ITO, Bangalore V. Sri. C. gopala Krishna Bhupathi, Bangalore

ITA 38/BANG/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63737 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 11-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Assessee Lawyers: C RAMESH
• Keywords: Business income; Opportunity of being heard; Cost of acquisition
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI GEORGE GEORGE K, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER I.T.A. NO.38/BANG/2012 (ASSESSMENT YEAR : 2006-07) INCOME TAX OFFICER, WARD 11(1), BANGALORE. . APPELLANT. VS. SHRI C. GOPALAKRISHNA BHUPATHI, B-2, EAGLE ROCK, EAGLE STREET, HOSUR ROAD CROSS, BANGALORE-25. .. RESPONDENT. PAN AHCPB 7482J APPELLANT BY : SMT. SUSAN THOMAS JOSE. RESPONDENT BY : SHRI C. RAMESH. DATE OF HEARING : 17.09.2012. DATE OF PRONOUNCEMENT : 28.09.2012. O R D E R PER SHRI JASON P. BOAZ : THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-I, BANGALORE DT.20.1.2011 FOR ASSESSMENT YEAR 2008-09. 2. THE FACTS OF THE CASE, IN BRIEF, ARE AS UNDER : 2.1 THE ASSESSEE FILED HIS RETURN OF INCOME FOR ASS ESSMENT YEAR 2008-09 ON 31.7.2008 DECLARING INCOME OF RS.10,15,060 FROM SALARY AND OT HER SOURCES. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 (H EREIN AFTER REFERRED TO AS 'THE ACT') AND 2 ITA NO.38/BANG/12 SUBSEQUENTLY TAKEN UP FOR SCRUTINY BY ISSUE OF NOTI CE UNDER SECTION 143(2) OF THE ACT ON 17.8.2009. THE ASSESSING OFFICER AFTER EXAMINING T HE CASE COMPLETED THE ASSESSMENT BY AN ORDER UNDER SECTION 143(3) OF THE ACT DT.16.12.2010 DETERMINING THE INCOME OF THE ASSESSEE AT RS.23,87,560. IN THE RELEVANT PERIOD, THE ASSESSEE HAD SHOWN GROSS RECEIPTS OF RS.13,87,500 FROM SALE OF 3 SITES AND HAD COMPUTED LONG TERM CAP ITAL GAIN (LTCG) AT NIL AFTER SETTING OFF SHORT TERM CAPITAL LOSS (STCL) ON SALE OF SHARES. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES CLAIM, TREATED THE SALE OF THREE SITES A S AN ADVENTURE IN THE NATURE OF TRADE AND TREATED THE ENTIRE SUM OF RS.13,87,500 AS BUSINESS INCOME. 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT DT.16.12.2 010, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). THE LEARNED CIT(A) DISPOSED OFF THE APPEAL BY AN ORDER DT.21.10.2011 IN FAVOUR OF THE ASSESSEE BY ALLOWING THE ASSESSEES A PPEAL. 3. REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE O RDER OF THE LEARNED CIT(A) DT.21.10.2011 FOR ASSESSMENT YEAR 2008-09. IN THE GROUNDS OF APPEAL RAISED IT HAS BEEN CONTENDED AS UNDER : 1. THE ORDER OF THE LEARNED CIT (APPEALS), IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF REVENUE, IS OPPOSED TO LAW AND THE FACT S AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED CIT (APPEALS) ERRED IN NOT CONFIRM ING THE VIEW OF THE ASSESSING OFFICER THAT THE TRANSACTION OF PURCHASE OF LAND, I TS DEVELOPMENT AND SALE OF SITE, FROM ITS INCEPTION, WAS AN ADVENTURE IN THE NATURE OF TRADE AND THUS, ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS. 3. THE LEARNED CIT (APPEALS) ERRED IN NOT APPRECIAT ING THE FACT THAT THE ASSESSEE HAS DECLARED THE BUSINESS PROFIT UNDER THE HEAD CA PITAL GAINS SOLELY FOR THE PURPOSE OF SETTING OFF THE LOSSES AGAINST SUCH PROF IT. 3 ITA NO.38/BANG/12 4. FOR THESE AND SUCH OTHER GROUNDS THAT MAYBE URG ED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT (APPEALS) B E REVERSED IN SO FAR AS THE ABOVE MENTIONED ISSUE IS CONCERNED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, TO AMEND OR TO DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. 4. THE GROUNDS RAISED AT S.NOS.1, 4 AND 5 ARE GENERAL IN NATURE AND THEREFORE NO ADJUDICATION IS CALLED FOR THEREON. 5.1 THE GROUNDS RAISED AT S.NOS.2 & 3 ARE IN RESPECT OF THE SINGLE ISSUE OF DISPUTE IN T HIS APPEAL AS TO WHETHER THE PURCHASE OF LAND, ITS DEVE LOPMENT AND THE SALE OF 3 SITES BY THE ASSESSEE IN THE RELEVANT PERIOD WAS ASSESSABLE AS BUSINESS INCOME OR UNDER THE HEAD CAPITAL GAIN. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUB MITTED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD SHOWN GROSS RECEIPTS OF RS.13,87,500 ON SALE OF THREE SITES TO DIFFERENT PA RTIES AND HAD COMPUTED LTCG THEREON AT RS.7,65,694. FROM THE RECORDS IT EMERGED THAT THE ASSESSEE HAD ACQUIRED 1 ACRE 20 GUNTAS OF CONVERTED LAND ON 6.5.1996 FROM SMT. VENKATALAKSHMA MMA, SMT. R. MANJULA, SMT. R. PUSHPA, SMT. R. INDIRA, SMT. R. SUGUNA AND SRI R. VENKATESH . ON EXAMINATION OF THE PURCHASE DEED AND SALE DEEDS IN RESPECT OF THE SAID PROPERTY, THE ASS ESSING OFFICER CAME TO THE VIEW THAT THE ASSESSEES LAND DEALINGS WERE AN ADVENTURE IN THE N ATURE OF TRADE AND THE RESULTANT INCOME CONSTITUTED BUSINESS INCOME AND NOT LTCG AS CLAIMED BY THE ASSESSEE. IT IS SUBMITTED THAT IN THE ABSENCE OF DETAILS OF COST OF ACQUISITION FOR T HE SAID LAND THE ENTIRE RECEIPTS WERE RIGHTLY BROUGHT TO TAX AS BUSINESS INCOME. THE LEARNED DEP ARTMENTAL REPRESENTATIVE SUBMITTED THAT THE LEARNED CIT(APPEALS) HAS REVERSED THE FINDING O F THE ASSESSING OFFICER THAT THE INCOME 4 ITA NO.38/BANG/12 WAS ASSESSABLE AS BUSINESS INCOME AND ALLOWED THE A SSESSEES CLAIM WITHOUT EXAMINING THE TRANSACTION OF PURCHASE OF LAND, ITS DEVELOPMENT AN D SALE OF SITES. IT IS FURTHER SUBMITTED THAT WITHOUT ASSIGNING ANY REASON WHATSOEVER THE LE ARNED CIT(APPEALS) IN HIS ORDER HAS NEITHER GIVEN ANY FINDING AS TO HOW THE ASSESSING OFFICER E RRED IN TAKING THE VIEW THAT THE LAND DEALINGS OF THE ASSESSEE WERE AN ADVENTURE IN THE NATURE OF TRADE NOR ANY FINDING/REASON TO ALLOW THE CLAIM OF THE ASSESSEE. IT IS FURTHER SUB MITTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT AS IS APPARENT FROM A PERUSAL O F THE ORDER OF THE LEARNED CIT(APPEALS), THE MATTER NEEDS TO BE REMITTED BACK TO THE FILE OF THE LEARNED CIT(APPEALS) SO THAT THIS ISSUE CAN BE EXAMINED DE NOVO AND DISPOSED OFF BY W AY OF SPEAKING ORDERS. 5.2 THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDERS OF THE LEARNED CIT(APPEALS) BUT FAIRLY STATED THAT HE HAD NO OBJECTION TO THE M ATTER BEING REMITTED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 5.3 WE HAVE HEARD BOTH PARTIES AND CAREFULLY PERUSE D THE MATERIAL ON RECORD. ON PERUSAL OF THE ORDERS OF THE LEARNED CIT(APPEALS), WE ARE I NCLINED TO AGREE WITH THE VIEWS EXPRESSED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THE ORDER OF THE LEARNED CIT(APPEALS) HAS BEEN PASSED IN A SUMMARY MANNER WITHOUT ASSIGNING A NY REASON OR FINDING FOR ALLOWING THE ASSESSEES CLAIM NOR ADDUCING ANY REASONS TO ESTABL ISH THAT THE VIEW OF THE ASSESSING OFFICER WAS NOT CORRECT IN THE FACTS AND CIRCUMSTANCES OF T HE CASE. WE, THEREFORE, IN THE INTEREST OF EQUITY AND JUSTICE REMIT TO THE FILE OF THE CIT(APP EALS) FOR FRESH CONSIDERATION THE ISSUE OF WHETHER THE LAND TRANSACTIONS ENTERED INTO BY THE A SSESSEE IN THE RELEVANT PERIOD, IS TO BE 5 ITA NO.38/BANG/12 TREATED AS AN ADVENTURE IN THE NATURE OF TRADE AN D CONSEQUENTLY INCOME THEREFORE BE TAXED AS BUSINESS INCOME AS HELD BY THE ASSESSING OFFICER OR WHETHER IT IS TO BE TREATED AS AN INVESTMENT AND TAXED AS LTCG AS CLAIMED BY THE ASSE SSEE AND TO PASS A SPEAKING ORDER THEREON. THE LEARNED CIT(APPEALS) IS DIRECTED TO AFFORD THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD IN THE MATTER. IT IS ORDERED ACCORD INGLY. 6. IN THE RESULT, REVENUES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8.09.2012. SD/- SD/- (GEORGE GEORGE K) (JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER *REDDY GP COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, - B BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDE R SR. PRIVATE SECRETARY, ITAT, BANGALORE