, THE ASSESSEE IS AN INDIVIDUAL AND HAS EARNED SHORT TERM CAPITAL GAI N AND INCOME FROM OTHER SOURCES. RETURN INCOME FOR ASSESSMENT YEAR 2009-10 WAS FILLED ON 28.03.2011 DECLARING TOTAL INCOME AT RS. 5,04,668/- . CASE WAS SELECTED FOR SCRUTINY ASSESSMENT. NOTICE U/S. 143(3) OF THE INCO ME TAX ACT FOLLOWED BY 142(1) OF THE ACT WAS DULY SERVED UPON ASSESSEE ALO NG WITH QUESTIONNAIRE CALLING NECESSARY DETAILS AND MAINLY REQUIRED INFOR MATION ABOUT THE TRANSACTION OF SALE OF CAPITAL ASSETS GIVING RISE T O SHORT TERM CAPITAL GAIN FROM SALE OF AGRICULTURAL LAND ADMEASURING 49,169 SQ. M TRS. SITUATED AT VILLAGE GODHAVI. NECESSARY DETAILS ABOUT COST OF ACQUISITIO N INCLUDING CONVERSION CHARGES, DETAILS OF BANK PAYMENT, AGREEMENT FOR SAL E, PROOF OF HANDING OVER OF POSSESSION WERE SUBMITTED. LEARNED ASSESSING OFF ICER AFTER EXAMINING THESE DETAILS WAS SATISFIED WITH THE WORKING OF SHO RT TERM CAPITAL GAIN SHOWN BY THE ASSESSEE AND ACCORDINGLY ACCEPTED THE DECLAR ED INCOME AS ASSESSED INCOME. 3. SUBSEQUENTLY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-A-1 ASSUMING THE JURISDICTION CAST UPON HIM PERUSED THE ASSESSMENT RECORDS AND OBSERVED THAT ASSESSEE HAS CLAIMED THAT THE LAND WA S SOLD TO MELODY ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 3 COMPLEX PVT. LTD. VIDE SALE AGREEMENT DATED 15.09.2 008 FOR RS. 38,74,431/- AND THIS AMOUNT HAS BEEN SHOWN AS THE SALE CONSIDER ATION. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERV E THAT THE ACTUAL TRANSFER TOOK PLACE VIDE KABJA KARAR DATED 23.03.20 09 IN FAVOR OF THE GATIL PROPERTIES LIMITED FOR A CONSIDERATION OF RS. 4,43, 52,100/-. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS OF THE VIE W THAT ASSESSEE SHOULD HAVE SHOWN SHORT TERM CAPITAL GAIN AT RS. 4,09,82,3 37/- INSTEAD OF RS. 5,04,668/- DISCLOSED IN THE RETURN OF INCOME. LEARN ED COMMISSIONER OF INCOME TAX (APPEALS) ACCORDINGLY ISSUED SHOW CAUSE NOTICE U/S. 263 OF THE ACT DATED 04.12.2013 WHICH READS AS FOLLOWS:- THE ASSESSEE HAD PURCHASED AGRICULTURAL LAND AT GODHAVI VILLAGE ADMEASURING 49,169 SQ MIS. DURING FY 2007-08. THE COST OF ACQUISITION INCLUDING CONVERSION CHARGES OF RS. 2,21,338/- WAS RS.33,69,763/-. THE BANAKHAT/AGREEMENT FOR SALE OF THIS (AND WITH MELODY COMPLEX PVT LTD. IS DTD. 15.09.2008 FOR RS.38,74,431/-. IN THE SAID AGREEMENT IT IS MENTIONED ON PAGE-4 THAT THE SELLER WOULD CONTINUE TO POSSES THE LAND TILL EXECUTI ON OF SALE DEED. POSSESSION HAS BEEN HANDED OVER VIDE KABJA KARAR DATED 23.03.2009 BY THE ASSESSEE TO GATIL PROPERTIES LTD. FOR A CONSIDERATION OF RS.4,43,52,100/- . HENCE AS PER THE PROVISIONS OF SECTION 2(47)(V) OF THE IT ACT 1961 AND 53A OF TRANSFER OF PROPERTY ACT THE TRANSFER OF ASSET TOOK PLACE ON 25.03.2009. THE ASSESSEE HAD CLAIMED THAT THE SAID LAND WAS SOLD TO MELODY COMPLEX PVT LTD. VIDE INITIAL AGREEMENT DATED 15.09.2008 FOR RS.38,74,431/-. IT IS EVIDENT THAT THE ACTUAL TRANSFER TOOK PLACE VIDE KABJA KARAR DATED 23.03.2009 IN FAVOR OF GATIL PROPERTIES LTD. FOR A CONSIDERATION OF RS.4,43,52,100/-. THE STCG WOULD THEREFORE BE RS.4,09,82,337/- INSTEAD OF RS. 5,04,668/- DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. 2. IN VIEW OF THE ABOVE, IT APPEARS TO THE UNDERSIGNED THAT THE ORDER DATED 28.12.2011 PASSED UNDER SECTION 143(3) OF THE I.T. ACT, 1961 BY THE ITO WARD 2(1), AHMEDABAD IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS OF REVENU E WITHIN THE MEANING OF SECTION 263(1) OF THE I.T. ACT, 1961. 3. YOU ARE, THEREFORE, REQUESTED TO SHOW CAUSE AS TO WHY APPROPRIATE ORDER UNDER SECTION 263(1) OF THE I.T. ACT, 1961 BE NOT PASSED IN YOUR CASE TO ELIMINATE THE ABOVE ERROR. FOR THIS PURPOSE, THE HEARING IN YOUR CASE IS FIXED ON 18/12/2013 AT 12.30 P.M. AT THE ABOVE ADDRESS. YOU MAY ATTEND PERSONALLY OR THROUGH AN AUTHORIZED REPRESENTATIVE ON THE SCHEDULED DATE AND TIME OR SUBMIT YOUR WRITTEN REPLY WITH SUPPORTING EVIDENCES. IN CASE NOTHING I S HEARD ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 4 FROM YOU BY THE SAID DATE, IT SHALL BE PRESUMED THAT YOU HAVE NOTHING TO STAT E IN THIS MATTER WHICH SHALL THEN BE DECIDED ON MERITS. 4. AGAINST THE ABOVE REFERRED SHOW CAUSE NOTICE, LE ARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE GAVE DETAILED SUBMIS SION CONTENDING THAT THE ORDER FRAMED BY LEARNED ASSESSING OFFICER U/S. 143( 3) OF THE ACT IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVEN UE AND HE HAS CONDUCTED SUFFICIENT INQUIRY BEFORE FRAMING ASSESSMENT ORDER AND HAS COMPLETED THE ASSESSMENT BY ADOPTING ONE OF THE PERMISSIBLE COURS ES PROVIDED UNDER LAW. LEARNED AUTHORISED REPRESENTATIVE SUBMITTED FOLLOWI NG SUBMISSIONS BEFORE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-1. 5. IN RESPONSE TO THE SHOW CAUSE NOTICE DATED 04-12-2013, THE AR OF THE ASSESSEE HAS CONTENDED THAT DURING THE F.Y.2008-09, THE ASSESSEE HAD AGREED TO SELL AGRICULTURAL LAND AT GODHAVI VILLAGE ADMEASURING 49,169 SQ. MTRS. VIDE AGREEMENT TO SALE/BANAKHAT DATED 15-9-2008. AS PER THE SAID AGREEMEN T, THE LAND ADMEASURING 49,169 SQ. MTRS. WAS SOLD TO MELODY COMPLEX PVT. LTD. FOR A TOTAL CONSIDERATION OF RS.38,74,431/-. AFTER THIS AGREEMENT, MELODY COMPLEX PVT. LTD., HAD EXECUTED A BANAKHAT DATED 25-3-2009 WHEREBY THE SAID LAND WAS SOLD T O GATIL PROPERTIES PVT, LTD. FOR A CONSIDERATION OF RS.4,43,52,100/-. T HE ASSESSEE HAS RECEIVED SALE CONSIDERATION OF RS.38,74,431/- AS PER BANAKHAT DATED 15 -9- 2008 AND THE CONFIRMING PARTY I.E. MELODY COMPLEX PVT. LTD. RECEIVED ITS SHARE OF SALE CONSIDERATION OF RS.4,04,77,669/- FROM THE ULTIMATE PURCHASER (TOTAL SA LE CONSIDERATION OF RS.4,43,52,100/-). THE ASSESSEE HAS STATED THAT MELODY COMP LEX PVT. LTD., HAS ACQUIRED THE RIGHTS OF THE PROPERTY VIDE AGREEMENT OF S ALE DATED 15- 9-2008 AS PER THE PROVISIONS OF SECTION 2(14). THE SAID RIGHT IS AN ENF ORCEABLE RIGHT WHICH HAS BEEN TRANSFERRED WITHIN THE MEANING OF SECTI ON 2(47)(II) OF THE ACT WHILE EXECUTING THE AGREEMENT DATED 25-3-2009 AS A CONFIRMING PART Y. THE ASSESSEE HAS PLACED RELIANCE ON ITAT MADRAS BENCH DECISION IN THE CAS E OF K.R. SRINATH WHEREBY IT IS HELD THAT WHEN THERE IS RELINQUISHMENT OF RI GHT IT AMOUNTS TO TRANSFER U/S 2(47). THE ASSESSEE HAS ALSO RELIED ON OTHER JUDGMENTS ON S IMILAR LINES. 5.1 THE AR HAS FURTHER CONTENDED THAT THE BANAKHAT/AGREEMENT TO SALE DATED 25-3-2009 HAS NOT BEEN TAKEN INTO CONSIDERATION IN THE NOTICE U/S 263 AND T HAT IS WHY THE ENTIRE CONSIDERATION OF RS.4,43,52,100/- IS CONSIDERED IN THE HANDS OF T HE ASSESSEE WHICH IS A FACTUALLY INCORRECT OBSERVATION. 5.2 IT IS FURTHER CONTENDED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS, THE AO HAS VERIFIED ALL THE DETAILS FILED BEFORE HIM PERTAI NING TO SALE OF LAND AND HENCE THE ASSESSMENT ORDER PASSED CANNOT BE CONSIDERED AS ERRONEOUS AND ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 5 PREJUDICIAL TO THE INTEREST OF REVENUE. THE AR HAS PLACED RELI ANCE ON THE SUPREME COURT JUDGMENT IN THE CASE OF MALABAR INDUSTRIAL COMPANY (243 ITR 83) WHERE IN IT IS HELD THAT WHEN TWO VIEWS ARE POSSIBLE ON A ISSUE AND THE AO HA S ADOPTED ONE VIEW WITH WHICH THE CIT DOES NOT AGREE, THEN SUCH ORDER CANNOT BE TREAT ED AS ERRONEOUS ORDER UNLESS THE VIEW TAKEN BY THE AO IS UNSUSTAINABLE IN LAW. THE AO HAS ALSO PLACED RELIANCE ON GUJARAT HIGH COURT ORDER IN THE CASE OF ARV IND JEWELLERS (259 ITR 502). SEVERAL OTHER JUDGMENTS ON SIMILAR LINES HAVE ALSO BEEN QUOTED. 5. HOWEVER LEARNED COMMISSIONER OF INCOME TAX (APPE ALS) WAS NOT CONVINCED WITH THE SUBMISSIONS MADE BY THE AUTHORIS ED REPRESENTATIVE OF THE ASSESSEE AND WAS OF THE FIRM BELIEF THAT ASSESS EE SHOULD HAVE OFFERED SHORT TERM CAPITAL GAIN BY TAKING THE SALE CONSIDERATION OF RS. 4,43,52,100/. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN HIS ORDER U/S. 263 SET ASIDE THE ASSESSMENT ORDER DATED 28.12.2011 AND DIR ECTED THE ASSESSING OFFICER TO MAKE FRESH ASSESSMENT IN LIGHT OF HIS F OLLOWING OBSERVATIONS:- 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE AR OF THE ASSESSEE. SO FAR AS THE OBJECTION OF THE ASSESSEE AGAI NST PROCEEDINGS U/S 263 IS CONCERNED ON THE GROUND THAT ACTION U/S 263 IS NOT POSSIBLE IN CASE S WHERE THE A.O, HAD ALREADY EXAMINED THE ISSUE, THIS PROPOSAL IS UNTENABLE FOR THE REASON THAT THE POWER U/S 263 IS INTENDED TO CORRECT THE WRONG ASSESSME NT MADE BY THE ASSESSING AUTHORITY. AS A MATTER OF FACT, IT APPEARS THAT NO SUCH INQUIRIES HAVE BEEN CONDUCTED BY THE AO. THE AO HAS SIMPLY ACCEPTED THE CLAIMS OF THE ASSESSEE AND FAILED TO MAKE ANY ENQUIRY WHICH WERE CALLED IN THE CIRCUMSTANCES OF THE CASE. EVEN ASSUMING THAT EVERY CLAIM, WHICH IS ALLOWED TO AN ASS ESSEE, NEED NOT BE ELABORATELY DEALT WITHIN AN ASSESSMENT ORDER BUT THE CHA IN OF EVENTS SHOULD SHOW THAT THERE WAS APPLICATION OF MIND. THE VIEW TAKEN BY THE AO SHOULD NOT BE A MERE VIEW BUT A JUDICIAL VIEW. BEING A QUASI-JUDICIAL AUTHORITY , THE AO CANNOT TAKE A VIEW, EITHER AGAINST OR IN FAVOUR OF THE ASSESSEE/REVENUE , WITHOUT MAKING PROPER ENQUIRIES AND WITHOUT PROPER EXAMINATION OF THE CLAIM MADE BY THE ASSESSEE IN THE LIGHT OF APPLICABLE LAW. REFERENCE IS MADE TO THE DECISION OF DELHI HIGH COURT IN THE CASE OF GEE VEE ENTERPRISES V. ADDL CIT (99 ITR 375), WHEREIN AFTER CONSIDERING THE DECISION OF SUPREME COURT IN THE CAS ES OF RAM PYARI DEVI SARAOGI V CIT (67 ITR 84) AND SMT. TARA DEVI AGARWAL V C IT (88 ITR 323), IT WAS HELD THAT ' THE POSITION AND FUNCTION OF THE INCOME-TAX OFFI CER IS VERY DIFFERENT FROM THAT OF A CIVIL COURT. THE STATEMENTS MADE IN A PLE ADING PROVED BY MINIMUM AMOUNT OF EVIDENCE MAY BE ACCEPTED BY A CIVIL COURT IN ABSENCE OF ANY REBUTTAL. THE CIVIL COURT IS NEUTRAL. IT IS SIMPLY GIVEN DECISION ON T HE BASIS OF THE PLEADINGS AND EVIDENCE WHICH COMES BEFORE IT. THE INCOME-TAX O FFICER IS NOT ONLY AN ADJUDICATOR BUT ALSO AN INVESTIGATOR. HE CANNOT REMAIN PASSIVE IN THE FACE ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 6 OF A RETURN WHICH IS APPARENT IN THE ORDER BUT CALL FOR FURTHER I NQUIRY. IT IS HIS DUTY TO ASCERTAIN THE TRUTH OF THE FACTS STATED IN THE RETURN WHEN THE CIRCUMSTANCES OF THE CASE ARE SUCH AS TO PROVOKE AN INQUIRY. THE MEANING TO BE GIVEN TO THE WORD 'ERRONEOUS' IN SECTION 263 EMERGES OUT OF THIS CONTEXT. IT IS BEC AUSE IT IS INCUMBENT ON THE INCOME-TAX OFFICER TO FURTHER INVESTIGATE THE FACTS STATED IN THE RETURN WHEN CIRCUMSTANCES WOULD MAKE SUCH AN INQUIRY PRUDENT THAT T HE WORD 'ERRONEOUS' IN SECTION 263 INCLUDES THE FAILURE TO MAKE SUCH AN INQUIRY. THE ORDER BECOMES ERRONEOUS BECAUSE SUCH AN INQUIRY HAS NOT BEEN MADE AND NOT BECAUSE THERE IS ANYTHING WRONG WITH THE ORDER IF ALL THE FACTS STATED THEREIN ARE ASSUMED TO BE CORRECT'. MOREOVER, IN THE CASE OF MALABAR INDUSTRIAL CO. LT D. (243 ITR 83) THE SUPREME COURT HAS CLEARLY SPELT OUT THAT INCORRECT ASSUMPTION OF F ACTS AND INCORRECT APPLICATION OF LAW AS ALSO NON APPLICATION OF MIND WILL SA TISFY THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. AS PER THE PROVISIONS OF S ECTION 263(1), ANY PROCEEDING UNDER THE INCOME TAX ACT AND ANY ORDER PASSED THEREIN C OMES WITHIN THE AMBIT OF REVISION U/S 263. IF THE STAND TAKEN BY THE A.O. WER E FINAL, THEN THERE WAS NO NEED TO HAVE SECTION 263 ON THE STATUTE BOOK AT ALL. SUCH INTERPRETATION WOULD RENDER THE SECTION SUPERFLUOUS WHICH COULD NEVER BE THE INTENTION OF THE LEGISLATURE. FURTHER, IN SWARUP VEGETABLE PRODUCTS VS. CIT, 187 ITR 412 (ALL.), IT WAS HELD THAT IT WAS BEYOND DISPUTE THAT U/S 263 T HE COMMISSIONER DOES HAVE THE POWER TO SET ASIDE THE ASSESSMENT ORDER AND SEND THE MATTER FOR FRESH ASSESSMENT IF HE IS SATISFIED THAT FURTHER ENQUIRY IS NECESSARY AND THAT THE IMPUGNED ORDER IS ERRONEOUS AND PREJUDICIAL TO THE INTERESTS O F REVENUE. THE SUPREME COURT HAS HELD IN CIT VS SHREE MANJUNATHESWARE PACKING P RODUCTS & CAMPHOR WORKS, 231 ITR 53, THAT THE REVISIONAL POWER CONFERRED ON T HE COMMISSIONER U/S 263 IS OF WIDE AMPLITUDE. 6.1 IT IS A SETTLED LEGAL POSITION THAT ANY ORDER PASSED BY THE AO WITHOUT PROPER INQUIRY AND INVESTIGATION IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE FOLLOWING JUDICIAL PRONOUNCEMENTS ENDORSE THE ABOVE CONTENTION: (I) THE MADRAS HIGH COURT IN THE CASE OF CIT VS. SESHASAYEE PAPER & BOARDS LTD., (2000) 242 ITR 490 (MADRAS) HAS HELD THAT FAILURE OF THE AO TO MAKE AN INQUIRY BEFORE GRANTING DEDUCTION WOULD RENDER THE ASSESSMENT ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. (II) THE MADRAS HIGH COURT, IN THE CASE OF CIT VS. SOUTH INDIA SHIPPING CORPORATION LTD. (1998) 233 ITR 546 (MAD.) HAS HELD THAT THE ORDER OF THE AO MAY BE ERRONEOUS IN LAW OR IN FACT. IT MAY BE ERRONEOUS IN THE SE NSE THAT THE AO HAD PASSED THE ORDER WITHOUT PROPERLY CONDUCTING THE INQUIRY IN COMPLETION OF THE ASSESSMENT AND THE ORDER MAY ALSO BE ERRONEOUS WHEN THE EXPENDITURE ALLOW ED AS AGAINST THE PROVISIONS OF LAW. (III) THE GAUHATI HIGH COURT N THE CASE OF TARAJAN TEA CO. PVT. LTD. (1994) 205 ITR 45, 61 (GAU.) WHEREIN IT WAS HELD THAT A DECISION TAKEN WITHOUT ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 7 CONSIDERING THE RELEVANT ASPECT OF A PARTICULAR POINT WOULD CERTAINL Y BE ERRONEOUS AND SUCH A DECISION IN FAVOUR OF THE ASSESSEE WITHOUT SUCH CONSIDERATION WOUL D BE PREJUDICIAL TO THE INTEREST OF REVENUE SO AS TO EMPOWER THE COMMISSIONER TO EXERCISE HIS REVISIONAL POWERS U/S 263 OF THE ACT. SIMPLY BECAUSE THE FACTS HAVE BEEN DISCLOSED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEE DINGS, IT DOES NOT GIVE HIM THE IMMUNITY FROM THE REVISIONAL JURISDICTION WHIC H THE COMMISSIONER CAN EXERCISE U/S 263 OF THE ACT. (IV) IN THE CASE OF MANNULAL MATADEEN VS CIT REPORTED AT (2005) 277 ITR 346 (ALL), THE ALLAHABAD HIGH COURT HAD HELD THAT THE ORDER OF REVISION WAS VAL ID AS THE AO HAD NOT MADE NECESSARY ENQUIRIES BEFORE ALLOWING DEDUCTION OF INTEREST. 7. COMING TO THE ARGUMENTS ON MERIT, THE ASSESSEE'S ASSUMPTION THAT THERE I S AN INADVERTENT MISTAKE IN THE NOTICE U/S 263 AS THE BANAKHAT/AGREEM ENT TO SALE DATED 25-3-2009 HAS NOT BEEN TAKEN INTO CONSIDERATION IS MISPLACED. THE ASSESSEE HAS NOT CONTEMPLATED THE CONTENTS OF THE NOTICE U/S 263 THOROUGHLY. THE BANAKHAT/AGREEMENT TO SALE DATED 15-9-2008 AS WELL AS 25-3-2009 ARE THE P RIME DOCUMENTS ON THE BASIS OF WHICH NOTICE U/S.263 DATED 4-12-2013 HAS BEEN ISSU ED. HENCE, THERE IS NO INADVERTENT MISTAKE AS POINTED OUT BY THE ASSESSEE. 7.1 THE ASSESSEE HAS EXPLAINED ALL THE FACTUAL ASPECTS OF THE T RANSACTION OF SALE OF LAND EXECUTED BY THE ASSESSEE DURING THE PREVIOUS YEAR. T HE ASSESSEE HAS THUS CONCLUDED THAT MELODY COMPLEX PVT. LTD., HAD ACQUIRED ALL THE RIGH TS OF THE LAND BELONGING TO THE ASSESSEE AND HAS ACCORDINGLY RELINQUISHED THESE RI GHTS IN FAVOUR OF GATIL PROPERTIES LTD. THE ASSESSEE HAS RESORTED TO THE PR OVISIONS OF SECTION 2(14) AND SECTION 2(47) OF THE INCOME-TAX ACT AND CONTENDED THAT TRANS FER INCLUDES RELINQUISHMENT OF A CAPITAL ASSET AS DEFINED UNDER SECTION 2( 14). THE SUBMISSIONS MADE BY THE ASSESSEE HAVE BEEN CONSIDERED. IT IS SEEN THAT THE ASSESSEE HAD PURCHASED LAND AT GODHAVI VILLAGE DURING THE F.Y.2007-08. THE SAME WAS CONVERTED INTO NON-AGRICULTURAL LAND BY PAYING CONVERSION CH ARGES OF RS.2,21,338/-. ACCORDINGLY, THE COST OF ACQUISITION WAS RS.33,69,763/- WHIC H HAS BEEN SHOWN IN THE RETURN OF INCOME. DURING THE YEAR UNDER CO NSIDERATION, THE ASSESSEE HAD COMMENCED THE PROCESS OF SELLING THIS NON-AGRIC ULTURAL LAND BY ENTERING INTO AN AGREEMENT FOR SALE WITH MELODY COMPLEX PVT. L TD. AS PER THIS AGREEMENT DATED 15-9-2008, THE ASSESSEE HAD AGREED TO SELL THE LAND T O MELODY COMPLEX PVT. LTD. SUBJECT TO FULFILLMENT OF CERTAIN CONDITIONS. AS PER CONDITION 'NO.5 MENTIONED IN THE SAID AGREEMENT, THE POSSESSION OF THE SAI D LAND WAS TO BE HANDED OVER BY THE ASSESSEE AT THE TIME OF EXECUTING SALE DEED. IT IS FURTHER STATED THAT ALL THE GOVERNMENT TAXES PERTAINING TO THE LAND WILL BE PAID BY THE ASSESSEE TILL THE DATE OF EXECUTION OF SALE DEED AND ONLY AFTER THAT THE RESPONSIBILITY OF PAYING SUCH TAXES WOULD BE ON THE PURCHASER. AFTER EXECUTING THI S AGREEMENT FOR SALE, THE ASSESSEE HAS EXECUTED A KABJA KARAR (POSSESSION DEED) ON 25-3-2009. IN THIS DEED, THE ASSESSEE IS FEATURED AS A SELLER AND THE ACTUAL PURC HASER IS GATIL PROPERTIES LTD. AND MELODY COMPLEX PVT LTD., IS A CONFIRMING PARTY. AS PER THE ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 8 DETAILS OF THE PAYMENT MADE BY GATIL PROPERTIES LTD., IT IS SEEN THAT ALMOST THE ENTIRE PAYMENT OF RS.4,43,52,100/- HAS BEEN MADE BY GATIL PROPERTIES LTD., ON 25- 3-2009. IT IS ALSO MENTIONED THAT THE CONFIRMING PARTY HAS ALREADY PAID RS.1,00,000/- TO THE ASSESSEE ON 15-9-2008. VIDE THIS POSSESSION DOCUMENT, T HE ASSESSEE HAS HANDED OVER THE POSSESSION OF THE SAID LAND TO GATIL PROPERTIES LT D. 8. FROM THE ABOVE FACTS, IT IS EVIDENT THAT THE LAND WAS IN POSSESSI ON OF THE ASSESSEE UPTO 25-03-2009 AND THE ACTUAL SALE OF LAND HAS THUS TAKEN PLACE ON 25- 3-2009 BETWEEN THE ASSESSEE AND GATIL PROPERTIES LTD. IN OTHER WORDS, THE ASSESSEE IS THE SELLER OF LAND AT GODHAVI VILLAGE ADMEASURING 49,169 SQ. MTRS. AND GATIL PROPERTIES LTD., IS THE PURCHASER OF THE LAND WHO HAS MADE PAYMENT OF RS.4,43,52,100/- IN LIEU OF THE TRANSFER OF LAND IN ITS FAVOUR BY THE ASS ESSEE. THE ASSESSEE COULD NOT HAVE POSSESSED THE LAND IF THE AGREEMENT DATED 15 -09-2008 WAS FINAL. AS PER THE PROVISIONS OF SECTION 2(47)(V), ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR R ETAINED IN ANY PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTI ON 53 A OF THE TRANSFER OF PROPERTY ACT, 1882 SHALL BE CONSIDERED AS A TRANSFER OF A CAPITAL ASSET. IN THIS CASE, THE POSSESSION OF THE LAND HAS BEEN HANDED OVER BY T HE ASSESSEE BY EXECUTING THE POSSESSION DOCUMENT DATED 25-3-2009 THEREFORE, IT IS CLE AR THAT THE ACTUAL TRANSFER OF CAPITAL ASSET TOOK PLACE ON 25-3-2009 BETWEEN THE ASSESSEE AND GATIL PROPERTIES LTD. SINCE GATIL PROPERTIES LTD., HAS MADE THE PAYMENT OF RS.4,43,52,100/-, THE SAID AMOUNT IS REQUIRED TO BE TREATED AS SALE CONSIDERA TION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN IN THE CASE OF THE AS SESSEE. ACCORDINGLY, STCG IN THE CASE OF THE ASSESSEE WILL BE R S.4,09,82,337/- (SALE CONSIDERATION RS.4,43,52,100/- MINUS COST OF ACQUISITION RS.33,69,763/-). FROM THE ASSESSMENT RECORDS, IT IS SEEN THAT THE AO HAS SIMPLY CALLED FOR CERTAIN DOCUMENTS OF SALE/PURCHASE OF PROPERTY BUT HAS NOT GONE INTO THE DE TAILS OF THE CHAIN OF TRANSACTIONS EXECUTED BY THE ASSESSEE WITH DIFFERENT ENTITIES. THE AO WAS EXPECTED TO CONDUCT A THOROUGH INQUIRY TO UNEARTH THE ACTUAL PROFIT MADE BY THE ASSESSEE IN THE FORM OF STCG. IT IS OBVIOUS THAT SUCH INQUIRY HAS NO T BEEN CONDUCTED DURING ASSESSMENT PROCEEDING WHICH HAS RESULTED IN ACCEPTANCE OF INCORRECT COMPUTATION OF CAPITAL GAIN SHOWN BY THE ASSESSEE IN THE R ETURN OF INCOME. 9. IN VIEW OF THE ABOVE FACTS AND APPLICABLE PROVISIONS OF LAW, IT IS AM PLY CLEAR THAT STCG ON SALE OF LAND WAS REQUIRED TO BE CONSIDERED AT RS.4,09,82,337/- AND NOT RS.5,04,668/- AS SHOWN IN THE RETURN OF INCOME. UNDER THESE CIRCUMSTANCES, IT IS EVIDENT THAT THE AO HAS ERRED IN ACCEPTI NG THE FIGURE OF STCG OF RS.5,04,668/- SHOWN BY THE ASSESSEE IN THE RETURN OF INCOME. AS A RESULT THEREOF, THERE WAS SUBSTANTIAL LOSS OF REVENUE TO THE EXCHEQUER SINCE THE INCOME OF THE ASSESSEE WAS ASSESSED AT A LOWER FIGURE. ACCORDINGLY, IT IS HELD T HAT THE ASSESSMENT ORDER PASSED U/S 143(3) DATED 28-12-2011 WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE, THE SAID ASSES SMENT FOR A.Y.2009-10 DATED 28-12-2011 IS CANCELLED AND THE AO IS DIRECTED TO MAKE FRESH ASSESS MENT OF ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 9 THE TOTAL INCOME OF THE ASSESSEE FOR THE SAID ASSESSMENT YEAR , AFTER ALLOWING OPPORTUNITY TO THE ASSESSEE AS PER LAW. 6. AGGRIEVED ASSESSEE IS NOW IN APPEAL BEFORE THE T RIBUNAL CHALLENGING THE VALIDITY OF THE ORDER U/S. 263 OF THE ACT. 7. LEARNED AUTHORISED REPRESENTATIVE OF THE COUNSEL REITERATED THE SUBMISSION MADE BEFORE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) STRONGLY CHALLENGING THE VALIDITY OF THE ORDER U/S. 263 OF THE ACT AND FURTHER SUBMITTED THAT IMPUGNED TRANSACTION OF SHORT TERM C APITAL GAIN EARNED FROM SALE OF AGRICULTURAL LAND WAS ADEQUATELY DEALT BY T HE LEARNED ASSESSING OFFICER IN LIGHT OF DETAILS DOCUMENTS AND EVIDENCE SUPPLIED DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH INTER ALIA INCLUDED COPIES OF PURCHASE DEED IN RESPECT OF LAND SOLD, COPY OF AGREEMENT TO SALE DATED 15.09.2008 ENTERED WITH MELODY COMPLEX PVT. LTD., COPY OF AGREEMENT TO SALE DATED 25.03.2009 WITH THE GATIL PROPERTIES LTD. WHEREIN MELODY COMPL EX PVT. LTD. IS SHOWN AS CONFIRMING PARTY AND THE COPY OF POSSESSION LETTER DATED 25.03.2009. HE FURTHER SUBMITTED THAT OUT OF THE TOTAL SALE CONSID ERATION OF RS. 4,43,52,100/- ASSESSEE HAS RECEIVED HER SHARE OF RS. 38,74,431/- WHICH HAS BEEN DULY OFFERED TO TAX AND THE REMAINING SUM OF RS. 4,04,77 ,669/- HAS BEEN RECEIVED BY THE CONFIRMING PARTY I.E. MELODY COMPLEX PVT. LT D. THROUGH ACCOUNT PAYEE CHEQUES AND IS A PART OF REVENUE/INCOME OF ME LODY COMPLEX PVT. LTD. THEREFORE THE TOTAL SALE CONSIDERATION OF RS. 4,43, 52,100/- HAS BEEN DULY ACKNOWLEDGED AS REVENUE BY BOTH THE PARTIES I.E. TH E ASSESSEE AND MELODY COMPLEX PVT. LTD. AS PER THE AGREEMENT TO SALE DATE D 15.09.2008 AND 25.03.2009. FURTHER LEARNED ASSESSING OFFICER HAS A DJUDICATED THE ISSUES IN DETAIL AND ACCEPTED THE DECLARED INCOME AS ASSESSED INCOME. IN THESE CIRCUMSTANCES LEARNED COMMISSIONER OF INCOME TAX (A PPEALS) HAS ERRED IN SETTING ASIDE HOLDING THE ORDER OF LEARNED ASSESSIN G OFFICER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 8. IN SUPPORT OF HIS CONTENTION LEARNED AUTHORISED REPRESENTATIVE REFERRED AND RELIED ON FOLLOWING JUDGMENT:- (1) MALABAR INDUSTRIAL CO. REPORTED AT 243 ITR 83 (SUPRE ME COURT) ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 10 (2) ARVIND JEWELLERS REPORTED AT 259 ITR 502 (GUJRAT HIGH COURT) (3) CIT VS. R.K. CONSTRUCTION CO. [2009] 313 ITR 65 (GUJ .) (4) COMMISSIONER OF INCOME TAX VS. GABRIEL INDIA LTD. 203 ITR 108 (HC BOMBAY). (5) COMMISSIONER OF INCOME-TAX-L VS. AMIT CORPN. [2012] 21 TAXMANN.COM 64 (GUJ.) 9. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESENT ATIVE VEHEMENTLY ARGUED SUPPORTING THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS). 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. SOLITARY GRIEVANCE OF THE ASSESSEE IN TH IS APPEAL IS CHALLENGING THE VALIDITY OF ORDER U/S. 263 OF THE ACT FRAMED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND HAS URGED THAT THE SAID OR DER IS VOID AND DESERVES TO BE CANCELLED. 11. WE FIND THAT THE ISSUE IN THIS APPEAL EMINATES OUT OF TRANSACTION OF SALE OF AGRICULTURAL LAND ADMEASURING 49,169 SQ. MTRS. SITUATED AT VILLAGE GODHAVI PURCHASED BY ASSESSEE AT A COST OF RS. 33,69,763/- ON 15.09.2008. ASSESSEE ENTERED INTO AN AGREEMENT TO SALE OF THIS LAND TO M ELODY COMPLEX PVT. LTD. FOR CONSIDERATION OF RS. 38,74,431/- AND RECEIVED A N AMOUNT OF RS. 1,00,000/- AS A PART PAYMENT AND IT WAS AGREED THAT POSSESSION WOULD BE HANDED OVER ON RECEIVING BALANCE CONSIDERATION OF RS. 37,74,431/-. SUBSEQUENTLY ON 25.03.2009 ASSESSEE ENTERED INTO ANOTHER AGREEMENT FOR SALE OF THE IMPUGNED AGRICULTURAL LAND WITH GATIL PROPERTIES LIMITED AND THE SALE CONSIDERATION MENTIONED IN THIS NEW AGREEMENT TO SALE DATED 25.03 .2009 WAS AT RS. 4,43,52,100/-. IN THE AGREEMENT DATED 25.03.2009 AS SESSEE IS SHOWN AS SELLER AND MELODY COMPLEX PVT. LTD. AS A CONFIRMING PARTY. ASSESSEE RECEIVED THE BALANCE SALE CONSIDERATION OF RS. 37,74,431/- AS AG REED IN AGREEMENT DATED 15.09.2008 AND MELODY COMPLEX PVT. LTD. RECEIVED RS . 4,04,77,669/- AS A CONFIRMING PARTY. POSSESSION WAS HANDED OVER ON 25. 03.2009 TO GATIL PROPERTIES LIMITED. 12. ASSESSEE IN HER RETURN OF INCOME HAS SHOWN THE TRANSACTION OF SALE OF AGRICULTURAL LAND AT CONSIDERATION OF RS. 38,74,43 1/- AND AFTER TAKING COST OF ACQUISITION OF RS. 33,69,763/-, OFFERED THE REMAINI NG AMOUNT OF RS. 5,04,668/- TO TAX AS SHORT TERM CAPITAL GAIN. LEARN ED ASSESSING OFFICER AFTER EXAMINING THE DETAILS OF THE IMPUGNED TRANSACTION O F SALE OF AGRICULTURAL LAND ACCEPTED THE DECLARED INCOME AS ASSESSED INCOME. TH EREAFTER LEARNED ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 11 COMMISSIONER OF INCOME TAX (APPEALS) ASSUMING ITS P OWER U/S. 263 OF THE ACT CALLED FOR THE ASSESSMENT RECORDS WHICH HAS ALL THE DETAILS INCLUDING THE AGREEMENT TO SALE DATED 15.09.2008 AND 25.03.2009. AFTER GOING THROUGH ALL THESE DOCUMENTS LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TOOK A VIEW THAT LEARNED ASSESSING OFFICER HAS NOT EXAMIN ED THE TRANSACTION PROPERLY AS THE ASSESSEE WAS LIABLE TO PAY TAX ON T HE SHORT TERM CAPITAL GAIN AFTER TAKING THE SALE CONSIDERATION AT RS. 4,43,52, 100/- AS AGAINST RS. 38,74,431/- SHOWN BY THE ASSESSEE AND HE ACCORDINGL Y WORKED OUT THAT THE SHORT TERM CAPITAL GAIN AT RS. 4,09,82,337/- INSTEA D OF RS. 5,04,668/- DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) SET ASIDE THE ORDER OF ASSESSI NG OFFICER AND DIRECTED TO ASSESS AFRESH ON THE BASIS OF OBSERVATIONS MADE BY HIM. NOW ASSESSEE IS IN APPEAL CHALLENGING THE VALIDITY OF ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) U/S. 263 OF THE ACT. 13. BEFORE ADJUDICATING THE FACT VIS--VIS THE IMPU GNED ORDER U/S 263 OF THE ACT, WE WILL FIRST LIKE TO GO THROUGH LAND MARK JUDGMENT OF HONBLE APEX COURT IN THE CASE OF MALABAR INDUSTRIAL CO. (SUPRA) WHEREIN FOLLOWING RATIO HAS BEEN LAID DOWN:- 'A BARE READING OF SECTION 263 OF THE INCOME-TAX ACT, 1961, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF JURISDICTION BY THE COMMIS SIONER SUO MOTTO UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS I N SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY (I) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND (II) IT IS PREJUDICIAL TO THE I NTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE INCOME-TA X OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ER RONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED BY THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORD ER IS ERRONEOUS THAT THE SECTION WILL BE ATTRACTED. AN INCORRECT ASSUMPT ION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY THE REQUIREMENT OF TH E ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYING THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. THE PHRASE 'PREJUDICIAL TO THE INTERESTS OF THE REVENUE' IS NOT AN EXPRES SION OF ART AND IS NOT DEFINED IN THE ACT. UNDERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE SCHEME OF THE ACT IS TO LEVY AND COLLECT TAX IN ACCORDANCE WITH THE PROVISIONS OF THE ACT AND THIS TASK IS ENTRUSTED TO THE REVENUE. IF DUE TO AN ERRONEOUS ORDER OF THE INCOME-TAX OFFICER, T HE ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 12 REVENUE IS LOSING TAX LAWFULLY PAYABLE BY A PERSON, IT WILL CERTAINLY BE PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE PHRASE ''PREJUDIC IAL TO THE INTERESTS OF THE REVENUE' HAS TO BE READ IN CONJUNCTION WITH AN ERRONE OUS ORDER PASSED BY THE ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENCE OR AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL T O THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF R EVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ON E VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF REVENUE UNLESS THE VI EW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW.' 14. WE FURTHER OBSERVE THAT HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF ARVIND JEWELERS (SUPRA) HAS LAID ANOTHER INDEPEN DENT RATIO BY HOLDING THAT, IF THERE IS MATERIAL ON RECORD AND THE SAID MATERI AL IS CONSIDERED BY THE ASSESSING OFFICER WHILE FRAMING ASSESSMENT IN A PAR TICULAR VIEW IS TAKEN MERELY BECAUSE DIFFERENT VIEW CAN BE TAKEN THAT SHO ULD NOT BE BASED ON ACTION U/S. 263 OF THE ACT. 15. WE FURTHER OBSERVE THAT THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME-TAX-L VS. AMIT CORPN . [2012] 21 TAXMANN.COM 64 (GUJ.) HAS HELD THAT JURISDICTION UN DER SECTION 263 DOES NOT PERMIT LATITUDE TO THE AUTHORITY TO EXERCISE POWERS FOR FURTHER INQUIRY ON PROCESSED ISSUES ADJUDICATED UPON IN ASSESSMENT. PA RA 5 READS AS UNDER: - 'WE ARE OF THE OPINION THAT THE TRIBUNAL COMMITTED NO ERROR. WHEN, DURING THE COURSE OF FRAMING OF THE ASSESSMENT, THE ASSESSING OFFICER HAD AC CESS TO ALL THE RECORDS OF THE ASSESSEE, AFTER PERUSING SUCH RECORD THE ASSESSING OFFICER FRAMED THE ASSESSMENT, SUCH ASSESSMENT COULD NOT HAVE BEEN RE-OPENED IN EXERCISE OF REVISION POWER UNDER SECTION 263 OF THE ACT FOR MAKING FURT HER INQUIRIES. IN THE FACTS OF THE CASE, IN OUR OPINION, TRIBUNAL RIGHTLY INTERFE RED WITH SUCH ORDER. NO QUESTION OF LAW ARISES. TAX APPEAL IS, THEREFORE, DISMISSED'. 16. NOW IN LIGHT OF THE RATIO LAID DOWN BY HONBLE APEX COURT AND HONBLE JURISDICTIONAL HIGH COURT AS REFERRED ABOVE , WE WILL FIRST EXAMINE THAT WHETHER THERE WAS SUFFICIENT INQUIRY OF THE IM PUGNED TRANSACTION BY THE LEARNED ASSESSING OFFICER AND WHETHER ALL THE RELEV ANT FACTS WERE PLACED BEFORE HIM FOR EXAMINING THE IMPUGNED TRANSACTION. 17. FROM PERUSAL OF RECORD WE FIND THAT NOTICE U/S. 143(2) OF THE ACT AND 142(1) OF THE ACT ALONG WITH DETAILED QUESTIONNAIRE WERE ISSUED TO ASSESSEE ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 13 ON 05.10.2011 AND IN RESPONSE THERETO ASSESSEE FILE D REPLY DATED 14.10.2011 WHICH READS AS FOLLOWS:- 1. YOUR HONOUR HAS ASKED THE DETAILS OF NATURE OF BUSINESS/ SOURCE OF INCOM E. IN THIS REGARD, I HAVE TO STATE THAT I HAVE NOT CARRIED OUT ANY BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATION. IT IS TO BE TAKEN NOTE OF THAT DURING THE YEAR UNDER C ONSIDERATION, I HAVE EARNED ONLY CAPITAL GAIN INCOME, INTEREST INCOME AND SITTING FEES INCOM E. 2. YOUR HONOUR HAS ASKED TO FURNISH ALL THE BANK ACCOUNT STATEMENTS OPERATED DURING THE YEAR UNDER CONSIDERATION. IN THIS REGARD, I AM ENCLOSING THE COPY OF BANK STATEMENT HEREWITH AS PER EXHIBIT - I. 3. YOUR HONOUR HAS ASKED TO FURNISH WORKING OF CAPITAL GAIN ALONG WITH THE DOCUMENTARY EVIDENCES. IN THIS REGARD, I HAVE INFORM YOUR HONOUR THAT COPY OF LEDGER ACCOUNT OF LAND ALONG WITH DEEDS OF THE SAME HAVE BEEN ATTACHED HER EWITH AS PER EXHIBIT - II. YOUR HONOUR HAS ALSO ASKED THE DETAILS AND DOCUMENTARY EVIDENCES RE GARDING EXEMPTION CLAIMED U/S 54. IN THIS REGARD, I HAVE INFORM YOUR HONOUR THAT WE I HAVE EARNED INCOME OF SHORT TERM CAPITAL GAIN. SO THE QUESTION OF EXEMPTION DOES NOT ARISE. FURTHER, I HAVE TO INFORM YOUR HONOUR THAT THE WORKING OF SHORT-TERM CAPITAL GAIN IS SHOWN IN STATEMENT OF TOTAL INCOME. 4. YOUR HONOUR HAS ASKED TO FURNISH DETAILS OF INTEREST INCOME A LONG WITH TDS CERTIFICATES THEREOF. IN THIS REGARD, I HAVE INFORM YOUR HONOUR THAT I HAV E ONLY SAVING BANK INTEREST INCOME OF RS. 2256/-. SO THE QUESTION OF TDS DOES NOT ARISE. 5. YOUR HONOUR HAS ASKED TO FURNISH DETAILS REGARDING SOURCE OF CASH DEPOSI T, IF ANY, IN SAVING BANK ACCOUNT EXCEEDING RS. 10000/-. IN THIS REGARD, I HAVE INFORM YOUR HONOUR THAT I HAVE CASH DEPOSIT EXCEEDING RS.10000/- ON 24/03/2009 AT THE SAID CASH SHOW N IN MY BOOK OF ACCOUNT. 6. YOUR HONOUR HAS ASKED TO FURNISH DETAILS OF UNSECURED LOANS IN TH IS REGARD, I HAVE INFORM YOUR HONOUR THAT COPY OF LEDGER ACCOUNT IS ENCLOSED HEREWITH AS PER EXHIBIT-ILL. FURTHER, YOUR HONOUR HAS ALSO ASKED THE CONFIRMATION OF LOAN ACCOUNT FROM THE PARTIES. IN THIS REGARD, I HAVE INFORM YOUR HONOUR I HAVE ACCEPTED LOAN FROM ONLY ONE PAR TY DURING THE YEAR UNDER CONSIDERATION. CONFIRMATION FOR THE SAME WILL BE PROVI DED IN NEXT HEARING. REMAINING LOANS ACCOUNTS ARE CARRIED FORWARD FROM A.Y. OS-09. THE CASE F OR A.Y. 08-09 WAS ALSO COVERED UNDER SCRUTINY ASSESSEMENT. COPY OF THE ORDER FOR THE A.Y. 08-09 IS ENCLOSED HEREWITH AS PER EXHIBIT - IV. 7. YOUR HONOUR HAS ASKED TO FURNISH DETAILS OF DIVIDEND INCOME. IN T HIS REGARD, I HAVE INFORM YOUR HONOUR THAT COPY OF LEDGER ACCOUNT FOR THE SAME HAS BEEN ENCLOSED HEREWITH AS PER EXHIBIT - V. 8. YOUR HONOUR HAS ASKED TO FURNISH DETAILS OF MOVABLE AND IMMOVABLE ASSETS . IN THIS REGARD, I HAVE INFORM YOUR HONOUR THAT DETAILS FOR ALL THE ASSETS IS AV AILABLE FROM MY ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 14 PERSONAL BALANCE SHEET. COPY OF BALANCE SHEET IS ALREADY SUBMITTED TO YOUR HONOUR. SO YOUR HONOUR IS REQUESTED TO REFER THE SAME. 9. YOUR HONOUR HAS ASKED TO FURNISH DETAILS OF INVESTMENT IN LAND. IN THIS REGARD, I HAVE INFORM YOUR HONOUR THAT DETAILS FOR ALL THE LAND IS PROVIDED AS PER EXHIBIT -II. I HOPE THE ABOVE DETAILS/EXPLANATIONS WILL SUFFICE YOUR HONOUR'S RE QUIREMENTS. I SHALL BE HAPPY TO FURNISH ANY OTHER DETAILS/EXPLANATIONS THAT MAY BE REQUIRED BY YOUR HONOUR. 18 FROM GOING THROUGH THE ABOVE REPLY OF ASSESSEE D ATED 14.10.2011 WE NOTICE THAT IN PARA THREE ASSESSEE HAS GIVEN THE DE TAIL OF THE TRANSACTION LEADING TO SHORT TERM CAPITAL GAIN ATTACHING THE CO PIES OF LEDGER ACCOUNT OF LAND ALONG WITH ALL THE DEEDS OF AGREEMENT TO SALE. FURTHER AFTER EXAMINING THE RELEVANT DETAILS LEARNED ASSESSING OFFICER ACCE PTED THE DECLARED INCOME OF THE ASSESSEE AS ASSESSED INCOME AND THE RELEVANT EXTRACT FROM THE ASSESSMENT ORDER U/S. 143(3) DATED 28.12.2011 THE M ENTIONED BELOW. RELEVANT PORTION OF THE ORDER U/S. 143(3) DATED 28. 12.2011 2. THE CASE WAS SELECTED FOR SCRUTINY THROUGH MANUAL LY AND NOTICE U/S. 143(2) WAS ISSUED ON 29/09/2011 WHICH WAS DULY SERVED UPON THE ASSESSEE THROUGH R.P.A.D. THEREAFTER DUE TO CHANGE OF INCUMBENT FRESH NOTICES U/S. 143[ 2] AND U/S.!42(1) ALONG WITH DETAILED QUESTIONNAIRE WERE ISSUED ON 05/10/2011 WHICH WERE DULY SER VED UPON THE ASSESSEE. IN RESPONSE TO THE NOTICES ISSUED U/S.143(2)7142(1), SHRI CHANDRAKANT P. RAVAL, I.T.P. & A.R. OF THE ASSESSEE FROM M/S. DHIREN SHAH & CO. C.AS. ATTENDED FROM TIME TO TIME. THE CASE WAS DISCUSSED WITH HIM. DETAI L/SUBMISSION FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ARE VERIFIED AND KEPT ON RECORD. 2.1 THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATION. SHE HAS EARNED ONLY CAPITAL GAIN INCOME, INTEREST INCOME AND SITTING FEES INCOME. 19. FROM PERUSAL THE REPLY SUBMITTED BY THE ASSESSE E BEFORE THE LEARNED ASSESSING OFFICER AND THE FINDING GIVEN BY LEARNED ASSESSING OFFICER IN THE ORDER U/S. 143(3) OF THE ACT, WE OBSERVE THAT THE I MPUGNED TRANSACTION WITH ALL RELEVANT FACTS AND FIGURES WERE FILED BEFORE TH E LEARNED ASSESSING OFFICER IN THE COMPUTATION OF INCOME. NECESSARY DETAILS WER E CALLED FOR U/S. 143(2) AND 142(1) OF THE ACT. SPECIFIC REPLY SUPPORTED WIT H EVIDENCE WERE FILED BY THE ASSESSEE IN THE ASSESSMENT PROCEEDINGS. LEARNED ASSESSING OFFICER HAS EXAMINED ALL THE AVAILABLE RECORDS AND HAS ACCEPTED THE TRANSACTION TO BE ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 15 BONAFIDE AND GENUINE. ASSESSMENT ORDER OF LEARNED A SSESSING OFFICER CANNOT BE TERMED ERRONEOUS BECAUSE IT HAS ADJUDICATED THE CORRECT FACTS WHICH IS NOT DISPUTED AT ANY STAGE BY THE REVENUE. 20. ANOTHER PRINCIPLE LAID DOWN BY THE HONBLE APEX COURT AS REFERRED ABOVE IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. IS TO EXAMINE AS TO WHETHER THE ORDER OF LEARNED ASSESSING OFFICER IS PREJUDICI AL TO THE INTEREST OF REVENUE. IT WAS FURTHER HELD THAT EVERY LOSS OF REVENUE CANN OT BE TREATED AS PREJUDICIAL IF THE ASSESSING OFFICER HAD ADOPTED ONE OF THE COU RSES PERMISSIBLE IN LAW WHICH MAY HAVE RESULTED IN LOSS OF REVENUE. ALSO IT WAS HELD THAT WHERE TWO VIEWS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TA KEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE IT CANNOT BE TREATE D AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTEREST OF REVENUE. NOW IN THE PRESENT CASE IN ORDER TO EXAMINE AS TO WHETHER THE DECISION TAKEN BY THE LEA RNED ASSESSING OFFICER IN THE ASSESSMENT PROCEEDINGS ORDER U/S. 143(3) WAS P ERMISSIBLE IN LAW OR NOT, WE OBSERVE THAT COORDINATE BENCH IN THE CASE OF SAP NA BEN, DEEPAK BHAI PATEL VS. COMMISSIONER OF INCOME TAX VIDE ITA NO. 2 414/A/2013 DATED 13.01.2016 IN WHICH THE AUTHOR OF THIS ORDER WAS ON E OF THE SIGNATORY AND IN THIS ORDER SIMILAR FACTS CAME FOR ADJUDICATION IN W HICH ASSESSEE ENTERED INTO AGREEMENT FOR SALE OF LAND TO A PARTY AND THEREAFTE R ANOTHER AGREEMENT TO SALE WAS ENTERED AT A VERY HIGH AMOUNT WITH THE SECURED PARTY AND IN THIS AGREEMENT THE FIRST PARTY WAS A CONFIRMING PARTY. I N THIS CASE ALSO ASSESSEE OFFERED SHORT TERM CAPITAL GAIN ON THE AGREED SALE CONSIDERATION SHOWN IN THE FIRST AGREEMENT TO SALE WHEREAS ASSESSING OFFICER W AS OF THE VIEW THAT ASSESSEE SHOULD HAVE OFFERED SHORT TERM CAPITAL GAI N BY TAKING THE HIGHER SALE CONSIDERATION SHOWN IN THE SECOND AGREEMENT TO SALE BECAUSE THE POSSESSION WAS HANDED OVER AT THE TIME OF GETTING CONSIDERATIO N AS PER THE SECOND AGREEMENT TO SALE. COORDINATE BENCH ALLOWED THE ASS ESSEES APPEAL AFTER MAKING DETAILED DISCUSSION BY OBSERVING AS FOLLOWS: - 23. THE FIRST REASON ASSIGNED BY THE LD.FIRST APPEL LATE AUTHORITY FOR IGNORING THE AGREEMENT DATED 4.4.2008 AND 2.3.2009 FOR HOLDING T HEM INVALID AND NON- GENUINE IS THAT FOR HARBOURING ANY 'TRANSFER' WITHI N THE MEANING OF CLAUSE (V) OF SECTION 2(47) , THERE MUST BE A TRANSACTION UNDER WHICH THE POSSE SSION OF IMMOVABLE PROPERTY IS ALLOWED TO BE TAKEN OR ALLOWE D TO BE RETAINED. THERE IS NO DISPUTE WITH REGARD TO THE ABOVE FINDING OF THE LD. CIT(A). WE ALSO CONCUR WITH ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 16 REGARD TO THE OBSERVATION OF THE LD.FIRST APPELLATE AUTHORITY THAT SECTION 53A OF THE TRANSFER OF PROPERTY ACT (TPA), 1982 IS NOT SOU RCE BY WHICH THE TITLE TO THE IMMOVABLE PROPERTY CAN BE ACQUIRED, BUT IT ONLY SER VED AS A SHIELD TO DEFEND ONE'S LAWFUL POSSESSION OBTAINED IN PURSUANCE TO A CONTRACT. ACCORDING TO THE LD.FIRST APPELLATE AUTHORITY, SECTIONS 17 AND 49 OF THE INDIAN REGISTRATION ACT HAVE BEEN AMENDED BY ACT NO.2001 WHEREBY IT HAS BEE N LAID DOWN THAT THE REGISTRATION OF SALE AGREEMENT/CONTRACT FOR THE PUR POSE OF SECTION 53A IS MANDATORY. THE LD.DR WHILE PUTTING RELIANCE UPON TH E ORDER OF THE LD.CIT(A) ALSO BROUGHT TO OUR NOTICE COPY OF THE GOVT. OF GUJARAT EXTRAORDINARY GAZETTE NOTIFICATION PUBLISHED ON SATURDAY, FEBRUARY, 2002 WHEREBY AMENDMENT OF THE INDIAN REGISTRATION ACT IN SECTION 17 OF THE REGISTRATION ACT HAS BEEN PUBLISHED. THE LD.CIT(A), WHILE CONSTRUING THE IMPACT OF SECTI ONS 17 AND 49 OF INDIAN REGISTRATION ACT ALONG WITH SECTION 53A OF TPA WITH IN THE MEANING OF SECTION 2(47) OF THE INCOME TAX ACT HAS CONCLUDED THAT THE 'TRAN SFER' WITHIN THE SECTION 2(47) OF THE INCOME TAX ACT CAN ONLY BE COMPLETED, IF IN PART PERFORMANCE OF THE CONTRACT, POSSESSION HAS BEEN HANDED OVER AS PER SE CTION 53A OF THE TPA. ONCE THE AGREEMENT WAS NOT REGISTERED THEN IT WILL LOSE ITS EVIDENTIARY VALUE WITHIN THE MEANING OF SECTION 53A OF THE TPA. IN OTHER WORDS, THE RIGHTS FLOWING FROM AN AGREEMENT CAN ONLY BE RECOGNIZED IF IT WAS DULY REG ISTERED. IF THE AGREEMENT WAS NOT REGISTERED, THEN THE RIGHTS WOULD NOT ACCRUE TO THE PARTIES TO THE AGREEMENT. IF NO RIGHTS WOULD ACCRUE, THEN IT WILL BE CONSTRUE D THAT THE POSSESSION WAS NOT DELIVERED BY THE ASSESSEE VIDE AGREEMENT DATED 4.4. 2008 AND 2.3.2009, MEANING THEREBY, NO TRANSFER HAS TAKEN PLACE. THE LD.FIRST APPELLATE AUTHORITY FURTHER PUT RELIANCE UPON THE JUDGMENT OF THE HON'BLE SUPREME C OURT IN THE CASE OF SURAJ LAMP & INDUSTRIES PVT. LTD. VS. STATE OF HARYANA, 1 4 TAXMANN.COM 103. 24. ON DUE CONSIDERATION OF THE ABOVE REASONING, WE ARE OF THE VIEW THAT AS FAR AS THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF SURAJ LAMP & INDUSTRIES (SUPRA) IS CONCERNED, IT IS ALTOGETHER I N DIFFERENT CONTEXT. THERE IS NO DISPUTE WITH REGARD TO THE PROPOSITION THAT TRANSFE R OF AN IMMOVABLE PROPERTY HAVING VALUE OF MORE THAN RS.100/- CAN ONLY BE COMP LETED BY WAY OF REGISTERED SALE DEED, AS CONTEMPLATED IN SECTION 17 OF THE REGISTRATION ACT. THIS JUDGMENT DEALS WITH THE CONCEPT OF POWER OF ATTORNEY, LEASE, LICENCE ETC. DEFINITION OF EXPRESSION 'TRANSFER' PROVIDED IN SECTION 2(47) IS MORE WIDER THAN IN THE GENERAL LAW. AS OBSERVED EARLIER, WHILE DEALING WITH THE IS SUE NO.(II), THE EXPRESSION 'TRANSFER' EMPLOYED IN SECTION 2(47) INCLUDES (A) ANY TRANSACTION WHICH ALLOWS POSSESSION TO BE TAKEN/RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TPA, AND (B) ANY TRANSACTION ENTERED INTO IN ANY MANNER WHICH HAS THE EFFECT OF TRANSFERRING, OR ENA BLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. IN THESE TWO EVENTUALITIES, PRO FITS ON ACCOUNT OF CAPITAL GAINS WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TR ANSACTIONS ARE ENTERED INTO, EVEN IF A TRANSFER OF IMMOVABLE PROPERTY IS NOT EFF ECTIVE OR COMPLETED UNDER THE GENERAL LAW. IN THE PRESENT CASE, THERE IS A FINE D ISTINCTION WHICH REMAINED UN- NOTICED AT THE END OF THE LD. CIT(A). ACCORDING TO THE ASSESSEE, THE RIGHTS WHICH HAVE BEEN ALIENATED BY HER BY VIRTUE OF AGREEMENT D ATED 4.4.2008 ARE THE RIGHTS OF CAPITAL NATURE. THESE RIGHTS HAVE BEEN ALIENATED IN FAVOUR OF SDS. THE LD.CIT(A) HAS REFERRED TO SECTIONS 17 AND 49 OF THE INDIAN REGISTRATION ACT, BUT, ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 17 FAILED TO NOTICE THE PROVISO APPENDED TO SECTION 49 WHICH HAS BEEN INCORPORATED BY WAY OF AMENDMENT SUBSEQUENTLY. THUS, IT IS PERTI NENT TO TAKE NOTE OF SECTION 49 ALONG WITH PROVISO WHICH READS AS UNDER: '49. EFFECT OF NON-REGISTRATION OF DOCUMENTS REQUIR ED TO BE REGISTERED.--NO DOCUMENT REQUIRED BY SECTION 17 OR BY ANY PROVISION OF THE TRANSFER OF PROPERTY ACT , 1882 (4 OF 1882), TO BE REGISTERED SHALL-- (A) AFFECT ANY IMMOVABLE PROPERTY COMPRISED THEREIN , OR (B) CONFER ANY POWER TO ADOPT, OR (C) BE RECEIVED AS EVIDENCE OF ANY TRANSACTION AFFE CTING SUCH PROPERTY OR CONFERRING SUCH POWER, UNLESS IT HAS BEEN REGISTERE D : PROVIDED THAT AN UNREGISTERED DOCUMENT AFFECTING IM MOVABLE PROPERTY AND REQUIRED BY THIS ACT OR THE TRANSFER OF PROPERTY ACT , 1882 (4 OF 1882), TO BE REGISTERED MAY BE RECEIVED AS EVIDENCE OF A CONTRAC T IN A SUIT FOR SPECIFIC PERFORMANCE UNDER CHAPTER II OF THE SPECIFIC RELIEF ACT, 1877 (1 OF 1877), OR AS EVIDENCE OF PART PERFORMANCE OF A CONTRACT FOR THE PURPOSES OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) OR AS EV IDENCE OF ANY COLLATERAL TRANSACTION NOT REQUIRED TO BE EFFECTED BY REGISTER ED INSTRUMENT.' 25. SECTION 53A OF THE T.P. ACT PROVIDE A SHIELD TO DEFEND THE POS SESSION TAKEN BY VIRTUE OF THE AGREEMENT. THE VENDEE CAN CLAIM PROTE CTION OF THE POSSESSION EVEN AGAINST THE OWNER I.E. VENDOR, DURING THE PERIOD SA LE DEED WAS NOT REGISTERED. THE PERSON WHO HAS ACQUIRED THE POSSESSION ON EXECU TION OF AGREEMENT AS REFERRED TO IN SECTION 53A MAY NOT BE ABLE TO PROTECT HIS POSSESSION ON ACCOU NT OF NON-REGISTRATION OF THE AGREEMENT, BUT FOR ALL OTHE R COLLATERAL PURPOSES, I.E. FOR TENDERING THE AGREEMENT INTO EVIDENCE FOR SUIT FOR SPECIFIC PERFORMANCE, ETC. IT IS TO BE TREATED AS VALID AGREEMENT. A CONTROVERSY IN THIS ASPECT HAD ARISEN WHETHER SUCH NON-REGISTERED AGREEMENT CAN BE ENTERT AINED IN EVIDENCE OR NOT IN A SUIT FOR SPECIFIC PERFORMANCE. A REFERENCE WAS MA DE BEFORE THE DIVISION BENCH OF PUNJAB & HARYANA HIGH COURT IN REGULAR SECOND AP PEAL NO.4946 OF 2011 IN THE CASE OF RAM KISHAN VS. BIJEDER MANN. THE HON'BL E HIGH COURT HAS RESOLVED THE CONTROVERSY AND HELD THAT SUCH UNREGISTERED AGR EEMENT CAN BE PRODUCED AS EVIDENCE IN SUIT FOR SPECIFIC PERFORMANCE. IT CAN B E MADE BASIS OF SUIT FOR SPECIFIC PERFORMANCE. THE FINDING RECORDED BY THE HON'BLE PU NJAB & HARYANA HIGH COURT IN THIS CASE REPORTED IN (2013) 1 PLR 195 AS UNDER: '11. A CONJOINT APPRAISAL OF SECTIONS 53A OF THE TRANSFER OF PROPERTY ACT, 1882, SECTIONS 17(1A) AND 49 OF THE INDIAN REGISTRATION A CT, 1908, PARTICULARLY THE PROVISO TO SECTION 49 OF THE INDIAN REGISTRATION AC T, IN OUR CONSIDERED OPINION, LEAVES NO AMBIGUITY THAT, THOUGH, A CONTRACT ACCOMP ANIED BY DELIVERY OF POSSESSION OR EXECUTED IN FAVOUR OF A PER- SON IN P OSSESSION, IS COMPULSORILY REGISTRABLE UNDER SECTION 17(1A) OF THE REGISTRATION ACT, 1908, BUT THE FAILURE TO REGISTER SUCH A CONTRACT WOULD ONLY DEPRIVE THE PER SON IN POSSESSION OF ANY BENEFIT CONFERRED BY SECTION 53A OF THE 1882 ACT. THE PROVISO TO SECTION 49 OF THE INDIAN REGISTRATION ACT CLEARLY POSTULATES THAT NON -REGISTRATION OF SUCH A ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 18 CONTRACT WOULD NOT PROHIBIT THE FILING OF A SUIT FO R SPECIFIC PERFORMANCE BASED UPON SUCH AN AGREEMENT OR THE LEADING OF SUCH AN UN REGISTERED AGREEMENT INTO EVIDENCE. 12. A SUIT FOR SPECIFIC PERFORMANCE BASED UPON AN U NREGISTERED AGREEMENT TO SELL ACCOMPANIED BY DELIVERY OF POSSESSION OR EXECUTED I N FAVOUR OF A PERSON WHO IS ALREADY IN POSSESSION, CANNOT, THEREFORE, BE SAID T O BE BARRED BY SECTION 17(1A) OF THE REGISTRATION ACT, 1908. 13. SECTION 17(1A) MERELY DECLARES THAT SUCH AN UNREGISTERED CONTRACT SHALL NOT BE PRESSED INTO SERVICE FOR THE PURPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882. SECTION 17(1A) OF THE REGISTRATION ACT, 1908, DOES NOT, WHETHER I N SPECIFIC TERMS OR BY NECESSARY INTENT, PROHIBIT THE FILING OF A SUIT FOR SPECIFIC PERFORMANCE BASED UPON AN UNREGISTERED AGREEMENT TO SELL, THAT RECORDS DELIVERY OF POSSESSION OR IS EXECUTED IN FAVOUR OF A PERSON TO WHOM POSSESSION IS DELIVERED AND THE PROVISO TO SECTION 49 OF THE INDI AN REGISTRATION ACT, 1908, PUT PAID TO ANY ARGUMENT TO THE CONTRARY. 14. WE, THEREFORE, HOLD THAT : (A) A SUIT FOR SPECIFIC PERFORMANCE, BASED UPON AN UNREGISTERED CONTRACT/AGREEMENT TO SELL THAT CONTAINS A CLAUSE R ECORDING PART PER- FORMANCE OF THE CONTRACT BY DELIVERY OF POSSESSION OR HAS BE EN EXECUTED WITH A PERSON, WHO IS ALREADY IN POSSESSION SHALL NOT BE DISMISSED FOR WANT OF REGISTRATION OF THE CONTRACT/AGREEMENT; (B) THE PROVISO TO SECTION 49 OF THE REGISTRATION ACT, LEGITIMISES SUCH A CONTRA CT TO THE EXTENT THAT, EVEN THOUGH UNREGISTERED, IT CAN F ORM THE BASIS OF A SUIT FOR SPECIFIC PERFORMANCE AND BE LED INTO EVIDENCE AS PR OOF OF THE AGREEMENT OR PART PERFORMANCE OF A CONTRACT.' 26. THUS, IF THE ASSESSEE REFUSED TO HONOUR HER AGR EEMENT DATED 4.4.2008, SDS HAS A RIGHT TO GET THIS AGREEMENT ENFORCED BY WAY O F SUIT FOR SPECIFIC PERFORMANCE AND THE ASSESSEE COULD BE PERSUADED TO EXECUTE THE SALE DEED IN FAVOUR OF SDS BY VIRTUE OF THIS AGREEMENT. THE VALI DITY OF THIS AGREEMENT UNDER GENERAL LAW VIZ. SPECIFIC RELIEF ACT AS WELL AS INDIAN REGISTRATION ACT HAS NOT BEEN EFFECTED. THIS ASPECT HAS NOT BEEN APPRECIATED BY THE LD.CIT(A) WHILE HOLDING THAT SINCE THE AGREEMENTS ARE UNREGISTERED, THEREFORE, THEY ARE NON- GENUINE. 27. LET US EXAMINE THE ISSUE WITH DIFFERENT ANGLES. FOR EXAMPLE, THE ASSESSEE REFUSES TO HONOUR HER AGREEMENT DATED 4.4.2008 AND SDS/CAPITAL CONSULTANCY FILES A SUIT FOR SPECIFIC PERFORMANCE. A DECREE FOR PERFORMANCE OF THE CONTRACT IS BEING GRANTED IN FAVOUR OF THE SDS. IN THAT SITUATI ON, THE ASSESSEE HAS TO REGISTER SALE DEED IN FAVOUR OF SDS. ON SUCH REGISTRATION SH E WOULD GET THE AMOUNTS ONLY AGREED UPON BY WAY OF AGREEMENT DATED 4.4.2008. SHE COULD BE CHARGED FOR CAPITAL GAIN ON THIS AMOUNT ONLY. EVEN FOR ARGUMENT 'S SAKE, THE REASONS OF THE REVENUE AUTHORITIES ARE BEING ACCEPTED THAT THE AGR EEMENTS DATED 4.4.2008 AND 2.3.2009 ARE UNREGISTERED, THEREFORE THEY SHALL NOT GOAD THE ADJUDICATOR TO CONSTRUE PART PERFORMANCE OF THE CONTRACT U/S.53 A OF T.P. ACT AND NO TRANSFER OF ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 19 THE LAND COULD BE CONSTRUED WITHIN THE MEANING OF S ECTION2(47)(V) OF THE ACT. IN THAT SITUATION, ONLY THE YEAR OF TAXABILITY COULD B E SHIFTED I.E. EFFECTIVE DATE FOR TRANSFER OF CAPITAL ASSET COULD BE TAKEN TO 27.1.20 10. HOW THE AO CAN BRING THE AMOUNT FOR TAXATION IN THE HANDS OF THE ASSESSEE ? UNDER ISSUE NO.(I), WE HAVE DISCUSSED THE NATURE OF RIGHT ACQUIRED BY SDS BY VI RTUE OF AGREEMENT DATED 4.4.2008. SUPPOSE THE AGREEMENT WAS NOT HONORED AND SUIT FOR SPECIFIC PERFORMANCE WAS FILED BY THE ASSESSEE FOR PERSUADIN G THE SDS TO PURCHASE THE LAND IN DISPUTE. DURING THE PENDENCY OF THE CIVIL S UIT SDS ASSIGNED HIS RIGHT TO A THIRD PARTY AND ULTIMATELY THAT THIRD PARTY AGREED FOR PURCHASE OF SUIT LAND. A SETTLEMENT IS ARRIVED. THE ASSESSEE WOULD GET ONLY A CONSIDERATION AGREED UPON BY VIRTUE OF AGREEMENT DATED 4.4.2008, AND OTHER CO NSIDERATION WILL GO TO SDS FOR ASSIGNING HIS RIGHT ACCRUED UNDER THIS AGREEMEN T. THE RIGHT TO OBTAIN REGISTRATION OF SALE DEED ACQUIRED BY HIM BY VIRTUE OF AGREEMENT DATED 4.4.2008, IS A CAPITAL RIGHT, THEREFORE, THE TRANSFER WOULD R ESULT CAPITAL GAIN. IT WILL BE TAXED IN THE HANDS OF SDS. THIS ASPECT HAS BEEN DEA LT WITH IN A LARGE NUMBER JUDGMENT DISCUSSED BY US IN ISSUE NO.(I). THUS, THE LD. REVENUE AUTHORITIES HAVE FAILED TO NOTICE DISTINCTION BETWEEN A VALID AND GE NUINE CONTRACT UNDER THE GENERAL LAW VIS--VIS A CONTRACT HAVING EFFECTED FO R THE PURPOSE OF SECTION 53A OF TP ACT. 28. NEXT REASON ASSIGNED BY THE LD.FIRST APPELLATE AUTHORITY IN THE IMPUGNED ORDER IS SECTION 63 OF GUJARAT/BOMBAY TENANCY AND A GRICULTURE LAND ACT, 1948 WHICH PROHIBITS NON-AGRICULTURISTS TO PURCHASE THE AGRICULTURE LAND. AS PER LD. CIT(A), SINCE SDS WAS NOT PROVED TO BE AN AGRICULTU RIST, THEREFORE, HE WAS NOT COMPETENT TO PURCHASE THE AGRICULTURE LAND. ONCE HE WAS PROHIBITED BY THE PROVISIONS OF TENANCY ACT, THEN HE CANNOT PURCHASE AGRICULTURE LAND, MEANING THEREBY, HE WILL BE DISQUALIFIED EVEN TO ENTER INTO AN AGREEMENT FOR PURCHASE OF THE LAND. ON CONSIDERATION OF ALL THESE REASONS, WE ARE OF THE VIEW THAT THE ASSESSEE AND THE SDS ARE DULY ELIGIBLE TO ENTER INT O ANY CONTRACT AS PER THE INDIAN CONTRACT ACT . THE EFFECT OF THE CONTRACT MAY NOT BE GIVEN BY VI RTUE OF GUJARAT/BOMBAY TENANCY AND AGRICULTURE LAND ACT, AS PER CLAUSE (C) OF SECTION 63 REFERRED BY THE LD.CIT(A). BUT THE LD.CIT(A) FAILE D TO NOTE PROVISO APPENDED TO HIS SECTION. THE PROVISO AUTHORIZES THE CONTROLING OFFICER TO GRANT PERMISSION FOR SUCH SALES. THE SALE COULD BE EXECUTED AFTER THE AG REEMENT AND AFTER GETTING APPROVAL. AS FAR AS THIS SECTION IS CONCERNED, IT D OES NOT CREATE ANY DISQUALIFICATION FOR ENTERING INTO CONTRACT, IT CRE ATES DISQUALIFICATION FOR ENFORCING THAT CONTRACT. THE CONTRACTEE CAN ENFORCE CONTRACT IN FAVOUR OF A PERSON WHO IS AN AGRICULTURIST. IT IS IMPORTANT TO NOTE THAT THE LAND TRANSACTED BY THE PARTIES WAS WITHIN THE VICINITY OF AHMEDABAD CI TY. IT WAS GOING TO BE CONVERTED INTO URBAN LAND UNDER THE TOWN PLANNING S CHEME AND ULTIMATELY BEFORE THE AGREEMENT DATED 2.3.2009, THE STATUS OF THE LAND WAS CHANGED FROM AGRICULTURE LAND. WHEN SDS HAS ASSIGNED HIS RIGHT U NDER THE AGREEMENT DATED 2.3.2009, THE LAND WAS ALREADY CONVERTED INTO A NON -AGRICULTURE LAND. THUS, THIS SECTION HAS NO BEARING AS A CORROBORATIVE PIECE OF EVIDENCE TO GOAD ANY AUTHORITY TO CONCLUDE THAT AGREEMENTS WERE NOT GENU INE. ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 20 29. NEXT REASONING GIVEN BY THE LD.FIRST APPELLATE AUTHORITY IS THAT THERE IS A HUGE CHANGE IN THE PRICE OF LAND BETWEEN A SHORT SP AN OF TIME. WHEN THE ASSESSEE ACQUIRED THE LAND, SHE INCURRED A COST OF RS.67,96, 432/-. SHE HAD ACQUIRED THE LAND IN BETWEEN 18.12.2007 UTPO 4.3.2008. SHE HAD A GREED TO SELL THIS LAND ON 4.4.2008 TO SDS FOR CONSIDERATION OF RS.76,75,413/- . THE RATE OF LAND UPTO THIS STAGE WAS RS.62.03 PER SQ.METERS, WHEREAS, WHEN THE AGREEMENT DATED 2.9.2009 WAS EXECUTED, IT WAS AT THE RATE OF RS.860/- PER SQ .METER. ACCORDING TO THE LD.CIT(A) APPRECIATION IN THE PRICE OF REAL ESTATE DOES TAKE PLACE OVER A PERIOD OF TIME. HOWEVER, IT IS ALSO A FACT THAT SUCH APPRECIA TION ALSO HAPPENS IN SLOW PROCESS, AND IN ANY CASE, IT DOES NOT HAPPEN IN SUC H A MANNER. THE LD.CIT(A) FURTHER OBSERVED THAT NOTHING HAS PREVENTED THE ASS ESSEE FROM RETRACTING THE CONTRACT ENTERED INTO WITH SDS SO AS TO EARN THIS G AIN BY HERSELF. 30. WE HAVE DULY CONSIDERED THIS REASONING OF THE L D.FIRST APPELLATE AUTHORITY, BUT, WE FIND THAT AS PER THE AGREEMENT DATED 2.3.20 09, THE VENDOR, I.E. SDS HAS TO OBTAIN PERMISSION WHICH ARE NECESSARY UNDER THE EXI STING LAW AT HIS COST FOR CONVERTING THE LAND INTO NON-AGRICULTURE LAND. THE LAND WAS CONVERTED INTO NON- AGRICULTURE LAND AUTHORIZING THE OWNERS TO CONSTRUC T DWELLING UNITS ON THE LAND. THIS PERMISSION WAS GRANTED BY THE DISTRICT PANCHYA T AND DISTRICT DEVELOPMENT OFFICER, AHMEDABAD BY ITS ORDER NO.MASAL/BAKHAP/SR- 131/VASHI-1526 TO 1552 DATED 12.9.2008. THIS WAS A SIGNIFICANT CHANGE IN T HE CHARACTER OF THE LAND. THE MOMENT, IT WAS CONVERTED INTO NON-AGRICULTURE LAND, ITS VALUE INCREASE MANY FOLDS. IT IS ALSO PERTINENT TO NOTE THAT AS PER SEC TION 40JJ(I) OF THE GUJARAT TOWN AND COUNTRY PLANNING ACT, 1976, THE LAND FALLING WI THIN THE SCHEME OF DEVELOPMENT, WOULD VESTS UPTO 40% IN THE DEVELOPMEN T AUTHORITIES FOR UTILISATION OF ROADS, PARK, SCHOOLS, DRAINAGE ETC. THUS, ONCE T HE LAND IS BEING CONVERTED INTO NON-AGRICULTURE LAND, THE WHOLE NATURE OF THE LAND WOULD CHANGE. AS FAR AS OBSERVATION OF THE LD.CIT(A) IS CONCERNED, THAT NOT HING PREVENTED THE ASSESSEE TO RETRACT FROM THE AGREEMENT IS CONCERNED, WE FAIL TO UNDERSTAND THE BASIS OF MAKING SUCH OBSERVATION. SHE ENTERED INTO A LAWFUL CONTRACT, WHICH IS OF BINDING NATURE, AND HOW CAN SHE RETRACT ? THE MOMENT SHE RE TRACTS, THEN OTHER PARTY CAN FILE SUIT FOR SPECIFIC PERFORMANCE. EVEN IF THE COU RT DOES NOT GRANT SPECIFIC PERFORMANCE OF THE CONTRACT, THEN, WOULD COMPENSATE THE CONTRACTEE FOR DAMAGE ? THE DAMAGES AGAIN WOULD BE QUANTIFIED CONSIDERING THE MARKET VALUE OF THE LAND. IT IS ALSO PERTINENT TO NOTE THAT THE ASSESSE E HAS PURCHASED THE LAND FROM 18.12.2007 TO 4.3.2008. SHE HAD PURCHASED THE AGRIC ULTURE LAND FROM NON- ASSOCIATE VENDORS. THE PURCHASE COST SHOWN BY THE A SSESSEE WAS AT RS.67,96,432/-. NO CIRCUMSTANCES HAVE CHANGED, AND THEREFORE, SHE HAS SOLD THE LAND ON 4.4.2008 AT A PRICE OF RS.76,75,413/-. THER E IS NO SUBSTANTIAL CHANGE OR APPRECIATION OF THE VALUE OF THE LAND IN JUST SHORT SPAN. THE LD.REVENUE AUTHORITIES HAVE FAILED TO COMPARE THIS FIGURE WHIL E EVALUATING THE EVIDENCE. THE CHANGE IN THE VALUE TAKEN PLACE ONLY AT THE MOMENT, WHEN, THE LAND WAS CONVERTED INTO A NON-AGRICULTURE LAND. FROM ANALYSI S OF THE ORDERS, IT REVEALED THAT APPROACH OF THE REVENUE AUTHORITIES FOR APPREC IATING THE GENUINENESS AND VERACITY OF THE AGREEMENT IS GUIDED BY THE TAX LIAB ILITY. ACCORDING TO THE REVENUE AUTHORITIES, SINCE TAX LIABILITY HAS BEEN AVOIDED B Y THE PARTIES, THEREFORE, THEIR AGREEMENTS ARE NOT GENUINE. IN OUR OPINION, GENUINE NESS OF ANY AGREEMENT IS ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 21 NOT DEPENDED UPON THE ACTUAL PAYMENT OF TAX RESULTE D ON ACCOUNT OF EXECUTION OF THESE AGREEMENTS. IT IS OTHER WAY ROUND. FIRST GENU INENESS OF THE AGREEMENTS HAS TO BE ASCERTAINED, AND THEN, IN CONSEQUENCE OF THES E AGREEMENTS, IF ANY TAX LIABILITY HAS ARISEN, IT IS TO BE FASTENED UPON THE RIGHT PERSONS. ACCORDING TO THE AO, SDS HAS SHOWN RS.9,87,33,247/- ON ACCOUNT OF PR OFIT ON SALE OF LAND, AND AGAINST THIS, HE CLAIMED LOSS OF RS.9,17,78,957/- F ROM HIS BUSINESS OF TRADING OF SHARES AND SECURITIES. THESE LOSSES HAVE BEEN ALLOW ED TO SDS IN A SCRUTINY ASSESSMENT ORDER PASSED IN HIS CASE U/S.143(3) OF T HE I.T.ACT. THE DEPARTMENT DID NOT RAISE ANY OBJECTION IN HIS ASSESSMENT PROCEEDIN GS AND DID NOT DOUBT THE TRANSACTIONS. NOW, THE STAND OF THE REVENUE IS, SIN CE IF IT IS TAXABLE IN THE HANDS OF THE SDS, THEN NO TAXES WOULD BE COLLECTED ON THE SE TRANSACTIONS, BECAUSE GAIN WOULD BE SET OFF AGAINST BROUGHT FORWARD LOSS. EVEN IF TRANSACTION IS SHIFTED TO THE ASSESSMENT YEAR, IN WHICH SALE DEED REGISTERED, IN THAT CASE, SDS WILL BRING HIS LOSSES OF EARLIER YEAR TO A.Y.2010-11. THEREFOR E, THE AGREEMENT OUGHT TO BE SUSPECTED AND OUGHT TO BE IGNORED, ONLY THEN TAXES COULD BE FASTED UPON THE ASSESSEE. WITH THIS ANGLE, WHEN THE AO HAS STARTED INQUIRY, OBVIOUSLY HE WOULD REACH ON THE CONCLUSION THAT THE AGREEMENT ARE NON- GENUINE. 31. AT THIS STAGE, FOR FORTIFYING OURSELF ON OUR FI NDING, WE WOULD LIKE TO NOTE THE OBSERVATIONS OF THE HON'BLE SUPREME COURT JUDGMENT IN THE CASE OF UNION OF INDIA VS. AZADI BACHAO ANDOLA, (2003) 132 TAXMANN 3 73 (SC). THE HON'BLE SUPREME COURT WHILE REFERRING TO THE DECISION OF TH E HON'BLE GUJARAT HIGH COURT IN THE CASE OF BANYAN & BERRY VS. CIT, 222 ITR 831 MADE THE FOLLOWING OBSERVATIONS. '134. WE MAY ALSO REFER TO THE JUDGMENT OF GUJARAT HIGH COURT IN BANYAN AND BERRY V. COMMISSIONER OF INCOME-TAX WHERE REFERRING TO MCDOWELL , THE COURT OBSERVED: '.....THE COURT NOWHERE SAID THAT EVERY ACTION OR I NACTION ON THE PART OF THE TAXPAYER WHICH RESULTS IN REDUCTION OF TAX LIABILIT Y TO WHICH HE MAY BE SUBJECTED IN FUTURE, IS TO BE VIEWED WITH SUSPICION AND BE TR EATED AS A DEVICE FOR AVOIDANCE OF TAX IRRESPECTIVE OF LEGITIMACY OR GENUINENESS OF THE ACT; AN INFERENCE WHICH UNFORTUNATELY, IN OUR OPINION, THE TRIBUNAL APPAREN TLY APPEARS TO HAVE DRAWN FROM THE ENUNCIATION MADE IN MCDOWELL CASE (1985) 1 54 ITR 148 (SC). THE RATIO OF ANY DECISION HAS TO BE UNDERSTOOD IN THE CONTEXT IT HAS BEEN MADE. THE FACTS AND CIRCUMSTANCES WHICH LEAD TO MCDOWELL'S DECISION LEAVE US IN NO DOUBT THAT THE PRINCIPLE ENUNCIATED IN THE ABOVE CASE HAS NOT AFFECTED THE FREEDOM OF THE CITIZEN TO ACT IN A MANNER ACCORDING TO HIS REQUIRE MENTS, HIS WISHES IN THE MANNER OF DOING ANY TRADE, ACTIVITY OR PLANNING HIS AFFAIRS WITH CIRCUMSPECTION, WITHIN THE FRAMEWORK OF LAW, UNLESS THE SAME FALL I N THE CATEGORY OF COLOURABLE DEVICE WHICH MAY PROPERLY BE CALLED A DEVICE OR A D UBIOUS METHOD OR A SUBTERFUGE CLOTHED WITH APPARENT DIGNITY.' THIS ACCORDS WITH OUR OWN VIEW OF THE MATTER. IN CWT V. ARVIND NAROTTAM , A CASE UNDER THE WEALTH TAX ACT , THREE TRUST DEEDS FOR THE BENEFIT OF THE ASSESSEE, HIS WIFE AND CHILD REN IN IDENTICAL TERMS WERE ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 22 PREPARED UNDER SECTION 21(2) OF THE WEALTH TAX ACT . REVENUE PLACED RELIANCE ON MCDOWELL . BOTH THE LEARNED JUDGES OF THE BENCH OF THIS COURT GAVE SEPARATE OPINIONS. CHIEF JUSTICE PATHAK, IN HIS OPINION SAID (AT P.486 ): 'RELIANCE WAS ALSO PLACED BY LEARNED COUNSEL FOR TH E REVENUE ON MCDOWELL AND COMPANY LTD. V. CTO (1985) 154 ITR 148(SC). THAT DE CISION CANNOT ADVANCE THE CASE OF THE REVENUE BECAUSE THE LANGUAGE OF THE DEE DS OF SETTLEMENT IS PLAIN AND ADMITS OF NO AMBIGUITY.' JUSTICE S. MUKHERJEE SAID, AFTER NOTICING MCDOWELL' S CASE, (AT PAGE 487): 'WHERE THE TRUE EFFECT ON THE CONSTRUCTION OF THE D EEDS IS CLEAR, AS IN THIS CASE, THE APPEAL TO DISCOURAGE TAX AVOIDANCE IS NOT A RELEVAN T CONSIDERATION. BUT SINCE IT WAS MADE, IT HAS TO BE NOTED AND REJECTED.' IN MATHURAM AGRAWAL V. STATE OF MADHYA PRADESH ANOT HER CONSTITUTION BENCH HAD OCCASION TO CONSIDER THE ISSUE. THE BENCH OBSER VED: 'THE INTENTION OF THE LEGISLATURE IN A TAXATION STA TUTE IS TO BE GATHERED FROM THE LANGUAGE OF THE PROVISIONS PARTICULARLY WHERE THE L ANGUAGE IS PLAIN AND UNAMBIGUOUS. IN A TAXING ACT IT IS NOT POSSIBLE TO ASSUME ANY INTENTION OR GOVERNING PURPOSE OF THE STATUTE MORE THAN WHAT IS STATED IN THE PLAIN LANGUAGE. IT IS NOT THE ECONOMIC RESULTS SOUGHT TO BE OBTAINE D BY MAKING THE PROVISION WHICH IS RELEVANT IN INTERPRETING A FISCAL STATUTE. EQUALLY IMPERMISSIBLE IS AN INTERPRETATION WHICH DOES NOT FOLLOW FROM THE PLAIN , UNAMBIGUOUS LANGUAGE OF THE STATUTE. WORDS CANNOT BE ADDED TO OR SUBSTITUTE D SO AS TO GIVE A MEANING TO THE STATUTE WHICH WILL SERVE THE SPIRIT AND INTENTI ON OF THE LEGISLATURE.' THE CONSTITUTION BENCH REITERATED THE OBSERVATIONS IN BANK OF CHETTINAD LTD. V. CIT , QUOTING WITH APPROVAL THE OBSERVATIONS OF LORD R USSELL OF KILLOWEN IN IRC V. DUKE OF WESTMINSTER AND THE OBSERVATIONS OF LORD SIMONDS IN RUSSELL V. SCOTT IT THUS APPEARS TO US THAT NOT ONLY IS THE PRINCIPL E IN DUKE OF WESTMINSTER ALIVE AND KICKING IN ENGLAND, BUT IT ALSO SEEMS TO HAVE A CQUIRED JUDICIAL BENEDICTION OF THE CONSTITUTIONAL BENCH IN INDIA, NOTWITHSTANDING THE TEMPORARY TURBULENCE CREATED IN THE WAKE OF MCDOWELL . ..... 144. IF THE COURT FINDS THAT NOTWITHSTANDING A SERI ES OF LEGAL STEPS TAKEN BY AN ASSESSEE, THE INTENDED LEGAL RESULT HAS NOT BEEN AC HIEVED, THE COURT MIGHT BE JUSTIFIED IN OVERLOOKING THE INTERMEDIATE STEPS, BU T IT WOULD NOT BE PERMISSIBLE FOR THE COURT TO TREAT THE INTERVENING LEGAL STEPS AS NON-EST BASED UPON SOME HYPOTHETICAL ASSESSMENT OF THE 'REAL MOTIVE' OF THE ASSESSEE. IN OUR VIEW, THE COURT ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 23 MUST DEAL WITH WHAT IS TANGIBLE IN AN OBJECTIVE MAN NER AND CANNOT AFFORD TO CHASE A WILL-O'- THE-WISP.' 32. NEXT REASONING ASSIGNED BY THE AO IS THAT FUNDS HAVE BEEN PROVIDED BY GANESH PLANTATION TO SDS. HUSBAND AND FATHER-IN-LAW OF THE ASSESSEE WERE HOLDING VOTING POWER OF MORE THAN 20% IN THE GANESH PLANTATION LTD. THEREFORE, THE TRANSACTIONS ARE ARRANGED IN THE FAMILY ITSELF. THE ASSESSEE HAS POINTED OUT THAT CAPITAL CONSULTANCY IS A PROPRIETARY CONCERN O F SDS. THIS CONCERN HAS TAKEN UNSECURED LOAN FROM THE COMPANY IN F.Y.2006-0 7 RELEVANT TO THE ASSTT.YEAR 2007-08. IN F.Y.2006-07, THE INTEREST OF RS.1,77,534/- WAS CHARGED FROM SDS BY GANESH PLANTATION. IN F.Y.2007-08 AN IN TEREST OF RS.61,74,961/- WAS CHARGED. THUS, ACCORDING TO THE ASSESSEE, THE F UNDS WERE PROVIDED ON INTEREST IN THE ORDINARY COURSE OF BUSINESS. SIMILA RLY, THE AO HAS RAISED A POINT THAT THE FUNDS TO THE ASSESSEE WERE PROVIDED BY TAR ANG REALITY PVT. LTD. WHICH IS ALSO FAMILY CONCERN. THE ASSESSEE HAS CONTENDED THA T SHE HAS TAKEN LOAN FROM TARANG REALITY PVT. LTD. OF RS.66,55,000/- AND ON R ECEIPT OF SALE CONSIDERATION OF RS.73,75,413/-, SHE HAD REPAID THE LOAN TO TARAN G REALITY PVT. LTD. IN THE CASE OF THE ASSESSEE, NO PHENOMENAL RISE IN THE VALUE OF THE LAND HAS ARISEN. SHE HAS PURCHASED AT RS.67,96,342/- FOR THE PERIOD STARTING FROM 18.12.2007 UPTO 4.3.2008. SHE HAD AGREED TO SELL THIS PROPERTY ON 4 .4.2008, JUST IN A SPAN OF 3-4 MONTHS. SHE HAS EARNED SMALL AMOUNT OF CAPITAL GAIN WHICH HAS BEEN OFFERED FOR TAXATION. AN ANALYSIS OF ALL THE FACTS AND CIRCUMST ANCES, DISCUSSED BY THE LD.REVENUE AUTHORITIES, WE ARE OF THE VIEW THAT SET TING OF SURROUNDING FACTS AND CIRCUMSTANCES, EVEN AS A WHOLE, DOES NOT SUGGEST TH AT AGREEMENT DATED 4.4.2008 OR 2.3.2009 ARE SHAM OR BOGUS. THEIR ENFORCEABILITY IN THE LAW CANNOT BE IGNORED. THE ALLEGED GAINS ON SALE OF PROPERTY CALC ULATED IN THE HANDS OF THE ASSESSEE ARE NOT SUSTAINABLE. WE ALLOW THE APPEAL O F THE ASSESSEE AND DELETE THE ADDITION OF RS.6,83,09,792/- FROM THE HANDS OF THE ASSESSEE. 33. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. 21. FROM GOING THROUGH THE ABOVE DISCUSSION OF THE COORDINATE BENCH IN ITA NO. 2414/A/2013, WE FIND THAT THE TRIBUNAL HAS ALLOWED THE ASSESSEES APPEAL BY ACCEPTING THAT THE ASSESSEE WAS LIABLE TO PAY TAX ON SHORT TERM CAPITAL GAIN CALCULATED BY TAKING THE SALE CONSIDER ATION AS MENTIONED IN THE FIRST AGREEMENT TO SALE IN THE APPEAL. BEFORE US AL SO THE FACTS ARE VERBATIM SIMILAR TO THOSE DISCUSSED IN THE DECISION OF TRIBU NAL IS REFERRED ABOVE AND LEARNED ASSESSING OFFICER HAS TAKEN THE SIMILAR VIE W AS HAS BEEN TAKEN BY THE COORDINATE BENCH ADJUDICATING SIMILAR FACTS. THIS G IVES FORCE TO THE CONTENTION OF LEARNED COUNSEL THAT LEARNED ASSESSING OFFICER H AS TAKEN ONE OF THE LEGALLY PERMISSIBLE VIEW WHILE FRAMING THE ASSESSMENT U/S. 143(3) OF THE ACT. ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 24 22. AS REGARDS THE ISSUE THAT THE LEARNED ASSESSIN G OFFICER HAS NOT MADE PROPER DISCUSSION IN THE BODY OF ASSESSMENT ORDER A BOUT IMPUGNED TRANSACTION AND DETAILS RECEIVED AND THE BASIS FOR TAKING THE DECISION, WE OBSERVE THAT IN THE JUDGMENT OF HONBLE HIGH COURT MUMBAI IN THE CASE COMMISSIONER OF INCOME TAX VS. GABRIEL INDIA LTD. 203 ITR 108 (HC BOMBAY) IT WAS HELD THAT THE DECISION OF THE INCOME TAX OFFICER CANNOT BE HELD TO BE ERRONEOUS SIMPLY BECAUSE IN HIS ORDER, H E HAD NOT MADE ANY ELABORATE DISCUSSION IN THAT RECORD. RELEVANT FINDI NG OF THE HONBLE COURT IS AS UNDER :- (II) COMMISSIONER OF INCOME-TAX V. GABRIEL INDIA LT D. 203 ITR 108 (HC BOMBAY). IN THIS CASE, IT HAS BEEN HELD AS UNDER : THE POWER OF SUO MOTU REVISION UNDER SUB-S. (1) OF S. 263 OF THE INCOME-TAX ACT, 1961, IS IN THE NATURE OF SUPERVISORY JURI SDICTION AND CAN BE EXERCISED ONLY IF THE CIRCUMSTANCES SPECIFIED THEREIN EXIST. T WO CIRCUMSTANCES MUST EXIST TO ENABLE THE COMMISSIONER TO EXERCISE POWER OF REVISION UNDER THIS SUB-SECTION, VIZ., (I) THE ORDER IS ERRONEOUS; (II) B Y VIRTUE OF THE ORDER BEING ERRONEOUS PREJUDICE MUST HAS BEEN CAUSED TO THE INTERESTS OF THE REVENUE. AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT I N ACCORDANCE WITH LAW. IF AN ITO ACTING IN ACCORDANCE WITH LAW MAKES CERTAI N ASSESSMENT, THE SAME CANNOT BE BRANDED AS ERRONEOUS BY THE COMMISSIONER SI MPLY BECAUSE, ACCORDING TO HIM, THE ORDER SHOULD HAVE BEEN WRITTEN MO RE ELABORATELY. THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUTION OF THE JUDG MENT OF THE COMMISSIONER FOR THAT OF THE ITO, WHO PASSED THE ORDER , UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE ITO WHILE MAKING AN ASSESSMENT EXAMINES THE ACCOUNTS, MAKES ENQUIRIES, APPLIES HIS MI ND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATES HIMSELF. THE COMMISSIONER, ON PERUSAL OF THE RECORDS, MAY BE OF THE O PINION THAT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SI DE AND LEFT TO THE COMMISSIONER, HE WOULD HAVE ESTIMATED THE INCOME AT A H IGHER FIGURE THAN THE ONE DETERMINED BY THE ITO. THAT WOULD NOT VEST TH E COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOM E HIMSELF AT A HIGHER FIGURE. THIS IS BECAUSE THE ITO HAS EXERCISED THE QU ASI-JUDICIAL POWER VESTED IN HIM IN ACCORDANCE WITH LAW AND ARRIVED AT A CO NCLUSION AND SUCH A CONCLUSION CANNOT BE TERMED TO BE ERRONEOUS SIMPLY BECAUSE T HE COMMISSIONER DOES NOT FEEL SATISFIED WITH THE CONCLUSION. IT MAY BE SAID IN ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 25 SUCH A CASE THAT IN THE OPINION OF THE COMMISSIONER THE ORDER IN QUESTION IS PREJUDICIAL TO THE INTEREST OF THE REVENUE. BUT THAT B Y ITSELF WILL NOT BE ENOUGH TO VEST THE COMMISSIONER WITH THE POWER OF SUO MOTU REVIS ION BECAUSE THE FIRST REQUIREMENT, NAMELY, THE ORDER IS ERRONEOUS, IS A BSENT. SIMILARLY IF AN ORDER IS ERRONEOUS BUT NOT PREJUDICIAL TO THE INTER EST OF THE REVENUE, THEN ALSO THE POWER OF SUO MOTU REVISION CANNOT BE EXERCISED. ANY AN D EVERY ERRONEOUS ORDER CANNOT BE SUBJECT-MATTER OF REVISION BECAUSE THE SECOND REQUIREMENT ALSO MUST BE FULFILLED. THERE MUST BE SOME PRIMA FACIE M ATERIAL ON RECORD TO SHOW THAT TAX WHICH WAS LAWFULLY EXIGIBLE HAS NOT BEEN IM POSED OR THAT BY THE APPLICATION OF THE RELEVANT STATUTE ON AN INCORRECT OR I NCOMPLETE INTERPRETATION A LESSER TAX THAN WHAT WAS JUST HAS BEEN IMPOSED. WHEN EXERCISE OF STATUTORY POWER IS DEPENDENT UPON THE EXISTENCE OF CERTAIN OBJECTIVE FACTS, THE AUTHORITY BEFORE EXERCISING SUCH POWER MUST HAVE MATERIALS ON RECORDS T O SATISFY IT IN THAT REGARD. IF THE ACTION OF THE AUTHORITY IS CHALLENGED BE FORE THE COURT, IT WOULD BE OPEN TO THE COURTS TO EXAMINE WHETHER THE RELEVANT OBJ ECTIVE FACTORS WERE AVAILABLE FROM THE RECORDS CALLED FOR AND EXAMINED BY SUCH AUTHORITY. HELD, THE ITO IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NA TURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN DETAILED EXPLA NATION IN THAT REGARD BY A LETTER IN WRITING. ALL THESE ARE PART OF THE RECORD OF THE CASE. EVIDENTLY, THE CLAIM WAS ALLOWED BY THE ITO ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. THIS DECISION OF THE ITO CANNOT BE HELD TO BE 'ER RONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSIO N IN THAT REGARD. MOREOVER, IN THE INSTANT CASE, THE COMMISSIONER- HIMSELF, EVEN AFTER INITIATING PROCEEDINGS FOR REVISION AND HEARING THE ASSESSEE, COULD NO T 'SAY THAI THE ALLOWANCE OF THE CLAIM OF THE ASSESSEE WAS ERRONEOUS AN D THAT THE A EXPENDITURE WAS NOT REVENUE EXPENDITURE BUT AN EXPENDIT URE OF CAPITAL NATURE. HE SIMPLY ASKED THE ITO TO RE-EXAMINE THE MATTER. THAT WAS N OT PERMISSIBLE. THE TRIBUNAL WAS JUSTIFIED IN SETTING ASIDE THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX UNDER SECTION 263. 23. IN LIGHT OF RATIOS LAID DOWN BY HONBLE APEX CO URT, JURISDICTIONAL HIGH COURT, OTHER HIGH COURTS, COORDINATE BENCH DECISION AND DETAILED DISCUSSIONS AND THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED OPINION THAT THE IMPUGNED TRANSACTION OF SALE OF AG RICULTURAL LAND FORMING THE BASIS OF THE ORDER OF LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) U/S. 263 OF THE ACT HAS BEEN PROPERLY ADJUDICATED BY LEARNED ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S. 143(3) OF THE ACT BY WAY OF CALLING SPECIFIC INFORMATION AND THE ASSESSEE HAS DULY SUPP LIED ALL THE INFORMATION AND LEARNED ASSESSING OFFICER AFTER TAKING ONE OF T HE LEGALLY PERMISSIBLE VIEW HAS ACCEPTED THE BONAFIDENESS, GENUINENESS AND CORR ECTNESS OF THE TRANSACTION ITA.NO.1175/AHD/2014 ASSESSMENT YEAR 2009-10 - 26 SHOWN BY THE ASSESSEE. WE ARE THEREFORE OF THE VIEW THAT THE ORDER U/S. 143(3) OF THE ACT DATED 28.12.2011 IS NEITHER ERRONEOUS NO R PREJUDICIAL TO THE INTEREST OF REVENUE AND NEEDS TO BE RESTORED BACK. 24. WE ACCORDINGLY HOLD THAT THE ORDER OF LEARNED C OMMISSIONER OF INCOME TAX (APPEALS) U/S. 263 OF THE ACT DESERVES T O BE QUASHED. 25. ACCORDINGLY IN THE RESULT THE APPEAL FILED BY T HE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 17TH MAY, 2017 AT AHMEDABAD. SD/- SD/- (S.S. GODARA) JUDICIAL MEMBER (MANISH BOARD) ACCOUNTANT MEMBER MUKUL KUMAR DATED, 17 /05/2017 ! '!/ COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &$% / THE RESPONDENT. 3. '(( ) * / CONCERNED CIT 4. ) * ( ) / THE CIT(A)- 5. !-. , , /DR,ITAT, AHMEDABAD. 6. .0 12 / GUARD FILE. ) ' / BY ORDER, ' (3 (ASSTT.REGISTRAR) ITAT, AHMEDABAD