Kanubhai Vanmalibhai Patel HUF, Surat V. Pr. CIT -I, Surat, Surat

ITA 38/SRT/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1559 (ITAT-SURAT)
• Duration Of Justice: 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 15-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S. T. BIDARI
• Keywords: Capital asset; Business income; Principle of natural justice; Bonafide belief; Period of limitation; Validity of assessment; Time period of passing order; Capital Gains
• Section: 263; 63; 154; 143(3); 54B; 13; 101

Judgement Text

INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND DR. ARJUN LAL SAINI, ACCOUNTANT MEMBER ITA NO.38/SRT/2021 (AY 2016-17) (H EARING IN VIRTUAL COURT) KANUBHAI VANMALIBHAI PATEL HUF, 6, SIDDHARTH SOCIETY, LAMBE HANUMAN ROAD, SURAT 395 010. PAN : AAKHP 0715 K VS THE PRINCIPAL COMMISSIONER OF INCOME TAX-1, SURAT. APPLICANT RESPONDENT ASSESSEE BY SHRI HIREN VEPARI CA REVENUE BY SHRI S.T.BIDARI - CIT(DR) DATE OF HEARING 28 . 0 5 .2021 DATE OF PRONOUNCEMENT 10.06.2021 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. PRINCIPAL COMMISSIONER OF INCOME TAX-1, [LD.PR.CIT] SURAT DATED 31.03.2021FOR THE ASSESSMENT YEAR (AY) 2016-17. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: (I) VALIDITY: (1) THE LEARNED PRINCIPAL COMMISSIONER OF INCOME-TAX, SURAT-1(A) NOT HAVING PROVIDED ADEQUATE OPPORTUNITY AND (B) NOT HAVING CONSIDERED SUBMISSION, ORDER U/S. 263 IS REQUIRED TO BE QUASHED. (2) WITH THE PROCEEDINGS U/S. 263 STARTED AT THE VERY FAG-END OF THE PROVISION OF GENEROUS TIME-LIMIT OF 2 YEARS, SUCH PROCEEDINGS DELAY NATURAL JUSTICE. (II) ASSUMPTION OF JURISDICTION: ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 2 (1) THE PRINCIPAL COMMISSIONER OF INCOME-TAX WAS NOT JUSTIFIED IN ASSUMING JURISDICTION U/S.263 WITHOUT SATISFYING CONDITIONS. (2) THE APPELLANT SUBMITS THAT THE PRINCIPAL COMMISSIONER OF INCOME-TAX OUGHT NOT TO HAVE INVOKED PROVISIONS OF SECTION 263 ON THE VERY SAME POINT ON WHICH THE ASSESSING OFFICER HAD MADE INQUIRY AND TAKEN POSITION. (3) THE APPELLANT FURTHER SUBMITS THAT THE PRINCIPAL COMMISSIONER OF INCOME-TAX DID NOT APPRECIATE THE SETTLED POSITION OF LAW WHERE PROCEEDINGS U/S.263 DO NOT STAND TO SUSTAIN IF PRINCIPAL COMMISSIONER OF INCOME-TAX OPTS TO TAKE DIFFERENT VIEW IN THE SAME MATTER. (4) THE LEARNED PR. CIT WAS DRIVEN BY EXTRANEOUS CONSIDERATION IN NOT DROPPING THE PROCEEDINGS U/S.263. (5) THE REVISION FAILS BECAUSE UNDER THE SAME JURISDICTION, THE APPELLANTS SHAVE (2/3) IN THE LAND IS TAKEN FOR REVISION, WHILE ON THE SAME SET OF FACTS, THE BALANCE SHARE (1/3) OF RELATIVE OF THE ASSESSEE PASSED U/S. 143(3) IS ALLOWED TO BE CONTINUED TO BE CLASSIFIED AS ' GAINS'. (III) MERITS: (1) WITH THE ASSESSE INDISPUTABLY BEING AN AGRICULTURIST, SELLING ITS AGRICULTURAL LAND AS AGRICULTURAL LAND AFTER HOLDING IT FOR A PERIOD OF 10 YEARS, WOULD NOT CHARACTERIZE SUCH TRANSACTION ONE-OFF IN A YEAR INTO ADVENTURE IN THE NATURE OF TRADE. (2) IF EVERY TRANSACTION OF CAPITAL GAINS IF CONSIDERED AS THOUGH THE ASSESSING OFFICER DID NOT PUT INQUIRY ON THE POINT OF VIEW OF ADVENTURE IN THE NATURE OF TRADE, EACH OF THE CASE WOULD BE AMENABLE TO REVISION. (3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TRANSACTION OF SALE AGRICULTURAL LAND SQUARELY FELL WITHIN THE HEAD 'CAPITAL GAINS'. (IV) MISCELLANEOUS: THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR VARY ANY OF THE GROUNDS OF THE APPEAL. ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 3 2. BRIEF FACTS OF THE CASE AS GATHERED FROM THE ORDER OF LOWER AUTHORITIES ARE THAT THE ASSESSEE IS HAVING STATUS OF HINDU UNDIVIDED FAMILY (HUF), FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2016-17 ON 31.03.2017 DECLARING INCOME OF RS.4,53,97,120/-. THE CASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 12.12.2018 ACCEPTING RETURN OF INCOME. SUBSEQUENTLY, THE ORDER WAS REVISED BY LD. PR.CIT BY EXERCISING HIS POWER UNDER SECTION 263 OF THE ACT VIDE ORDER DATED 31.03.2021. THE LD. PR.CIT BEFORE PASSING THE REVISION ORDER, NOTED THAT ON PERUSAL OF RECORD, HE FOUND THAT ASSESSEE HAD SOLD A PIECE OF LAND OUT OF R.S. NO.371, VILLAGE VESU TALUKA MAJURA DISTRICT, SURAT TO A PARTNERSHIP FIRM RISING REALITY FOR A SALE CONSIDERATION OF RS.33.82 CRORE AND CLAIMED DEDUCTION UNDER SECTION 54B OF THE ACT OF RS.17.75 CRORE ON PURCHASE OF ANOTHER AGRICULTURE LAND. THE PURCHASER FIRM PURCHASED THE SAID PIECE OF LAND FOR COMMERCIAL DEVELOPMENT. THE LD. PR.CIT NOTED THAT IN THREE SUBSEQUENT YEARS THE ASSESSEE FREQUENTLY TRADED IN LAND AS A COMMODITY IN A LARGE QUANTITY, WHICH SIGNIFIES THAT ASSESSEE IS DOING A BUSINESS OF LAND DEALINGS AND NOT AS A CAPITAL ASSET. THE LAND HELD BY ASSESSEE IS STOCK IN TRADE AND INCOME ARISING OF SALE OF WHICH WILL BE TREATED AS BUSINESS INCOME. FURTHER, THE LD. PR.CIT NOTED THAT ASSESSEE OBTAINED PERMISSION FROM DEPUTY COLLECTOR, SURAT UNDER SECTION 63 OF TENANCY ACT, FOR SELLING TO AGRICULTURAL ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 4 LAND FOR NON-AGRICULTURAL / COMMERCIAL PURPOSE. AND THAT DURING THE ASSESSMENT, THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE ABOUT THE AGRICULTURE ACTIVITIES CARRIED OUT BY ASSESSEE IN THE SAID LAND, THUS, THE ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION UNDER SECTION 54B OF THE ACT. 3. ON THE BASIS OF AFORESAID OBSERVATION, THE LD. PR.CIT TOOK HIS VIEW THAT THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER (AO) IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. THE LD. PR.CIT ISSUED A SHOW CAUSE NOTICE UNDER SECTION 263 DATED 23.03.2021 FOR FIXING THE DATE OF HEARING ON 26.03.2021. THE LD. PR.CIT NOTED THAT SHOW CAUSE NOTICE WAS SERVED UPON THE ASSESSEE ON 23.03.2021 AND THE ASSESSEE REQUESTED FOR ADJOURNMENT FOR A WEEK. THE ASSESSEE WAS GRANTED FURTHER TIME AND DIRECTED TO SUBMIT ITS REPLY ON OR BEFORE 29.03.2021 BY 5.30 PM THROUGH ITBA PORTAL. THE LD. PR.CIT NOTED THAT ASSESSEE SUBMITTED HIS REPLY ON ITBA PORTAL. THE REPLY WAS NOT UPLOADED IN A PROPER FORMAT, THUS, THE SAME COULD NOT BE OPENED. THEREFORE, THE LD. PR.CIT ISSUED ANOTHER NOTICE ON THE SAME DATE 29.03.2021 FOR FURNISHING REPLY IN A PROPER FORMAT EITHER ON ITBA PORTAL OR THROUGH EMAIL BY 30.03.2021 UP TO 7 PM. THE LD. PR.CIT NOTED THAT THE ASSESSEE HAS NEITHER UPLOADED REPLY ON ITBA PORTAL NOR SENT THROUGH EMAIL. THE LD. PR. CIT, THEREAFTER PROCEEDED TO CONSIDER THE MATERIAL AVAILABLE BEFORE HIM. THE LD. PR.CIT ON THE BASIS OF MATERIAL AVAILABLE ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 5 BEFORE HIM NOTED THAT IN ASSESSMENT YEAR 2013-14, 2014-15 TO 2018-19, THE ASSESSEE TRADED IN VARIOUS LAND DEALINGS TRADING ACTIVITIES. THE ASSESSEE HAS FREQUENTLY PURCHASE AND SOLD THE LAND WHICH QUALIFIES THE ASSESSEE AS A BUSINESS IN LAND AND NOT AS A CAPITAL ASSET FOR PERSONAL USE. THE ASSESSEE SOLD THE SAID LAND AT A CONSIDERATION OF RS.33.82 CRORE AND CLAIMED DEDUCTION UNDER SECTION 54B OF THE ACT OF RS.17.75 CRORE. NO DOCUMENTARY EVIDENCE FOR USE OF LAND FOR AGRICULTURAL PURPOSE OR EXPENSES INCURRED FOR AGRICULTURAL YIELD IS FILED. THUS, IN ABSENCE OF DOCUMENTARY EVIDENCE, IT IS NOT ESTABLISHED THAT LAND WAS USED FOR AGRICULTURAL PURPOSE, WHICH IS THE PRIMARY CONDITION FOR CLAIMING DEDUCTION UNDER SECTION 54B OF THE ACT. THE LD. PR.CIT AFTER REFERRING THE DECISION OF HONBLE SUPREME COURT IN A LEADING CASE OF MALABAR INDUSTRIAL COMPANY LTD., VS CIT (243 ITR 83 SC) AND OTHER CASES HELD THAT ORDER PASSED WITHOUT APPLICATION OF MIND WOULD ATTRACT THE INVOCATION OF POWER UNDER SECTION 263 OF THE ACT. THE LD. PR.CIT HELD THAT THE ASSESSMENT ORDER IS PASSED WITHOUT MAKING ENQUIRY AND WITHOUT APPLICATION OF MINDS. THEREFORE, THE ASSESSMENT ORDER WAS SET-ASIDE WITH A DIRECTION TO THE ASSESSING OFFICER TO PASS THE ASSESSMENT ORDER DE-NOVO AND EXAMINE THE ISSUE OF CAPITAL GAIN AND DEDUCTION UNDER SECTION 54B OF THE ACT AFTER GRANTING REASONABLE OPPORTUNITY TO THE ASSESSEE. ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 6 4. AGGRIEVED BY THE ORDER OF LD. PR.CIT, THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE THIS TRIBUNAL. THE APPEAL WAS FILED ON 15.04.2021. THE ASSESSEE FILED AN APPLICATION FOR HEARING OF THE APPEAL ON OUT OF TURN BASIS. THE PRAYER OF ASSESSEE FOR HEARING THE APPEAL ON OUT OF TURN BASIS WAS ALLOWED ON 16.04.2021. 5. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. COMMISSIONER OF INCOME-TAX DEPARTMENTAL REPRESENTATIVE (CIT-DR) FOR THE REVENUE AND PERUSED THE ORDER OF LOWER AUTHORITIES. THE LD.AR OF THE ASSESSEE ALSO FILED HIS WRITTEN SUBMISSION RUNNING INTO 27 PAGES. THE LD.AR FOR ASSESSEE ALSO FILED VARIOUS DOCUMENTS IN THE FORM OF PAPER BOOK (PB), CONSISTING COPY OF NOTICE UNDER SECTION 263 OF THE ACT DATED 23.03.2021, COPY OF APPLICATION DATED 27.03.2021 FOR SEEKING ADJOURNMENT BEFORE LD PCIT, COPY OF REPLY DATED 30.03.2021IN RESPONSE TO THE SHOW CAUSE NOTICE UNDER SECTION 263. COPY OF ACKNOWLEDGMENT OF RETURN OF INCOME, COMPUTATION OF INCOME, PROFIT AND LOSS ACCOUNT, CAPITAL ACCOUNT, BALANCE SHEET AND COPY OF SALE DEED AND DECISION OF CERTAIN CASE LAWS. 6. IN SUPPORT OF VARIOUS GROUNDS OF APPEAL RAISED BY THE ASSESSEE, THE LD.AR OF THE ASSESSEE SUBMITS THAT HE HAS THREE FOLD SUBMISSIONS. FIRSTLY ON THE VALIDITY OF ORDER PASSED IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE, SECONDLY, ON TECHNICALITY ABOUT VALIDITY OF ASSUMPTION OF JURISDICTION AND THIRDLY ON ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 7 MERIT. THE LD.AR ON HIS FIRST SET OF SUBMISSION IN VALIDITY OF ASSESSMENT ORDER SUBMITS THAT SHOW CAUSE NOTICE ISSUED BY THE LD. PR.CIT ONLY 23.03.2021 IT WAS ISSUED ALMOST FAG END OF PERIOD OF LIMITATION FOR REVISING ASSESSMENT ORDER. THE MAXIMUM TIME LIMIT FOR REVISING THE ASSESSMENT ORDER WAS EXPIRING ON 31.03.2021. THE ASSESSEE RECEIVED ON 26.03.2021 AT 3.45 PM. THE NOTICE WAS HANDED OVER TO AUTHORISED REPRESENTATIVE ON 27.03.2021. 27 TH MARCH 2021 WAS SATURDAY. THE AR FOR THE ASSESSEE VIDE APPLICATION DATED 27 TH MARCH 2021 SOUGHT ADJOURNMENT FOR A WEEK. NEXT DAY WAS 28.03.2021 BEING SUNDAY. THE LD. PR.CIT PLEASED TO GRANT THE ADJOURNMENT FOR TWO DAYS AND FIXED THE CASE ON 29.03.2021. 29.03.2021 WAS A HOLIDAY ON ACCOUNT COLOUR DAY OF HOLI FESTIVAL. FURTHER, 30.03.221 WAS THE NEXT WORKING DAY. THE ASSESSEE WAS ALLOWED TIME UP TO 5.00 PM TO FILE HIS REPLY. THE ASSESSEE PREPARED A DETAILED RESPONSE WHICH WAS FILED (UPLOADED) IN PDF FORMAT AT ITBA PORTAL OF LD PR CIT ON 30.03.2021. AS RECORDED BY LD. PR.CIT IN HIS ORDER THAT DUE TO TECHNICAL GLITCH, THE E-FILING PORTAL OF LD. PR.CIT COULD NOT BE OPENED. THE LD. PR.CIT AGAIN ISSUED A NOTICE ASKING THE ASSESSEE TO UPHOLD THE REPLY AGAIN. THE ASSESSEE CAME TO KNOW ABOUT THE SAID NOTICE ONLY AFTER THE ORDER WAS PASSED BY LD. PR.CIT. THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE REPLY OF THE ASSESSEE WAS RECEIVED IN THE OFFICE OF LD. PR.CIT. EVEN AFTER RECEIPT OF ORDER UNDER ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 8 SECTION 263 OF THE ACT, THE ASSESSEE FILED APPLICATION UNDER SECTION 154 OF THE ACT ON 14.04.2021 ALONG WITH DETAILED SUBMISSION FOR SEEKING RECTIFICATION IN THE REVISION ORDER, ON INJUSTICE FACED BY THE ASSESSEE DUE TO ALLEGED TECHNICAL GLITCH. THE APPLICATION UNDER SECTION 154 OF THE ACT WAS NOT PROCESSED. THE LD. AR FOR THE ASSESSEE FURTHER SUBMITS THAT THE PROCEEDINGS UNDER SECTION 263 OF THE ACT WERE INITIATED AT FAG END OF THE LIMITATION PERIOD. THE ASSESSEE EXPLAINED THAT WHEN THE NOTICE WAS RECEIVED ON 26.03.2021, THE ONLY FIVE DAYS TOTAL NUMBER OF DAYS LEFT FOR PASSING ORDER. 27.03.2021 WAS SATURDAY, 28.03.2021 WAS SUNDAY 29 TH WAS MONDAY AND GAZETTED HOLIDAY BEING COLOUR DAY OF HOLI FESTIVAL. THUS, ONLY EFFECTIVELY ONE DAY WAS AVAILABLE WITH LD. PR.CIT. THUS, THE LD. PR.CIT FAILED TO OFFER FAIR AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. AS PER THE MANDATE OF SECTION 263 OF THE ACT, THE LD. PR.CIT REQUIRED TO PROVIDE OPPORTUNITY OF HEARING. THE LD.AR FOR THE ASSESSEE FURTHER SUBMITS THAT IN ABSENCE OF PROPER OPPORTUNITY OF THE LD PCIT VIOLATED THE PRINCIPLES OF NATURAL JUSTICE AND THE ORDER PASSED BY LD. PR.CIT UNDER SECTION 263 IS LIABLE TO BE QUASHED. 7. IN SUPPORT OF HIS SUBMISSION, THE LD.AR FOR THE ASSESSMENT RELIED UPON THE DECISION OF COORDINATE BENCH OF CUTTACK TRIBUNAL IN JAIDURGA MINERALS (200 DTR 205). THE LD.AR SUBMITS THAT THE CO-ORDINATE BENCH OF CUTTACK ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 9 TRIBUNAL QUASHED THE REVISION ORDER PASSED BY PCIT, WHEREIN THE PROCEEDINGS WERE STARTED JUST 11 DAYS BEFORE THE DATE OF EXPIRY OF LIMITATION PERIOD. HOWEVER, IN CASE OF ASSESSEE ONLY TOTAL FIVE DAYS WERE LEFT AT THE TIME OF INITIATION OF PROCEEDINGS UNDER SECTION 263. 8. ON SECOND ALTERNATIVE SUBMISSIONS, ON ASSUMPTION OF JURISDICTION LD.AR FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE SOLD AGRICULTURAL LAND WHEREIN THE ASSESSEE WAS HAVING 2/3 RD SHARE. THE 1/3 RD SHARE WAS OWNED BY RAMESH PURUSOTTAMBHAI PATEL. IN RAMESH PURUSOTTAMBHAI PATEL THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) AND SIMILAR TRANSACTION WAS ACCEPTED BY THE AO IN ALLOWING CAPITAL GAIN. COPY OF ASSESSMENT ORDER IS PLACED ON RECORD. AT THE TIME OF ASSUMING JURISDICTION UNDER SECTION 263 OF THE ACT WITH REGARD TO 2/3 RD SHARE OF LAND AS ADVENTURE IN NATURE, THE LD. PR.CIT WAS MINDFUL OF THE FACT THAT BALANCE 1/3 RD PIECE OF LAND WAS ADDED AS A CAPITAL GAIN, CONSCIOUSLY NO REVISION IS PROPOSED IN CASE OF RAMESH PURUSOTTAMBHAI PATEL. THE LD.AR FOR THE ASSESSEE SUBMITS THAT ASSESSEE CANNOT BE TREATED INDIFFERENTLY THAN OF HIS CO-OWNER, THUS, THE PROPOSED REVISION ITSELF IN SELF- CONFLICTING IN ITS APPROACH AND REQUIRED TO BE QUASHED. THE LD.AR FURTHER SUBMITS THAT DURING THE ASSESSMENT, THE LD.AO MADE REQUISITE ENQUIRY ABOUT THE PURCHASE OF LAND, SALE OF LAND, EVIDENCE OF AGRICULTURAL ACTIVITIES, DETAILS OF CROPS, HEAD WISE AGRICULTURAL EXPENSES, DETAILS OF SALE PROCEED OF ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 10 AGRICULTURAL PRODUCT ALONG WITH EXTRACT OF FORM 7/12 (LAND RECORD). THE ASSESSEE FURNISHED THE COMPLETE DETAILS TO THE SATISFACTION OF LD.AO. THE LD.AO AFTER COMPETE SATISFACTION OF THE QUERIES, ALLOWED THE CAPITAL GAIN. DURING THE YEAR, THE SOLITARY TRANSACTION OF SALE OF LAND IS WITH REGARD TO THE SALE OF LAND IN QUESTION. NO OTHER SALE OF PURCHASE MADE BY ASSESSEE. THE ASSESSEE PURCHASED THE SAID LAND IN 2005. THE LAND WAS SOLD ON 21.03.2016 AFTER SEEKING PROPER PERMISSION AS PRESCRIBED UNDER SECTION 63 OF THE ACT OF GUJARAT TENANCY AND AGRICULTURAL LAND ACT, WITHOUT WHICH THE AGRICULTURAL LAND COULD NOT BE SOLD TO A NON-AGRICULTURALIST. THE ASSESSEE ALWAYS HAS SHOWN INVESTMENT IN LANDS IN ITS BOOKS OF ACCOUNTS. THE BOOKS OF ACCOUNTS OF ASSESSEE WERE DULY EXAMINED BY THE LD.AO BEFORE PASSING THE ASSESSMENT ORDER. THE LD.AR FURTHER SUBMITS THAT THE CONTENTION OF LD. PR.CIT THAT ASSESSEE IS FREQUENTLY MAKING PURCHASE OF SALE OF THE LAND AND ASSESSEE WAS TREATED AS TRADER IN THE LAND IN AN ORGANISED WAY. THE LD. PR.CIT IN PARA 5 OF THE ORDER MADE A TABULATED DETAILS, WHICH SHOWS THAT ONLY THREE PIECES OF LAND HAVE BEEN SOLD OVER A PERIOD OF NINE YEARS, ALL HAVE BEEN AGRICULTURAL LANDS. HOLDING PERIOD IS FROM THREE YEARS TO TEN YEARS. THE ASSESSEE PURCHASED LAND ONLY THRICE IN A PERIOD OF NINE YEARS. THE PURCHASE OF AGRICULTURAL LAND TO AVAIL THE BENEFIT OF SECTION 54B OF THE ACT. ON THE CONTENTION OF LD. PR.CIT THAT ASSESSEE HAS NOT GIVEN ANY DOCUMENTARY ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 11 EVIDENCE ABOUT THE AGRICULTURAL ACTIVITIES IN THREE YEARS, THE LD.AR FOR ASSESSEE SUBMITS THAT COMPLETE DETAILS OF AGRICULTURAL INCOME WERE FURNISHED TO THE LD.AO, COPIES OF WHICH ARE PLACED ON RECORD AT PAGE NO.57 TO 101 OF THE PAPER BOOK. THE ASSESSEE GROWN CROP OF JOWAR, WHICH WERE DONATED TO SHRI MARUTI GOSALA MANAGED BY SHRI MARUTI SEWA TRUST. THE ASSESSEE FURNISHED THE CONFIRMATION OF SAID TRUST. THE LD.AR FOR THE ASSESSEE FURTHER SUBMITS THAT THE ASSESSEE SOLD AGRICULTURAL LAND, COPY OF SALE DEED DATED 21.03.2016 ITSELF CHARACTERISE THE NATURE OF LAND. AN AGRICULTURAL LAND CAN NEVER SELL LAND TO THE NON-AGRICULTURIST THAT WAS THE REASON TO OBTAIN THE NECESSARY PERMISSION UNDER SECTION 63 OF THE ACT OF GUJARAT TENANCY AGRICULTURAL LAND ACT. THE LD.AR OF THE ASSESSEE ALSO RELIED UPON THE THE FOLLOWING DECISION; SURESH CHAND GOYAL 298 ITR 277 (MADHYA PRADESH), BANGALORE TRIBUNAL IN D.N. KRISHNAPPA (21-DTR-11), SMT. N. KAASIVISALAM [93-TTJ-537 (CHENNAI), B.VENU MADHAV IN ITA NO.1698/AHD/2012 AND PUNE TRIBUNAL IN ASHOK MOTILAL KATARIA 308-ITR(A.T.)-298. 9. ON THE OTHER HAND, THE LD. CIT-DR SUPPORTED THE ORDER OF LD. PR.CIT. THE LD PCIT IN PARA -5 OF HIS ORDER CLEARLY HELD THAT THE ASSESSEE IS FREQUENTLY DEALING IN SALE AND PURCHASE OF LAND IN A ORGANISED ACTIVITY. THE LD. PR.CIT SUBMITS THAT THE ASSESSMENT ORDER IS SILENT ABOUT THE QUERIES RAISED BY THE AO. THE LD. CIT-DR FOR THE REVENUE FURTHER SUBMITS THAT AO ALLOWED THE ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 12 DEDUCTION OF CAPITAL GAIN UNDER SECTION 45 ON PURCHASE OF ANOTHER CAPITAL GAIN TO THE ASSESSEE WITHOUT EXAMINING THE NATURE OF LAND TRANSFERRED BY THE ASSESSEE. THOUGH, THE LAND TRANSFERRED BY THE ASSESSEE WAS ASSET BUT NOT AGRICULTURE LAND FOR THE PURPOSE OF CLAIMING EXEMPTION UNDER SECTION 54B OF THE ACT. THE AO , WHILE PASSING THE ASSESSMENT ORDER HAS NOT APPLIED HIS MIND. 10. ON THE CONTENTION OF LD.AR THAT ASSESSEE WAS NOT GRANTED FAIR AND PROPER HEARING, THE LD. CIT-DR FOR THE REVENUE SUBMITS THAT THE ASSESSEE WAS GIVEN LIBERTY TO FURNISH THE REPLY. THE ASSESSEE INSTEAD OF FILING REPLY SOUGHT ADJOURNMENT FOR ONE WEEK. THE ONE WEEK ADJOURNMENT WAS NOT AT ALL POSSIBLE AS THE TIME PERIOD FOR PASSING THE ORDER UNDER SECTION 263 OF THE ACT WAS EXPIRING ON 31.03.2021. THE LD. PR.CIT GRACIOUSLY ALLOWED THE ASSESSEE TO FILE HIS REPLY ON HIS ITBA PORTAL. WHEN THE REPLY OF ASSESSEE COULD NOT BE OPENED DUE TO TECHNICAL GLITCH AS THE SAME WAS NOT FILED IN PROPER FORMAT. THE LD. PR.CIT FURTHER ALLOWED THE ASSESSEE TO FURNISH THEIR REPLY THROUGH E- MAIL. THE ASSESSEE FAILED TO FURNISH THE REPLY BEFORE THE LD. PR.CIT IN TIME. THE LD. PR.CIT REVISED THE ORDER AFTER GRANTING THE OPPORTUNITY OF HEARING AND CONSIDERING THE MATERIAL AVAILABLE ON RECORD. THE LD. CIT-DR FOR THE REVENUE SUBMITS THAT ASSESSEE HAS NO CASE EITHER ON LAW OR ON FACTS. THE ASSESSEE CANNOT SEEK PARITY UNDER LAW ON THE GROUND THAT HIS CO-OWNER WAS ALLOWED EXEMPTION OF CAPITAL GAIN. IF THE CO-OWNERS ARE ALLOWED SIMILAR ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 13 DEDUCTION THE SAME IS INVALID IN LAW. THE ORDER PASSED BY ASSESSING OFFICER IS ERRONEOUS AND IN SO FAR AS PREJUDICIAL TO THE INTEREST OF REVENUE BEING UNSUSTAINABLE IN LAW. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF BOTH THE PARTIES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALSO CONSIDERED VARIOUS DOCUMENTARY EVIDENCE AND FURTHER DELIBERATED ON CASE LAWS RELIED BY THE LD AR FOR THE ASSESSEE. WE HAVE ALSO CONSIDERED THE DETAILED WRITTEN SYNOPSIS FURNISHED BY LD.AR OF THE ASSESSEE WHICH IS RUNNING IN 27 PAGES. THE PERUSAL OF ASSESSMENT ORDER REVEALS THAT AO ALLOWED THE EXEMPTION/ DEDUCTION OF CAPITAL GAIN UNDER SECTION 54, WITHOUT DISCUSSING THE NATURE OF ASSET (AGRICULTURE LAND). THERE IS NO DISPUTE ABOUT THE LOCATION OF THE LAND/ IMPUGNED LAND SOLD BY THE ASSESSEE, WHICH WAS SITUATED IN THE HEART OF SURAT CITY. SURAT CITY IS METROPOLITAN CITY. FURTHER THERE IS NO DISCUSSION ABOUT THE NATURE OF LAND WHERE FURTHER INVESTMENT IS MADE IN AGRICULTURAL LAND OR NOT. THE ASSESSMENT IS SILENT ON THE VARIOUS QUESTIONS RAISED BY THE AO. FROM THE QUESTIONNAIRES RAISED BY THE AO, WE FIND THAT VERY NATURE OF ASSET WAS NOT EXAMINED BY AO. NO DOUBT THE ASSESSEE DECLARED CAPITAL GAIN BUT, WHETHER ITS EXEMPTION CAN BE CLAIMED ON PURCHASE OF OTHER AGRICULTURE LAND, IS NOT AT ALL EXAMINED BY THE ASSESSING OFFICER. 12. THE QUESTION, WHETHER THE PARTICULAR LAND IS AGRICULTURE LAND HAS TO BE DECIDED ON CONSIDERING THE FACTS AND CIRCUMSTANCES OF EACH ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 14 CASE. THE SUPERIOR COURTS HAVE LAID DOWN CERTAIN GUIDELINE HAVING REGARDS TO CERTAIN GUIDELINE HAVING REGARD TO THE FOLLOWING FREQUENTLY OCCURRING FACTORS: SALE OF LAND FOR HOUSING PURPOSE; OBTAINING PERMISSION TO SELL THE LAND FOR NON-AGRICULTURE PURPOSE; ABSENCE OF CULTIVATION PRIOR TO SALE, ABSENCE OF INTENTION TO CULTIVATE LAND IN FUTURE, LOCATION OF LAND WITHIN IN MUNICIPAL AREA, THE NATURE OF THE SURROUNDING AREA; THE PRICE AT WHICH THE LAND WAS SOLD WITHIN THE MUNICIPAL AREA AND ENTRY IN MUNICIPAL RECORD. ALL THESE FACTORS WERE NOT CONSIDERED BY THE AO WHILE PASSING THE ASSESSMENT ORDER. 13. THE HONBLE SUPREME COURT IN A WELL KNOWN LEADING CASE IN MALABAR INDUSTRIAL CO. LTD. V. CIT [2000] (243 ITR 832 SC) HELD THAT BY READING OF SECTION 263 OF THE INCOME-TAX ACT, MAKES IT CLEAR THAT THE PREREQUISITE FOR THE EXERCISE OF THE JURISDICTION BY THE COMMISSIONER SUO MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS INSOFAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER HAS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, ( I ) THE ORDER OF THE ASSESSING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS; AND ( II ) IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT - IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIAL TO THE REVENUE - RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. AN INCORRECT ASSUMPTION OF FACTS OR AN INCORRECT APPLICATION OF LAW WILL SATISFY ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 15 THE REQUIREMENT OF THE ORDER BEING ERRONEOUS. EVERY LOSS OF REVENUE AS A CONSEQUENCE OF AN ORDER OF THE ASSESSING OFFICER, CANNOT BE TREATED AS PREJUDICIAL TO THE INTERESTS OF THE REVENUE, FOR EXAMPLE, WHEN AN INCOME-TAX OFFICER ADOPTED ONE OF THE COURSES PERMISSIBLE IN LAW AND IT HAS RESULTED IN LOSS OF REVENUE, OR WHERE TWO VIEWS ARE POSSIBLE AND THE INCOME-TAX OFFICER HAS TAKEN ONE VIEW WITH WHICH THE COMMISSIONER DOES NOT AGREE, IT CANNOT BE TREATED AS AN ERRONEOUS ORDER PREJUDICIAL TO THE INTERESTS OF THE REVENUE UNLESS THE VIEW TAKEN BY THE INCOME-TAX OFFICER IS UNSUSTAINABLE IN LAW . 14. ON CONSIDERING VARIOUS PLEAS OF BOTH THE PARTIES, WE ARE OF THE PRIMA FACIA VIEW THAT THE LD. PCIT VALIDLY ASSUMED HIS JURISDICTION FOR EXERCISING HIS POWER UNDER SECTION 263 OF THE ACT BY TAKING VIEW THAT THE ORDER PASSED BY ASSESSING OFFICER IS ERRONEOUS AND IN SO FAR AS PREJUDICIAL TO THE INTEREST OF JUSTICE. NO DOUBT, THAT LD. PR.CIT INVOKED THE JURISDICTION UNDER SECTION 263 OF THE ACT ON 23.03.2021, JUST BEFORE SEVEN DAYS OF EXPIRY OF PERIOD OF LIMITATION FOR PASSING REVISION ORDER. WE FIND, THOUGH, THE ASSESSEE FILED ITS REPLY; HOWEVER, IT COULD NOT BE RE-OPENED AND CONSIDERED BY LD. PCIT, DUE TO GLITCH IN THE ITBA SYSTEM. FACTS REMAINED THAT THE LD. PCIT PASSED THE IMPUGNED ORDER WITHOUT CONSIDERING VARIOUS PLEAS OF THE ASSESSEE RAISED IN ITS REPLY. IT IS ALSO A FACT THAT THE HANDS OF LD. PR CIT WERE TIED BY THE PERIOD OF LIMITATION WHICH WAS EXPIRING ON 31.03.2021 AND ULTIMATELY THE ORDER WAS PASSED ON 31.03.201. THE ASSESSEE HAS NOT RAISED ANY GRIEVANCES THAT THE ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 16 ORDER UNDER SECTION 263 WAS PASSED BEYOND PERIOD OF LIMITATION. IT IS CARDINAL PRINCIPLE OF NATURAL JUSTICE THAT NOBODY SHOULD BE LEFT UNHEARD. 15. THEREFORE, CONSIDERING THE PACULARITY OF THE PRESENT CASE, WE ARE OF THE VIEW THAT THE MATTER REQUIRE FRESH ADJUDICATION AS THE SAME IS PASSED IN A HASTY MANNER. HENCE, WE REMIT THE CASE TO THE FILE OF LD PCIT TO CONSIDER THE REPLY FILED BY THE ASSESSEE AND PASS ORDER UNDER SECTION 263 OF THE ACT, AFRESH IN ACCORDANCE WITH LAW, WITHOUT BEING INFLUENCE BY OUR OBSERVATION. THE LD. PCIT IS FURTHER DIRECTED TO GIVE REASONABLE OPPORTUNITY TO THE ASSESSEE. FURTHER CONSIDERING THE FACTS OF THIS PARTICULAR CASE, THE ASSESSEE IS ALSO GIVEN LIBERTY EITHER TO RELY ON ITS EARLIER REPLY OR MAY FILE FRESH REPLY TO THE SHOW CAUSE NOTICE UNDER SECTION 263. KEEPING IN VIEW THAT WE HAVE REMIT THE ENTIRE CASE TO THE FILE OF LD. PCIT, THEREFORE, THE CONSIDERATION AND ADJUDICATION ON THE OTHER SUBMISSIONS ON MERIT AS RAISED BY THE LD. AR FOR THE ASSESSEE, HAVE BECOME ACADEMIC. 16. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER ANNOUNCED ON 10 TH JUNE, 2021 BY PLACING RESULT ON NOTICE BOARD. SD/- SD/- (DR ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT, DATED: 10/06/2021 / SGR ITA NO.38/SRT/20121 SHRI KANUBHAIVANMALIBHAI PATEL (HUF) (AY 2016-17) 17 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR 6. GUARD FILE BY ORDER / / TRUE COPY / / ASSISTANT REGISTRAR, ITAT, SURAT