MAHAVEER YADAV, Jaipur V. ITO, Jaipur

ITA 209/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2050 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 09-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset converted into stock in trade; Capital asset; Business income; Retrospective amendment; Cost of acquisition; Date of conversion; Fair market value; Reassessment proceedings
• Section: 45(2); 2(14); 133(6); 148; 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA -@ ITA. NO. 209/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2011-12 SHRI MAHAVEER YADAV S/O SHRI GANGADEEN, VPO- BUDHI BAWAL, TEHSIL- KOTKASIM, ALWAR CUKE VS. INCOME TAX OFFICER WARD-1(5) ALWAR LFKK;H YS[KK LA -@THVKBZVKJ LA -@ PAN/GIR NO.: BNOPM8131L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SMT. NEENA JEPH (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 04/12/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 27/02/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-22, ALWAR DATED 07.02.2017 FOR ASSESSMENT YEAR 2011-12 WHEREIN THE FOLLOWING GROUNDS OF APPEAL ARE TAKEN:- 1. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE PLOTS ON THE AGRICULTURAL LAND SOLD BELONGS TO THE HUF AND NOT TO THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. ITA NO. 209/JP/2017 SHRI MAHAVEER YADAV, ALWAR VS. ITO, WARD-1(5) ALWAR 2 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE AO THAT THE PLOTS ON AGRICULTURAL LAND SOLD IS AN ADVENTURE IN THE NATURE OF TRADE AND THEREBY ASSESSING SUCH INCOME AT RS. 48,98,790/- INSTEAD OF WORKING OUT LONG TERM CAPITAL GAIN ON SALE OF THESE PLOTS. 2.1 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT ALLOWING THE DEDUCTION TOWARDS COST OF LAND WHILE CONFIRMING THE ASSESSMENT OF THE INCOME OF RS. 48,98,790/- UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS. 2.2 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN NOT CONSIDERING THE FACT THAT FOR BETTER REALIZATION OF ITS CAPITAL ASSET, THE HUF SOLD THE AGRICULTURAL LAND AFTER PLOTTING AND THE SAME BEING NOT A CAPITAL ASSET U/S 2(14) OF THE ACT, THE SAME IS NOT LIABLE FOR CAPITAL GAIN. 2. THE GROUND NO. 1 OF ASSESSEES APPEAL IS AGAINST THE FINDING OF THE LD. CIT(A) WHEREIN HE HAS NOT ACCEPTED THE CONTENTION OF THE ASSESSEE THAT THE PLOTS ON THE AGRICULTURE LAND BELONGS TO THE HUF AND NOT TO THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. AS PER LD. CIT(A), THE ASSESSEE HAS FAILED TO PRODUCE SUFFICIENT EVIDENCE BOTH AT THE ASSESSMENT AND DURING THE APPELLATE PROCEEDINGS TO PROVE THAT THE LAND BELONGS TO THE HUF OR A VALID HUF EXISTS. THE LD. CIT(A) HAS ALSO TAKEN NOTE OF FACT THAT THE SALE DOCUMENTS BEAR THE NAME OF THE APPELLANT IN HIS INDIVIDUAL CAPACITY AND THE SALE PROCEEDS ARE ALSO DEPOSITED IN THE APPELLANTS INDIVIDUAL BANK ACCOUNT. THE LD. CIT(A) ALSO HELD THAT THE ITA NO. 209/JP/2017 SHRI MAHAVEER YADAV, ALWAR VS. ITO, WARD-1(5) ALWAR 3 ASSESSEE HAS NOT BROUGHT ON RECORD WHETHER HE IS FILING RETURN OF INCOME AS HUF OR NOT. HE HAS FURTHER HELD THAT AO HAS GIVEN A DETAILED REASONONING AS TO WHY THE INCOME HAS BEEN TAXED IN HIS INDIVIDUAL CAPACITY IN PARA-7 OF THE ASSESSMENT ORDER WHICH IS REPRODUCED AS UNDER:- DJNKRK DH RJQ FU/KKZJ.K DS NKSJKU CRK;K X;K DJNKRK DS }KJK HUF TEHU IJ IYKFVAX DJDS VKOKLH; HKQ[K.M CSPS X;S FKS VKSJ HKQ[K.M FCH LS IZKIR JKFK :- 13]87000@&6]04]200 + 3]96]000 + 3]87]000 ESSA GH MLUS MLDS CSAD [KKRS ESA TEK DJOK;K GSA CSAD [KKRS ESA TEK JKFK DK DJNKRK LS DKSBZ YSUK&NSUK UGH GS DJNKRK DK ;G DGUK FD MLDS }KJK HUF DH TEHU CSPH XBZ GS DJNKRK DH O;FDRXR TEHU UGH GS] ;G RDZ FCYDQY EKU; ;KSX; UGH GSA D;KSFD DJNKRK }KJK IZLRQR HKW&IZCU/K SETTLEMENT FOHKKX JKTLFKKU JKT; DS FJDKMZ VUQLKJ FNUKAD 23-02-2015 DKS TKJH UDY DS VUQLKJ [KLJK UECJ 1219 DH D`FK HKWFE 1- JH EKRKNHU IQ= JH XAXKNHU 2- JH DKYH;K IQ= JH XAXKNHU O JH >CCW IQ= JH GJN;KY DS UKE LS MDR HKWFE DK CVOKJK@UKEAKRJ.K IWOZ ESA GH FD;K TK PQDK GSA FTLDS LK{; FU/KKZJ.K FJDKMZ IJ MIYC/K GSA D;KASFD ;FN DJNKRK }KJK HUF DH TEHU IJ HKQ[K.M CSPS TKRS RKS FO; NLRKOSTKSA IJ HUF DS LHKH LNL;KSA D S G L R K { K J F D ; S T K R S I J U R Q F O ; D H J F T L V H I J D S O Y D J N K R K D S G H G L R K { K J G S A DJNKRK DH RJQ LS DH HUF DH TEHU GKSUS DK DKSBZ IZEKF.KD LK{; IZLRQR UGHA FD;K X;KA BLDS VYKOK FO; NLRKOSTKSA ESA ;G FCYDQY LIV GS FD FOSRK I{K DSOY DJNKRK GSA FO; NLRKOSTKSA ES IQRUH TEHU DK DKSBZ MYYS[K UGHA GSA DJNKRK US MLDS CSAD [KKRS LS C;KT DH VK; DKS VU; L=KASRKS LS VK; DKS DJNKRK DH O;FDRXR VK; EKURS GQ, MLDH FOOJ.KH ESA NKKZ;K GSA BL DKJ.K DJNKRK DK ;G DGUK DH MLUS HUF DH TEHU IJ DSOY 3 VKOKLH; HKW[K.M CSP GSA TKS LR; UGHA GS] DJNKRK US VKOKLH; HKW[K.M O;FDRXR GSFL;R LS CSPS GSA D;KSAFD DJNKRK LOEA MLDK ,D EK= LOKEH GSA 3. DURING THE COURSE OF HEARING, THE LD. AR SUBMITTED THAT THE LAND UNDER CONSIDERATION IS AN ANCESTRAL LAND AS IS EVIDENT FROM THE COPY OF INHERITANCE DOCUMENT ISSUED BY TEHSILDAR DT. 26.06.1975. FROM THE SAME AND THE FAMILY PEDIGREE, IT CAN BE NOTED THAT SH. HARDAYAL HAS ITA NO. 209/JP/2017 SHRI MAHAVEER YADAV, ALWAR VS. ITO, WARD-1(5) ALWAR 4 TWO SONS, I.E. SH. JHABBU AND SH. GURBAX. THEREFORE, THE LAND WAS RECORDED IN KHASRA GIRDAWARI IN THE NAME OF SH. JHABBU, SHARE AND SH. GURBAX, SHARE. SH. GURBAX HAS TWO SONS, NAMELY SH. GANGADEEN AND SH. MATADEEN WHEREAS SH. JHABBU HAS NO SUCCESSOR AND THEREFORE, HE ADOPTED SH. MATADEEN. THEREFORE, AFTER THE DEATH OF SH. GURBAX AND SH. JHABBU, IN KHASRA GIRDAWARI, SHARE IN THE LAND WAS RECORDED IN THE NAME OF SH. MATADEEN AND SHARE IN THE NAME OF SH. GANGADEEN. SH. GANGADEEN HAS TWO SONS, NAMELY SH. KALYA AND SH. MAHAVEER WHEREAS SH. MATADEEN HAS ONLY ONE DAUGHTER. THEREFORE, AFTER THE DEATH OF SH. GANGADEEN, IN THE REVENUE RECORD, SHARE IN THE LAND WAS RECORDED IN THE NAME OF MATADEEN AND SHARE IN THE NAME OF SH. MAHAVEER & SH. KALYA. SH. MATADEEN HAS NO SON, HE RELINQUISHED HIS SHARE IN THE NAME OF SH. KALYA. ACCORDINGLY, SH. KALYA HAS SHARE IN THE LAND WHEREAS SH. MAHAVEER HAS SHARE IN THE LAND. IN THE REVENUE RECORDS, THE LAND IS ALWAYS MUTATED IN THE INDIVIDUAL NAME, THEREFORE, THERE IS NO MENTION OF HUF IN THESE RECORDS BUT FROM THE FACT ON RECORD IT CAN BE NOTED THAT THE LAND IS ANCESTRAL LAND WHICH IS INHERITED BY SH. KALYA AND SH. MAHAVEER. THUS, THE LAND UNDER CONSIDERATION IS HUF LAND. 3.1 IT WAS FURTHER SUBMITTED THAT THE AO HAS CONSIDERED THE LAND AS THE INDIVIDUAL LAND OF ASSESSEE ONLY BECAUSE THE MUTATION OF LAND IN THE REVENUE RECORD IS IN THE NAME OF INDIVIDUAL MEMBER AND NOT IN THE NAME OF HUF AND THAT IN THE SALE DOCUMENTS OF THE PLOTS, THERE IS NO MENTION OF THE HUF. THIS FINDING OF THE AO IS CONFIRMED BY CIT(A) AT PG 3, PARA 6.2 OF THE ORDER. IT IS SUBMITTED THAT WHETHER THE LAND IS THE HUF LAND OR THE INDIVIDUAL LAND IS TO BE DECIDED ON THE BASIS OF THE ITA NO. 209/JP/2017 SHRI MAHAVEER YADAV, ALWAR VS. ITO, WARD-1(5) ALWAR 5 ANCESTORS FROM WHOM THE SAME IS INHERITED AND NOT ON THE BASIS OF THE NAME IN WHICH IT IS RECORDED IN THE REVENUE RECORD. IN THE PRESENT CASE, LAND IS NOT SUCCEEDED BY THE ASSESSEE FROM HIS FATHER BUT INHERITED BY HIM FROM HIS FOREFATHERS. THEREFORE, THE LAND UNDER CONSIDERATION IS AN HUF LAND IN THE HANDS OF ASSESSEE AND NOT AN INDIVIDUAL LAND. 4. THE LD DR IS HEARD WHO HAS RELIED ON THE FINDINGS OF THE LOWER AUTHORITIES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURUSED THE MATERIAL ON RECORD. IT IS NOTED THAT SHRI MAHAVEER INHERITED SHARE OF HIS FATHERS SHARE IN THE SUBJECT ANCESTRAL LAND SITUATED IN VILLAGE BUDHI BAWAL, TEHSIL KOTKASIM, DISTRICT ALWAR AFTER THE DEATH OF HIS FATHER, SHRI GAGANDEEN. THE QUESTION FOR CONSIDERATION WHETHER ON DEATH OF HIS FATHER, SHRI GAGANDEEN, THE ASSESSEE SHRI MAHAVEER INHERITED THE SHARE IN THE SUBJECT LAND IN HIS INDIVIDUAL CAPACITY OR IN THE CAPACITY OF HIS HUF. APPARENTLY SHRI GAGANDEEN EXPIRED AFTER COMING INTO FORCE OF THE HINDU SUCCESSION ACT, 1956 WITHOUT LEAVING BEHIND ANY WILL, THE LAND HAS THUS DEVOLVED ON THE ASSESSEE BY INTESTATE SUCCESSION UNDER SECTION 8 OF THE HINDU SUCCESSION ACT WHEREBY SHARE HAS DEVOLVED ON THE ASSESSEE, SHRI MAHAVEER AND SHARE HAS DEVOLVED ON HIS BROTHER AND SON OF THE DECEASED, SHRI KALYA. 6. IN THIS CONNECTION, A REFERENCE MAY BE MADE TO A DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CWT V. CHANDER SEN [1986] 161 ITR 370. THE HONBLE SUPREME COURT IN THAT CASE WAS CONCERNED WITH THE NATURE OF THE PROPERTY FOR THE PURPOSES OF WEALTH-TAX. THE SUPREME ITA NO. 209/JP/2017 SHRI MAHAVEER YADAV, ALWAR VS. ITO, WARD-1(5) ALWAR 6 COURT OBSERVED THAT IT WOULD BE DIFFICULT TO HOLD TODAY THAT PROPERTY WHICH DEVOLVED ON A HINDU MALE UNDER SECTION 8 OF THE HINDU SUCCESSION ACT WOULD BE HUF PROPERTY IN HIS HANDS VIS-A-VIS HIS OWN SON; THAT WOULD AMOUNT TO CREATING TWO CLASSES AMONG THE HEIRS MENTIONED IN CLASS I, THE MALE HEIRS IN WHOSE HANDS IT WILL BE JOINT HINDU FAMILY PROPERTY VIS-A-VIS THEIR SONS, AND THE FEMALE HEIRS WITH RESPECT TO WHOM NO SUCH CONCEPT COULD BE APPLIED OR CONTEMPLATED. THE SUPREME COURT, THEREFORE, HELD THAT THE PROPERTY WHICH DEVOLVED ON THE SON UNDER SECTION 8 WOULD BE HIS ABSOLUTE PROPERTY AND WOULD NOT BE JOINT HINDU FAMILY PROPERTY VIS-A-VIS HIS OWN SON. 7. THIS JUDGMENT OF THE HONBLE SUPREME COURT HAS BEEN FOLLOWED IN THE SUBSEQUENT JUDGEMENT IN THE CASE OF THE CIT V. EL. KARUPPAN CHETTIAR [1992] 197 ITR 646 (SC). IN THIS CASE, THE SUPREME COURT CONSIDERED THE CASE OF THE DECEASED WHO, WITH HIS WIFE, SONS AND DAUGHTER CONSTITUTED A HUF AT THE TIME OF HIS DEATH. HIS HEIRS INCLUDING HIS SON SUCCEEDED TO THE PROPERTIES LEFT BY THE DECEASED UNDER SECTION 8. THE QUESTION WAS WHETHER THE INCOME FROM THE PROPERTY COMING TO THE SON ON THE DEATH OF THE DECEASED SHOULD BE ASSESSED AS THE INCOME OF THE JOINT FAMILY OF THE SON. THE SUPREME COURT HELD THAT THE INCOME FROM THE PROPERTY WHICH WAS INHERITED BY THE SON ON HIS FATHER'S DEATH WAS NOT ASSESSABLE AS INCOME OF THE JOINT FAMILY. 8. THE ABOVE JUDGMENT OF THE HONBLE SUPREME COURT HAS BEEN FOLLOWED BY THE JURISDICTIONAL RAJASTHAN HIGH COURT IN CASE OF CIT VS LUN KARAN GOYAL [1993] 203 ITR 67 (RAJ). IN THIS CASE, THE QUESTION FOR CONSIDERATION BEFORE THE HONBLE COURT WAS 'WHETHER, ON THE FACTS AND ITA NO. 209/JP/2017 SHRI MAHAVEER YADAV, ALWAR VS. ITO, WARD-1(5) ALWAR 7 IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS JUSTIFIED IN HOLDING THAT THE SEPARATE PROPERTY OF THE DECEASED SHRI L.R. AGARWAL WOULD CONSTITUTE HUF PROPERTY IN THE HANDS OF HIS SONS AND GRANDSONS?' REFERRING TO VARIOUS HIGH COURT DECISIONS AND THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CWT V. CHANDER SEN, IT WAS HELD THAT THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT THE SEPARATE PROPERTY OF THE DECEASED WOULD CONSTITUTE HUF PROPERTY IN THE HANDS OF THE DECEASED ASSESSEE'S SONS AND GRANDSONS. THE RELEVANT FINDINGS OF THE HONBLE HIGH COURT ARE AS UNDER: .IT WILL BE SEEN IN THIS CASE THAT THE AAC DECIDED THE APPEAL UNDER ITS ORDER DATED 19-3-1981 (ANNR. B) ON THE BASIS OF GUJARAT HIGH COURT RULING IN THE CASE OF DR. BABUBHAI MANSUKH BHAI ( SUPRA). IT WILL BE FURTHER SEEN FROM THE ORDER OF THE TRIBUNAL DATED 24-3-1982 THAT THE TRIBUNAL DISMISSED THE APPEAL RELYING ON ITS EARLIER DECISION IN THE CASE OF MM. JAIN ( SUPRA) AND THE AFORESAID CASE OF THE GUJARAT HIGH COURT. THE ABOVE CASE OF THE GUJARAT HIGH COURT AND OTHER CASES OF THE ALLAHABAD HIGH COURT, ANDHRA PRADESH AND MADHYA PRADESH HIGH COURTS WERE CONSIDERED BY THE APEX COURT IN THE CASE OF CWT V. CHANDER SEN AIR 1986 SC 1753 AND THE SUPREME COURT HELD THAT THE VIEW TAKEN IN THE AFORESAID CASE OF GUJARAT HIGH COURT P IN DR. BABUBHAI MANSUKHBHAI IS NOT THE CORRECT VIEW AND THE APEX COURT UPHELD THE VIEW TAKEN BY OTHER HIGH COURTS REFERRED TO ABOVE. THE APEX COURT IN PARA 20 OF THE AFORESAID JUDGMENT SAID: '20. IN VIEW OF THE PREAMBLE TO THE ACT I.E. THAT TO MODIFY WHERE NECESSARY AND TO CODIFY THE LAW, IN OUR OPINION IT IS NOT POSSIBLE WHEN SCHEDULE INDICATES HEIRS IN CLASS I AND ONLY INCLUDES SON AND DOES NOT INCLUDE SON'S SON BUT DOES INCLUDE SON OF A PRE- ITA NO. 209/JP/2017 SHRI MAHAVEER YADAV, ALWAR VS. ITO, WARD-1(5) ALWAR 8 DECEASED SON, TO SAY THAT WHEN SON INHERITS THE PROPERTY IN THE SITUATION CONTEMPLATED BY SECTION 8 HE TAKES IT AS KARTA OF HIS OWN UNDIVIDED FAMILY. THE GUJARAT HIGH COURT'S VIEW NOTED ABOVE, IF ACCEPTED, WOULD MEAN THAT THOUGH THE SON OF A PREDECEASED SON AND NOT THE SON OF A SON WHO IS INTENDED TO BE EXCLUDED UNDER SECTION 8 TO INHERIT, THE LATTER WOULD BY APPLYING THE OLD HINDU LAW GET A RIGHT BY BIRTH OF THE SAID PROPERTY CONTRARY TO THE SCHEME OUTLINED IN SECTION 8. FURTHERMORE, AS NOTED BY THE ANDHRA PRADESH HIGH COURT, THE ACT MAKES IT CLEAR BY SECTION 4 THAT ONE SHOULD LOOK TO THE ACT IN CASE OF DOUBT AND NOT TO THE PRE-EXISTING HINDU LAW. IT WOULD BE DIFFICULT TO HOLD TODAY THAT THE PROPERTY WHICH DEVOLVED ON A HINDU UNDER SECTION 8 OF THE HINDU SUCCESSION ACT WOULD BE HUF PROPERTY IN HIS HANDS VIS-A-VIS HIS OWN SON; THAT WOULD AMOUNT TO CREATING TWO CLASSES AMONG THE HEIRS MENTIONED IN CLASS I, THE MALE HEIRS IN WHOSE HANDS IT WILL BE JOINT HINDU FAMILY PROPERTY AND VIS-A-VIS THEIR SONS AND FEMALE HEIRS WITH RESPECT TO WHOM NO SUCH CONCEPT COULD BE APPLIED OR CONTEMPLATED. IT MAY BE MENTIONED THAT HEIRS IN CLASS I OF SCHEDULE UNDER SECTION 8 OF THE ACT INCLUDED WIDOW, MOTHER, DAUGHTER OF PRE-DECEASED SON, ETC.' (P. 1760) 6. IT CAN, THEREFORE, BE SAID THAT THE VIEW TAKEN BY THE TRIBUNAL IS NOT CORRECT. WE, THEREFORE, ANSWER THE QUESTION REFERRED TO US AS UNDER: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS NOT JUSTIFIED IN HOLDING THAT THE SEPARATE PROPERTY OF THE DECEASED SHRI L.K. ITA NO. 209/JP/2017 SHRI MAHAVEER YADAV, ALWAR VS. ITO, WARD-1(5) ALWAR 9 GOYAL WOULD CONSTITUTE HUF PROPERTY IN THE HANDS OF HIS SONS AND GRANDSONS.' 9. THE LEGAL PROPOSITION AND THE RATIO OF THESE DECISIONS WOULD APPLY TO THE PRESENT CASE ALSO AND THE SHARE IN THE SUBJECT LAND INHERITED BY THE ASSESSEE UNDER SECTION 8 ON THE DEATH OF HIS FATHER CANNOT BE CONSIDERED AS HUF PROPERTY IN HIS HANDS. THEREFORE, INCOME FROM DISPOSAL OF SUCH LAND WILL HAVE TO BE CONSIDERED AS HIS INDIVIDUAL INCOME. WE THEREFORE UPHELD THE VIEW OF THE LOWER AUTHORITIES WHERE THE INCOME ON THE DISPOSAL OF PLOTS OF LAND HAS BEEN BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. THE GROUND NO.1 TAKEN BY THE ASSESSEE IS THUS DISMISSED. 10. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED THE FINDINGS OF THE LD CIT(A) IN AFFIRMING THE ACTION OF THE AO IN TREATING THE SALE OF PLOTS OF AGRICULTURE LAND AS ADVENTURE IN THE NATURE OF TRADE AND THEREBY ASSESSING THE INCOME AS BUSINESS INCOME INSTEAD OF WORKING OUT LONG CAPITAL GAINS ON SALE OF THESE PLOTS OF LAND. IT HAS FURTHER BEEN CONTENDED THAT WHAT HAS BEEN SOLD IS AN AGRICULTURE LAND AND THE SAME NOT BEING A CAPITAL ASSET U/S 2(14) OF THE ACT, IT IS NOT LIABLE FOR CAPITAL GAINS TAX. IT HAS ALSO BEEN CONTENDED THAT THE DEDUCTION TOWARDS THE COST OF LAND HAS NOT BEEN ALLOWED WHILE DETERMINING THE INCOME UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS. 11. BRIEFLY STATED, THE FACTS OF CASE ARE THAT BASIS RECEIPT OF THE AIR INFORMATION, THE ASSESSING OFFICER OBSERVED THAT THERE IS A CASH DEPOSIT OF RS. 11,19,000/- IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH ITA NO. 209/JP/2017 SHRI MAHAVEER YADAV, ALWAR VS. ITO, WARD-1(5) ALWAR 10 THE PUNJAB NATIONAL BANK AND THE SAID INCOME HAS ESCAPED TAXATION AND AFTER REGARDING REASONS, NOTICE U/S 148 WAS ISSUED TO THE ASSESSEE. IN RESPONSE TO THE NOTICE, THE ASSESSEE FILED HIS RETURN OF INCOME DISCLOSING OTHER INCOME OF RS. 88,500/-. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE CASH SO FOUND DEPOSITED IN HIS BANK ACCOUNT RELATES TO CASH RECEIPT ON SALE OF THE PLOTS OF LAND. BASED ON FIELD INSPECTION DONE BY AN INSPECTOR OF THE DEPARTMENT AND BASED ON INFORMATION RECEIVED FROM TEHSILDAR, THE AO DETERMINED THAT THE ASSESSEE HAS SOLD 20 RESIDENTIAL PLOTS FOR AN AMOUNT OF RS. 84,09,200/- DURING THE FY 2010-11 RELEVANT TO THE IMPUNGED ASSESSMENT YEAR. AS PER ASSESSING OFFICER, THE NATURE OF INCOME RECEIVED BY THE ASSESSEE ON THE SALE OF THE RESIDENTIAL PLOTS IS IN THE NATURE OF BUSINESS INCOME FOR THE REASON THAT THE LAND HAS BEEN SOLD AFTER PLOTTING WHICH HAS RESULTED IN CHANGE IN THE NATURE AND CHARACTER OF AGRICULTURE LAND TO RESIDENTIAL. IT HAS FURTHER BEEN HELD BY THE AO THAT BY SUCH PLOTTING OF LAND, THE AGRICULTURE LAND HAS BEEN CONVERTED INTO STOCK-IN-TRADE OF ASSESSEES BUSINESS. IN THIS REGARD, IT HAS BEEN HELD BY THE AO THAT AFTER GETTING THE MAPS PREPARED AND LAYING DOWN THE ROAD, THE PLOTTING HAS BEEN DONE AND THE PLOTS HAVE BEEN SOLD DURING THE PREVIOUS YEAR AND IN THE YEAR UNDER CONSIDERATION. THE SAID FACT IS CONFIRMED FROM THE INFORMATION RECEIVED FROM THE TEHSILDAR AND ALSO THE REPORT OF THE INSPECTOR WHO HAS CARRIED OUT THE PHYSICAL INSPECTION OF THE SITE AND WHOSE FINDINGS ARE CONTAINED AT PARA 12 OF THE ASSESSMENT ORDER WHICH IS REPRODUCED AS UNDER:- 12- DJNKRK }KJK FU/KKZJ.K OKZ O VU; OKKSZ ESA DQY YXHKX 150 VKOKLH; HKQ[K.M CSPS X;S FKSA BL LECU/K ESA DK;KZY; DS FUJH{KD LS HKH TKWP DJOKBZ XBZ FKHA DK;KZY; DS FUJH{KD US LHKH IGYQVKSA DH TKWP DJ FNUKAD 20-03-2015 DKS FJIKSVZ IZLRQR DH VKSJ FJIKSVZ ITA NO. 209/JP/2017 SHRI MAHAVEER YADAV, ALWAR VS. ITO, WARD-1(5) ALWAR 11 ESA CRK;K FD% MIJKSDR FOK;KURXZR JH EGKOHJ IQ= JH XAXKNHU] LK- CQF