N.Shanmugha Sundaram, CHENNAI V. ITO, Coimbatore

ITA 2191/CHNY/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9303 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 03-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 23-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: J BALACHANDER
• Keywords: Gross profit estimation; Capital asset; Business income
• Section: 143(3); 2(14); 133A; 133(6); 131; 63

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , C B ENCH, CHENNAI . , . , # $ BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI G.PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A.NO.2191/MDS/2015 ( / ASSESSMENT YEAR: 2009-10) MR. N.SHANMUGHA SUNDARAM 30, NELLITHURAI ROAD, METTUPALAYAM-641 301. VS INCOME TAX OFFICER, WARD-V(1), COIMBATORE. PAN: ARBPS4097F ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. J.BALACHANDER, ADVOCATE /RESPONDENT BY : MR. A.V.SREEKANTH, JCIT /DATE OF HEARING : 3 RD MARCH, 2016 /DATE OF PRONOUNCEMENT : 12 TH MAY, 2016 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS)- 3, COIMBATORE DATED 30.09.2015 IN ITA NO.571/2014- 15 PASSED UNDER SECTION 143(3) R.W.S. 250 OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL ELABORATE GROUN DS IN HIS APPEAL HOWEVER, THE CRUXES OF THE ISSUES ARE AS FOLLOWS:- I) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF ` 17,31,880/- MADE BY THE LEARNED ASSESSING OFFICER ON ACCOUNT O F LOW PROFIT MARGIN DISCLOSED IN THE RETURN OF INCOME . II) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE 2 ITA NO.2191/MDS/2015 LEARNED ASSESSING OFFICER OF ` 1,07,04,700/- ON ACCOUNT OF PROFIT ON SALE OF LAND AS BUSINESS INCOME. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS AS A WHOLESALE TRADER IN VEGETABLE S IN METTUPALAYAM FILED HIS RETURN OF INCOME ON 29.09.20 09 FOR THE ASSESSMENT YEAR 2009-10 ADMITTING HIS TOTAL INCOME OF ` 4,45,290/- AND ` 20,000/- AS AGRICULTURAL INCOME. INITIALLY THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE AC T. SUBSEQUENTLY AN ENQUIRY UNDER SECTION 131(1A) WAS CONDUCTED BY THE INVESTIGATION WING OF THE DEPARTME NT ON 29.09.2009 AND ON 09.06.2009 IN THE CASE OF THE AS SESSEE AND A REPORT WAS SUBMITTED. THEREAFTER THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE WAS ISSUED UNDER S ECTION 143(2) WAS ISSUED ON 21.09.2010 AND FINALLY ASSESSM ENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 27.12. 2011 WHEREIN THE LEARNED ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF A) PROFIT ON SALE OF LAND AS BUSINESS IN COME FOR RS.1,07,04,700/- AND B) ADDITION ON ACCOUNT OF LOW GROSS PROFIT AMOUNTING TO RS.17,31,880/-. 3 ITA NO.2191/MDS/2015 GROUND NO.1:- ADDITION ON ACCOUNT OF SALE OF LAND AS BUSINESS INCOME OF RS.1,07,04,700/-: 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS REVEALED THAT THE ASSESSEE HAD PURCHASED LAND MEAS URING 6.07 ACRES IN SURVEY NO.379/1, NALLATIPALAYAM VILLA GE, POLLACHI TALUK ON 28.09.2006 FOR ` 9,10,500/- FOR A PURCHASE CONSIDERATION OF RS.32.77 LAKHS BY THE ADVICE OF SH RI G.SHANMUGANATHAN A FRIEND OF THE ASSESSEE. MR. G.SHANMUGANATHAN HAD IN FACT IDENTIFIED THE LAND OF 50 ACRES IN NALLATIPALAYAM VILLAGE, POLLACHI. THE ASSESSEE H AD PURCHASED THE AFORESAID LAND AND HIS OTHER FRIENDS PURCHASED THE ADJACENT LANDS ACCORDING TO THEIR BUYING CAPACI TY. IT WAS OPINED BY THE LEARNED ASSESSING OFFICER THAT THE IN TENTION OF THE ASSESSEE AND HIS FRIENDS WERE TO SELL THE LAND IMMEDIATELY, HOWEVER DUE TO LEGAL ISSUES THE SAME W AS SOLD AFTER THE LEGAL ISSUES WERE SORTED OUT. IN THE PRO CESS, THE ASSESSEE SOLD HIS LAND ON 3.7.2008 FOR SALE CONSID ERATION OF ` 1,39,82,500/- TO M/S. ALMCO PROPERTIES PVT. LTD., C HENNAI. THE LEARNED ASSESSING OFFICER THEREAFTER OBTAINED T HE CHITTA AND ADANGAL COPY OF THE LAND FROM DEPUTY THASILDAR BY INVOKING THE PROVISIONS OF SECTION 133(6) OF THE AC T. FROM THAT 4 ITA NO.2191/MDS/2015 IT WAS REVEALED THAT NO CROP WAS CULTIVATED IN THE LAND PURCHASED BY THE ASSESSEE. THOUGH THE ASSESSEE HAS PURCHASED THE LAND ON 29.09.2006 THE ASSESSEE HAD S HOWN AGRICULTURAL INCOME IN HIS RETURN OF INCOME ONLY FO R THE ASSESSMENT YEAR 2009-10. THE ASSESSEE COULD ALSO N OT ESTABLISH THAT AGRICULTURAL OPERATION WAS PERFORMED IN THE LAND OWNED BY HIM DURING THE RELEVANT ASSESSMENT YEAR. THE LEARNED ASSESSING OFFICER FURTHER OBSERVED THAT IN THE PURCHASE BILL DATED 28.09.2006 IT WAS MENTIONED THA T THE WATER IN THE WELL ON THE LAND SHOULD BE USED ONLY F OR DRINKING PURPOSES. FROM THE ABOVE THE LEARNED ASSESSING OFFI CER ARRIVED AT THE FOLLOWING CONCLUSION:- I) THE ASSESSEE HAD THE INTENTION OF SELLING THE LA ND IMMEDIATELY AND THE PLANS GOT DELAYED ONLY DUE TO L EGAL ISSUES. II) THE ASSESSEE HAS NOT CULTIVATED ANY CROPS DURIN G THE PERIOD IN WHICH THE ASSESSEE WAS IN POSSESSION OF T HE LAND I.E. 2 YEARS. III) THE SUPPORTIVE RECORDS FURNISHED BY THE ASSESS EE ARE PROVED TO HAVE BEEN FALSE. IV) NO EVIDENCES FURNISHED FOR THE EXPENSES INCURR ED SUCH AS THE WAGES, FERTILIZER COST ETC. IN SUPPORT OF TH E AGRICULTURAL INCOME SAID TO HAVE BEEN ARISING OUT OF THIS LAND. V) THE ASSESSEE HAS NOT OFFERED AGRICULTURAL INCOME IN THE EARLIER YEAR WHEN THE LAND WAS IN HIS POSSESSION. 5 ITA NO.2191/MDS/2015 FOR THE AFORESAID REASONS, THE LEARNED ASSESSING OF FICER FURTHER CAME TO A CONCLUSION THAT THE PROFIT ON SAL E OF LAND BY THE ASSESSEE IS ADVENTURE IN THE NATURE OF TRADE AN D THEREFORE THE PROFIT DERIVED FROM SALE OF LAND HAS TO BE TREATED AS BUSINESS INCOME AND ACCORDINGLY BROUGHT TO TAX T HE AMOUNT OF RS.1,07,04,700/-. 5. ON APPEAL, THE LEARNED COMMISSIONER OF INCOME TA X (APPEALS) CONFIRMED THE ORDER OF THE LEARNED ASSESS ING OFFICER BY OBSERVING AS UNDER:- 8.1 ADDITION ON ACCOUNT OF LOW PROFIT MARGIN RS.18.31,880/-: A PERUSAL OF THE RECORDS SHOWS THAT THE ASSESSING OFFICER HAS TAKEN A STATEMENT ON OATH DATED 29.9.20 08 FROM THE ASSESSEE WHEREIN IT WAS STATED THAT THE GP OF THE BUSINESS WILL BE6% FROM THE ASSESSEE'S VEGETABLE BUSINESS. DURING THE COURSE OF APPEAL THE ASSESSSEE WAS NOT ABLE TO GIVE ANY EVIDENCE TO THE CONTRARY. THEREFORE, RELYING ON THE STATEMENT OF TH E ASSESSEE AS WELL AS INABILITY OF THE ASSESSEE TO FURNISH ANY RECORDS ON THE CONTRARY THE ADDITION OF RS. 17,31,880/- IN CONFIRMED IN THE HANDS OF THE APPELLANT, TOWARDS LOWER GP DISCLOSED IN THE RETURN OF INCOME FOR THE VEGETABLE BUSINESS. 8.2 ADDITION AS BUSINESS INCOME - RS. 1,07,04,700/- I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT AND THE MATERIALS AVAILABLE ON RECORD FROM WHICH TH E FOLLOWING POINTS EMERGE: 6 ITA NO.2191/MDS/2015 A) A SURVEY ULS 133A WAS CONDUCTED IN THE CASE OF SHRI N. SHANMUGHANATHAN ON 31/7/2008 FROM WHICH IT WAS NOTICED THAT SHRI SHANMUGANATHAN ALONG WITH FOUR OT HERS INCLUDING THE ASSESSEE, HAD PURCHASED 50 ACRES OF LAND ON 28/9/2006 AND SOLD THE SAME ON 03/07/2008: B) DURING THE COURSE OF SURVEY A STATEMENT WAS REC ORDED FROM SHRI SHANMUGHANATHAN, RELEVANT PORTION OF WHICH IS AS UNDER: 'Q 7: I AM SHOWING YOU IMPOUNDED MATERIAL IN ANNEXURE VAPILSLLMP LOSSE SHEET NO. AND ALSO LS. NO. 76 IN ANNEXURE NSKLLSLLMP. WHICH SHOWS INCOME AND EXPENSE DETAILS OF SENRAMPALAYAM LAND TO THE EXTEND OF 50.26 ACRES. PI EXPLAIN A. LS. 76 ONLY A PROVISIONAL BUSINESS INCOME CALCULATION OF SENTRAPALAYAM LAND. VAPILSLLMP LS NO. IS THE ACTUA L PURCHASE PRICE OF 50.26 ACRES IN SENTRAPALAYAM WHICH HAS BEEN SOLD TO ALAMCO PROPERTIES PVT LTD., CHENNAI WH OSE SALE DEED I AM PRODUCING BEFORE YOU. AS PER THIS DEED DATED 3/7/2008. I HAVE REGISTERED MY PORTION OF LAND AT RS.3,76,76,250/- Q. 8. THIS LAND WAS PURCHASED IN 2006 AND 2007 BY YOU. FOR WHAT PURPOSE THIS WAS PURCHASED? . G) THE ASSESSEE HAS RELIED ON THE JUDGEMENT OF MRS. SHAKUNTHALA VENKATACHALAM VS. ACIT. HOWEVER, THE ASSESSEE'S CASE CAN BE CLEARLY DISTINGUISHED FROM T HE DECISION CITED ABOVE ON THE FOLLOWING LINES: H) THE ASSESSEE HAS NOT PRODUCED ANY PROOF FOR PAYM ENT OF AGRICULTURAL KIST, WHICH WAS A CRUCIAL POINT NOTICE D IN THE SAKUNATHALA VENKITACHALAM JUDGEMENT. I) THERE ARE EVIDENCES IN THE FORM OF STATEMENT REC ORDED ON OATH FROM THE PREVIOUS OWNER AND ADJACENT LAND OWNE RS THAT THERE WAS NO AGRICULTURAL ACTIVITY PERFORMED ON THE LANDS. ALSO THE ADJACENT PIECES OF LAND HAVE BEEN PUT TO NON-AG RICULTURAL PURPOSES AND BEING SITUATED ON THE HIGHWAY AND VERY NEAR TO THE TALUK HQ AND MANY INDUSTRIES AND EDUCATIONAL IN STITUTIONS BEING CONSTRUCTED, LAND WAS IN A DEVELOPED ZONE, HA VING 7 ITA NO.2191/MDS/2015 PREMIUM PRICE. J) FURTHER IT IS CLEAR THAT NEITHER THE ASSESSEE NOR: THE PURCHASER ARE AGRICULTURALISTS AND HAD NO INTENTION OF DOING ANY AGRICULTURAL ACTIVITY. K) IT IS IMPORTANT TO NOTE THAT APART FROM VAO'S CE RTIFICATE AND CHITTA/ADANGAL, ASSESSEE HAS NOT PRODUCED ANY OTHER DETAILS TO SUBSTANTIATE HIS CLAIM THAT THE LANDS UNDER QUESTIO N WAS REALLY AGRICULTURAL LAND. I) ASSESSEE COMPANY HAS NOT PRODUCED ANY KIND OF EV IDENCE TO SHOW THAT, IT HAD PAID GOVERNMENT OF TAMILNADU ANY KIND OF LAND REVENUE ON THE CROPS GROWN DURING ASSESSMENT Y EAR OR PRIOR TO THAT PERIOD M) THE MAIN IMPORTANT DISTINGUISHABLE FEATURE IS A FACT THAT THAT THE JUDGEMENT CITED BY THE ASSESSEE WAS ON THE ISSU E OF CAPITAL GAINS WHEREAS IN THE CASE OF THE ASSESSEE THE ASSESSING OFFICER HAS TREATED THE AMOUNT AS BUSINES S INCOME. N) IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES THE CASE OF THE ASSESSEE IS CLEARLY DISTINGUISHABLE FROM THE JURISD ICTIONAL HIGH COURT DECISION IN THE CASE OF SHAKUNTHALA VENKITACH ALAM. 8.2.1 IT MAY BE POINTED OUT THAT THE HONOURABLE SUP REME COURT HAS LAID DOWN 13 CRITERIA TO ARRIVE AT A CONCLUSION REGARDING THE NATURE OF LAND, WHETHER AGRICULTURAL OR NOT. THE RE LEVANT QUESTIONS ARE THE FOLLOWING: '(1) WHETHER THE LAND WAS CLASSIFIED IN THE REVENUE RECO RDS AS AGRICULTURAL AND WHETHER IT WAS SUBJECT TO THE PAYM ENT OF LAND REVENUE? . (2) WHETHER THE LAND WAS ACTUALLY OR ORDINARILY USED FO R AGRICULTURAL PURPOSES AT OR ABOUT THE RELEVANT TIME ? (3)WHETHER SUCH USER OF THE LAND WAS FOR A LONG PERIOD OR WHETHER IT WAS OF A TEMPORARY CHARACTER OR BY WAY OF A STOP-GAP ARRANGEMENT? (4) WHETHER THE INCOME DERIVED FROM THE AGRICULTURA L OPERATIONS CARRIED ON IN THE LAND BORE ANY RATIONAL PROPORTION TO THE INVESTMENT MADE IN PURCHASING THE LAND? (5) WHETHER, THE PERMISSION UNDER SECTION 65 OF THE BOMBAY LAND REVENUE CODE WAS OBTAINED FOR THE NON-AGRICULT URAL USE OF THE LAND? IF SO, WHEN AND BY WHOM (THE VENDOR OR TH E VENDEE)? 8 ITA NO.2191/MDS/2015 WHETHER SUCH PERMISSION WAS IN RESPECT OF THE WHOLE OR A PORTION OF THE LAND? IF THE PERMISSION WAS IN RESPECT OF A PORTION OF THE LAND AND IF IT WAS OBTAINED IN THE PAST, WHAT WAS T HE NATURE OF THE USER OF THE SAID PORTION OF THE LAND ON THE MATERIAL DATE? (6) WHETHER THE LAND, ON THE RELEVANT DATE, HAD CEA SED TO BE PUT TO AGRICULTURAL USE? IF SO, WHETHER IT WAS PUT TO A N ALTERNATIVE USE? WHETHER SUCH CESSER AND/OR ALTERNATIVE USER WA S OF A PERMANENT OR TEMPORARY NATURE? (7) WHETHER THE LAND, THOUGH ENTERED IN REVENUE REC ORDS, HAD NEVER BEEN ACTUALLY USED FOR AGRICULTURE, THAT IS, IT HAD NEVER BEEN PLOUGHED OR TILLED? WHETHER THE OWNER MEANT OR INTENDED TO USE IT FOR AGRICULTURAL PURPOSES? (8) WHETHER THE LAND WAS SITUATE IN A DEVELOPED AREA? WHETHER ITS PHYSICAL CHARACTERISTICS, SURROUNDING SITUATION AND USE OF THE LANDS IN THE ADJOINING AREA WERE SUCH AS WOULD INDI CATE THAT THE LAND WAS AGRICULTURAL? (9) WHETHER THE LAND ITSELF WAS DEVELOPED BY PLOTTI NG AND PROVIDING ROADS AND OTHER FACILITIES? (10) WHETHER THERE WERE ANY PREVIOUS SALES OF PORTIONS OF THE LAND FOR NON- AGRICULTURAL USE? (11) WHETHER PERMISSION UNDER SECTION 63 OF THE BOMBAY TENANCY AND AGRICULTURAL LANDS ACT, 1948, WAS OBTAINED BECAUSE THE SALE OR INTENDED SALE WAS IN FAVOUR OF A NON-AGRICULTURIST? IF SO, WHETHER THE SALE OR INTENDED SALE TO SUCH NON-A GRICULTURIST WAS FOR NON-AGRICULTURAL OR AGRICULTURAL USER? (12) WHETHER THE LAND WAS SOLD ON YARDAGE OR ON ACR EAGE BASIS? (13) WHETHER AN AGRICULTURIST WOULD PURCHASE THE LA ND FOR AGR ICULTURAL PURPOSES AT THE PRICE AT WHICH THE LAND W AS SOLD AND WHETHER THE OWNER WOULD HAE EVER SOLD THE LAND VALU ING IT AS A PROPERTY YIELDING AGRICULTURAL PRODUCE ON THE BASIS OF ITS YIELD? 8.2.2 THE ANSWERES TO THE ABOVE QUESTIONS IN THE CA SE OF THE ASSESSEE ARE GIVEN ASUNDER:- CRITERIA ASSESSEES CASE 1 LAND IS CLASSIFIED AS AGRICULTURAL LAND IN REVENU E 9 ITA NO.2191/MDS/2015 RECORDS BUT CROPS WERE NOT RAISED ON THAT LAND AS P ER RECORDS OF VAO 2. LAND IN QUESTION WAS NOT USED FOR AGRICULTURAL PURPOSES SINCE ASSESSEE PURCHASED THE LAND IN 2006 TILL HE SOLD IT. 3. LAND WAS LEFT FALLOW FROM PURCHASE TILL DATE. 4. INCOME FROM AGRICULTURE COULD NOT BE MORE THAN O F RS.1,00,000/- PER ACRE. HOWE VER, THE LAND WAS SOLD ATRS.23.50 LAKHS PER ACRE. 5. NO PERMISSION WAS NOT OBTAINED FOR NON-AGRICULTU RAL PURPOSES. 6. LAND WAS NOT UTILIZED FOR AGRICULTURAL PURPOSE FROM PURCHASE TILL DATE. ALSO LAND WAS NOT UTILIZED FOR ANY OTHER PURPOSE AND WAS LEFT FALLOW. 7. NO LAND IN QUESTION WAS NOT PUT TO AGRICULTURE B Y ASSESSEE AND ASSESSEE HAD NO INTENTION TO USE IT FO R AGRICULTURAL PURPOSES. 8. YES THE LAND IS SITUATED IN A DEVELOPED AREA. 9. NO LAND WAS NOT DEVELOPED INTO ANY PLOTS 10. YES, ASSESSEE HAS SOLD LAND FOR NON-AGRICULTURA L PURPOSES 11. ASSESSEE SOLD LAND TO M/S. ALMCO PROPERTIES PVT .LTD. AND THIS COMPANY IS NOT ENGAGED IN ANY AGRICULTURAL ACTIVITIES BUT CARRYING OUT BUSINESS OF DEVELOPING LAND PROPERTIES CONSTRUCTING COMMERCIAL/RESIDENTIAL COMPLEXES ON IT. THEREFORE, NO AGRICULTURE WAS DONE ON THIS LAND AFTER THE LAND WAS SOLD 12. LAND WAS SOLD ON ACREAGE BASIS. 13. CONSIDERING THE FACT THAT THE LAND IS SITUATED IN RAIN FED AREA, THE AVERAGE RETURNS FROM THE LAND COULD BE RS.1,00,000/- PER ACRE AND THE SALE PRICE WAS RS.23.50 LAKHS PER ACRE, NO AGRICULTURIST WOULD HAV E PURCHASED THIS LAND FOR PURELY AGRICULTURAL PURPOSE S. THE EXPONENTIAL APPRECIATION IN THE VALUE OF THE LAND OVER A PERIOD OF 23 MONTHS CANNOT BE FOR AGRICULTURAL PURPOSES BUT FOR NON-AGRICULTURAL PURPOSES LIKE INDUSTRY, COMMERCIAL PURPOSES. 8.2.3 A PERUSAL OF THE ABOVE 13 CRITERIA ALONG WITH HONOURABLE SUPREME COURT DECISION IN THE CASE OF THE RAJA J. RAMESHWAR RAO 42 ITR 179 WHEREIN IT IS HELD THAT WHEN A LAND IS ACQUIRED WITH PRIMARY MOTIVE TO SELL IT FOR PROFIT, THIS INT ENTION CAN ONLY SAID TO BE FOR BUSINESS AND NOTHING ELSE. FU IN E C ASE OF 10 ITA NO.2191/MDS/2015 ELT VS. NARASIMHA REDDY SUPREME COURT HELD THAT PARTICULAR TRANSACTION CAN BE CONSIDERED AS ADVENTURE NATURE O F TRADE IF CERTAIN FACTS AND CIRCUMSTANCES ARE CUMULATIVELY CO NSIDERED NAMELY (1) WHETHER THE ASSESSEE IS A BUSINESSMAN OR AGRICULTURIST? (2) WHETHER ASSESSEE HAD PURCHASED A LAND LOCATED IN URBAN LAND SURROUNDED BY BIG FACTORIES? (3) WHETHER THE ASSESSEE HAD LEFT THE LAND UNCULTIVATED FOR MAN Y YEARS? AND (4) WHETHER HE HAS SOLD THE LAND FOR HUGE PROFI T? 8.2.4 A PERUSAL OF THE ABOVE FACTS AND CIRCUMSTANCE S WOULD CLEARLY INDICATE THAT THE ASSESSEE DID NOT HAVE ANY INTENTION TO DO AGRICULTURAL ACTIVITY. THIS IS EVIDENT FROM THE FACT THAT THE ASSESSEE HAS NOT SHOWN ANY AGRICULTURAL INCOME FOR ASSESSMENT YEAR 2007-08. HE HAS NOT PRODUCED ANY VO UCHER FOR THE SALE OF AGRICULTURAL COMMODITIES NOR ANY EX PENSES RELATING TO PESTICIDE, INSECTICIDE ETC. TO SHOW THA T HE HAS CARRIED OUT AGRICULTURAL ACTIVITIES IN THE SAID LAND. THE S TATEMENT FROM THE INSPECTOR WHO HAVE DONE INSPECTION OF THE LAND ALSO SHOWS THAT NO AGRICULTURAL ACTIVITY WAS CARRIED OUT IN TH E LAND FOR THE PAST SEVERAL YEARS. 8.2.5 THE ASSESSEE ALSO FALSIFY THE CHITTA AND ADAN GAL FOR FASALI YEAR 1416 & 1417. THE ORIGINAL CHITTA AND ADANGAL S UBMITTED BY THE DEPUTY TAHSILDAR SHOWS THAT NO CROPS WERE GROW N IN ASSESSEES LAND SURVEY NO.379/1. 8.2.6 IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAD OMITTED TO DECLARE ANY INCOME FROM SALE OF LAND IN HIS RETURN OF INCOME EITHER AS CAPITAL GAINS OR AS INCOME FROM BUSINESS. THE ASSESSEE DISCLOSED ONLY BUSINESS INCOME CARRIED OUT BY HIM AS A WHOLESALE DEALER IN POTATOES. THEREFORE, THE ASSE SSEE'S CLEAR INTENTION WAS TO AVOID PAYMENT OF TAX BY TOTALLY AV OIDING THE SALE OF PROPERTY FROM THE RETURN OF INCOME. THE MA TTERS CAME TO LIGHT ONLY AFTER THE ASSESSING OFFICER RECEIVED INF ORMATION ARISING FROM SURVEY IN THE CASE OF SHANMUGHASUNDARA M U/S 133 (6). 8.2.7 A COPY OF THE ASSESSMENT ORDER IN THE CASE OF SHRI SHANMUGHASUNDARAM, THE CHIEF PROMOTER OF THE PROJEC T, DATED 30/3/2013 SHOWS THAT THE ASSESSING OFFICER HAS TREATED THE INCOME ON SALE OF LAND AS BUSINESS INCOME. 8.2.8 A PERUSAL OF THE MATERIALS IMPOUNDED FROM THE PREMISE OF SHRI SHANMUGHANATHAN, IT IS SEEN THAT RIGHT FROM THE COMMENCEMENT OF THE VENTURE SHRI SHANMUGHANATHAN AN D OTHERS DECIDED TO CONVERT THE LAND INTO LAYOUTS BY NAMING IT AS 11 ITA NO.2191/MDS/2015 VIP NAGAR. IN THIS REGARD, ONE OF THE CO-PURCHASERS , SHRI PALANISAMY CONFIRMED THE ABOVE ACTIVITIES AN ALSO S TATED THAT THEY HAD ENTERED INTO AN ORAL AGREEMENT WITH M/S. JBJ CITY DEVELOPERS FOR MARKETING THE SAME. HIS ANSWER TO QUESTIONS NO.7 AND 8 OF THE STATEMENT DATED 2.9.200 8 RECORDED U/S 131 (1A) CLEARLY REVEAL THAT THE PURPO SE WAS NOT TO PUT THE LAND TO AGRICULTURAL OPERATIONS. WHEN NE GOTIATIONS WERE GOING ON, THIS GROUP HAD GOT AN OPPORTUNITY TO SELL THE ENTIRE LAND TO MIS. ALMCO PROPERTIES CHENNAI AT A HEFTY AMOUNT. FROM THE ABOVE, IT IS CLEAR THAT THE LAND L AWS PURCHASED PURELY FOR RESALE AND NOT FOR ANY AGRICUL TURAL ACTIVITIES. 8.2.9 IT IS CLEAR FROM THE ABOVE DISCUSSION THAT TH E ASSESSEE, ALONG WITH FOUR OTHERS PURCHASED 50 ACRES OF LAND F ROM OVER 50 PERSONS, REARRANGED TO DIVIDE THE SAME BY METES AND BOUNDS AND SOLD THE SAME WITHIN 23 MONTHS, WITH A R ETURN OF 326% AND 11.75 TIMES THE GUIDELINE VALUE, TO A REAL ESTATE DEVELOPER ALAMCO PROPERTIES, CHENNAI, WHICH WAS CLE ARLY A RESULT OF CAREFUL PLANNING AND EXECUTION OF A REAL ESTATE VENTURE, RESULTING IN A PROFIT OF RS. 1,07,04,700/-. THIS PROFIT WILL BE TREATED AS INCOME FROM ADVENTURE IN THE NATURE O F BUSINESS. 8.2.10 THEREFORE, THE PROFIT ON THE SALE OF 6.07 AC RES OF LAND AMOUNTING TO RS. 1,07,04,700/- IS TREATED AS BUSINESS INCOME OF THE ASSESSEE. THE APPEAL OF THE ASSESSEE IS DISMISSED. 6. THE LEARNED AUTHORIZED REPRESENTATIVE ARGUED BEF ORE US STATING THAT THE LAND SOLD BY THE ASSESSEE IS AG RICULTURAL LAND THEREFORE THE PROFIT ARISING ON THE SAME CANNO T BE TAXED. HE FURTHER SUBMITTED THAT THE INTENTION OF THE ASSE SSEE CANNOT BE PRESUMED BY THE LEARNED ASSESSING OFFICER OR THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BASED ON WHICH THE ADDITION IS MADE. THE LEARNED AUTHORIZED REPRESENT ATIVE 12 ITA NO.2191/MDS/2015 FURTHER SUBMITTED THAT IN THE CASE OF THE FRIEND OF THE ASSESSEE MR. G.SHANMUGANATHAN, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAD DELETED TH E ADDITION UNDER SIMILAR CIRCUMSTANCES IN ITA NO.539/ 14-15 VIDE ORDER DATED 02.11.2015. IT WAS THEREFORE PLEAD ED THAT THE REVENUE CANNOT TAKE DIFFERENT STAND ON THE SAME FACTS AND THEREFORE, THE ADDITION MADE IN THE HANDS OF TH E ASSESSEE MAY BE DELETED AS HELD IN THE CASE OF THE ASSESSEES FRIEND MR. G.SHAMMUGANATHAN, THE ADJACEN T LAND OWNER. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE O THER HAND ARGUED IN SUPPORT OF THE ORDERS OF THE REVENUE . 8. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY PER USED THE MATERIALS AVAILABLE ON RECORD. WE FIND MERIT IN THE CONTENTION OF THE LEARNED AUTHORIZED REPRESENTATIVE . AS POINTED OUT BY HIM, IN THE CASE OF SHRI G.SHANMUGAN ATHAN, THE ASSESSEES FRIEND, WHERE THE FACTS ARE SIMILAR, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS HELD THAT THE INCOME FROM SALE OF LAND EARNED BY THE ASSESSEE CAN NOT BE 13 ITA NO.2191/MDS/2015 TREATED AS INCOME FROM BUSINESS. THE RELEVANT PORTI ON OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) IS REPRODUCED HEREIN BELOW FOR REFERENCE:- 7.2 I HAVE PERUSED THE ASSESSMENT ORDER, GROUNDS OF APPEAL AND THE WRITTEN SUBMISSIONS IN THIS REGARD. THE ADDITION MADE ON ACCOUNT OF SALE OF AGRICULTURAL LA NDS IS TREATED AS BUSINESS INCOME. THIS IS THE CASE OF ASSESSMENT PASSED CONSEQUENT TO SURVEY CONDUCTED IN THE PREMISES OF THE APPELLANT ON 31.07.2008. LOOSE SHEET NO.9 IMPOUNDED IN ANNEXURE ANN/VAP/LS/LMP REPRESENT S PURCHASE DETAILS OF A LAND ANN/NSK/LS/LMP REPRESEN TS SALE DETAILS OF THE SAME LAND WHICH TOOK PLACE IN J ULY 2008., APPELLANT IDENTIFIED THE, LAND IN A VILLAGE CALLED SENDRAMPALAYAM , A SMALL HAMLET IN THE OUTSKIRTS OF COIMBATORE. THE RELEVANT LAND OWNED BY THE VILLAGE RS OF WHICH NO PROPER DOCUMENT WERE AVAILABLE. THE VILLAG ERS MADE OFFER TO THIS ,APPELLANT TO BUY THE ENTIRE LAND SO THAT THIS APPELLANT ALONG WITH FOUR OTHER FRIENDS PURC HASED LANDS DURING THE A.Y. 2007-08. THE PURCHASES WERE MADE AND RELEVANT PAYMENTS WERE MADE TO THE SELLER. OUT OF 50 ACRES THE APPELLANT P-URCHASED16 ACRES AND BALANCE LAND WERE PURCHASED BY FOUR OTHERS IN INDEPENDENT DOCUMENTS. 7.3 DURING THE FINANCIAL YEAR 2008-09 RELEVANT TO ASST. YEAR 2009-10 ALMCO .PVT. LTD. APPROACHED THE .APPELLANT AND OFFERED THE FANCY PRICE OF RS.3,77,76,250/-. TH E SAID COMPANY ALSO PURCHASED FROM THE NEIGHBOURING LAND OWNERS. ACCORDING TO THE APPELLANT THE LAND WAS AGRICULTURAL LAND SITUATED OUTSIDE 8 KMS OF THE MUN ICIPALITY AND ALSO, ASSERTED THAT THIS IS NOT CAPITAL ASSET U/S 2(14) AND NOT LIABLE FOR CAPITAL GAINS TAX; THE APPELLAN T ASSERTED HE PURCHASED AQRICULTURAL LAND'. IN THE SA LE DEED, ITSELF IT IS MENTIONED THAT IT IS AGRICULTURAL LAND . IN THE REVENUE RECORDS THIS IS CLASSIFIED AS AGRICULTURAL LAND. CHITTA AND ADANGAL PRODUCED BY THE APPELLANT ALSO SUPPORTS HIS CLAIM. WHEREAS AO QUOTED THE INTENTION OF THE APPELLANT AND FOUR OTHERS FOR PURCHASE THE LAND AS RESALE. RELYING ON THE SUPREME COURT JUDGEMENT IN T HE CASE OF G.VENKATASWAMY NAIDU CO. V CIT (35 ITR 594) AND SAROJ KUMAR MAZUMDAR YS CIT (37 ITR 242) THE A O HAS STATED THAT THE APPELLANT TREATED THIS SALE OF LAND AS ADVENTURE IN THE NATURE OF TRADE BEFORE ME THE APPE LLANT HAS RAISED CERTAIN ISSUES WHICH ARE DISCUSSED AS UNDER: 14 ITA NO.2191/MDS/2015 1. THE AO HAS DEPUTED HIS INSPECTOR TO VERIFY WHET HER THE LAND IS AGRICULTURAL LAND OR NOT. 2. THE AO HAS CALLED FOR CHITTA AND ADANGAL AND LAND CLASSIFICATION DETAILS FROM THASILDAR IN A SEALED COVER. ALL THESE CONFIRM HAT THE LAND IS AGRICULTURE LAND. NO LEVELING, PLOTTING IS DONE BY THE APPELLANT. IN THIS CONNECTI ON, THE APPELLANT RELIED ON THE FOLLOWING CASE LAWS: . .......... . .......... 7.4 THE' AO PROCEEDED. TO MAKE THIS ADDITION SOLELY BASED ON INTENTION OF THE APPELLANT TO MAKE A PROFLT BY RE-SELLING IT. 'WHEREAS THE APPELLANT CONTENDS THAT FROM THE 'VERY BEGIN FLING IF THE INTENTION IS TO RE-SEL L, THE BEST OPTION WOULD BE TO GET THE POWER OF ATTORNEY AND DEVELOP THE LAND AND SELL IT FOR A BETTER PRICE. IN THE INSTANT CASE PROPERTY 'REGISTERED IN INDIVIDUAL NAM ES BY INCURRING 9% OF THE COST OF LAND AS STAMP' DUTY AND REGISTRATION CHARGES, THE SALE HAPPENED AFTER A GAP OF ONE AND A HALF 'YEARS AFTER THE PROPERTY WAS TRANSF ERRED TO INDIVIDUAL NAMES. NO DEVELOPMENT ACTIVITY LIKE CLEARING, LEVELING AND PLOTTING HAS TAKEN PLACE AND ' ALSO THE APPELLANT STATES THAT THE-ASSESSING OFFICER INDEPENDENTLY VERIFIED WITH REVENUE AUTHORITIES. I .E. THASILDAR AND THE THASILDAR CONFIRMED THAT IT IS AGRICULTURAL LAND AND 'IT REMAINED AGRICULTURAL LAN D TILL THE DATE OF SALE. IN THE INSTANT CASE, IT WAS NOT T HE CASE OF AO THAT THE 'APPELLANT WAS CARRYING ON REGULAR BUSINESS OF SALE OR PURCHASE OF LAND. 7.5 THE ASSESSING OFFICER STATES THAT LAND IN QUESTION WAS NOT PURCHASED BY THE APPELLANT FOR CARRYING ON AGRICULTURAL OPERATION AND THERE WAS AN INTENTION OF DOING BUSINESS. HOWEVER, NO MATERIAL COULD BE BROUGHT' ON RECORD BY THE ASSESSING OFFICE R IN 'SUPPORT OF THIS STAND EXCEPT THE ALLEGATION THAT S OME OF THE FRIENDS OF THE APPELLANT HAD ALSO ENTERED SIMIL AR DEALS IN THEIR INDIVIDUAL CAPACITY AND THE LAND IN QUESTION OF WAS SOLD BY THE APPELLANT WITHIN ONE AN D HALF YEARS FROM THE DATE OF PURCHASE. IN VIEW OF TH E MATTER THAT THERE' BEING NO FINDING IN REGARD TO TH E CARRYING OF THE BUSINESS BY THE APPELLANT OF SALE A ND PURCHASE OF THE LAND AND THE LAND BEING STOCK IF T RADE, THE CONTENTION OF THE ASSESSING OFFICER THAT THE IN COME FROM THE SALE OF LAND' AMOUNTED TO PROFIT AND GAINS OF 15 ITA NO.2191/MDS/2015 BUSINESS COULD NOT BE SUSTAINED. 7.6 IN THE INSTANT CASE THERE WAS NO EVIDENCE OF ANY TRADING ACTIVITY IN THE TRANSACTION OF PURCHASE AN D SALE BY THE APPELLANT, THE TRANSACTION COULD NOT BE TREATED AS VENTURE IN THE NATURE OF TRADE . THE ONUS OF PROVIN G THAT THE LAND FORMED PART OF THE BUSINESS ASSET OF THE A PPELLANT WAS ON ASSESSING OFFICER AND IN THE ABSENCE OF ANY EVIDENCE TO THAT EFFECT THE RESUMPTION WOULD BE THA T THE LAND WAS HELD AS A CAPITAL ASSET BY THE APPELLANT A ND THE INCOME FROM THE TRANSFER WAS NOT INCOME FROM BUSINE SS. 7.7 IN VIEW OF THE FOREGOING DISCUSSION IT IS CLEAR THA T THE INCOME IN QUESTION COULD NOT BE TAKEN UNDER THE ACT EITHER AS BUSINESS INCOME OR AS CAPITAL GAINS. THE ADDITION MADE IN THIS REGARD IS DIRECTED TO BE DELE TED. ACCORDINGLY THE GROUNDS RAISED IN THIS REGARD ARE ALLOWED. 9. IN THIS SITUATION, WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE CANNOT TAKE DIFFERENT STAND ON THE SAME FAC TS IN THE CASE OF THE ASSESSEE AND THAT OF HIS FRIEND. ON A Q UERY BY THE BENCH WHETHER IN THE CASE OF THE FRIEND OF THE ASSE SSEE SHRI G.SHANMUGANATHAN, THE REVENUE HAD GONE ON APPEAL, B OTH THE PARTIES EXPRESSED THEIR INABILITY TO THROW LIGH T ON THE SAME. THEREFORE, IN THE INTEREST OF JUSTICE, WE HER EBY REMAND THE MATTER BACK TO THE FILE OF THE LEARNED ASSESSIN G OFFICER WHO SHALL VERIFY THE OUTCOME OF THE DECISION OF SUC H APPEAL, IF ANY AND FOLLOW THAT DECISION AND IF NO SUCH APPEAL WAS PREFERRED, THEN FOLLOW THE DECISION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IN THE CASE OF SHRI 16 ITA NO.2191/MDS/2015 G.SHANMUGANATHAN, MENTIONED HEREIN ABOVE. IT IS ORD ERED ACCORDINGLY. GROUND NO.2 ADDITION ON ACCOUNT OF LOW GROSS PROFIT AMOUNTING TO RS. 17,31,880/-. 10. AS WE FIND FROM THE ORDERS OF THE LEARNED ASSES SING OFFICER AND THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) THE REVENUE HAS MADE ADDITION OF RS.17,31 ,880/- IN THE HANDS OF THE ASSESSEE ONLY FOR THE REASON TH AT HE HAS DECLARED ONLY 6% AS HIS GROSS PROFIT IN THE VEGETAB LE BUSINESS. THEREFORE THE LEARNED ASSESSING OFFICER MADE AN ADDITION OF RS.17,31,880/- ON AN AD-HOC BASIS WHICH WAS FURTHER CONFIRMED BY THE LEARNED COMMISSIONER OF IN COME TAX (APPEALS). NO OTHER DISCUSSION OR REASONING EM ERGES FROM THE ORDERS OF THE REVENUE WITH RESPECT TO THE AFORESAID ADDITION. THEREFORE, WE FIND THE ORDER OF THE LEARN ED ASSESSING OFFICER AS WELL AS LEARNED COMMISSIONER O F INCOME TAX (APPEALS) TO BE CRYPTIC ON THIS ISSUE. H ENCE WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION OF RS. 17,31,880/- CANNOT BE SUSTAINED. ACCORDINGLY, WE HEREBY DELETE THE 17 ITA NO.2191/MDS/2015 ADDITION OF RS.17,31,880/- MADE ON ACCOUNT OF LOW G ROSS PROFIT. 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THE 12 TH MAY, 2016 SD/- SD/- ( . ) ( . ) (G.PAVAN KUMAR) ( A.MOHAN ALANKAM ONY ) # % / JUDICIAL MEMBER % / ACCOUNTANT MEMBER # /CHENNAI, ( /DATED 12 TH MAY, 2016 SOMU *+ ,+ /COPY TO: 1. APPELLANT 2. RESPONDENT 3. - () /CIT(A) 4. - /CIT 5. + 1 /DR 6. /GF