BALBIR SINGH, Jaipur V. DCIT, Alwar

ITA 121/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99363 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 31-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P BHATEJA CIT DHK
• Keywords: Capital asset; Business income; Opportunity of being heard
• Section: 143(3); 54B; 2(14)

Judgement Text

RAVK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA -@ ITA NO. 121/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2008-09 BALBIR SINGH, V&PO MAJRA KATH, NEAR BSNL, EXCHANGE, THE, BEHROR, DISTRICT- ALWAR. CUKE VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AUQPS 2392 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BHATEJA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 24/09/2015. MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 21/10/2015. VKNS'K@ ORDER PER T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 14/11/2012 OF THE LEARNED C.I.T.(A), ALWAR FOR A.Y. 2 008-09. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1. THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS E RRED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF RS. 4,20,000/- MADE BY A.O. OUT OF SALARY PAYMENT ON ESTIMATED BASIS BY HOLDING THAT THE SAME HAS BEEN C LAIMED EXCESSIVE IN ORDER TO REDUCE THE COMMISSION INCOME. 2 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT 2. THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF RS. 2,70,000/- MADE BY A.O. OUT OF COMMISSION EXPENSES ON ESTIMATED BASIS. 3. THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED ON FACTS AND IN LAW IN CONFIRMING DISALLOWANCE OF RS. 5,62,900/- OUT OF VARIOUS EXPENSES ON ESTIMATED BAS IS. 4. THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF A.O. I N ASSESSING THE GAIN OF RS. 20,09,361/- ON SALE OF AG RICULTURAL LAND AS INCOME FROM BUSINESS AS AGAINST THE CLAIM O F ASSESSEE THAT THE SAID LAND IS NOT A CAPITAL ASSET U/S 2(14), HENCE, NOT LIABLE TO TAX. 5. THE LD COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED ON FACTS AND IN LAW IN CONFIRMING THE ACTION OF A.O. IN ASSESSING THE AGRICULTURAL INCOME OF RS. 60,400/- A S INCOME FROM OTHER SOURCES. 2. THE FIRST GROUND OF THE ASSESSEES APPEAL IS AGA INST CONFIRMING THE DISALLOWANCE OF RS. 4,20,000/- MADE OF BY THE AS SESSING OFFICER OUT OF SALARY PAYMENT. THE ASSESSEE IS A REAL ESTATE AGE NT TRADING IN LAND AND PLOT ETC. THE ASSESSEE FILED HIS RETURN ON 31/3/ 2009 DECLARING INCOME OF RS. 1,08,28,030/- AND HAD SHOWN AGRICULTUR AL INCOME OR RS. 60,400/-. THE CASE WAS SCRUTINIZED U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT). THE ASSESSEE FURNISHED DETAILS 3 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT REQUIRED BY THE ASSESSEE DURING THE ASSESSMENT PROC EEDINGS AND ALSO PRODUCED ACCOUNTS BOOK AND VOUCHERS ETC. WHICH WAS TE ST CHECKED BY THE A.O. THE ASSESSED CLAIMED SALARY EXPENSES OF RS . 19,20,000/- AT THE RATE OF 1,60,000/- PER MONTH IN CASH, TO VARIOUS PE RSONS FOR WHICH HE HAD MAINTAINED SALARY SHEETS. THE LD ASSESSING OFFI CER GAVE REASONABLE OPPORTUNITIES OF BEING HEARD AND ASKED TO FILE THE COMPLETE DETAILS INCLUDING NAMES AND COMPLETE POSTAL ADDRESSES OF AL L THE EMPLOYEES, PAYMENT MADE AND THE DUTIES ASSIGNED TO THEM. THE AS SESSEE FURNISHED A LIST OF 24 PERSONS TO WHOM HE PAID SALARY BUT HAD NOT SUBMITTED COMPLETE POSTAL ADDRESSES AND DUTIES ASSIGNED TO EA CH OF THEM. IT IS SUBMITTED BEFORE THE ASSESSING OFFICER THAT EMPLOYE ES WERE ENGAGED IN FIELD WORK LIKE IDENTIFICATION OF LAND, ITS OWNERS, O BTAINING LAND RECORDS FROM GOVERNMENT OFFICES, COORDINATION WITH THE LAND OWNERS, TO GET WRITTEN THE SALE DEEDS THROUGH DEED WRITERS/ADVOCATES , TO VERIFY THE CORRECTNESS OF LAND TITLES THROUGH ADVOCATES, TO MA NAGE SMOOTH COMPLETION OF TRANSACTION, BANK DEALING AND ANY OTH ER KIND OF ALLIED WORK REQUIRED FOR THE CLIENT. ALL THE EMPLOYEES ARE RESIDENT OF SMALL VILLAGES OF NEARBY AREAS. NO SPECIFIC DUTY IS ASSIG NED TO ANY SPECIFIC EMPLOYEE. FURTHER IT WAS SUBMITTED THAT NO EMPLOYEE IS RELATED TO THE 4 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT ASSESSEE. THE LD ASSESSING OFFICER ASKED TO PRODUCED 10 PERSONS FOR CROSS VERIFICATION VIDE LETTER DATED 27/12/2010. TH E ASSESSEE PRODUCED SIX EMPLOYEES BEFORE THE LD ASSESSING OFFICER WHO H AD EXAMINED THEM BUT FOUR PERSONS WERE NOT MADE AVAILABLE FOR CROSS E XAMINATION BY THE ASSESSEE. THE LD ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAD DONE THE BROKERAGE WORK ON BEHALF OF ONLY THREE PARTIES OF TWO GROUPS OF KOLKATA AND HAD FAILED TO PRODUCED NUMBER OF EMPLOYEES FOR EXAMINATION, THEREFORE, HE TREATED THE SALARY PAYME NT EXCESSIVE. THE LD ASSESSING OFFICER ALLOWED SALARY EXPENSES OF RS. 15 LACS AND REMAINING AMOUNT OF RS. 4,20,000/- WAS ADDED BACK IN THE INCOM E OF THE ASSESSEE ON ESTIMATE BASIS BEING UNPROVED AND UNSUBSTANTIATE D. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD CONFIRMED THE ADDITION BY OBSERVING THAT THE LD ASSESSING OFF ICER HAD MADE INQUIRY BY WAY OF RANDOM VERIFICATION OF PERSONS TO WHOM SALA RY WAS PAID IN CASH AND FOUR OUT OF TEN PERSONS COULD NOT BE PRODU CED FOR EXAMINATION AND VERIFICATION. THIS CONSTITUTES 40% OF THE SAMPLE OF TEN PERSONS SELECTED BY THE ASSESSING OFFICER. CONSIDERING THE PAYMENTS HAVE BEEN MADE IN CASH AND THE APPELLANT HAS FAILED TO VERIFY THE SALARY PAYMENTS 5 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT IN THE COURSE OF VERIFICATION BY THE ASSESSING OFFI CER MADE ON RANDOM BASIS. HE HELD THAT THE OBSERVATIONS MADE BY THE AS SESSING OFFICER IS ABOUT 22% OF SALARY PAYMENT. THUS, DISALLOWANCE ASSES SED TO BE QUITE REASONABLE. ACCORDINGLY, HE CONFIRMED THE ADDITION. 4. NOW THE ASSESSEE IS APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE VIDE LETTER DATED 0 7/12/2010 HAS FURNISHED LIST OF 24 PERSONS TO WHOM SALARY PAYMENT WERE MADE AND EXPLAINED THAT NO SPECIFIC DUTIES WERE ASSIGNED TO T HEM. HE HAS FURTHER REITERATED THE SUBMISSIONS MADE BY THE ASSESSEE BEF ORE THE ASSESSING OFFICER THAT EMPLOYEES WERE ENGAGED IN FIELD WORK LIK E IDENTIFICATION OF LAND, ITS OWNERS, OBTAINING LAND RECORDS FROM GOVERN MENT OFFICES ETC.. THE COMPLETE POSTAL ADDRESS OF THE EMPLOYEES WERE GI VEN INASMUCH AS ALL THE EMPLOYEES BELONG TO NEARBY VILLAGES AND IN VILLAGES, THE HOUSE NUMBER OR NAME OF LOCALITY GENERALLY DOES NOT EXIST . THE ASSESSEE FILED LETTER DATED 27/12/2010 HAD EXPLAINED THAT FOUR OUT OF TEN EMPLOYEES WHO COULD NOT BE PRODUCED FOR EXAMINATION ARE EITHER OUT OF STATION OR HAVE LEFT THE JOB. THE ASSESSEE WAS TRYING TO PRODUCE THEM BUT DUE TO TIME CONSTRAINT, HE COULD NOT PRODUCE THEM BEFORE 3 1/12/2010. THUS, MERELY NON-PRODUCTION OF FOUR EMPLOYEES CANNOT BE A GROUND FOR 6 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT DISALLOWANCE OF SALARY PAYMENT. THE FINDING OF THE L D CIT(A) WAS WITHOUT ANY BASIS. THE CASH PAYMENT OF SALARY DID NO T MEAN THAT SALARY WAS NOT GENUINE. THE ASSESSEE HAS TAKEN DETAILS OF E XPENSES AND SIGNATURE ON RECEIPTS, WHICH WAS AVAILABLE WITH THE AS SESSEE, THUS NO ADVERSE INFERENCE CAN BE DRAWN BY THE LOWER AUTHORITI ES. THERE IS NO EVIDENCE THAT SALARY EXPENSES CLAIMED BY THE ASSESS EE WAS NOT PAID AND HAD COME BACK TO THE ASSESSEE. HE RELIED UPON THE D ECISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT VS. DHANRAJGIRI NAR AIN SINGH GIRJI 91 ITR 544 WHEREIN IT HAS BEEN HELD THAT IT IS NOT OPEN TO THE DEPARTMENT TO PRESCRIBE WHAT EXPENDITURE AN ASSESSEE SHOULD INC UR AND IN WHAT CIRCUMSTANCES HE SHOULD INCUR THAT EXPENDITURE. EVE RY BUSINESSMAN KNOWS HIS INTEREST BEST. FURTHER THE HONBLE PATNA H IGH COURT IN THE CASE OF JAMSHEDPUR MOTOR ACCESSORIES STORES VS. CIT 95 TAXMAN 664 HAS HELD THAT A LESSER AMOUNT THEN THE AMOUNT EXPEN DED CANNOT BE ALLOWED MERELY BECAUSE THE ASSESSING OFFICER THINKS THAT ASSESSEE COULD HAVE MANAGED BY PAYING A LESSER AMOUNT AS A PRUDENT BUSINESSMAN. THE AUTHORITIES CAN EXAMINE GENUINENESS OF THE EXPEN DITURE AND THE PURPOSE FOR WHICH IT WAS EXPENDED. IF THE PURPOSE FOR WHICH IT IS 7 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT EXPENDED IS ELIGIBLE FOR DEDUCTION, NO DISCRETION I S LEFT TO BE AUTHORITY TO SURMISE THE QUANTUM THAT OUGHT TO HAVE BEEN SPENT. 5. AT THE OUTSET, THE LD DR HAS VEHEMENTLY SUPPORTE D THE ORDER OF THE LOWER AUTHORITIES AND PRAYED TO UPHOLD THE ORDER OF THE LD CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE WAS ASKED TO FURNISH DETAILS OF EMPLOYEES ON 07/12/2010, WHICH WAS SUBMITTED WITH NAME, ADDRESS AND SALARY PAID, TO THE ASSESSING OFF ICER. HE ALSO EXPLAINED THE WORK DONE AND DUTIES ASSIGNED TO THEM. IT IS UNDISPUTED FACT THAT THE PAYMENT OF SALARY WAS MADE IN CASH. THE BUSINESS OF THE ASSESSEE AS SUCH THAT LOCAL PEOPLE ARE REQUIRED TO MAKE AVAILABLE THE DETAILS OF LAND AVAILABLE FOR SALE, OWNERS OF THE LA ND, MARKET RATE OF THAT AREA, OTHER FACTUAL/TITLE INFORMATION TO MAKE AGREE MENT WITH SUPPORT OF THE ADVOCATE ETC. THE ASSESSEE HAD DISCLOSED MORE TH AN RS. ONE CRORE RETURNED INCOME ON WHICH HE HAD CLAIMED SALARY EXPEN DITURE OF RS. MORE THAN 19 LACS, WHICH IS VERY NOMINAL. THE ASSESSI NG OFFICER UP TO 27/12/2010 HAD RECODED THE STATEMENT OF SIX PERSONS AND NO ADVERSE INFERENCE HAD BEEN DRAWN BY HIM. THE OTHER FOUR PERSO NS WERE NOT MADE AVAILABLE BY THE ASSESSEE AS CLAIMED BY HIM TH AT THEY LEFT THE JOB 8 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT AND ARE NOT TRACEABLE. THE TIME GIVEN BY THE ASSESSI NG OFFICER IS VERY SHORT. THE LD CIT(A) HAD NOT ASKED THE ASSESSEE TO P RODUCE THE REMAINING EMPLOYEES FOR VERIFICATION AT THE TIME OF APPELLATE PROCEEDINGS. THEREFORE, WE DO NOT FIND ANY REASON TO CONFIRM THE ADDITION TO THIS HEAD. ACCORDINGLY, WE ALLOW THIS GRO UND OF ASSESSEES APPEAL. 7. THE SECOND GROUND OF THE ASSESSEES APPEAL IS AGA INST CONFIRMING THE DISALLOWANCE OF RS. 2,70,000/- MADE BY THE ASSES SING OFFICER OUT OF COMMISSION EXPENSES ON ESTIMATE BASIS. THE LD ASSESS ING OFFICER OBSERVED THAT THE ASSESSEE HAD CLAIMED TOTAL COMMIS SION EXPENSES AT RS. 10,20,000/-, IN CASH, FOR ACQUISITION OF LAND F OR THE THREE PARTIES OF KOLKATA. THE ASSESSING OFFICER ASKED THE ASSESSEE TO GIVE DETAILS OF BROKERAGE PAYMENT AND TO PRODUCE RELEVANT DOCUMENTA RY EVIDENCE AND VOUCHERS ETC. WITH REGARD TO BROKERAGE PAYMENT. THE A SSESSEE HAD FURNISHED LIST OF 21 PERSONS TO WHOM THE BROKERAGE WAS PAID. THE ASSESSEE WAS REQUESTED BY THE ASSESSING OFFICER TO P RODUCE FOUR PERSONS FOR EXAMINATION FOR TEST CHECK BASIS TO WHOM COMMISSION PAID. THE ASSESSEE OUT OF FOUR PERSONS, TWO PERSONS WERE PRO DUCED, STATEMENT OF BOTH THE PERSONS WERE RECORDED AND REMA INING TWO 9 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT PERSONS COULD NOT BE PRODUCED BY THE ASSESSEE FOR E XAMINATION. THE ASSESSING OFFICER HELD THAT THE ASSESSEE DID NOT MA INTAIN OR PRODUCE ANY SPECIFIC DETAILS AND THE BASIS ON WHICH SAID PAYMENT WAS PAID IN CASH TO VARIOUS BROKERS. ALL THE VOUCHERS RELATING TO THE B ROKERAGE PAYMENT WAS SELF MADE ONLY. THE LD ASSESSING OFFICER OBSERVED TH AT THE ASSESSEE HAD NOT FULLY PROVED THE BROKERAGE PAYMENT AND WAS ALSO NOT FULLY VERIFIABLE. THEREFORE, HE ALLOWED THE COMMISSION PAYMENT OF RS. 7,50,000/- FOR BUSINESS PURPOSE AND REMAINING AMOUNT OF RS. 2,70,0 00/- WAS ADDED BACK TO THE INCOME OF THE ASSESSEE. 8. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD CONFIRMED THE ADDITION BY OBSERVING THAT THE ASSESSEE PAID BR OKERAGE OF RS. 10,20,000/- IN CASH TO 21 PERSONS ONLY BY SELF MADE VOUCHERS BEARING THE NARRATION BEING THE AMOUNT PAID TO.. (NAME OF PERSON) FOR COMMISSION AGAINST LAND. THE APPELLANT HAS NOT MAIN TAINED OR PRODUCED SPECIFIC DETAILS OF TRANSACTION REGARDING THE PURCHASE/SALE OF LAND FOR WHICH CLAIM OF COMMISSION/BROKERAGE PAYMEN T HAS BEEN MADE. THE APPELLANT HAS ALSO FAILED TO PRODUCE ALL THE PER SONS CALLED FOR EXAMINATION IN THE COURSE OF RANDOM VERIFICATION. HE HELD THAT THE 10 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT EXPENSES CLAIMED BY THE ASSESSEE WERE NOT FULLY VERI FIABLE, THUS HE CONFIRMED THE ADDITION. 9. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD AR OF THE ASSESSEE HAS SUBMITTED THAT ASSESSEE VIDE LETTER DA TED 27.12.2010 HAD EXPLAINED THAT 2 OUT OF 4 BROKERS, WHO CANNOT BE PRO DUCED FOR EXAMINATION ARE EITHER OUT OF STATION OR HAVE LEFT THE JOB AND ASSESSEE IS TRYING TO PRODUCE THEM BUT DUE TO TIME CONSTRAINT, HE COULD NOT PRODUCE THEM BEFORE 31.12.2010. THUS, MERELY NON-PRODUCTION OF 2 BROKERS CANNOT BE A GROUND FOR DISALLOWANCE OF COMMISSION PA YMENT. THEREFORE, THE LD CIT(A)S OBSERVATION MADE IN THE ORDER IS UNC ALLED FOR. PAYMENT IN CASH DOES NOT MEAN THAT THE EXPENSES WERE NOT GEN UINE. IN RESPECT OF CASH PAYMENT, THE VOUCHERS CONTAINING THE DETAIL OF EXPENSES AND SIGNATURE OF THE RECIPIENT ARE AVAILABLE. HE FURTHE R RELIED UPON THE CASE LAW REFERRED FOR THE SALARY EXPENSES AND ARGUED THAT SAME ARE SQUARELY APPLICABLE ON THIS PAYMENT ALSO. THUS, HE PRAYED TO DELETE THE ADDITION. 10. THE LD DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LD CIT(A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE FURNISHED THE 11 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT DETAILS OF BROKERAGE VIDE LETTER DATED 17/12/2010 B EFORE THE ASSESSING OFFICER. HOWEVER, HE ASKED THE ASSESSEE TO PRODUCE T HE FOUR BROKERS ON 27/12/2010 FOR VERIFICATION. IT IS A FACT THAT TIME GIVEN BY THE LD ASSESSING OFFICER WAS NOT SUFFICIENT. HOWEVER, THE AS SESSEE PRODUCED TWO BROKERS FOR VERIFICATION. THE DETAILS OF BROKERAG E HAVE BEEN SUBMITTED ALONGWITH LETTER DATED 07/12/2010. THE DETA ILS FURNISHED BEFORE THE ASSESSING OFFICER SHOWED THAT THEY ARE V ILLAGERS OF NEARBY AREA WHO PROVIDED THE SERVICES TO MAKE AVAILABLE THE LAND IN THAT AREA. IT IS UNDISPUTED FACT THAT PAYMENTS WERE MADE IN CAS H ON SELF MADE VOUCHERS, THE LD ASSESSING OFFICER HAD NOT BROUGHT ON RECORD ANY ADVERSE EVIDENCE THAT BROKERAGE PAYMENT IS NOT GENU INE. HE SIMPLY DISALLOWED THE EXPENSES ON ESTIMATE BASIS. THEREFORE, WE DO NOT FIND ANY REASON TO CONFIRM THE DISALLOWANCE OUT OF BROKER AGE EXPENSES. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED. 12. THE THIRD GROUND OF APPEAL IS AGAINST CONFIRMING THE DISALLOWANCE OF RS. 5,62,000/- OUT OF VARIOUS EXPENSES ON ESTIMA TE BASIS. THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CL AIMED VARIOUS EXPENSES UNDER LEGAL FEES FOR REGISTRY, TRAVELLING EXPENSES, STAFF WELFARE EXPENSES, ADVERTISEMENT EXPENSES, TELEPHONE EXPENSE S, PRINTING AND 12 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT STATIONERY EXPENSES, LAND MAP PREPARING EXPENSES, F ESTIVAL EXPENSES, GENERAL EXPENSES AND GUEST HOUSE EXPENSES TO THE TU NE OF RS. 18,76,340/-. THE ASSESSEE WAS ASKED TO PROVE THE EXPE NSES WITH THE HELP OF NECESSARY DOCUMENTS/EVIDENCE BY SUPPORTING VOUCHERS BY THE ASSESSING OFFICER. THE ASSESSEE PRODUCED THE VOUCHER S OF SELF MADE ONLY FOR ALL THE ABOVE EXPENSES AND DID NOT PRODUCE ANY DOCUMENTARY EVIDENCE OR SUPPORTING VOUCHERS IN RESPECT OF ALL T HE EXPENSES. THE LD ASSESSING OFFICER ALLOWED 12 LACS EXPENSES LOOKING T O THE VOLUME OF BUSINESS BUT REMAINING EXPENSES OF RS. 6,76,340/- WA S FOUND BY THE ASSESSING OFFICER UNPROVED/UNVERIFIABLE AND UNSUBST ANTIATED. 13. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING O FFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WHO HAD ALLOWED THE APPEAL PARTLY BY OBSERVING THAT SELF MADE VOUCHERS CANNOT BE THE SOLE BASIS FOR CLAIM OF EXPENSES ON THE GROUND THAT THE EXPENSES WERE REASONABLE CONSIDERING THE GROSS AMOUNT OF COMMISSI ON RECEIVED. IT IS POSSIBLE THAT FOR SOME OF THE ITEMS THE APPELLANT M AY NOT BE ABLE TO GET SUPPORTING BILLS OR VOUCHERS BUT THAT SHOULD NORMAL LY BE A SMALL PERCENTAGE OF THE TOTAL EXPENSES CLAIMED. IT IS AN ADMITTED FACT THAT NO SUPPORTING VOUCHERS OR ANY OTHER DETAILS WERE FURNIS HED BY THE APPELLANT 13 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT IN SUPPORT OF ITS CLAIM OF VARIOUS EXPENDITURE. THE APPELLANT HAS BEEN OPERATING AS REAL ESTATE AGENT, TRADING IN LANDS AN D PLOTS ETC. IN THE VILLAGE OF MAJRA KATH OF TEHSIL BEHROR AND HAS CLAIM ED HEAVY EXPENSES UNDER VARIOUS HEADS LIKE TRAVELLING, STAFF WELFARE, ADVERTISEMENT, TELEPHONE, FESTIVAL EXPENSES AND GENERAL EXPENSES. IN ABSENCE OF PROPER SUPPORTING BILLS AND VOUCHERS THESE EXPENSES WERE NOT VERIFIABLE. THEREFORE, HE FOUND THE DISALLOWANCES JUSTIFIED. HOWEV ER, HE HELD THAT THE DISALLOWANCE WAS HIGHER SIDE, THUS HE RESTRICTED THE DISALLOWANCE OUT OF TOTAL VARIOUS EXPENSES @ 30% AT RS. 5,62,900/- A ND HE ALLOWED THE RELIEF TO THE TUNE OF RS. 1,13,440/-. 14. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD A R OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE VIDE LETTE R DATED 27.12.2010 HAD EXPLAINED THAT THE EXPENSES HAVE BEEN INCURRED DURING THE REGULAR COURSE OF BUSINESS TO PERFORM THE VARIOUS WORKS AS P ER DETAILS SUBMITTED BEFORE THE ASSESSING OFFICER. THE ASSESSEE HAD DECL ARED N.P. RATE @ 60.34% WHICH IS VERY MUCH REASONABLE. THE NATURE OF T HESE EXPENSES IS SUCH THAT PAKKA BILLS ARE NOT POSSIBLE AND THEREFOR E PAYMENTS WERE MADE THROUGH VOUCHERS. EACH PAYMENT HAD BEEN SUPPOR TED BY THE SIGNATURE OF THE RECIPIENT ON THE VOUCHERS AND ARE VERIFIABLE. THEREFORE, 14 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT THE LD CIT(A) WAS NOT JUSTIFIED TO MAKE DISALLOWANCE @ 30% OUT OF TOTAL EXPENSES. IN A.Y. 2009-10 THE LD ASSESSING OFFICER MADE DISALLOWANCE OF 20% AND 10% OUT OF STAFF WELFARE AND TRAVELLING EXPE NSES RESPECTIVELY ON THE GROUND THAT PAYMENTS HAD BEEN MADE IN CASH WI THOUT SUPPORTING VOUCHERS. HOWEVER, THE LD CIT(A) REDUCED THE DISALLO WANCE TO 10% AND 6.34% OUT OF STAFF WELFARE AND TRAVELLING EXPENSES R ESPECTIVELY. HE FURTHER RELIED ON THE FOLLOWING CASE LAWS:- (I) ACIT VS. GANPATI ENTERPRISES LTD. (2013) 142 ITD 118 (DELHI)(TRIB.) (II) CIT VS. ORACLE INDIA (P) LTD. 199 TAXMAN 181 (DE L) (HC) (MAG.) (III) SEASONS CATERING SERVICES (P) LTD. VS. DCIT 43 DTR 397 (DEL) (TRIB) (IV) ARTHUR & ANDERSON & CO. VS. ACIT (2010- TIOL-416 -ITAT) THUS, HE PRAYED TO REDUCE THE DISALLOWANCE SUITABLY. 15. AT THE OUTSET, THE LD AR HAS VEHEMENTLY SUPPORT ED THE ORDER OF THE LD CIT(A) AND REITERATED THE ARGUMENTS GIVEN BY THE LD CIT(A) AS THE PAYMENTS WERE MADE IN CASH AND SELF MADE VOUCHERS, W HICH ARE NOT VERIFIABLE. 16. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEES BUSINESS IS 15 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT AS SUCH THAT NO PAKKA VOUCHERS CAN BE COLLECTED FRO M THE RECIPIENTS OF PAYMENTS. THE LD ASSESSING OFFICER ALSO HAD NOT VERI FIED THE DETAILS GIVEN BY THE ASSESSEE AND ALSO HE SOUGHT THE INFORM ATION ON 27/12/2010 AND COMPLETED THE ASSESSMENT ON 31/12/20 10 HURRIEDLY. IT IS DIFFICULT TO PROVIDE THE FULL PARTICULARS OF EXP ENSES. IT IS ALSO A FACT THAT NON BUSINESS PURPOSES, THE EXPENDITURE CAN BE RULED OUT IN ABSENCE OF THIRD PARTY EVIDENCE. THE ADDITION CONFIRMED BY THE LD CIT(A) APPEARS TO BE HIGHER SIDE. THEREFORE, IN THE INTEREST OF JUSTIC E, WE CONSIDER REASONABLE DISALLOWANCE OUT OF TRAVELLING EXPENSES, STAFF WELFARE EXPENSES, TELEPHONE EXPENSES, FESTIVAL EXPENSES, GE NERAL EXPENSES AND GUEST HOUSE EXPENSES @ 10% OUT OF TOTAL EXPENSES CLA IMED. WE DO NOT REQUIRE TO BE DISALLOWED ANY EXPENSES OUT OF LEGAL F EES FOR REGISTRY, ADVERTISEMENT EXPENSES, PRINTING AND STATIONARY EXP ENSES, LAND MAPING AND PREPARING EXPENSES. THUS WE CONFIRM THE ADDITION OF RS. 14,000/- OUT OF TOTAL DISALLOWANCES MADE BY THE LD CIT(A) AT R S. 5,62,900/-. ACCORDINGLY, THIS GROUND OF ASSESSEES APPEAL IS PA RTLY ALLOWED. 17. THE GROUND NO. 4 OF THE ASSESSEES APPEAL IS AGA INST CONFIRMING THE ADDITION OF RS. 20,09,361/- ON SALE OF AGRICULT URAL LAND AS INCOME FROM BUSINESS AS AGAINST AGRICULTURAL INCOME CLAIME D BY THE ASSESSEE. 16 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD MADE TRANSACTIONS OF SALE OF AGRICULTURAL LAND WORTH TOTA L RS. 39,46,950/-, WHICH WERE PURCHASED FOR RS. 19,37,589/- IN THE ASSE SSMENT YEAR UNDER CONSIDERATION AND THE PRECEDING ASSESSMENT YEAR, RE SULTING IN PROFIT OF RS. 20,09,361/-. THE LD ASSESSING OFFICER GAVE REASO NABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE. THE ASSESSEE SUBMITTED BE FORE THE ASSESSING OFFICER THAT HE HAD SHOWN PROFIT OF RS. 20,09,361/- ON SALE OF AGRICULTURAL LAND, WHICH HAD NOT BEEN INCLUDED IN TH E INCOME AND HAD OBVIOUSLY BEEN CLAIMED AS EXEMPT. THESE LANDS ARE PU RELY AGRICULTURAL AND RECORDED AS SUCH IN THE REVENUE RECORD OF THE S TATE GOVT. THE AGRICULTURAL LANDS ARE VERY WELL COVERED U/S 2(14) O F THE ACT, IN WHICH CAPITAL ASSET IS DENIED. IT IS FURTHER CLAIMED BY T HE ASSESSEE BEFORE THE ASSESSING OFFICER THAT ALL THE AGRICULTURAL LAND WER E SOLD AS SUCH AND NOT AS COMMERCIAL OR RESIDENTIAL PROPERTY AS EVIDENT FR OM THE SALE OF AGRICULTURAL LAND. HE HAS NOT MADE ANY DIVISION OF LAND AND HAD NOT SOLD ANY PART OF THE PURCHASED LAND. RATHER HE HAD SOLE COMPLETE LAND AS DESCRIBED IN THE LAND PURCHASED DOCUMENT. HE FURTHE R SUBMITTED THAT THE AGRICULTURAL LAND SOLD AT VILLAGE BARDOD, TEHSIL BEHROR, VILLAGE BELNI TEHSIL BEHROR, VILLAGE SHAHAJAHANPUR TEHISL BEHROR AN D VILLAGE GHASIPURA 17 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT TEHSIL SHAHPURA, WHICH IS SITUATED MORE THAN 8 KM FRO M THE RESPECTIVE MUNICIPAL LIMITS. THE AGRICULTURAL LAND IS NOT COVER ED WITHIN THE DEFINITION OF CAPITAL ASSETS U/S 2(14) OF THE ACT. THE ASSESSEE FILED COPY OF NOTIFICATION DATED 06/01/1994, WHICH PROVED THAT ON LY ALWAR AND JAIPUR DISTRICT ARE NOTIFIED FOR THE PURPOSE OF TAXABILITY OF AGRICULTURE LAND SITUATED WITHIN 8 KM FROM MUNICIPAL LIMITS. THUS, IT WAS CLAIMED BY THE ASSESSEE THAT PROFIT ON SALE OF THE AGRICULTURAL LA ND WAS NOT LIABLE TO BE TAXED AS BUSINESS INCOME AND FURTHER IT IS NOT TAXA BLE UNDER THE HEAD CAPITAL GAIN. AS PER REVENUE RECORD, THE LAND STILL HAD SHOWN AS AGRICULTURAL LAND. AFTER CONSIDERING THE ASSESSEES REPLY, THE LD ASSESSING OFFICER HELD THAT THE ASSESSEE HAD PURCHASED SMALL PIECES OF LAND AND SOLE THEM AFTER A VERY SHORT HOLDING PERIOD OF 39 D AYS TO 310 DAYS DURING THE YEAR UNDER CONSIDERATION. FURTHER THE LA ND PURCHASED FROM SMT. NIRMAL RANI ON 17/11/2007 FOR RS. 2,76,952 WAS SOLD IN PARTS TO THREE DIFFERENT PARTIES NAMELY (I) MAHIPAL SINGH, ( II) NARESH DEVI & (III) LALITA FOR RS. 1,25,000, RS. 1,77,500/- AND RS. 1,5 2,250/- RESPECTIVELY WITHIN TWO MONTHS OF THE PURCHASE. THE ASSESSEE HAS REGULARLY BEEN DOING THE TRANSACTI ONS OF PURCHASE AND SALE OF AGRICULTURAL LAND, YEAR AFTER YEAR. DURING THE 18 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2007-08, THE ASSESSEE PURCHASED 4 PIECES OF AGRICULTURAL LAND FO R RS. 48,19,460/- AND SOLD THE SAME IN PARTS TO DIFFERENT PERSONS FOR RS. 1,31,31,200/-, EARNING PROFIT OF RS. 83,11,740/-. ALL THESE PURCHA SES AND SALE WERE MADE IN THE SAME FINANCIAL YEAR AND THE HOLDING PER IOD WAS OF 16 DAYS TO 152 DAYS ONLY. THE DETAILS OF PURCHASE AND SALE OF AGRICULTURAL LAND DURING THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSES SMENT YEAR 2007-08 WERE ENCLOSED WITH THE ASSESSMENT ORDER AS ANNEXURE-B BY THE A.O. HE FURTHER HELD THAT FROM THE DETAILS GIVEN IN ANN EXURE-A AND ANNEXURE-B IT CAN BE SEEN THAT THE ASSESSEE HAS BEE N SELLING THE LAND IN VERY SMALL PIECES AND MEASUREMENTS IN MOST OF THE S ALE DEEDS IS ALSO GIVEN IN SQUARE YARDS. THE PURCHASERS OF THESE PIECE S OF LAND ARE MOSTLY OF POST COLONIES OF NEW DELHI. MUMBAI, CHENNA I AND PUNE ETC., WHO HAVE PURCHASED THESE LANDS ON VERY HIGH PRICES. IT IS OBVIOUS THAT THEY HAVE PURCHASED THESE PIECES OF LANDS FOR COMME RCIAL PURPOSES ONLY AND NOT FOR DOING ANY AGRICULTURAL OPERATIONS. THE ASSESSEE HAS NOT DONE ANY AGRICULTURAL OPERATIO NS ON THESE LANDS, AS THE PERIOD OF LAND HOLDING HAS BEEN VERY SMALL. THE MERE FACT THAT THE NATURE OF LAND IN REVENUE RECORDS IS AGRIC ULTURAL IS NOT 19 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT CONCLUSIVE. SIMPLY BECAUSE THE LAND IS ENTERED INTO REVENUE RECORD WOULD NOT MEAN THAT IT IS BEING USED FOR THE PURPOSE OF AGRICULTURE, FOR WHICH HE RELIED ON THE DECISION IN THE CASE OF STATE OF U.P. VS. NAND KUMAR AGGARWAL, AIR 1998 S.C. 473, 476. FROM THE DETAILS OF LAND PURCHASED AND SOLD DURING THE F.Y. 2006- 07 (ANNEXURE-B), IT CAN BE SEEN THAT THE LAND MENTI ONED AT SR. NO. (2) WAS PURCHASED FROM SHRI DAYANAND, BEHROR ON THE BASI S OF AGREEMENT ONLY FOR RS. 12,25,000/- WHICH WAS ACQUIRED BY RIICO FOR RS. 43,60,000/- AND THE COMPENSATION WAS RECEIVED BY SHR I DAYANAND, BEHROR, WHO TRANSFERRED THIS AMOUNT TO THE ASSESSEE SHRI BALBIR SINGH IN VIEW OF THE SAID AGREEMENT. THE NATURE OF THIS TRANSA CTION CLEARLY SHOWS THAT THIS PURCHASE AND SALE WAS NOT AT ALL OF AGRICU LTURAL IN NATURE. DURING THE PERIOD RELEVANT TO ASSESSMENT YEARS 200 7-08 AND 2008-09 THE ASSESSEE HAS PURCHASED/SOLD NUMBER OF I MMOVABLE PROPERTIES THE DETAILS OF WHICH WERE ENCLOSED AS ANNE XURE-C AND ANNEXURE-D, WHICH ITSELF SHOWS THAT THE ASSESSEE HAS BEEN DOING THESE TRANSACTIONS AS BUSINESS ON REGULAR BASIS. 20 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT THE ASSESSEE HIMSELF IS A REAL ESTATE AGENT FOR THE LAST SO MANY YEARS AND EARNING LOT OF BROKERAGE INCOME ON ACCOUN T OF PURCHASE OF AGRICULTURAL LAND FROM LOCAL FARMERS, BY INDUSTRIAL HOUSES, IN VIEW OF THE WELL KNOWN ON-GOING INDUSTRIAL DEVELOPMENT IN BEHROR, NEEMRANA AND SHAHJANPUR ON NH-8 IN BEHROR TEHSIL OF ALWAR DISTRICT . IT IS ALSO WELL KNOWN THAT DUE TO THE SAID INDUSTRIAL DEVELOPMENT TH E RATES OF AGRICULTURAL AND OTHER LANDS IN BEHROR TEHSIL HAVE I NCREASED MANIFOLDS DURING THE LAST 5-6 YEARS, WHICH ARE NOT AT ALL COMM ENSURATE WITH ANY RETURN OF AGRICULTURAL CULTIVATION. SINCE THE ASSES SEE HIMSELF IS A REAL ESTATE BROKER OF HIGH STATURE, THEREFORE, HE NOT ON LY KNOWS THE HAZARDS AND THE PROFITS OF DEALING IN LAND AND REAL ESTATE BUT HE IS FULLY ACQUAINTED WITH THE LANDS BELONGING TO VARIOUS FARME RS OF THE AREA AND THEIR POTENTIALITIES. THEREFORE, HE HAS PURCHASED A ND SOLD THE SAID LANDS WITH SOLE MOTIVE OF EARNING PROFIT AND NOT FOR DOING ANY AGRICULTURAL OPERATIONS. IF A TRANSACTION IS RELATED TO THE B USINESS WHICH IS NORMALLY CARRIED ON BY THE ASSESSEE, THOUGH NOT DIRECTLY A P ART OF IT, AN INTENTION TO LAUNCH UPON AN ADVERNTURE IN THE NATURE OFTRADE MAY READILY BE INFERRED [KHAN BAHADUR AHMED ALLADIN & SONS VS. CIT (1968) 68 ITR 573, 578 (SC), JANKI RAM BAHADUR RAM VS. CIT (1965) 57 ITR 21 (SC). 21 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT HE ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF BHAGIRATH PRASAD BILGAIYA VS. CIT 139 ITR 916 (MP). IN VIEW OF THE FACTS DISCUSSED ABOVE THE PROFIT OF RS. 20,09,361/- EARNED BY THE ASSESSEE IS HELD TO BE PROFIT EARNED FROM TRADE OF PURCHASE AND SALE OF LAND IS TAXABLE. THE ADDITION O F RS. 20,09,361/- HAS BEEN ADDED BACK TO THE INCOME OF THE ASSESSEE. 18. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING O FFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- 6.3 I HAVE CONSIDERED THE ASSESSMENT ORDER AS WELL AS SUBMISSIONS MADE BY THE A.R.. I FIND THAT THE APPEL LANT IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF PLO T AND LAND AND HAS ALSO DERIVED COMMISSION INCOME AS REAL ESTATE AGENT DURING THE YEAR. THE A.O. HAS MADE A DETAILED DISCUSSION IN PARA 2.3 OF THE ASSESSMENT ORDER AND HAS CONCLUDED THAT THE PROFIT OF RS. 20,09,361/- EARNED ON PURCHASE AND SALE OF AGRICULTURAL LAND IS IN THE NA TURE OF BUSINESS INCOME FOR THE FOLLOWING REASONS: (I) THE APPELLANT HAS PURCHASED SMALL PIECES OF LAND AND SOLD THEM AFTER A VERY SHORT HOLDING PERIOD OF 39 TO 310 DAYS. 22 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT (II) THE APPELLANT HAS BEEN REGULARLY DOING THE TRANSACTION OF PURCHASE AND SALE OF AGRICULTURAL LA ND YEAR AFTER YEAR WHICH SHOWS THAT THE INTENTION OF PURCHASE AND SALE OF LAND IS ONE OF TRADING AND NOT OF INVESTMENT. (III) THE SALES HAVE BEEN MADE MOSTLY TO PURCHASERS OF LAND FROM DELHI, MUMBAI, CHENNAI, PUNE ETC. FOR COMMERCIAL PURPOSE AND NOT FOR DOING ANY AGRICULTURAL OPERATIONS. (IV) THE APPELLANT HIMSELF HAS NOT DONE AGRICULTURAL OPERATIONS ON THESE LANDS AND THE PERIOD OF HOLDING HAS BEEN SMALL. THE MERE FACT THAT THE NATURE OF LAND IN REVENUE RECORD IS AGRICULTURAL WOULD NOT MEAN THAT IT WAS BEING USED FOR THE PURPOSE OF AGRICULTURE. (V) THE A.O. HAS RELIED UPON DECISION CITED AT (A) STATE OF U.P. VS. NAND KUMAR AGARWAL, AIR 1998 (SC) 473, 476, (B) KHAN BAHADUR AHMED ALLADIN & SONS VS. CIT 68 ITR 573 (SC) (C) JANKI RAM BAHADUR RAM VS. CIT 57 ITR 21 (SC) (D) 139 ITR 916 (MP). THE AR HAS MAINLY RELIED ON THE SUBMISSION THAT THES E AGRICULTURAL LANDS WERE COVERED BY THE PROVISION OF SECTION 2(14) OF THE IT ACT IN WHICH CAPITAL ASSET IS DEFINED AND SINCE ALL THE AGRICULTURE LANDS WERE SOLD AS SUCH AN D NOT AS 23 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT COMMERCIAL OR RESIDENTIAL PROPERTY, THE INCOME FROM SUCH SALE IS NOT LIABLE TO BE TAXED AS BUSINESS INCOME A ND FURTHER THE CAPITAL GAINS IS ALSO NOT ATTRACTED. IT HAS BEE N SUBMITTED THAT IN A.Y. 2008-09, ONLY ONE LAND PURCHASED FROM NIRMAL RANI HELD FOR 1 TO 2 MONTHS, WAS SOLD IN PART TO THR EE PERSONS. OTHER FOUR LANDS WERE SOLD WITHOUT MAKING AN Y DIVISION. I FIND THAT THE APPELLANT HAS BEEN PURCHASING AND S ELLING LAND ON A REGULAR BASIS FROM YEAR TO YEAR AND THE I NTENTION OF PURCHASE OF SUCH AGRICULTURE LAND HAS BEEN TO EA RN PROFIT AND NOT TO HOLD THE AGRICULTURE LAND AS INVESTMENT. THE APPELLANT HIMSELF IS A REAL ESTATE BROKER AND THE S O CALLED AGRICULTURAL LAND HAS NOT BEEN USED BY HIM FOR THE PURPOSE OF AGRICULTURE. THE AREA IN AND AROUND BEHROR, NEEMR ANA AND SHAHJAHANPUR ON NATIONAL HIGH WAY-8 HAS BEEN WITNESSING LOT OF INDUSTRIAL DEVELOPMENT AND THE LAN D IS BEING PURCHASED FOR COMMERCIAL PURPOSES BY VARIOUS PERSONS FROM DELHI, MUMBAI, CHENNAI, PUNE ETC.. THUS , THE PURCHASES OF SUCH AGRICULTURE LAND AND ITS SALE IN SHORT INTERVALS BY THE APPELLANT WOULD QUALIFY AS ADVENTUR E IN THE NATURE OF TRADE AS POINTED OUT BY THE A.O. RELIANCE IS ALSO PLACED ON THE DECISION DATED 18/07 /2012 OF HONBLE ITAT, MUMBAI D BENCH IN THE CASE OF RATAN SHI MULJI PATEL, NAVI MUMBAI VS. DEPARTMENT OF INCOME TA X IN 24 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT ITA NO. 5499/MUM/2011 FOR A.Y. 2008-09 IN WHICH IT H AS BEEN OBSERVED AS UNDER:- 5.5 THE REAL USE OF LAND IS VERY RELEVANT AND MATE RIAL FOR DECIDING THE TRUE INTENTION OF THE ASSESSEE IN ACQUIRING THE LAND AND SELLING THE SAME. TO APPLY THE EXCEPTION OF CAPITAL ; ASSET AS PER SECTION 2(14), THE CHARTER OF LAND BEING AGRICU LTURE HAS TO BE DECIDED WITH REFERENCE TO THE INTENTION AND PURP OSE OF ACQUIRING THE LAND. ONCE IT IS BORNE OUT FROM THE F ACTS AND CIRCUMSTANCES OF THE CASE THAT THE INTENTION OF THE ASSESSEE WAS NOT TO PUT TO THE LAND FOR AGRICULTURAL USE AND ACCORDINGLY, IT WAS NOT USED FOR AGRICULTURE PURPOSE BY THE ASSE SSEE AS WELL AS EVEN BY THE PURCHASER, WHO IS A BUILDER, THEN TH E PROVISIONS OF SECTION 2(14)(III) WOULD NOT APPLY IN THE CASE O F THE ASSESSEE. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF T HE CASE, I AM OF THE CONSIDERED OPINION THAT THE A.O. HAS RI GHTLY ASSESSED THE PROFIT OF RS. 20,09,361/- EARNED BY TH E ASSESSEE ON PURCHASE AND SALE OF AGRICULTURAL LAND AS INCOME FROM BUSINESS. ACCORDINGLY, THE ADDITION OF RS. 20,09,361/- IS CONFIRMED AND THIS GROUND IS DISMISS ED. 19. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD A R OF THE ASSESSEE HAS SUBMITTED AS UNDER:- 1. WHETHER AN ASSET IS HELD AS AN INVESTMENT OR AS STOCK IN TRADE IS A MATTER OF INTENTION OF THE BUYER AT THE TIME OF P URCHASE OF THE ASSET. THIS INTENTION IS TO BE GATHERED FROM THE ENT RIES IN THE BOOKS OF ACCOUNTS & OTHER CIRCUMSTANTIAL EVIDENCES. IN THE PRESENT CASE, ASSESSEE HAS PURCHASED THE LAND AS AN INVESTMENT WHICH IS EVIDENT FROM THE FACT THAT IN THE BALANCE S HEET, HE HAS 25 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT DECLARED THESE LANDS UNDER THE HEADING FIXED ASSET S. AS ON 31.03.2005, ASSESSEE WAS HOLDING ONLY TWO PROPERTIES UNDER THE HEAD FIXED ASSETS. IN F.Y. 05-06 I.E. A.Y. 06-07, H E PURCHASED 9 MORE PROPERTIES OUT OF WHICH ONE WAS SOLD & THE REMAI NING 8 ALONG WITH THE TWO PROPERTIES PURCHASED IN LAST YEAR WAS SHOWN AS FIXED ASSET AS ON 31.03.2006. IN F.Y. 06-07, I .E. A.Y. 07-08, ASSESSEE PURCHASED SOME MORE PROPERTIES. OUT OF THE PROPERTIES PURCHASED DURING THE YEAR AND IN EARLIER YEAR, SOME OF THE PROPERTIES WERE SOLD AND THE REMAINING PROPERTIES WER E SHOWN UNDER THE HEADING FIXED ASSET AS ON 31.03.2007. S IMILARLY IN F.Y. 07-08, I.E. A.Y. 08-09, SOME MORE PROPERTIES W ERE PURCHASED, SOME ARE SOLD AND THE REMAINING PROPERTI ES WERE SHOWN UNDER THE HEADING FIXED ASSET AS ON 31.03.20 08 . FROM THE SAME, IT IS EVIDENT THAT ASSESSEE HAS ACQUIRED THE IMMOVABLE PROPERTY AS INVESTMENT & NOT AS STOCK IN TRADE. FURTHER, WHENEVER HE SOLD ANY PROPERTY, IT IS REINVE STED IN PURCHASE OF ANOTHER PROPERTY. HE HAS MADE INVESTMEN T IN THE PROPERTY & HELD IT WITH AN INTENTION TO HAVE CAPITAL APPRECIATION. HENCE, GAIN FROM THE SALE OF AGRICULTURAL LAND IN T HE YEAR UNDER CONSIDERATION CANNOT BE ASSESSED AS BUSINESS INCOME . 2. IT MAY BE NOTED THAT IN A.Y. 07-08, ASSESSEE HAS EARNED GAIN OF RS.83,11,740/- ON SALE OF AGRICULTURAL LAND. THE GAI N WAS CLAIMED AS NOT LIABLE TO AS THE AGRICULTURAL LAND S OLD WAS NOT A CAPITAL ASSET U/S 2(14) OF THE IT ACT. IN COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE VIDE LETTER DT. 09.12.2009 P ROVIDED THE 26 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT DETAILS OF PROFIT ON SALE OF AGRICULTURAL LAND AND CLAIMED THAT THE SAME IS NOT CHARGEABLE TO TAX. THE AO AFTER CONSIDER ING THE REPLY OF THE ASSESSEE ACCEPTED THE CLAIM IN ASSESSM ENT FRAMED U/S 143(3) DT. 30.12.2009. THUS, WHEN IN A.Y. 07-08, AO HIMSELF ACCEPTED THAT THE AGRICULTURAL LAND PURCHASED BY TH E ASSESSEE IS HELD BY HIM AS INVESTMENT, TWO OF THE LANDS SOLD DUR ING THE YEAR OUT OF THE LAND ACQUIRED IN PREVIOUS YEAR RESULTING INTO GAIN OF RS.15,28,563/- CANNOT BE ASSESSED AS BUSINESS INCOM E (REFER ITEM NO. 2 AND 3 OF ANNEXURE A ENCLOSED WITH THE ASS ESSMENT ORDER). IT MAY ALSO BE NOTED THAT ASSESSEE ONLY SOL D TWO LANDS WHICH WERE PURCHASED DURING THE YEAR RESULTING INTO G AIN OF RS.4,80,798/-. 3. THE VARIOUS OBSERVATIONS MADE BY THE LOWER AUTHORI TIES IN HOLDING THAT THE ASSESSEES ACTIVITY OF PURCHASE & SALE OF AGRICULTURAL LAND IS AN ADVENTURE IN THE NATURE OF TRADE & THEREFORE THE GAIN IS TO BE ASSESSED AS BUSINESS IN COME IS INCORRECT AS EXPLAINED HEREIN UNDER:- OBSERVATION OF AO/CIT(A) ASSESSEES EXPLANATION FROM THE DETAILS OF PURCHASE AND SALE OF AGRICULTURAL LAND DURING THE YEAR UNDER CONSIDERATION[REFER ANNEXURE A OF ASSESSMENT ORDER], IT CAN BE SEEN THAT ASSESSEE HAS PURCHASED SMALL PIECES OF LAND AND SOLD THEM AFTER A VERY SHORT HOLDING PERIOD OF 39 DAYS TO 310 DAYS. FURTHER FROM THE CHART, IT CAN BE SEEN THAT THE LAND FROM ANNEXURE A, IT CAN BE NOTED THAT ASSESSEE HAS ENTERED INTO 5 SALE TRANSACTIONS OF AGRICULTURAL LAND. OUT OF SAME, THE HOLDING PERIOD OF 4 AGRICULTURAL LAND MENTIONED AT S.NO. 1 TO 3 RANGED FROM 6 MONTHS 15 DAYS TO 10 MONTHS 7 DAYS. ONLY ONE LAND MENTIONED AT S.NO. 4 WAS HELD FOR ONE TO TWO MONTHS ONLY. BUT WOULD 27 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT PURCHASED FROM SMT. NIRMAL RANI WAS SOLD IN PARTS TO THREE DIFFERENT PARTIES WITHIN 2 MONTHS OF THE PURCHASE. THIS LEAD TO A CONCLUSIVE INFERENCE THAT AT THE TIME OF INVESTMENT IN LAND, THE INTENTION OF THE ASSESSEE WAS TO TRADE IN LAND? THE PROFIT MOTIVE UNDER LIES ANY INVESTMENT AND CANNOT BE TAKEN TO BE THE SOLE CRITERIA FOR DECIDING WHETHER THE GAINS MADE FROM SHORT TERM REALIZATION OF INVESTMENTS WERE BUSINESS IN NATURE. AT BEST, THE SALE OF LAND WITHIN A PERIOD OF A YEAR CAN BE TREATED AS SHORT TERM CAPITAL GAIN IN ASSESSEES HANDS. FURTHER, SELLING THE LAND IN PARTS (ONLY ONE LAND MENTIONED AT S.NO. 4) CANNOT BE CRITERIA FOR HOLDING THAT ASSESSEES ACTIVITY IS AN ADVENTURE IN THE NATURE OF TRADE. RELIANCE IS PLACED IN CASE OF CIT VS. HARJIT SINGH SANGHA (2013) 217 TAXMAN 201(P&H) (HC)(MAG.) WHEREIN LAND PURCHASED BY ASSESSEE WAS REGISTERED IN LAND REVENUE RECORDS AS AGRICULTURAL LAND, AND IT WAS BEING USED BY ASSESSEE AS SUCH. LATER ON, IT WAS SOLD IN SMALL PLOTS TO DIFFERENT PURCHASER. NO DEVELOPMENT OF LAND WAS MADE BY ASSESSEE PRIOR TO ITS SALE. IT WAS HELD THAT ASSESSEES ACTIVITY COULD NOT BE TERMED AS AN ADVENTURE IN THE NATURE OF TRADE AND GAIN/PROFIT ARISING FROM SALE COULD NOT BE TAXED AS BUSINESS INCOME. THE ASSESSEE IS REGULARLY DOING THE TRANSACTION OF PURCHASE AND IT IS TO BE NOTED THAT IN A.Y. 07 - 08, GAIN OF RS.83,11,740/- ON SALE OF 28 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT SALE OF AGRICULTURAL LAND, YEAR AFTER YEAR. IN A.Y. 07-08, ASSESSEE PURCHASED 4 PIECES OF AGRICULTURAL LAND AND SOLD THE SAME IN PARTS TO DIFFERENT PERSONS EARNING PROFIT OF RS.83,11,740/- [REFER ANNEXURE B OF THE ASSESSMENT ORDER]. ALL THE PURCHASE AND SALE WERE MADE IN THE SAME FINANCIAL YEAR AND THE HOLDING PERIOD WAS OF 16 DAYS TO 152 DAYS ONLY. AGRICULTURAL LAND WAS CLAIMED BY THE ASSESSEE AS NOT LIABLE TO TAX AS THE ASSET ITSELF WAS NOT A CAPITAL ASSET U/S 2(14) OF THE IT ACT. THE SAME WAS ACCEPTED BY THE AO IN THE ORDER PASSED U/S 143(3) AS EXPLAINED IN PARA 2 ABOVE. THUS, IN A.Y. 07-08, AO HIMSELF HAS ACCEPTED THE GAIN ON SALE OF AGRICULTURAL LAND AS A SALE OF CAPITAL ASSET AND NOT AN ADVENTURE IN THE NATURE OF TRADE. FROM THE DETAILS GIVEN IN ANNEXURE A AND B, IT CAN BE SEEN THAT ASSESSEE IS SELLING THE LAND IN VERY SMALL PIECES AND MEASUREMENT IN MOST OF THE SALE DEEDS IS ALSO GIVEN IN SQUARE YARDS. THE PURCHASERS OF THESE PIECES OF LAND ARE MOSTLY OF POSH COLONIES OF DELHI, MUMBAI, CHENNAI, PUNE ETC. WHO HAVE PURCHASED THESE PIECES OF LANDS FOR HIGH PRICES FOR COMMERCIAL PURPOSE ONLY AND NOT FOR DOING ANY AGRICULTURAL OPERATIONS. FROM THE DETAILS GIVEN IN ANNEXURE A AND B, IT CAN BE NOTED THAT THE LAND SOLD IS IN HECTARE ALONG WITH WHICH THE SQUARE YARD IS ALSO MENTIONED. HOWEVER, NONE OF THE LAND SOLD IS IN SMALL PIECE. FURTHER, WHO PURCHASED THE LAND AND WHAT WAS HIS INTENTION FOR PURCHASE OF LAND IS IRRELEVANT TO DECIDE WHETHER THE LAND HOLD BY THE ASSESSEE IS FOR INVESTMENT OR ADVENTURE IN THE NATURE OF TRADE. IN CASE OF SMT. M. VIJAYA & ORS. VS DCIT (2015) 116 DTR 393 (HYD.) (TRIB.) HELD THAT WHERE LAND IN QUESTION IS SHOWN AS AGRICULTURAL IN REVENUE RECORDS, NOT UNDER CONVERSION PROCEEDINGS, NOT PUT TO NON-AGRICULTURAL USE, NOT SITUATED IN DEVELOPED AREA AND NOT FALLING IN ANY MUNICIPALITY BUT FALLING IN A VILLAGE WAS AGRICULTURAL LAND NOT LIABLE TO CAPITAL GAIN TAX ON SALE, THE FACT THAT THE LAND WAS PURCHASED BY A DEVELOPER CANNOT 29 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT BE A DETERMINING FACTOR BY ITSELF TO SAY THAT THE LAND WAS CONVERTED INTO USE FOR NON-AGRICULTURAL PURPOSES. THE ASSESSEE HAS NOT DONE ANY AGRICULTURAL OPERATIONS ON THESE LANDS AS THE PERIOD OF HOLDING IS VERY SMALL. THE MERE FACT THAT THE NATURE OF LAND IN REVENUE RECORDS IS AGRICULTURAL IS NOT CONCLUSIVE. THERE IS NO CONDITION IN THE INCOME TAX ACT, 1961 THAT TO DETERMINE THE NATURE OF LAND AS AGRICULTURAL LAND, THERE SHOULD BE AGRICULTURAL ACTIVITIES PERFORMED ON THE SAID LAND. WHETHER THE LAND IS AN AGRICULTURAL LAND OR NOT WOULD DEPEND ON ITS CLASSIFICATION IN THE REVENUE RECORDS. THERE IS NO DISPUTE AS TO THE FACT THAT THE LANDS WERE CLASSIFIED AS AGRICULTURAL LAND IN THE REVENUE RECORDS. THE CONDITION OF USER OF LAND FOR AGRICULTURE PURPOSE IS FOR CLAIMING DEDUCTION U/S 54B AND NOT FOR DETERMINING WHETHER IT IS A CAPITAL ASSET OR NOT U/S 2(14). THEREFORE, ONCE A LAND IS CLASSIFIED IN THE REVENUE RECORDS AS AN AGRICULTURAL LAND AND IT IS SITUATED BEYOND 8 KMS OF THE MUNICIPAL LIMIT, IT WOULD REMAIN AN AGRICULTURAL LAND EVEN IF NO AGRICULTURAL ACTIVITIES IS PERFORMED ON THE SAID LAND. CONVERSELY, IF ON AN INDUSTRIAL/COMMERCIAL/RESIDENTIAL LAND, AGRICULTURAL ACTIVITIES ARE CARRIED OUT THE SAME WOULD NOT BECOME AN AGRICULTURAL LAND. THE DECISION OF DELHI HIGH COURT IN CASE OF HINDUSTAN INDUSTRIAL RESOURCES LTD. VS. ACIT 335 ITR 77 AND OF 30 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT BOMBAY HIGH COURT IN CASE OF CIT VS. SMT. DEBBJE ALENO 331 ITR 59 ON THIS ISSUE IS FULLY APPLICABLE. FROM THE DETAILS OF LAND PURCHASED AND SOLD IN A.Y. 07-08 (ANNEXURE B), IT CAN BE SEEN THAT LAND MENTIONED AT S.NO. 2 WAS PURCHASED FROM SH. DAYANAND ON THE BASIS OF AGREEMENT WHICH WAS ACQUIRED BY RIICO AND THE COMPENSATION WAS RECEIVED BY SH. DAYANAND WHO TRANSFERRED THIS AMOUNT TO ASSESSEE IN VIEW OF THE SAID AGREEMENT. THE NATURE OF THIS TRANSACTION CLEARLY SHOWS THAT THIS PURCHASE AND SALE WAS NOT AT ALL AGRICULTURAL IN NATURE. THIS OBSERVATION IS IRRELEVANT IN AS MUCH IN A.Y. 07-08, THE AO HAS ACCEPTED THAT GAIN ON SALE OF THE LAND IS EXEMPT BEING NOT A CAPITAL ASSET U/S 2(14). IN A.Y.S 07 - 08 AND 08 - 09, ASSESSEE HAS PURCHASED/SOLD NUMBER OF IMMOVABLE PROPERTIES, THE DETAILS OF WHICH ARE ENCLOSED IN ANNEXURE C AND D WHICH ITSELF SHOWS THAT ASSESSEE HAS BEEN DOING THESE TRANSACTIONS AS BUSINESS ON REGULAR BASIS. IN A.Y. 07 - 08, THE AO HAS ACCEPTED THAT GAIN ON SALE OF THE LAND IS EXEMPT BEING NOT A CAPITAL ASSET U/S 2(14). FURTHER ONLY BECAUSE, ASSESSEE HAS PURCHASED THE NUMBER OF IMMOVABLE PROPERTIES AND SOLD SOME OF THEM, IT WOULD NOT MEAN THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF PROPERTY DEALINGS. FROM THE BALANCE SHEET, IT CAN BE NOTED THAT OVER THE YEARS THE HOLDING OF PROPERTIES HAS INCREASED FROM RS.22.12 LACS AS ON 31.03.2006 TO 118.20 LACS AS ON 31.03.2007 AND TO RS. 318.09 LACS AS ON 31.03.08. THUS, WHATEVER PROPERTY IS SOLD, THE SAME IS AGAIN REINVESTED IN PURCHASE OF THE PROPERTY AND SHOWN AS FIXED ASSETS. 31 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT THEREFORE, IT CANNOT BE INFERRED THAT ASSESSEE IS DOING THE BUSINESS OF PROPERTIES ON REGULAR BASIS. THE ASSESSEE HIMSELF IS A REAL ESTATE AGENT FOR LAST SO MANY YEARS AND EARNING LOT OF BROKERAGE INCOME ON ACCOUNT OF PURCHASE OF AGRICULTURAL LAND FROM LOCAL FARMERS BY INDUSTRIAL HOUSES IN VIEW OF WELL KNOWN ON-GOING INDUSTRIAL DEVELOPMENT IN BEHROR, NEEMRANA. DUE TO SAID INDUSTRIAL DEVELOPMENT, THE RATES OF AGRICULTURAL AND OTHER LANDS HAVE INCREASED MANIFOLDS DURING LAST 5- 6 YEARS WHICH ARE NOT AT ALL COMMENSURATE WITH ANY RETURN OF AGRICULTURAL CULTIVATION. THEREFORE, PURCHASE AND SALE OF LAND BY ASSESSEE IS WITH SOLE MOTIVE OF EARNING PROFIT AND NOT FOR DOING ANY AGRICULTURAL OPERATION. ONLY BECAUSE ASSESSEE IS ALSO A REAL ESTATE AGENT WOULD NOT MEAN THAT HE IS ENGAGED IN THE BUSINESS OF PROPERTY DEALING IN RESPECT OF THE INVESTMENT IN PROPERTIES MADE BY HIM. EVEN A REAL ESTATE DEALER CAN HAVE TWO PORTFOLIO OF THE PROPERTIES ONE AS A BUSINESS ASSET AND ANOTHER AS INVESTMENT. FURTHER, BECAUSE OF INDUSTRIAL DEVELOPMENT, RATES OF AGRICULTURAL LAND HAVE INCREASED DISPROPORTIONATE TO THE RETURN FROM AGRICULTURAL CULTIVATION WOULD NOT MEAN THAT PURCHASE OR SALE OF THE LAND IS WITH A MOTIVE OF EARNING PROFIT AND NOT TO REALIZE THE CAPITAL APPRECIATION. 4. IT MAY BE NOTED THAT ONLY BECAUSE AGRICULTURAL A CTIVITIES WERE NOT CARRIED OUT OR THAT THE PERSON TO WHOM THE LAND WAS SOLD HAS NO INTENTION TO CARRY OUT THE AGRICULTURAL ACTI VITIES ON THE LAND SOLD OR THAT THE LAND IS SOLD WITHIN A SHORT PE RIOD WOULD NOT MEAN THAT THE AGRICULTURAL LAND HELD BY THE ASS ESSEE IS NOT FOR INVESTMENT BUT FOR ADVENTURE IN THE NATURE OF T RADE. IN VARIOUS CASES, IT HAS BEEN HELD THAT THIS IS NOT A DECISIVE FACTOR TO HELD THAT GAIN FROM SALE OF SUCH LAND IS TO BE A SSESSED AS BUSINESS INCOME. HE RELIED ON THE FOLLOWING CASE LAWS : 32 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT (I) HINDUSTAN INDUSTRIAL RESOURCES LTD. VS ACIT [201 1] 335 ITR 77 (DELHI) (HC) (II) CIT V SMT. DEBBJE ALENO [2011] 331 ITR 59 (BOM) (III) SMT. SUPRIYA KANWAR VS. ITO (2014) 149 ITD 1 ( JODHPUR) (TRIB.) (TM) 5. CIT(A) HAS RELIED ON THE DECISION OF ITAT MUMBAI B ENCH IN CASE OF RATANSHI MULJI PATEL VS. DEPARTMENT OF INCO ME TAX IN ITA NO. 5499/MUM/2011 FOR A.Y. 08-09 DT. 18.07.2012 . HOWEVER, THIS DECISION CONSIDERING THE DECISION OF T WO HIGH COURTS REFERRED ABOVE CANNOT BE A BASIS FOR HOLDING THAT GAIN ON SALE OF AGRICULTURAL LAND IS TAXABLE AS BUSINESS INCOME. OTHERWISE ALSO, IF THE TAXING STATUTE IS AMBIGUOUS A ND VAGUE AND IS SUSCEPTIBLE TO TWO INTERPRETATIONS, THE INTER PRETATION WHICH FAVOURS THE SUBJECTS, AS AGAINST THERE THE REV ENUE, HAS TO BE PREFERRED AS HELD BY SUPREME COURT IN CASE OF CIT VS. VATIKA TOWNSHIP PVT. LTD. 367 ITR 466 [PARA 39(C) OF THE ORDER]. IN THE PRESENT CASE, EVEN THE AO HAS ACCEPT ED THAT ASSESSEE HAS HOLD THE AGRICULTURAL LAND AS AN INVES TMENT IN A.Y. 07-08 AND THEREFORE THERE IS NO REASON TO CONS IDER THE SAME AS BUSINESS ASSET IN A.Y. 08-09. IN VIEW OF ABOVE, THE AO BE DIRECTED TO DELETE THE ADDITION OF RS.20,09,361/- ON ACCOUNT OF PROFIT ON SALE OF AGRI CULTURAL LAND MADE BY HIM AS BUSINESS INCOME. 20. AT THE OUTSET, THE LD DR HAS SUPPORTED THE ORDE R OF THE LOWER AUTHORITIES AND ARGUED THAT THE ASSESSEE IS DOING S YSTEMATIC BUSINESS OF 33 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT PURCHASING AND SELLING OF THE AGRICULTURAL LAND, WHI CH WAS NOT FOR THE PURPOSE OF AGRICULTURAL ACTIVITIES ON IT. THE INTENT ION OF THE ASSESSEE WAS TO EARN PROFIT BY PURCHASING AND SELLING OF THE AGR ICULTURAL LAND. NUMBER OF TRANSACTIONS AND FREQUENCY OF THE TRANSACTIONS I TSELF PROVED THAT THE ASSESSEES ACTIVITIES IN DEALING IN PURCHASE AND SA LE OF AGRICULTURAL LAND ARE ADVENTUROUS IN NATURE OF TRADE. HE RELIED ON TH E DECISION IN THE CASE OF HEMACHAND HIRACHAND SHAH VS. CIT (1995) 83 TAXMAN 626 (GUJ) WHEREIN THE HON'BLE HIGH COURT HAS HELD THAT THE ASS ESSEE ENTERED INTO A SERIES OF TRANSACTIONS OF PURCHASE AND SALE OF LA NDS, WHICH WAS HELD BY THE HON'BLE HIGH COURT AS ORGANIZED BUSINESS ACTIVI TY AND THE ASSESSEE WAS CARRYING ON BUSINESS OR ADVENTURE IN NATURE OF T RADE. HE FURTHER RELIED ON DECISION IN THE CASE OF SMT. INDRAMANI BA I VS. ADDL.CIT (1993) 200 ITR 594 (SC) WHEREIN IT HAS BEEN HELD BY THE HON 'BLE SUPREME COURT THAT A PIECE OF LAND PURCHASED AND SOLD INTO FOUR PLOTS TO INDIVIDUALS HELD ADVENTURE IN NATURE OF TRADE. THERE FORE, ORDER OF THE LD CIT(A) MAY PLEASE BE UPHELD. 21. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. DURIN G THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS CLAIMED EXEMPTED IN COME ON ACCOUNT OF 34 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT PURCHASING AND SELLING OF AGRICULTURAL LAND AT RS. 20,09,361/-. THE INTENTION OF THE ASSESSEE WAS TO GET CAPITAL APPRECI ATION ON PURCHASE AND SALE OF AGRICULTURAL LAND. THE ASSESSEE HAD SHOW N SEPARATELY BROKERAGE INCOME EARNED ON TRADING OF LAND AS BUSIN ESS INCOME. ALL THE PURCHASES AND SALES OF THE AGRICULTURAL LAND BEYOND 8 KM FROM THE MUNICIPAL AREA HAD BEEN SHOWN IN THE FIXED ASSETS AS INVESTMENT NOT IN STOCK IN TRADE. THE ASSESSEES CASE HAS SCRUTINIZED CONTINUOUSLY AND IN PAST ALSO THESE ADDITIONS WERE MADE BY THE ASSESSING OFFICER BUT THE COORDINATE BENCH HAS SET ASIDE THE ISSUE TO THE ASS ESSING OFFICER. IT APPEARS THAT THE COORDINATE BENCH ALSO NOT ACCEPTED THE REVENUES PLEA. FURTHER IN A.Y. 2007-08, THE ASSESSEE HAD SHOWN EXEM PTED CAPITAL GIVEN OF RS. 83,11,740/-, WHICH HAS BEEN ACCEPTED BY THE ASSESSING OFFICER HIMSELF AS THE ASSESSEE HAS DRAWN ATTENTION ON PAGE NO. 31 TO 33 OF PAPER BOOK WHEREIN COPY OF ASSESSMENT ORDER F OR A.Y. 2007-08 ENCLOSED WHICH SHOWS THAT THERE IS NO ADDITION MADE B Y THE ASSESSING OFFICER UNDER THIS HEAD BUT DURING THE YEAR UNDER C ONSIDERATION, THE LD ASSESSING OFFICER HELD THE SAME EXEMPTED INCOME AS BUSINESS INCOME. THE RULE OF RES JUDI CATA IS NOT APPLICABLE IN THE C ASE OF INCOME TAX PROCEEDINGS BUT THE HON'BLE SUPREME COURT IN THE CA SE OF RADHASWAMI 35 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT SATSANG VS. CIT 193 ITR 321 HAS HELD THAT RULE OF CON SISTENCY IS TO BE FOLLOWED TO SETTLE THE REPEATED ISSUE. THE FACTS AND CIRCUMSTANCES OF THE CASE ARE IDENTICAL TO A.Y. 2007-08, THEREFORE, WE DO NOT FIND ANY REASON TO HOLD EXEMPTED AGRICULTURAL CAPITAL GAIN AS ADVEN TURE IN NATURE OF TRADE I.E. BUSINESS INCOME. THE BOOK ENTRIES ARE TO BE EXAMINED FOR DECIDING THE NATURE OF TRANSACTION. THE ASSESSEE HAD SHOWN THESE LANDS UNDER THE HEAD FIXED ASSETS, THEREFORE, THE CASE LA W REFERRED BY THE ASSESSEE ARE SQUARELY APPLICABLE IN THE CASE OF ASS ESSEE. ACCORDINGLY, WE REVERSE THE ORDER OF THE LD CIT(A) ON THIS GROUND . THUS, THIS GROUND OF APPEAL IS ALLOWED IN FAVOUR OF THE ASSESSEE. 22. THE 5 TH GROUND OF ASSESSEES APPEAL IS AGAINST CONFIRMING THE ACTION OF ASSESSING OFFICER BY THE LD CIT(A) BY ASS ESSING THE AGRICULTURAL INCOME OF RS. 60,400/- AS INCOME FROM OTHER SOURCES . THE LD ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD DECLARED AGR ICULTURAL INCOME OF RS. 60,400/- AND REQUIRED TO FURNISH EVIDENCES IN S UPPORT OF THIS CLAIM. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSIN G OFFICER THAT HE HAD ABOUT 12 BIGHAS OF AGRICULTURAL LAND, BUT NO DO CUMENTARY EVIDENCE OF AGRICULTURAL INCOME WERE WITH HIM. THEREFORE, THE L D ASSESSING OFFICER 36 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT ASSESSED THIS INCOME AS INCOME FROM OTHER SOURCES A ND TAXED ACCORDINGLY. 23. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING O FFICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD CIT(A), WH O HAD CONFIRMED THE ADDITION BY OBSERVING AS UNDER:- 7.3 I HAVE CONSIDERED THE ASSESSMENT ORDER AS WELL AS SUBMISSIONS MADE BY THE AR. I FIND THAT THE APPELLA NT HAS FAILED TO SUBSTANTIATE ITS CLAIM THAT IT HAD AGRICU LTURAL INCOME OF RS. 60,400/- WITH ANY DOCUMENTARY EVIDENCE . THE APPELLANT IS ENGAGED IN THE BUSINESS OF REAL EST ATE AND PURCHASE AND SALE OF LAND. IN THESE CIRCUMSTANCES T HE A.O. HAS RIGHTLY ASSESSED THE SAID INCOME AS INCOME FROM OTHER SOURCES. THIS GROUND OF APPELLANT IS DISMISSED. 24. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LD A R OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE VIDE LETTE R DATED 30.12.2010 EXPLAINED THAT HE IS HAVING ABOUT 12.50 BIGHA OF AG RICULTURAL LAND ON WHICH HE HAS DECLARED AGRICULTURAL INCOME OF RS.60,4 00/- AND VIDE LETTER DATED 23.12.2010, HE FILED KHASRA GIRDAWARI TO PROVE THAT AGRICULTURAL ACTIVITIES WERE CARRIED ON THIS LAND. ASSESSEE HAS D ECLARED AGRICULTURAL INCOME OF RS.1,24,800/- IN A.Y. 06-07 WHICH WAS ACCEPTED BY THE A.O.. 37 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT IN A.Y. 07-08 AGRICULTURAL INCOME OF RS.1,10,000/- DECLARED BY THE ASSESSEE , AO ASSESSED THE SAME AT RS. 1,60,000/-. IN A.Y. 09- 10, AGRICULTURAL INCOME IS ASSESSED AT RS.1,25,000/- . THUS, WHEN IN ALL EARLIER YEARS AND IN SUBSEQUENT YEAR, AGRICULTURAL INCOME HAS BEEN ACCEPTED, THERE IS NO REASON TO CONSIDER THE AGRICU LTURAL INCOME OF RS.60,400/- DECLARED DURING THE YEAR AS INCOME FROM OTHER SOURCES. IN VIEW OF ABOVE, AO BE DIRECTED TO ACCEPT THE AGRICULT URAL INCOME DECLARED BY THE ASSESSEE. 25. AT THE OUTSET, THE LD DR HAS SUPPORTED THE ORDE R OF THE LD CIT(A) AND ARGUED THAT NO EVIDENCE OF AGRICULTURAL ACTIVIT IES WERE SUBMITTED BEFORE THE LOWER AUTHORITIES, THEREFORE, THE LD ASSE SSING OFFICER RIGHTLY ASSESSED THE AGRICULTURAL INCOME UNDER THE HEAD INC OME FROM OTHER SOURCES. 26. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. THE AS SESSEE REGULARLY HAD DECLARED THE AGRICULTURAL INCOME NOT ONLY IN THE PR ECEDING YEAR BUT SUBSEQUENT YEAR, WHICH HAS BEEN ACCEPTED BY THE ASSE SSING OFFICER. THE ASSESSEE HAS FILED THE REPLY DURING THE COURSE OF A SSESSMENT PROCEEDINGS VIDE LETTER DATED 30/12/2010 AND COPY K HASRA GIRDAWARI 38 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT VIDE LETTER DATED 23/12/2010 TO PROVE THAT THE ASSE SSEE HAD CARRIED OUT AGRICULTURAL ACTIVITY ON THAT LAND. THE LD ASSESSING OFFICER IN ASSESSMENT YEAR 2006-07, 2007-08 AND 2009-10 HAS BEEN ACCEPTED THE ASSESSEES AGRICULTURAL INCOME. THE LD ASSESSING OFFICER ALSO H AD NOT BROUGHT OUT ANY EVIDENCE TO SUBSTANTIATE THE FINDING MADE BY HI M THAT THE ASSESSEE HAD NOT CARRIED OUT ANY AGRICULTURAL ACTIVITY ON IT . THEREFORE, WE ALLOW THE ASSESSEES GROUND OF APPEAL AND THE ASSESSING O FFICER IS DIRECTED TO TREAT THE AGRICULTURAL INCOME AS SUCH. 27. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/10/2015. SD/- SD/- YFYR DQEKJ VH-VKJ-EHUK (LALIET KUMAR) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21 ST OCTOBER, 2015 RANJAN* VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI BALBIR SINGH, ALWAR. 2. IZR;FKHZ @ THE RESPONDENT- THE ACIT, CIRCLE-2, ALWAR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 39 ITA NO. 121/JP/2013 BALBIR SINGH VS. ACIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.121/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR