Shri Shaileshbhai Vallabhbhai Mangukiya, Surat V. The Income Tax Officer, Ward-6(4), Surat

ITA 1818/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1716 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-04-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 24-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K GUPTA
• Assessee Lawyers: SAPNESH SETH
• Keywords: Sale consideration of property below Jantri Value; Business income
• Section: 50C

Judgement Text

ITA NO.1 818 / AHD/20 1 3 A.Y. 200 9 - 10 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHRI S.S. GODARA , JUDICIAL MEMBER I TA NO. 1 818 /AHD /201 3 ASSESSMENT YEAR: 200 9 - 10 SHAILESHBHAI VALLABHBHAI MANGUKIYA , VS. INCOME TAX OFFICER, 61/62, GIRNAR SOCIETY, WARD 6 (4), SURAT. NANA VARACHHA ROAD, SURAT. [PAN A QBPM 8965 F ] (APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI SAPNESH SETH , A.R RESPONDENT BY : S HRI A .K. GUPTA , SR. D.R. DATE OF HEARING : 05 .04 . 20 16 DATE OF PRONOUNCEMENT : 02.05 . 2016 O R D E R PER S.S. GODARA , J.M. TH IS ASSESSEE S APPEAL FOR ASSESSMENT YEAR 200 9 - 10 , ARISE FROM THE ORDER OF THE C I T(A) - I , SURAT DATED 2 5 . 04 .201 3 PASSED IN CASE NO.C AS - I/ TFR.6.88/227/12 - 13 IN PROCE EDINGS UNDER SECTION 1 43(3) OF THE INCOME T AX ACT, 196 1; IN SHORT THE ACT . 2. F OLLOWING ARE THE SUB STANTIVE GROUNDS PLEADED IN THE INSTANT APPEAL: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARN E D COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN TREATING INCOME FROM SALE OF PLOTS AS INCOME UNDER THE HEAD S HORT TERM C APITAL GAIN INSTEAD OF BUSINESS INCOME . 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.2,33,720/ - MADE BY ASSESSING OFFICER AS SUPPRESSED SALES PRICE ON THE BASIS OF VALUE ASSESSED BY STAMP VALUATION AUTHORITY AND FURTHER ERRED IN DIRECTING ASSESSING OFFICER TO MAKE SUCH ADDITI ON AS INCOME UNDER THE HEAD SHORT TERM CAPITAL GAIN . 3. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE L E ARNED COMMISSIONER OF INCOME T AX (APPEALS) HAS ERRED IN ENHANCING THE INCOME OF ASSESSEE BY TREATING AGRICULTURAL I NCOME TO THE EXTENT OF RS.7,20,135/ - AS INCOME FROM OTHER SOURCES . ITA NO.1 818 / AHD/20 1 3 A.Y. 200 9 - 10 PAGE 2 OF 5 3. BOTH PARTIES STATED AT THE OUTSET THAT THE FORMER TWO GROUNDS REPRODUCED HEREINABOVE ARE INTERCONNECTED. THE SAME ARE T AKEN UP FOR DISPOSAL TOGETHER. THIS ASSESSE E SOLD HIS 3 PLOTS B - 217, B - 222 & B - 223 TO AS MANY SEPARATIST VENDEES FOR SALE PRICE OF RS.25 , 500 / - IN FIRST AND THIRD INSTANCES FOLLOW E D BY RS.55 , 500 / - QUA THE S E COND ONE. STAMP VALUE THEREOF WAS RS.80 , 400 / - , R S .1,78,420 AND RS.80 , 400; RESPECTIVELY. THE A SSESSING OFFICER S OUGHT TO APPLY THESE JANTRY RATES TO ASSESSEE THE DIFFERENCE ARISING BETWEEN ACTUAL AND STAMP PRICE COMING TO RS.2,33,720/ - . THE ASS ESSEE STRONGLY BACKED THE ACTUAL P RICE . T HE A SSESSING OFFICER IN ASS ESSMENT ORDER DATE D 23.12.2011 STILL WENT BY THE STAMP PRICE ONLY THEREBY ADDING THE I MPUGNED SUM O F RS.2 , 33,720/ - AS SUPPRESSED SALES. 4. THE ASS ESSEE PREFER R E D APPEAL. HE INTER ALIA PLEADED THAT SECTION 50C OF THE A CT DID NOT APPLY SINCE HE HAD DECLARED PROFITS ARIS I NG FR O M THESE PLOT S SALE AS B USINESS INCOME AND NOT C APITAL GAIN EXIGIBLE UNDER SECTION 50C OF T H E ACT. THE CI T(A) SOUGHT FOR SALE AGREEMENT O F THE PLOT, BALANCE SHEET OF THE PURCHASE AND SALE S ASS ESSMENT YEARS ALON G WITH AREA, LOCATION, ETC. T HE ASSESSEE APPEARS TO HAV E AVAILED THREE EFFE CTIVE OPPORTUNITIES. HE DID NOT BRING THE RELEVANT RECORDS. THIS MADE THE CIT ( A ) TO REQUEST TO SEEK DETAILS THROUGH THE A SSESSING OFFICER. CONSEQ UENTIAL PROCEEDING ENSUED. THE CIT(A) INTER ALIA TOOK COGNISANCE OF THE FACT ON RECORD THAT THE ASSESSEE DE RIVED INCOME FROM CEMENT DEALERSHIP, PURCHASE D TEN PLOTS IN ASSESSMENT YEAR 2008 - 09 FOR RS.1,53,395/ - , TREATED THEM AS FIXED ASSET IN BALANCE SHEET AS ON 31. 0 3.2008 F O LLOW E D BY THAT ADOPTED AS STOCK IN TRADE IN THE IMPUGNED ASSESSMENT YEAR, SOLD THREE PLOT S IN THE RELEVANT PREVIOUS YEAR FOLLOWED BY REST OF THE SEVEN IN ASSESSMENT YEAR 2010 - 11. H E TOOK INTO ACCOUNT ALL THESE F ACTS TO T R EAT THE IMPU GNED PROFITS ARISING FROM SALE OF THREE PLOTS AS SHORT TERM C APITAL GAIN AND NOT AS BUSINESS INCOME. THIS LEAV ES THE ASSESSEE AGGRIEVED. ITA NO.1 818 / AHD/20 1 3 A.Y. 200 9 - 10 PAGE 3 OF 5 5. LEARNED AUTHORISED REPRESENTATIVE TAKES US TO PAGE NO. 4 OF THE PAPER BOOK. THE ASSESSEE PURCHASED TEN SMALL CHUNKS OF PLOTS FOLLOWED BY SALE OF THREE OF THEM IN THE IMPUGNED ASSESSMENT YEAR AND REST SEVEN IN ASSESSMENT YEAR 2010 - 11 . H E SUBMITS THAT AREA INVOLVED IN THESE PLOTS AND SMALL HOLDING PERIOD INDICATE THAT ASSESSEE HAD UNDER TA KEN THE S E PLOT INVESTMENT AS AN ADVENTURE IN THE NATURE OF TRADE ONLY. L EARNED DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTS THE LOWER APP EL LATE FINDINGS. 6. WE HAVE HEARD BOTH PARTIES. RELE V ANT FAC T S NA RRATED IN PRECED I NG PARAGRAPHS ARE NOT REPEATED F O R THE SAKE OF BREVITY. SUFFICE TO SAY THERE IS NO DISPUTE THAT THE ASS ESSEE HAD INCLUDED ALL THESE PLOTS AS FIXED ASSETS IN TH E BALANCE SHEE T OF THE PURCHASE YEAR AND THERE IS NO EXPLANATION AS TO HOW HE COULD TAKE HOLD TOGETHER A DIFFERENT RECOURSE BY SHOWING THE VERY ASSET AS STOCK IN TRADE IN THE IMPUGNED ASSESSMENT YEAR . IT HAS COME ON RECORD THAT THIS ASSESSEE IS ALREADY INVOLVED IN CEME NT DEALERSHIP BUSINESS NOT HAVING ANY SEPARATE INFRASTRUCTURE TO PROVE ANY ORGANISED VENTURE FOR MAKING INVESTMENT IN SUCH LAND DEALS. THERE IS NO OTHER LAND TRANSACTION OR S I MILAR BUSINESS BEING PROVED IN ANY PRECEDING OR SUCCEEDING ASSESSMENT YEAR S TO P ROVE SUCH A BUSINESS ACTIVITY. WE UPHOLD CIT (A) S FINDING UNDER CHALLENG E IN THESE FACTS AND CIRCUMSTANCES. FIRST AND SECOND SUBSTANTIVE GROUNDS RAISED IN THE INSTANT APPEAL FAIL. 7. WE NOW COME TO AS SESSEE S THIRD SUB STANTIVE GROUND. HE HAD CREDITED AG RICULTURAL PRODUCE SALE OF RS.22,20,887/ - WITH NET PROFIT @ 60% COMING TO RS.14,32,530/ - AS AGAINST THAT INFORMED BY THE SAHKARI UDYOG MANDALI TO T H E TUNE OF RS.24,07,184 RESULTING IN DIFFE RENTIAL FIGURE OF RS.1,86,297/ - . T HERE IS NO DISPUTE THAT HE DID N OT MAINTAIN ANY EXPENDITURE DETAILS. W E FIND IT A CAS E OF ENHANCEMENT MADE BY THE CIT ( A ) IN THE LOWER APP ELLATE PROCEEDINGS HOLDING AS UNDER : - ITA NO.1 818 / AHD/20 1 3 A.Y. 200 9 - 10 PAGE 4 OF 5 8.2 AS REGARDS, AGRICULTURAL INCOME, THE SALE PROCEEDS ARE OF RS.24, 07, 184/ - AND NOT RS.22,20,887 / - AS F AR AS SALE BILLS ARE CONCERNED. 8.3 MOREOVER, THE 7/12 EXTRACTS FILED DURING THE ASSESSMENT PROCEEDINGS ARE FOR FINANCIAL YEARS 2010 - 11, 2011 - 12, AND 2012 - 13 AND DO NOT MENTION ANY CROP. NO. 7/12 EXTRACT OF FINANCIAL YEAR 2008 - 09 COULD BE LOCATED IN FILE. THIS PUTS A QUESTION MARK ON THE GENUINENESS OF AGRICULTURAL SALE PROCEEDS ALSO. 8.4 AS REGARDS, THE NET PROFIT , SHOWN @ 60 %, IT IS VERY HIGH AND THE AGRICULTURAL SECTOR DOES NOT HAVE SUCH HIGH RATE OF NET PROFIT. THE AGRICULTURAL INCOME SHOWN FOR THE LAST THREE ASSESSMENT YEARS ARE MENTIONED HEREIN UNDER : - SR. NO. ASSTT . YEAR/S AMOUNT (IN RS.) 1 2007 - 08 5,01,440 2 2008 - 09 4,10,516 3 2009 - 10 9, 25,230 8.5 THE AVERAGE AGRICULTURAL INCOME FOR THESE THREE ASSESSMENT YEARS COMES TO RS 6,12,395 / - . AGAINST T HIS, AGRICULTURAL INCOME OF RS.13,32, 530/ - IS UNREALISTIC FOR THE ASSESSMENT YEAR 2009 - 10 THEREFORE, THE APPELLANT WAS REQUIRED TO SHOW CAUSE AS TO WHY THE AGRICULTURAL INCOME SHOULD NOT BE TAKEN AT 20 - 25 % OF RS.24,07,184 / - . HOWEVER, NO SUB MISSION WAS MADE BY THE APPELLANT ON THIS ISSUE EXCEPT A STATEMENT THAT APPELLANT RELIES ON THE RETURN FILED. 8.6 SINCE THE APPELLANT HAS NOT MAINTAINED ANY DETAILS OF AGRICULTURAL EXPENSES, THE APPELLANT S AGRICULTURAL INCOME IS ESTIMATED AT RS.6,12,395 / - BEING AVERAGE MENTIONED IN PARA 8.5 OF THIS ORDER. THE EXCESS AGRICULTURAL INCOME SHOWN (RS.13,32, 530/ - - RS 6,12, 395 / - = RS 7,20,135/ - ) IS ASSESSABLE UNDER THE HEAD INCOME FROM OTHER SOURCES . IT IS CLARIFIED THAT ESTIMAT E OF AGRICULTURAL INCOME AT RS.6,12, 395 / - DOES NOT AMOUNT TO ACCEPTANCE OF SALE PROCEEDS DUE TO FINDINGS IN PARA 8.3 OF THIS ORDER. 8. WE HAVE HEARD BOTH THE PARTIES. THERE IS NO DISPUTE THAT THE ASSESSEE HAS BEEN TREATED AS AN AGRICULTURIST IN ASSESSMENT YEARS 2007 - 08 TO 2009 - 1 0. MEANING THEREBY THERE IS NO ISSUE ABOUT HIS OWNING THE LANDS IN QUESTION. IT HAS FURTHER COME ON RECORD THAT THE CONCERNED AGRICULTURAL CO - OPERATIVE BODY HAS ALREADY SHOWN HIS SALES TO THE TUNE OF RS.24,07,184/ - . THE CIT ( A ) APPEARS TO HAVE NOTICED TH E SALE ITA NO.1 818 / AHD/20 1 3 A.Y. 200 9 - 10 PAGE 5 OF 5 PRODUCE OF RS.22,20,887/ - WITH NET PROFIT @ 60% (SUPRA). WE FIND THAT THIS AGRICULTURAL CO - OPERATIVE BODY IN FACT DEALS WITH SUGAR CANE BEING PROCESSED INTO SUGAR PRODUCE. THERE CANNOT BE ANY DISPUTE THAT SUGARCANE IS A CASH CROP WHICH IS MORE LAB OUR INTENSIVE NOT REQUIRING HUGE EXPENDITURE BY WAY OF PESTICIDES, INSECTICIDES ETC. THE CIT(A) IN HIS FINDINGS UNDER CHALLENGE DOES NOT DRAW ANY PARALLELS IN THE CROP GROWN IN THE IMPUGNED ASSESSMENT YEAR VIS - A - VIS THOSE IN THE EARLIER ASSESSMENT YEARS . W E ACCEPT ASS ESSEE S NET PROFIT @ 60% IN THE S E FAC T S AND CIR CUMSTANCES. THE REVENUE S ARGUMENT S SUPPORTING TH E LOWER APP ELLATE FININGS UNDER CHALLENGE ARE ACC ORDINGLY REJECTED. THE IMPUGNED ENHANCEMENT BEING MADE BY THE CIT ( A ) AFTER RE - ESTIMATION OF AGR ICULTURAL PRODUCE IS ACCORDINGLY DELETED. THE THIRD SUBSTANTIVE GROUND IN THE INSTANT APPEAL SUCCEEDS. 9. IN THE RESULT, THIS ASSESSEE S APPEAL IS PARTLY ALLOWED. PRONOUNCED IN THE O PEN COURT TODAY ON TH E 2 ND DAY OF MAY , 201 6 . SD/ - SD/ - PRAMOD KUMAR S .S. GODARA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 2 ND DAY OF MAY , 2016 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD