Shri KAILASHCHAND AGRAWAL HUF, Indore V. The CIT-II, Indore

ITA 323/IND/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5740 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 01-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJEEV VARSHNEY
• Assessee Lawyers: C P RAWKA
• Keywords: Business income; Assessment record
• Section: 143(3); 54F; 54; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O. P. MEENA, ACCOUTANT MEMBER I.T.A. NO. 323/IND/2014 ASSESSMENT YEAR SHRI KAILASH CHAND AGARWAL HUF 6, AF, DEVANSH BUILDING, SCHEME NO.54, INDORE PAN:AAAHA 9014 J VS. COMMISSIONER OF INCOME TAX-II, INDORE APPELLANT RESPONDENT APPELLANT BY SHRI C.P. RAWKA , CA RESPONDENT BY SHRI RAJEEV VARSHNEY, CIT (DR) DATE OF HEARING 16.08.2016 DATE OF PRONOUNCEMENT .09.2016 ORDER PER O.P.MEENA, ACCOUTANT MEMBER. THIS APPEAL BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 FILED AGAINST THE ORDER UNDER SECTION 263 OF THE IN COME-TAX ACT, 1961, (IN SHORT THE ACT) DATED 31.03.2014, PA SSED BY THE I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 2 OF 19 LD. COMMISSIONER OF INCOME-TAX-II, INDORE. (HEREINA FTER REFERRED TO AS THE LD. CIT) 2. GROUND NO.1 TO 4 HAVE BEEN TAKEN AGAINST THE INVOKING THE PROVISIONS OF SECTION 263 AND PASSING ORDER U/S.263 OF THE I T ACT STATING THAT THE ORDER PASSE D U/S.263 IS WITHOUT JURISDICTION, ARBITRARY, ILLEGAL AS THE ORDE R UNDER SECTION 143(3) WAS PASSED AFTER PROPER ENQUIRY AND APPRECIATION OF VARIOUS DOCUMENTS. HENCE, ORDER PAS SED BY THE AO IS NOT ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF REVENUE. THE ORDER PASSED U/S.263 AFTER TAKING COUN TER COMMENTS OF THE A.O. IS DESERVE TO BE ANNULLED AND SET-ASIDE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H UF HAS SHOWN INCOME UNDER THE HEAD OF BUSINESS, HOUSE PROPERTY, AND CAPITAL GAINS. THE RETURN OF INCOME F ILED ON 31.03.2010 DECLARING TOTAL INCOME AT RS. 7,41,370/- WHICH WAS ASSESSED U/S. 143(3) AT RS.9,25,370/- ON 29.12.2 011. SUBSEQUENTLY, ON EXAMINATION OF ASSESSMENT RECORD S AND FACTS OF THE CASE, THE LD. CIT FOUND THAT THE ASSES SMENT ORDER PASSED BY THE ASSESSING OFFICER, IS ERRONEOUS IN AS MUCH AS PREJUDICIAL TO THE INTEREST OF REVENUE AS NO INQUIR Y/ I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 3 OF 19 INVESTIGATION WERE MADE IN RESPECT OF ALLOWING THE CLAIM OF BENEFIT U/S. 54F OF THE ACT, PARTICULARLY, WHEN THE ASSESSEE WAS FOUND INDULGING IN BUSINESS ACTIVITIES, ALLOWING OF SALE OF LAND AS CAPITAL GAIN, RATHER THAN TREATING THE SAME AS TRADE IN THE NATURE OF BUSINESS. THE AO HAS FAILED TO EXAMIN E THE APPLICABILITY OF PROVISIONS OF WEALTH TAX ACT, INTE REST INCOME ON HEAVY ADVANCES ETC. ACCORDINGLY, NOTICE UNDER S ECTION 263 OF THE ACT WAS ISSUED ON 26.11.2013 WHEREIN THE ASSES SEE WAS ASKED TO SHOW CAUSE AS TO WHY THE ORDER OF THE ASSESS ING OFFICER FOR THE ASSESSMENT YEAR 2009-10 BE NOT BE REVISED BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 4. THE LD. CIT HAS SOUGHT TO REVISE THE ASSESSMENT ORD ER ON FOLLOWING GROUNDS :- (1) THE CLAIM OF EXEMPTION U/S. 54F OF THE ACT ON SALE OF LAND WAS ALLOWED WHEREAS LAND WAS AGRICULTURAL LAND WHICH WAS SOLD AFTER OBTAINING COL ONIZER LICENSE AND A RESIDENTIAL COLONY WAS DEVELOPED IN T HE NAME OF RAMESHWAR DHAM , WHEREIN PLOTS WERE SOLD TO DIFFERENT PERSONS, HENCE, THE ASSESSEE WAS DOING BUSINESS OF D EVELOPING COLONY AND INCOME FROM SALE OF PLOTS WAS CHARGEABLE AS BUSINESS INCOME AND THEREFORE THE EXEMPTION U/S. 54 F WAS I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 4 OF 19 NOT ALLOWABLE. (2) THE ASSESSEE HAS SOLD ANOTHER LA ND ON WHICH SHORT-TERM CAPITAL GAINS OF RS. 7,81,000/- WAS SHOWN AND EXPENSES OF RS. 4,50,000/- WAS CLAIMED ON IMPROVEMEN T. THIS WAS ALLOWED WITHOUT EXAMINING THE CLAIM (3) THEREFOR E, IF SALE OF LAND IS CONSIDERED THEN THE TURN OVER WORKS OUT TO RS. 62,19,00-/ ACCORDINGLY, THE APPLICABILITY OF PROVIS ION OF SECTION 44AA AND 44AB ARISES AND CONSEQUENTLY PENALTY PROCE EDINGS U/S 271A AND 271B WERE REQUIRED TO BE INITIATED. (4) NO ENQUIRES WERE MADE IN RESPECT OF HUF PROPERTIES SH OWN IN BALANCE SHEET (5) THE ASSESSEE HAS SHOWN VARIOUS PRO PERTIES IN BALANCE SHEET, HENCE LIABILITY UNDER WEALTH TAX ACT WAS REQUIRED TO BE EXAMINED. (6)IT WAS ALSO FOUND THAT T HE ASSESSEE HAS GIVEN LOANS TO VARIOUS PERSON AMOUNTING TO RS. 41,05,177/- AND SHOWN BANK BALANCE AT RS. 25,49,204/ - BUT NO INTEREST INCOME IS SHOWN. THE AO FAILED TO EXAMIN E THE ABOVE FACTS; HENCE, ORDER WAS ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF THE REVENUE. THEREFORE, A SHOW CAUSE NOT ICE UNDER SECTION 263 WAS ISSUED. THE ASSESSEE REPLIED THAT TH E ASSESSEE HAS NEVER APPLIED FOR COLONIZER LICENSE. THE EXPENS ES ON ACCOUNT IMPROVEMENT WERE DULY EXAMINED BY THE AO AND IN I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 5 OF 19 FACT A SUM OF RS.1,00,000/- WERE DISALLOWED IN ASSE SSMENT ORDER PASSED. HENCE, THE ISSUE CANNOT BE REVISED UN DER REVISION POWER. AS REGARD APPLICABILITY OF SECTION 44AB, IT WAS SUBMITTED THAT THE ASSESSEE HAS CARRIED OUT BUSINES S OF WHICH INCOME HAS BEEN FULLY DISCLOSED U/S. 44AE AND 44AF OF THE ACT. AS REGARDS ADVANCES AND LOANS IT WAS SUBMI TTED THAT NO INTEREST WAS CHARGED FROM DEBTOR HENCE QUESTION O F INTEREST INCOME DOES NOT ARISE. THE BANK BALANCE IS UNDER CU RRENT ACCOUNT IN WHICH NO INTEREST INCOME WAS EARNED. LD. CIT HAS REFERRED THE REPLY OF THE ASSESSEE TO THE AO FOR HI S COUNTER COMMENTS, WHEREIN THE AO SUBMITTED THAT THE CONTENTI ON OF THE ASSESSEE IS INCORRECT, AS THE ASSESSEE HAS OBTA INED COLONIZER LICENSE BEARING NO. 2 DTD. 17.12.2004 FRO M O/O SUB DIVISIONAL OFFICER (REVENUE) SANWER, DIST. INDORE AN D DEVELOPED COLONY IN THE NAME OF RAMESHWAR DHAM AS C OULD BE SEEN FROM SALE DEED DTD. 31. 03. 2009, AFTER CON SIDERING THE SUBMISSION OF THE ASSESSEE, THE LD. CIT FOUND THAT COMMENTS OF THE ASSESSEE ARE NOT SPECIFIC. THE LD. CIT OBSER VED THAT THE DETAILED EXAMINATION OF CLAIM OF IMPROVEMENT OF LAN D WITH REGARD TO SHORT-TERM CAPITAL GAINS, WEALTH TAXABILIT Y AND I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 6 OF 19 DETAILS OF UNSECURED LOANS AND ADVANCES WERE NOT CA RRIED OUT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD . CIT, THEREFORE, SET-ASIDE THE ASSESSMENT TO THE FILE OF THE AO ON ALL THE ISSUES RAISED VIDE NOTICE U/S. 263 OF THE ACT D TD 26.11.2013 WITH A DIRECTION TO RE-EXAMINE THE ABOVE POINT AND ASSESSMENT BE MADE DE NOVO. 5. AGGRIEVED WITH THE ORDER, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE US. 6. THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE HUF HAS NEVER APPLIED FOR COLONIZER LICENSE AND NEVER ENGAGED IN THE BUS INESS OF REAL ESTATE. THE AO HAS CANVASSED WRONG THEORY THAT THE A SSESSEE POSSESSED COLONIZER LICENSE, WHICH IS FACTUALLY INCO RRECT. THUS, LD. CIT HAS SET-ASIDE THE ASSESSMENT ORDER UNDER WR ONG NOTION AND PHRASEOLOGY USED BY THE LD. CIT CLEAR BEYOND DO UBT THAT THE LD. CIT WAS NOT SATISFIED ON THE QUESTION OF AS SESSMENT BEING ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. INSTEAD, SHE HAS JUST SET-ASIDE TO PLEASE THE REVEN UE AND PLACING BURDEN ON THE ASSESSEE TO PUT FORTH HIS CAS E AGAIN. THE LD. A. R. SUBMITTED THAT FACTS OF INDIVIDUAL CA SE OF KAILASH I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 7 OF 19 CHANDRA AGARWAL HAVE BEEN INCORPORATED BY THE LD. CI T TO SET- ASIDE THE ASSESSMENT OF HUF WHICH IS FRAMED AFTER DU E EXAMINATION OF THE ISSUE AND DUE INVESTIGATION BY T HE AO. THE LD. A.O. HAS MADE AN ADDITION OF RS. 4, 50,000/- UN DER THE HEAD SHORT-TERM CAPITAL GAINS AFTER DETAILED EXAMIN ATION. BODY OF ASSESSMENT ORDER DOES NOT INDICATE THE FIRM SATI SFACTION OF THE LD. CIT. THE LD. CIT HAS NOT POINTED OUT ANY ER ROR IN ASSESSMENT ORDER FRAMED AND ACCEPTED THE REPORT OF THE A.O. ON FACE VALUE. THE LD. CIT HAS QUESTIONED THE APPLI CABILITY OF SECTION 44AA AND 44AB WITHOUT APPRECIATING THAT THE ASSESSEE HAS OFFERED THE INCOME U/S. 44AE AND 44AF. 7. PER CONTRA, THE LD. CIT (DR) SUBMITTED THAT THE AO, HAS MADE ONLY SEMBLANCE ENQUIRES AND THAT TOO IN SIPHO NED MANNER AND ACCEPTED THE VERSION OF THE ASSESSEE WITH OUT MAKING PROPER ENQUIRY REGARDING NATURE OF LAND SOLD AND ALLOWED DEDUCTION U/S. 54F OF THE ACT WITHOUT ANY EN QUIRY. THE AO ALSO DID NOT ENQUIRE THE NATURE OF EXPENSES OF RS. 4.50 LAKH INCURRED SALE OF ANOTHER LAND, WHICH WAS SOLD AF TER DEVELOPING AND LANDSCAPING AND LABELLING. THE LD. CIT (DR) HAS ALSO RELIED UPON THE FOLLOWING CASE LAWS VIZ; CI T VS. I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 8 OF 19 DEEPAK KUMAR GARG (2008) 299 ITR 435 (MP, CIT VS. MAHAVAR TRADERS (1996) 220 ITR 167 (MP), RENU GUPTA VS. CIT [2008] 301 45 (RAJ), PT. LASHKARI RAM VS. CIT [2005] 272 I TR 309 (ALL), CIT VS. HIMACHAL PRADESH FINANCIAL CORPN. [2 010] 186 TAXMAN 105 (HP), CIT VS. SUNIL GOYAL [2009] 176 TAX MAN 184 (UTTARAKHAND), MOFUSSIL WAREHOUSE TRADING CO. LTD V S. CIT [1999] 238 ITR 867 (MAD), DUGGAL & CO. VS. CIT [19 94] 77 TAXMAN 331 (DEL), CIT VS. ACTIVE TRADERS (P.) LTD. [1993] 69 TAXMAN 281 (CAL), ADDL CIT VS. MUKUR CORPORATION [1 9978] 111 ITR 312 (GUJ.) IN SUPPORT OF HIS CONTENTION. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL AVAILABLE ON RECORD. THE PERUSAL OF PARA 3 .1 OF ASSESSMENT ORDER SHOWS THAT THE ASSESSEE HAS SHOWN SA LE OF IMMOVABLE PROPERTY AT RS.31,56,000/- OF WHICH SALE CONSIDERATION WAS CONSIDERED TO BE AT RS.33,53,000/ -. THE ASSESSEE HAS CLAIMED INDEXATION COST AT RS. 3,02,95 9/- AND DALALI EXPENDITURE OF RS. 94,680/-. THUS THE ASSESS EE HAS SHOWN LONG TERM CAPITAL GAINS AT RS. 29,55,361/-, A GAINST WHICH THE ASSESSEE HAS CLAIMED TO HAVE BEEN INVESTE D IN RESIDENTIAL HOUSE AT RS. 30,50,000/- ON WHICH DEDUC TION U/S. I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 9 OF 19 54F WAS CLAIMED AND ALLOWED BY THE AO WITHOUT MAKING ANY INQUIRY REGARDING NATURE OF LAND SOLD. THE LD. CIT OBSERVED IN HER NOTICE UNDER SECTION 263 THAT THE EXEMPTION U/S . 54F IS NOT ALLOWABLE AS THE NATURE OF LAND SOLD IS AGRICUL TURAL LAND, AND SAME WAS SOLD AFTER DEVELOPING A RESIDENTIAL COL ONY NAMED AS RAMESHWAR DHAM AFTER OBTAINING COLONIZER LICENS E AND SOLD IN FROM OF PLOTS TO DIFFERENT PERSONS. THUS, T HE ASSESSEE WAS DOING BUSINESS OF DEVELOPING OF COLONY, WHICH CAN BE SAID AS ADVENTURE IN NATURE OF TRADE. 9. THE LD. A. R. HAS CLAIMED THAT ORDER U/S.263 IS MIX ED UP OF TWO DIFFERENT CASES. THE ASSESSEE IS BEING ASS ESSED IN HIS INDIVIDUAL CAPACITY VIDE PAN AAAZPA9222B AND THE HU F KAILASH CHANDRA AGARWAL IS SEPARATELY ASSESSMENT TO TAX VIDE PAN AAAHA9014J. THE ASSESSEE HUF HAS NEVER APPLIED FOR COLONIZER LICENSE AND HAS NEVER ENGAGED IN THE BUSI NESS OF REAL ESTATE, WHEREAS THE AO HAS CANVASSED THE THEORY THAT THE ASSESSEE HAS POSSESSED COLONIZER LICENSE. THIS ARGU MENT LOOKS VERY ATTRACTIVE AT FIRST FLUSH BUT LOSES ITS SHINE WHEN WE ANALYSE THE ISSUE IN DEPTH. THE RELEVANT EXTRACT OF ASSESSEE`S I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 10 OF 19 REPLY DTD. 30.03.2014 SUBMITTED IN RESPONSE TO NOT ICE UNDER SECTION 263 READS AS UNDER: THE INCOME TAX OFFICER HAS LEVELLED THE SUBMISSION OF THE ASSESSEE AS TOTALLY WRONG. THE ASSESSEE HAS NEVER D ENIED THAT IT DOES NOT POSSESS THE COLONIZER LICENSE. BUT THIS CANNOT BE A GROUND TO HOLD THAT THE SALE OF LAND IS IN THE NATU RE OF BUSINESS> 10. THE ABOVE REPLY OF THE ASSESSEE SHOW THAT THE ASSESS EE HUF HAD POSSESSED A COLONIZER LICENSE. THEREFORE, T HE ARGUMENT OF THE LD. A.R., IS CONTRADICTORY TO THE F ACTS OF THE CASE. FURTHER THE SALE DEED DTD. 31.03.2009 ALSO MA INTAINED THE NAME OF THE SELLER AS KAILASH CHAND AGARWAL WITH PAN NO. AAAHA9014J. THIS PAN BELONG TO THE ASSESSEE HUF, WHICH MEANS THE ASSESSEE HUF IS DOING BUSINESS OF DEVELOP ING OF COLONY. THE AO ALSO IN HIS COUNTER COMMENTS IN PAR A NO.4, DTD. 29.03.2014 STATED THAT THIS SALE DEED RELATE S TO HUF AND THESE PROPERTIES ARE APPEARING IN THE BALANCE SHEET OF HUF APPEARING, THESE ARE ACQUIRED OUT OF HUF`S FUND. FU RTHER PERUSAL OF SALE AGREEMENT DTD 31.03.2009 ALSO SHOWE D THAT THE ASSESSEE HAD PURCHASED AGRICULTURAL LAND AND AFTER DEVELOPING I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 11 OF 19 A RESIDENTIAL COLONY NAMED AS RAMESHWAR DHAM SOLD THE SAME IN THE FORM OF PLOTS. AS PER PAGE 2 & 3 OF SAL E DEED ALSO STATED THAT THE ASSESSEE HUF HAS OBTAINED COLONIZER LICENSE ON 17.12.2004 FROM SDO (REVENUE) SANWAR, AND PERMISSION FOR DEVELOPMENT WAS TAKEN VIDE LETTER NO.SN/R-1/05/DTD. 09.02.2005 FOR DEVELOPING A RESIDENTIAL COLONY IN T HE NAME RAMESHWAR DHAM. THUS, IT IS PALPABLE THAT THE ASSE SSEE HAD BEEN CARRYING ON BUSINESS OF REAL ESTATE BUSINESS. THEREFORE, THE NATURE OF LAND SOLD WAS IN NATURE OF ADVENTURE I N NATURE OF TRADE & BUSINESS, HENCE, INCOME ARISING OUT OF SUC H ACTIVITY IS VERY MUCH ASSESSABLE AS BUSINESS INCOME AND NOT AS LONG- TERM CAPITAL GAINS. THE AO HAS ACCEPTED THE CLAIM O F THE ASSESSEE WITHOUT MAKING OR CAUSING ANY ENQUIRY. THER EFORE, DEDUCTION ALLOWED U/S. 54F WAS PATENTLY WRONG /INCORR ECT. THESE FACTS ESTABLISH THAT THE ORDER PASSED BY THE AO WAS ERRONEOUS IN SO FAR AS IT PREJUDICIAL TO THE INTERE ST OF REVENUE. THE LD. CIT HAS RIGHTLY OBSERVED IN HIS SHOW CAUSE N OTICE DTD. 26.11.2013 THAT AS PER PARA 4 OF THE ASSESSMENT ORD ER DTD. 29.12.2011 FOR A.Y. 2009-10 IS ERRONEOUS, PREJUDICI AL TO THE INTEREST OF REVENUE, AND REQUIRED TO BE SET-ASIDE U NDER I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 12 OF 19 REVISIONARY POWER U/S.263 OF THE ACT. THEREFORE, TH E CONTENTION OF THE LD. A. R. THAT LD. CIT WAS NOT SAT ISFIED ON THE QUESTION OF ASSESSMENT BEING ERRONEOUS AND PREJUDIC IAL TO THE INTEREST OF REVENUE IS NOT TENABLE IN LAW AND ON FAC TS. THE ARGUMENT OF THE LD. A. R. THAT LD. CIT MERELY SET-A SIDE TO THE AO WITHOUT SATISFACTION IS NOT CORRECT. THE ARGUMEN T OF THE LD. A. R. THAT ORDER IS SET-ASIDE AFTER OBTAINING COUNT ER COMMENTS OF THE A.O. IS ALSO DOES NOT HOLD WATER AS THE SECTI ON 263 PROVIDES THE COMMISSIONER CAN CAUSE OR MAKE ANY ENQ UIRY AS DEEM FIT. THE LD. CIT(DR), HAS RELIED IN THE CASE O F CIT VS. MAHAVAR TRADERS (1996) 220 ITR 167 (MP), WHEREIN T HE HONBLE JURISDICTIONAL HIGH COURT HAS HELD THAT ON PERUSAL OF RECORD OF I.T.O., IT APPEARED THAT HE HAS NOT EXAMI NED THE MATTER IN THE LIGHT OF CONDITIONS LAID DOWN FOR GRAN T OF RELIEF UNDER SECTION 80HH AND UNDER SECTION 80J. THE I T O PROCEEDED TO ASSESS THE LIABILITY OF THE ASSESSEE A ND THAT WAS NOT CORRECT APPROACH. IN THE INSTANT CASE THE AO H AS ALSO FAILED TO EXAMINE THE CONDITION LAID DOWN U/S. 54F O F THE ACT. 11. THEREFORE, THE ASSESSMENT ORDER MADE BY THE AO IN ACCEPTING THE CLAIM OF THE ASSESSEE WITHOUT CAUSING ANY I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 13 OF 19 INQUIRY WHATSOEVER IS ERRONEOUS AS WELL AS PREJUDICIA L TO THE INTEREST OF REVENUE. THIS VIEW IS ALSO SUPPORTED BY THE DECISION OF HONBLE M.P. HIGH COURT IN THE CASE OF CIT VS. DEEPAK KUMAR GARG (2008) 299 ITR 435 (MP)WHEREIN IT WAS OBSE RVED THAT WHERE FROM ORDER OF ASSESSING OFFICER, IT WAS CL EAR THAT FOR WANT OF TIME. ASSESSING OFFICER HAS DONE ONLY A SEMB LANCE ENQUIRY AND THAT TOO, IN VERY SLIPSHOD MANNER AND A SSESSING OFFICER HAD ACCEPTED VERSION OF THE ASSESSEE WITHOUT PROPER ENQUIRY, AS A RESULT OF WHICH SUBSTANTIAL AMOUNT OF TAXABLE INCOME WAS NOT BROUGHT TO TAX, COMMISSIONER RIGHTLY HELD ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE. 12. SECOND ISSUE IS THAT THE AO ALLOWED SHORT-TERM CAPI TAL GAINS CLAIM OF THE ASSESSEE AFTER MAKING AD-HOC DIS ALLOWANCE OF RS.1 LAKH OUT COST OF IMPROVEMENT WITHOUT VERIFIC ATION AND MAKING FIELD ENQUIRES. THE LD. A. R. SUBMITTED IN H IS WRITTEN SUBMISSIONS THAT THE AO HAD MADE ADDITION OF RS.4, 50,000/- UNDER THE HEAD SHORT-TERM CAPITAL GAINS AFTER DETAI LED INVESTIGATION. THE LD. CIT GUIDED BY AO`S REPORT AS SESSMENT I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 14 OF 19 CANNOT BE SET-ASIDE JUST BECAUSE SHE WANTED ENQUIRY TO BE CONDUCTED IN PARTICULAR FASHION. 13. WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSEE HAS PURCHASED A PLOT OF LAND FOR RS. 15,50,000/- ON 18.06.2007. THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS. 4, 50,000/- INCURRED BECAUSE OF LANDSCAPING, LABELLING , AND OTHER EXPENSES AS COST OF IMPROVEMENT. THE ASSESSEE HAS A LSO CLAIMED BROKERAGE EXPENSES OF RS. 85,000/-. THUS TH E COST OF IMPROVEMENT WAS WORKED OUT TO RS. 20, 85,000/- . THE ASSESSEE HAS SOLD THIS PLOT OF LAND FOR RS. 28, 66, 000/- ON 14.12.2008. THUS, THE ASSESSEE HAS DISCLOSED SHORT- TERM CAPITAL GAINS AT RS. 7, 81,000/- [28, 66,000-20, 85 ,000]. THE AO ASKED TO FURNISH DETAILS AND EVIDENCES OF EXPENS ES OF RS. 4,50,000/-. HOWEVER, NO DETAILS OR EVIDENCES IN RES PECT OF EXPENSES INCURRED ON LANDSCAPING AND LABELLING WAS FURNISHED. THE AO OBSERVED THAT THE VALUE OF LAND H AS BEEN IS APPRECIATED BY 85% WITHIN A SPAN OF 18 MONTHS, THERE MIGHT BE POSSIBLE THAT SOME LANDSCAPING AND LABELLING WAS DONE. THE AO THEREFORE OBSERVED THAT IN VIEW OF INABILITY OF T HE ASSESSEE TO FURNISH DETAILS OF SUCH EXPENSES, A DISALLOWANCE OF RS. I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 15 OF 19 1,00,000/- IS MADE AND SHORT TERM CAPITAL GAINS WAS COMPUTED AT RS. 8,81,000/-. THESE FACTS SHOW THAT TH E AO DESIRED TO CAUSE ENQUIRY BUT HIS EFFORTS WAS BLOCKED BY THE ASSESSEE BY NOT FURNISHING REQUIRED INFORMATION. TH US THE AO HAS FAILED TO MAKE ANY INQUIRY AND INVESTIGATION RE GARDING NATURE OF LAND SOLD, NATURE OF EXPENSES INCURRED ON LANDSCAPING AND LABELLING. HOW THE LAND PRICE HAS A PPRECIATED BY 85% WITHIN SHORT SPAN OF 18 MONTHS AND SIMPLY A CCEPTED THE VERSION OF THE ASSESSEE, ON FACE OF IT, WITHOUT ANY EVIDENCE WHATSOEVER AND MADE SYMBOLIC DISALLOWANCE OF RS. 1 LA KH. THE AO DO OBSERVED THAT IT IS POSSIBLE THAT THE ASS ESSEE WILL HAVE DONE THE LANDSCAPING AND LABELLING. THUS, THE OBSERVATION OF THE A.O. SHOWS THAT DUE TO NON-SUBMIS SION OF THE DETAILS OF COST OF IMPROVEMENT ON ACCOUNT OF LA NDSCAPING AND LABELLING OF LAND, THE AO DID NOT MAKE ANY INQU IRY REGARDING NATURE OF LAND SOLD. HOW THE APPRECIATION OF 85% IN LAND SALE OF LAND HAS HAPPEN WITHIN SHOT SPAN OF TIM E, ACCEPTED THE VERSION OF THE ASSESSEE ON THE FACE OF IT, AND MADE SYMBOLIC DISALLOWANCE OF RS.1 LAKH TAKEN FOR WA NT OF VERIFICATION OF EXPENSES. THE AO COMPUTED SHORT TE RM CAPITAL I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 16 OF 19 GAINS AT RS. 7,82,000/- . THEREFORE, THE SUBMISSION OF THE ASSESSEE THAT THE AO HAS MADE ADDITION OF RS. 4, 50 ,000/- UNDER THE HEAD CAPITAL GAINS IS NOT CORRECT. FURTHE R, THE ASSESSEE HAS NOT FURNISHED ANY DETAILS IN RESPECT O F COST OF IMPROVEMENT; THEREFORE, THE AO HAD PERFORCE TO MAKE AD-HOC ADDITION OF RS. 1 LAKH. THIS FACT ITSELF SHOWS THAT NO ENQUIRY AND INVESTIGATION WAS MADE BY THE AO, WHEREAS THE LAN D IN QUESTION WAS SOLD AFTER PLOTTING DUE TO WHICH THE PRI CE OF WHICH HAS BEEN HIGHLY APPRECIATED TO 85%. THUS IN SU CH CIRCUMSTANCES, THE ASSESSMENT ORDER SO PASSED IS ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 14. THIRD ISSUE IS REGARDING APPLICABILITY OF PROVISION S OF SECTION 44AA OR 44AB. WE FIND THAT LD. CIT HAS OBSE RVED THAT THE TURNOVER OF THE ASSESSEE IS WORKED OUT TO RS. 62 , 19,000/- . IN SUCH CIRCUMSTANCES, THE APPLICABILITY TO ABOVE PROVISIONS DOES ARISE AND CONSEQUENTLY, PENALTY PROCEEDING U/S . 271A AND 271B WERE REQUIRED TO BE INITIATED. FAILURE TO INITIATE PENALTY PROPERTY RENDERS ORDER AS ERRONEOUS AND PRE JUDICIAL TO THE INTEREST OF REVENUE. THE HONBLE COORDINATED BE NCH COCHIN IN THE CASE OF MOHANDAS P K VS INCOME TAX OFFICER I N I. T. A. I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 17 OF 19 NO. 243/COCH/20109AY06-07) DTD. 19.04.2012 HAS HELD THAT ASSESSMENT ORDER CAN BE REVISED ON ACCOUNT OF DROPP ING OF PENALTY PROCEEDING U/S. 271B WITHOUT PASSING SPEAKIN G ORDER. WHEREAS IN THE CASE IN HAND PENALTY PROCEEDING U/S. 271A AND 271B WERE REMAINED TO BE INITIATED. 15. FOURTH AND FIFTH ISSUE RELATES TO THE CONTENTION OF THE ASSESSEE THAT LD. CIT HAS FAILED TO NOTE THAT REAL ESTATE BUSINESS PERTAINS TO KAILASH CHAND IN HIS INDIVIDUA L CAPACITY AND NOT OF HUF. HOWEVER, AS DISCUSSED ABOVE PAR 9 O F THIS ORDER THAT THE SALE DEED CLEARLY MENTIONED THE PAN OF HUF, WHICH IS ALSO BORN OUT FROM THE REPORT OF THE AO AND VARIOUS IMMOVABLE PROPERTIES WERE REFLECTED IN THE BALANCE SHEET OF ASSESSEE HUF. 16. SIXTH ISSUE RELATES THAT THE ASSESSEE HAS SHOWN LOAN S AND ADVANCES OF RS. 41, 05,177/- AND BANK BALANCE A T RS. 25, 49,204/- BUT NO INTEREST IS CHARGED. HOWEVER, NO AR GUMENT IS MADE IN THIS REGARD, BUT IT IS SEEN THAT IT WAS CLAI MED IN REVISION PROCEEDING THAT BANK ACCOUNT IS CURRENT AC COUNT. HOWEVER, THIS ISSUE APPEARS TO HAVE NOT EXAMINED BY THE AO NOR THE NATURE OF LOANS WAS ENQUIRED. THEREFORE, ON THIS SCORE I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 18 OF 19 THE ASSESSMENT ORDER IS FOUND TO BE ERRONEOUS AND P REJUDICIAL TO THE INTEREST OF REVENUE. 17. IN THE LIGHT OF ABOVE DISCUSSION, WE FIND THAT THE A O HAD NOT CONSIDERED ALL THE RELEVANT ASPECTS OF THE CASE CAREFULLY WHILE PASSING THE ORDER. THE MERE FACT THA T THE FAILURE ON THE PART OF THE A.O. IN NOT EXAMINING T HE MATTER CAREFULLY WOULD RENDER HIS ORDER ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. IN OUR VIEW, THE AFORESAID SUBMISSION OF THE ASSESSEE MUST FAIL FOR THE REASON S ALREADY EXPLAINED IN THE FOREGOING PARAS OF THIS ORDER AS T HE ORDER, WHICH IS SOUGHT TO BE REVISED UNDER SECTION 263 REFL ECTS NO PROPER APPLICATION OF MIND BY THE AO AND THUS BE A MENABLE TO REVISION UNDER SECTION 263. IN THIS CASE, BEFORE US, THE ASSESSMENT ORDER PASSED BY THE AO LACKS JUDICIAL ST RENGTH TO STAND. IT IS IN THIS VIEW OF THE MATTER THAT WE FEEL THAT THE LEARNED COMMISSIONER HAS CORRECTLY EXERCISED HIS RE VISIONAL JURISDICTION UNDER SECTION 263. THEREFORE, ALL THE GROUNDS OF APPEAL OF THE ASSESSEE ARE REJECTED. I.T.A.NO.323/IND/2014/A.Y.:09-10/KAILASH CHAND AGAR WAL, HUF PAGE 19 OF 19 18. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. THE ORDER PRONOUNCED IN OPEN COURT ON 22.09.2016 SD/- (D.T.GARASIA) JUDICIAL MEMBER SD/- (O.P.MEENA) ACCOUNTANT MEMBER DATED: 22ND SEPTEMBER, 2016. OPM*