Shri Dhirubhai Kanjibhai Patel,HUF, Navsari V. The Income tax Officer,Wad-1, Navsari

ITA 2217/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9650 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-04-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 23-03-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 05-09-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Reasonable cause
• Section: 54F

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD .., , BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER SL. NO(S) ITA NO(S) NOS. ASSESSMENT YEAR(S) APPEAL(S) BY APPELLANT VS. RESPONDENT APPELLANT RESPONDENT 1. 2217/AHD/2011 2004-05 SHRI DHIRUBHAI KANJIBHAI PATEL HUF BAL MANDIR FALIA KACHIAWADI, NAVSAI PAN:AAEHD 5625A ITO WARD-1 NAVSARI 2. 2218/AHD/2011 2005-06 ASSESSEE REVENUE 3. 2219/AHD/2011 2008 - 09 ASSESSEE REVENUE ASSESSEE BY : -NONE- REVENUE BY : SHRI M.K.SINGH, SR.DR / DATE OF HEARING 23/03/2015 !' / DATE OF PRONOUNCEMENT 17/04/2015 / O R D E R PER BENCH : THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED A GAINST THE SEPARATE ORDERS OF THE LD.COMMISSIONER OF INCOME TA X(APPEALS)-VALSAD (CIT(A) IN SHORT) ALL IDENTICALLY DATED 30/06/20 11 PERTAINING TO ASSESSMENT YEARS (AYS) 2004-05, 2005-06 & 2008-09. SINCE COMMON ITA NOS.2217,2218 & 2219 /AHD/2011 SHRI DHIRUBHAI KANJIBHAI PATEL HUF VS. ITO AYS 2004-05, 2005-06 & 2008-09 RESPECTIVELY - 2 - ISSUES AND FACTS ARE INVOLVED IN THESE APPEALS, THE SE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS C ONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP ITA NO.2217/AHD/2011 FOR AY 20 04-05, WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED BY THE A SSESSEE:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT, THE LD.ASSESSING OFFICER ERRED IN REOPENIN G ASSESSMENT BY ISSUING NOTICE U/S.148 OF THE I.T.ACT, 1961. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS.22,47,514/- BY TREATING THE GAIN ARI SING ON SALE OF LAND AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS AS SHOWN BY ASSESSEE & THEREBY, FURTHER ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION U/S.54EC OF THE I.T.ACT, 1961. 3. IT IS THEREFORE PRAYED THAT ABOVE TREATMENT MADE BY ASSESSING OFFICER AND CONFIRMED BY LEARNED COMMISSIONER OF IN COME TAX (APPEALS) MAY PLEASE BE DELETED. 4. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 3. NO ONE APPEARED ON BEHALF OF APPELLANT-ASSESSEE. HOWEVER, A LETTER DATED 20/03/2015 IS PLACED ON RECORD SEEKING FOR ADJOURNMENT. THE REASON FOR ADJOURNMENT IS THAT THE COUNSEL FOR THE ASSESSEE HANDLING THE MATTER WAS OUT OF STATION. MERELY BEING OUT OF STA TION IS NOT A REASONABLE CAUSE, THEREFORE, THE REQUEST OF THE ASSESSEE IS RE JECTED. THE APPEALS WERE TAKEN UP FOR HEARING IN THE ABSENCE OF THE ASSESSEE . ITA NOS.2217,2218 & 2219 /AHD/2011 SHRI DHIRUBHAI KANJIBHAI PATEL HUF VS. ITO AYS 2004-05, 2005-06 & 2008-09 RESPECTIVELY - 3 - 3.1. WE FIND THAT THERE IS A LETTER DATED 27/03/201 4 BY THE ASSESSEE AS PLACED ON RECORD SEEKING THE ITA NOS.2217, 2218 & 2219/AHD/2011 FOR AYS 2004-05, 2005-06 & 2008-09 RESPECTIVELY TO BE FIXED ON PRIORITY BASIS. THE REASON FOR SEEKING FOR EARLY HEARING WA S THAT THE ISSUE IS RAISED IN THESE APPEALS COVERED BY THE DECISION OF THE COORDINATE BENCH (ITAT C BENCH AHMEDABAD) IN ASSESSEES OWN CASE I N ITA NOS.1745/AHD/2010 FOR AY 2006-07 AND A COPY OF THE SAID TRIBUNALS ORDER DATED 30/08/2013 HAS ALSO BEEN PLACED ON RECO RD. 4. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS REOPENED AND THE ASSESSMENT U/S.143(3) R.W.S.147 OF THE INCO ME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED V IDE ORDER DATED 15/12/2010; THEREBY THE ASSESSING OFFICER (AO IN SH ORT) TREATED THE SALE CONSIDERATION OF 19 PLOTS AMOUNTING TO RS.28,09,392 /- AS GROSS PROFIT AND AFTER GIVING DEDUCTION OF 20% OF THE EXPENDITURE, T HE NET PROFIT WAS ASSESSED AT RS.22,47,514/-. AGAINST THIS, THE AS SESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS, DISMISSED THE APPEAL BY FOLLOWING HIS PREDECESSORS ORDER PASSED IN APPEAL NO.CIT(A)/VLS/421/08-09 FOR AY 2006-07, DATE D 11.11.2009. AGGRIEVED BY THE ORDER OF THE LD.CIT(A), THE ASSESS EE IS NOW IN APPEAL BEFORE US. ITA NOS.2217,2218 & 2219 /AHD/2011 SHRI DHIRUBHAI KANJIBHAI PATEL HUF VS. ITO AYS 2004-05, 2005-06 & 2008-09 RESPECTIVELY - 4 - 5. THE LD.SR.DR SUPPORTED THE ORDERS OF THE AUTHORI TIES BELOW AND SUBMITTED THAT THERE IS NO ILLEGALITY IN THE ORDER OF THE LD.CIT(A). THE FIRST GROUND IS AGAINST THE VALIDITY OF REOPENING T HE ASSESSMENT U/S.148 OF THE ACT. SINCE NO ARGUMENT IS MADE IN RESPECT OF T HIS GROUND OR ANY WRITTEN SUBMISSIONS IS FILED, THEREFORE THE GROUND NO.1 IS DISMISSED. 6. NOW THE ONLY EFFECTIVE GROUND IS GROUND NO.2 W HICH READS AS UNDER:- 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFF ICER IN MAKING ADDITION OF RS.22,47,514/- BY TREATING THE GAIN ARI SING ON SALE OF LAND AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS AS SHOWN BY ASSESSEE & THEREBY, FURTHER ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION U/S.54EC OF THE I.T.ACT, 1961. 6.1. WE HAVE HEARD THE LD.SR.DR, PERUSED THE MATERI AL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITI ES BELOW. THE CONTENTION OF THE ASSESSEE IS THAT THE ISSUE IS SQU ARELY COVERED BY THE DECISION OF THE COORDINATE BENCH (ITAT C BENCH AH MEDABAD) PASSED IN ITA NO.1745/AHD/2010 FOR AY 2006-07 IN ASSESSEE S OWN CASE, ORDER DATED 30/08/2013. IT IS ALSO THE CONTENTION OF THE ASSESSEE IS THAT IN AYS 2004-05, 2005-06 & 2008-09, THE LD.CIT(A) HAS FOLLO WED HIS PREDECESSORS ORDER PASSED IN AY 2006-07. WE FIND THAT THE TRIBUNAL IN ITA NO.1745/AHD/2010(SUPRA) HAS RECORDED THE GROUND IN APPEAL WHICH READS AS UNDER:- ITA NOS.2217,2218 & 2219 /AHD/2011 SHRI DHIRUBHAI KANJIBHAI PATEL HUF VS. ITO AYS 2004-05, 2005-06 & 2008-09 RESPECTIVELY - 5 - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT, THE LEARNED CIT(A) HAS ERRED IN CON FIRMING THE ACTION OF ASSESSING OFFICER IN TREATING THE GAIN AR ISING ON SALE OF LAND AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS AS SHOWN BY ASSESSEE & THEREBY, ERRED IN DISALLOWING ASSESSE ES CLAIM FOR DEDUCTION U/S.54EC & 54F OF THE ACT TOTALING TO RS. 37,50,409/-. 6.2. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSES SEE AND EXAMINING THE VARIOUS CASE-LAWS, THE COORDINATE BENCH IN ITA NO.1745/AHD/2010(SUPRA) IN PARAS-6.5 & 6.6 ALLOWED THE GROUND BY OBSERVING AS UNDER:- 6.5. WE HAVE ALSO EXAMINED A UNREPORTED DECISION O F ITAT A BENCH AHMEDABAD PRONOUNCED IN THE CASE OF AJIT KUMA R PATEL VS. DCIT, CIRCLE-1, (ITA NO.826/AHD/2010), ORDER DATED 30 TH OF SEPTEMBER, 2010, WHEREIN IT WAS HELD THAT THERE WAS NO SERIES OF TRANSACTION AS IT HAPPENS IN A ROUTINE BUSINESS TRA NSACTION, MEANING THEREBY THERE WAS NO REGULAR PURCHASE AND S ALE OF LAND BY THE ASSESSEE; HENCE, NOT A COMMERCIAL ACTIVITY. IT WAS HELD THAT THERE WAS NO BUSINESS INTENTION AND THE LAND WAS AC QUIRED WITH THE ONLY MOTIVE TO FETCH CAPITAL APPRECIATION. LIKEWIS E ITAT AHMEDABAD IN THE CASE OF MADAN MOHAN MAGALDAS VS. I TO, 35 TTJ 134 (AHD) HAS HELD THAT WHEREOF ASSESSEE HAS CO NVERTED ANCESTRAL LAND INTO STOCK IN TRADE OF HIS BUSINESS AND SOLD IT, SINCE SALE OF PLOT WAS A SOLITARY TRANSACTION AND WAS COM PLETED WITHIN A SHORT PERIOD, THEREFORE, SURPLUS RESULTING FROM SUC H TRANSACTION WAS HELD TO BE TAXABLE AS CAPITAL GAINS AND NOT AS BUSINESS INCOME. 6.6. RESPECTFULLY, FOLLOWING THESE DECISIONS AS CIT ED FROM THE SIDE OF THE ASSESSEE, WE HEREBY RESERVE THE FINDINGS OF THE AUTHORITIES ITA NOS.2217,2218 & 2219 /AHD/2011 SHRI DHIRUBHAI KANJIBHAI PATEL HUF VS. ITO AYS 2004-05, 2005-06 & 2008-09 RESPECTIVELY - 6 - BELOW AND ALLOW THE GROUNDS OF THE ASSESSEE. GROUN D NO.1 IS HEREBY ALLOWED. 6.3. WE FIND THAT IN THE YEAR UNDER CONSIDERATION, THE LD.CIT(A) HAS DECIDED THIS ISSUE AS UNDER:- 4.3. DECISION :- I HAVE CONSIDERED THE OBSERVATION OF THE AO IN THE ASSESSMENT ORDER AS WELL AS THE SUBMISSION OF THE AR OF THE AP PELLANT. THE AO HAS RIGHTLY RAISED AN ISSUE OF TREATMENT OF INCOME AS BUSINESS INCOME AND NOT THE INCOME FROM CAPITAL GAIN. THE A PPELLANT HAS CONVERTED THE LAND INTO NA WAY BACK IN 1987, WHICH ITSELF ESTABLISHES THE FACTS THAT THE APPELLANT HAS A VERY PURPOSE EARNING INCOME OUT OF LAND FROM DAY ONE. THE PROPERTY RECO RD EVEN DOES NOT DISCUSS ABOUT THE INHERITANCE OF LAND. THE CRU X OF ISSUE OF CONVERSION OF LAND INTO NA BEFORE TWO DECADES IS A SUFFICIENT INDICATION TO DETERMINE THE INTENTION OF THE APPELL ANT TO VENTURE IN NATURE OF TRADE. THE ARGUMENTS ADVANCED BY THE AR OF THE APPELLANT IS SIMPLY BASED UPON THE INHERITANCE OF L AND AND HE EMPHASIZED UPON THE ISSUE OF A SINGLE PLOT OF LAND AND THE INVESTMENT MADE BY THE APPELLANT TO CLAIM THE DEDUC TION U/S.54EC AND 54F OF THE ACT. IN THIS CASE, FOR THE ASSTT.YE AR 2006-07, THE APPEAL WAS DECIDED AGAINST THE APPELLANT VIDE APPEL LATE ORDER IN APPEAL NO.CIT(A)/VLS/421/08-09 DATED 11.11.2009. S INCE THE FACTS OF THE CASE ARE IDENTICAL, THE SAID DECISION IS FOLLOWED IN THIS YEAR OF ASSESSMENT TOO. THUS, THIS GROUND OF APPEA L IS DISMISSED. 6.4. IT IS EVIDENT THAT THE LD.CIT(A) HAS FOLLOWED HIS PREDECESSORS ORDER PASSED IN AY 2006-07. THE ORDER PASSED IN AY 2006-07 WAS SUBJECTED TO APPEAL IN ITA NO.1745/AHD/2010, WHEREI N THE COORDINATE BENCH HAS DECIDED THIS ISSUE IN FAVOUR OF ASSESSEE. THE REVENUE HAS NOT CONTROVERTED THIS FACT AND COULD NOT POINT OUT ANY CHANGE INTO THE FACTS ITA NOS.2217,2218 & 2219 /AHD/2011 SHRI DHIRUBHAI KANJIBHAI PATEL HUF VS. ITO AYS 2004-05, 2005-06 & 2008-09 RESPECTIVELY - 7 - AND CIRCUMSTANCES OF THE CASE, ALSO COULD NOT POINT OUT HOW THE ORDER OF THE COORDINATE BENCH PASSED IN ITA NO.1745/AHD/2010 IS NOT APPLICABLE ON THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THEREFORE, WE SEE NO REASON TO TAKE A DIFFERENT VIEW THAN TAKEN BY THE C OORDINATE BENCH PASSED IN ITA NO.1745/AHD/2010(SUPRA). HENCE, RESP ECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH, GROUND NO.2 R AISED IN THE ASSESSEES APPEAL IS ALLOWED AND THE ORDER OF THE L D.CIT(A) IS HEREBY SET ASIDE. THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION. 7. GROUND NOS.3 & 4 ARE GENERAL IN NATURE REQUIRE N O INDEPENDENT ADJUDICATION. 8. IN THE RESULT, ASSESSEES APPEAL FOR AY 2004-05 IS PARTLY ALLOWED. 9. NOW, WE TAKE UP THE ASSESSEES APPEALS; I.E. ITA NOS.2218/AHD/2011 & 2219/AHD/2011 FOR AY 2005-06 & 2008-09 RESPECTIVELY. GROUNDS RAISED BY THE ASSESSEE IN TH E RESPECTIVE APPEALS, READ AS UNDER:- ASSESSEES APPEAL IN ITA NO.2218/AHD/2011 FOR AY 20 05-06 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LD.ASSESSING OFFICER ERRED IN REOPENIN G ASSESSMENT BY ISSUING NOTICE U/S.148 OF THE I.T.ACT, 1961. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS.36,97,920/- BY TREATING THE GAIN AR ISING ON SALE OF LAND AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS AS SHOWN BY ITA NOS.2217,2218 & 2219 /AHD/2011 SHRI DHIRUBHAI KANJIBHAI PATEL HUF VS. ITO AYS 2004-05, 2005-06 & 2008-09 RESPECTIVELY - 8 - ASSESSEE & THEREBY, FURTHER ERRED IN CONFIRMING THE DISALLOWANCE OF DEDUCTION U/S.54EC & 54F OF THE I.T.ACT, 1961. 3. IT IS THEREFORE PRAYED THAT ABOVE TREATMENT MADE BY ASSESSING OFFICER AND CONFIRMED BY LEARNED COMMISSIONER OF IN COME TAX (APPEALS) MAY PLEASE BE DELETED. 4. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. ASSESSEES APPEAL IN ITA NO.2219/AHD/2011 FOR AY 2 008-09 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF RS.1,68,000/- BY TREATING THE GAIN AR ISING ON SALE OF LAND AS BUSINESS INCOME INSTEAD OF CAPITAL GAINS . 2. IT IS THEREFORE PRAYED THAT ABOVE TREATMENT MADE BY ASSESSING OFFICER AND CONFIRMED BY LEARNED COMMISSIONER OF IN COME TAX (APPEALS) MAY PLEASE BE DELETED. 3. APPELLANT CRAVES LEAVE TO ADD, ALTER OR DELETE ANY GROUND(S) EITHER BEFORE OR IN THE COURSE OF HEARING OF THE APPEAL. 10. THE FACTS ARE IDENTICAL TO THE FACTS AS WERE R AISED IN OF ITA NO.2217/AHD/2011 FOR AY 2004-05(SUPRA) AND THE REVE NUE HAS NOT POINTED OUT ANY CHANGE INTO THE FACTS AND CIRCUMSTA NCES OF THE CASE(S). THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF C OORDINATE BENCH PASSED IN ITA NO.1745/AHD/2010 FOR AY 2006-07, DAT ED 30/08/2013 AND TAKING A CONSISTENT VIEW THE ISSUE REGARDING GA IN ARISING SALE OF LAND IN QUESTION IS DECIDED IN FAVOUR OF THE ASSESSEE FO R BOTH THE YEARS. ITA NOS.2217,2218 & 2219 /AHD/2011 SHRI DHIRUBHAI KANJIBHAI PATEL HUF VS. ITO AYS 2004-05, 2005-06 & 2008-09 RESPECTIVELY - 9 - 9. IN THE COMBINED, ASSESSEES APPEALS FOR AYS 2004 -05 & 2005-06 ARE PARTLY ALLOWED AND ASSESSEES APPEAL FOR AY 200 8-09 IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 17 TH DAY OF APRIL, 2015 AT AHMEDABAD. SD/- SD/- ( .. ) ( ) ( N.S. SAINI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 17/ 04 /2015 (..,.../ T.C. NAIR, SR. PS !'#$#%! / COPY OF THE ORDER FORWARDED TO : 1. )* +, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. /0/12 3 / CONCERNED CIT 4. 3 ( )* ) / THE CIT(A)-VALSAD 5. 45-12 , )* )12' , )0 / DR, ITAT, AHMEDABAD 6. 5789 / GUARD FILE. / BY ORDER, .4*- //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 31.3.15 (DICTATION-PAD 9+ PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER ..11.4.15 3. OTHER MEMBER... 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.17.4.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 17.4.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER