Smt Kanchanben Manubhai, Ahmedabad V. The A C I T Cen Cir-2(3), Ahmedabad

ITA 459/AHD/1997

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5982 (ITAT-AHMEDABAD)
• Duration Of Justice: 13 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 07-01-2010
• Assessment Year: 1983-1984
• Appeal Filed On: 06-02-1997
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C
• Assessee Lawyers: MK PATELTUSHAR VASAAR
• Keywords: Reopening of assessment; Capital asset; Principle of natural justice; Cost of acquisition; Date of conversion; Initiation of penalty proceedings; Valuation report; Reason to believe; Reassessment proceedings
• Section: 45(2); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C, AHMEDABAD BEFORE SHRI BHAVNESH SAINI, JM & SHRI A.N. PAHUJA, AM I.T.A. NO.459/AHD/1997 - AY 1983-84 I.T.A. NO.2040/AHD/2003 - AY 1984-85 SHRI NALIN MANUBHAI SHAH VS ACIT, CIRCLE-2(3) L/H OF SMT. KANCHANBEN AHMEDABAD MANUBHAI PARIJAT, NEAR ST XAVIERS COLLEGE CORNER HL COMMERCE COLLEGE ROAD NAVRANGPURA, AHMEDABAD [PAN : NOT AVAILABLE] (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MK PATEL/TUSHAR VASA,AR REVENUE BY : SHRI MC PANDIT, DR O R D E R AN PAHUJA : THESE APPEALS BY THE ASSESSEE AGAINST TWO SEPARATE ORDERS DATED 28.11.1996 FOR THE AY1983-84 OF THE LD. CIT(A)-VI A ND DATED 28.2.2003 FOR THE AY 1984-85 OF THE LD. CIT(A)-XVI, AHMEDABAD, RAISE THE FOLLOWING GROUNDS. ITA NO.459/AHD/1997[ AY 1983-84] I. 1. THE LEARNED C.I.T.(A) ERRED IN LAW AND ON F ACTS IN UPHOLDING THE DECISION OF THE LEARNED ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2(3) (HEREINAFTER REFERRED TO AS THE LEARNED A.O.). H E SOUGHT TO HAVE ALLOWED THE APPEAL IN FULL IN ACCORDANCE WITH THE GROUNDS OF APPEAL RAISED BY THE APPELLANT BEFORE TH E LEARNED C.I.T.(A). 2. THE APPELLANT STATES THAT THE ORDER OF THE LEARN ED CIT(A) BEING CONTRARY TO LAW, FACTS AND EVIDENCE ON RECORD IS WHOLLY UNSUSTAINABLE IN LAW AND ON FACTS AND AS SUC H IS REQUIRED TO BE SET ASIDE. II. 1. THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON FACTS IN REACHING THE CONCLUSION AS HE DID THAT THE LEARN ED A.O. HAD VALIDLY REOPENED THE ASSESSMENT UNDER THE PROVI SIONS OF SECTION 147 OF THE ACT. ITA NO 459/A/97 & I.T.A. NO.2040/A/03 2 2. THE APPELLANT STATES THAT THE LEARNED CIT(A) ERR ED IN LAW AND ON FACTS IN NOT CONSIDERING / FAILING TO CO NSIDER THE VARIOUS SUBMISSIONS PLACED BEFORE HIM BY THE APPELL ANT. HE OUGHT TO HAVE HELD THAT THE LEARNED A.O. HAD NO GRO UND NOR ANY REASON TO BELIEVE THAT THE INCOME HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 READ W ITH SECTION 148 OF THE ACT WHEN THE APPELLANT HAD ALREA DY FURNISHED THE RETURN BY REGISTERED POST A.D. AND TH E TAX ON THE BASIS OF THE SAID RETURN WAS DULY PAID UNDER AM NESTY SCHEME. 3. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN IGNORING / FAILING TO CONSIDER THE FACT THAT THE AP PELLANT HAVING ALREADY FILED THE RETURN AND THE SAID RETURN HAVING NOT BEEN DISPOSED OF BY THE LEARNED A.O., HE HAD NO JURISDIC TION TO ISSUE NOTICE UNDER SECTION 147 / 148 OF THE ACT. 4. THE APPELLANT STATES THAT THE ACTION OF THE LEAR NED A.O. BEING CONTRARY TO SETTLED LAW MUST BE HELD TO BE WHOLLY WITHOUT JURISDICTION. III. 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACT S IN HOLDING THAT THE APPELLANT WAS LIABLE TO TAX ON LON G TERM CAPITAL GAIN AMOUNTING TO RS.11,86,499/- ON CONVERS ION OF ITS LONG TERM CAPITAL ASSET, NAMELY, LAND INTO STOCK-IN -TRADE PRIOR TO CONTRIBUTION THEREOF AS HER CAPITAL IN THE FIRM STYLED M/S BHOOMI CORPORATION. 2. THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON F ACTS IN HOLDING THAT THE APPELLANT WAS LIABLE TO LONG TE RM CAPITAL GAINS TAX ON THE AFORESAID CONVERSION OF CAPITAL AS SET INTO STOCK-IN-TRADE AND THEREBY BRINGING TO TAX THE DIFF ERENCE BETWEEN THE ACTUAL COST OF LAND AND THE AMOUNT DETE RMINED ON CONVERSION INTO STOCK-IN-TRADE TO CAPITAL GAINS CONTRARY TO THE SETTLED LAW ON THE SUBJECT. 3. THE LEARNED CIT(A) GROSSLY ERRED IN IGNORING/ OVERLOOKING THE FACT THAT THE PROVISIONS OF SECTION 2(47)(IV) OF THE ACT WERE NOT APPLICABLE FOR THE ASSESSMENT YEAR UNDER APPEAL. 4. THE APPELLANT STATES THAT TREATMENT OF CONVERSIO N OF CAPITAL ASSET INTO STOCK-IN-TRADE WHICH ATTRACTS LI ABILITY TO CAPITAL GAINS TAX WAS PLACED ON THE STATUTE BOOK WI TH EFFECT FROM 1.4.1985 AND AS SUCH THE SAID PROVISIONS HAD ITA NO 459/A/97 & I.T.A. NO.2040/A/03 3 ABSOLUTELY NO APPLICATION FOR THE ASSESSMENT YEAR U NDER APPEAL. 5. THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON F ACTS IN IGNORING THE BINDING DECISION OF THE HONBLE SUP REME COURT IN THE CASE OF C.I.T. VS. BAI SHIRINBHAI KOOK A (46 I.T.R. 86) (MAJ. VIEW) WHICH HAS LAID DOWN THAT THE DIFFERENCE BETWEEN THE ACTUAL COST AND THE AMOUNT DETERMINED ON CONVERSION OF ASSET IS NOT EXIGIBLE T O TAX. 6. THE APPELLANT STATES THAT THE LEARNED C.I.T.(A) HAS COMMITTED GROSS JUDICIAL IMPROPRIETY BY IGNORING TH E MAJORITY VIEW IN BAI SHRIINBHAI K. KOOKAS CASE (SUPRA) AND RELYING ON THE MINORITY VIEW TO SUPPORT HIS DECISIO N TO TAX THE DIFFERENCE BETWEEN THE CONVERTED VALUE AND THE ACTU AL COST OF THE CAPITAL ASSET. THE LEARNED CIT(A)S ACTION IS INVALID IN LAW, IF NOT PERVERSE. 7. THE APPELLANT FURTHER STATES THAT THE DECISION O F THE LEARNED CIT(A) BEING CONTRARY TO LAW LAID DOWN BY T HE HONBLE SUPREME COURT DESERVES TO BE QUASHED FORTHW ITH. 8. THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON F ACTS IN RELYING ON THE DECISION OF THE HONBLE SUPREME C OURT IN THE CASE OF SUNIL SIDDHARTHBHAI AND KARTIKEYA V. SA RABHAI (156 ITR 509) TO SUPPORT HIS VIEW THAT THE APPELLAN T HAS INDULGED A DEVICE OR RUSE FOR CONVERTING THE ASSETS INTO STOCK IN TRADE AND THEREAFTER CONTRIBUTING THE SAME TO TH E FIRM IN WHICH SHE WAS A PARTNER. 9. THE LEARNED A.O. AS WELL AS THE LEARNED C.I.T.( A) FAILED TO DISCHARGE THE BURDEN WHICH LAY UPON THEM TO ESTABLISH BY CONCLUSIVE EVIDENCE THAT THE IMPUGNED TRANSACTION WAS A DEVICE OR RUSE TO AVOID THE LIABI LITY TO TAX 10. THE APPELLANT FURTHER STATES THAT HER CASE IS F ULLY COVERED BY THE RECENT BINDING DECISION OF THE HONB LE GUJARAT HIGH COURT IN THE CASE OF BANYAN AND BERRY VS. CIT (222 I.T.R. 831) AND AS SUCH THE FINDINGS OF TH E LEARNED CIT(A) TO THE CONTRARY ARE WHOLLY UNTENABLE IN LAW. 11. THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THE DECISION OF THE LEARNED A.O. TO AD OPT THE VALUE OF CONSIDERATION OF PROPERTY AT RS. 12,38,000 /- BEING THE VALUE TAKEN AT THE TIME OF CONVERSION OF THE PR OPERTY FOR DETERMINING THE ALLEGED LIABILITY TO CAPITAL GAINS. ITA NO 459/A/97 & I.T.A. NO.2040/A/03 4 12. THE APPELLANT STATES THAT THE SAID DIFFERENCE A S DETERMINED BY WAY OF CAPITAL GAINS OUGHT NOT TO HAV E BEEN BROUGHT TO TAX IN LIGHT OF THE DECISION IN BAI SHIR INBHAI K. KOOKAS CASE( SUPRA). IV. 1. THE LEARNED CIT(A) GROSSLY ERRED IN HOLDING THAT THE BAR OF LIMITATION WOULD BE LIFTED FOR A.Y. 1984-85 IN VIEW OF THE PROVISIONS OF SECTION 153(3) OF THE ACT. 2. THE APPELLANT STATES THAT THE DIRECTIONS ISSUED BY THE LEARNED CIT(A) ON THE BASIS OF THE FINDING REACHED WHILE DISPOSING OF THE APPEAL FOR A.Y. 1983-84 ARE WHOLLY CONTRARY TO THE SETTLED LAW ON THE SUBJECT AND BEING CONTRAR Y TO THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS MANICK SONS (74 ITR 1) THE SAID DIRECTIONS DESERVE TO BE QUASHED. 3. THE LEARNED CIT(A) GROSSLY ERRED IN OVERLOOKING / IGNORING THE FACT THAT HE HAD NO JURISDICTION TO IS SUE DIRECTIONS FOR A.Y. 1984-85 AS NO APPEAL WAS PENDIN G WITH HIM FOR THE SAID YEAR. 4. THE LEARNED CIT(A) GROSSLY ERRED IN ISSUING THE SAID DIRECTION RELYING ON VARIOUS DECISIONS REFERRED TO BY HIM IN HIS ORDER. 5. THE APPELLANT STATES THAT THE SAID DECISIONS HAV E ABSOLUTELY NO APPLICATION IN VIEW OF THE DECISION O F THE HONBLE SUPREME COURT IN MANICK CASE (SUPRA) 6. THE APPELLANT FURTHER STATES THAT THE ALTERNATIV E FINDINGS RECORDED BY THE LEARNED CIT(A) BEING CONTR ARY TO THE SETTLED LAW DESERVE TO BE QUASHED. V. THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON F ACTS IN UPHOLDING THE LEVY OF INTEREST AS MADE BY THE LEARN ED A.O. VI. THE LEARNED CIT(A) GROSSLY ERRED IN LAW AND ON FACTS IN UPHOLDING THE INITIATION OF PENALTY PROCEEDINGS UND ER SECTIONS 271(1)(A) AND 273 OF THE ACT BY THE LEARNE D A.O. VII. THE APPELLANT RESERVES ITS RIGHT TO ADD, AMEND , ALTER, SUBSTITUTE OR MODIFY ALL OR ANY OF THE GROUNDS STAT ED HEREINBEFORE. ITA NO 459/A/97 & I.T.A. NO.2040/A/03 5 PRAYER THE APPELLANT RESPECTFULLY PRAYS THAT :- I) PROCEEDINGS UNDER SECTION 147 / 148 OF THE ACT B Y THE LEARNED A.O. MAY KINDLY BE QUASHED. II) IN THE ALTERNATIVE THE ADDITION OF RS.11,86,499 /- AS CAPITAL GAIN MAY KINDLY BE DELETED. III) THE DIRECTIONS ISSUED BY THE LEARNED CIT(A) TO REOPEN THE ASSESSMENT FOR A.Y. 1984-85 MAY KINDLY BE DELETED. IV) LEVY OF INTEREST MAY KINDLY BE DELETED. V) INITIATION OF PENALTY PROCEEDINGS MAY KINDLY BE QUASHED. VI) SUCH AND FURTHER RELIEF WHICH THE APPELLANT IS ENTITLED AS THE FACTS AND CIRCUMSTANCES OF THE CASE MAY JUSTIFY. ITA NO.2040/AHD/2003 IN THIS APPEAL, THE ASSESSEE RAISED THE FOLLOWING G ROUNDS: 1. THAT THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E-TAX IS AGAINST LAW, FACTS AND EVIDENCE ON RECORD. 2. THAT THE LEARNED INCOME-TAX OFFICER HAS ERRED IN CONFIRMING THE ORDER U/S 144 R.W.S. 147 OF THE TOTAL INCOME OF THE ASSESSEE OF RS. 8,82,499 AS AGAINST RETURNED / ASSE SSED INCOME OF RS.5,791. 3. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APP EALS) HAS NOT CONSIDERED THE GROUND OF APPEAL THAT THE INCOME -TAX OFFICER HAD WRONGLY INITIATED THE ASSESSMENT PROCEE DINGS AND MADE ASSESSMENT U/S 144 READ WITH SECTION 147 O F THE INCOME TAX ACT, 1961; AND THE APPELLANT CONTENDS TH AT THE PROCEEDINGS INITIATED ARE TIME BARRED AND VOID ABIN ITIO. 3.1 THE APPELLANT CONTENDS THAT THE ASSESSING OFFIC ER HAS ISSUED NOTICE U/S 148 R.W.S. 147 SERVED ON 13-9-99 WHICH I S TIME BARRED AND IS AGAINST THE PROVISIONS OF LAW HENCE T HE PROCEEDINGS AND ASSESSMENT MADE U/S 144 R.W.S. 147 IS AGAINST THE PRINCIPLES OF LAW. 3.2 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) OUGHT TO HAVE HELD THAT THERE WAS NO GROUND FOR THE INCOME-T AX OFFICER TO BELIEVE THAT INCOME HAS ESCAPED ASSESSME NT BECAUSE RETURN OF INCOME WAS FILED UNDER AMNESTY SC HEME BY THE APPELLANT WHICH WAS ACCEPTED AND ONLY DUE TO APPELLATE ORDER FOR A.Y. 83-84 AND FOR THE PURPOSES OF GIVING EFFECT TO SUCH APPELLATE ORDER THE ASSESSMENT FOR A .Y. 84-85 ITA NO 459/A/97 & I.T.A. NO.2040/A/03 6 IS FINALIZED WHICH IS NOT AN ASSESSMENT UNDER SECTI ON 144 R.W.S. 147 OF THE ACT HENCE THE ORDER PASSED BY THE ASSESSING OFFICER PRESUMING JURISDICTION IS NOT A V ALID ORDER AND HENCE THE ORDER PASSED REQUIRES TO BE CANCELLED / ANNULLED. 3.3 THAT THE APPELLANTS REPRESENTATIVE ALREADY INFO RMED THAT THERE WAS NO OBLIGATION TO FILE RETURN OF INCOME IF THE ORDER IS TO BE PASSED TO GIVE EFFECT TO THE APPELLATE ORDER AND EVEN IF THERE IS OBLIGATION TO FILE RETURN OF INCOME, RETUR N OF INCOME FILED EARLIER BY THE APPELLANT SHOULD BE CONSIDERED AS RETURN FILED UNDER THE PRESENT PROCEEDINGS WHICH IS IGNORE D AND THE FINALIZATION OF ASSESSMENT MADE BY THE ITO IS WRONG AND THE COMPLIANCE MADE BY ASSESSEE IS IGNORED, THEREFORE T HE ASSESSMENT MADE UNDER SECTION 144 IS INCORRECT AND INVALID. 3.4 THE ASSESSMENT ORDER ACCEPTING THE RETURN OF IN COME FILED BY THE APPELLANT WAS FINALIZED ON DT.25-2-87 AND AL L THE PARTICULARS OF INCOME INCLUDING THE CONVERSION OF C APITAL ASSET TO STOCK IN TRADE AND INTRODUCTION OF CAPITAL IN TO THE FIRM AS CAPITAL OF THE APPELLANT HENCE THERE WAS NO NEW INFORMATION ON RECORD TO JUSTIFY AND AUTHORIZE REOP ENING OF ASSESSMENT AND IN PARTICULAR AFTER THE ADDITION IS MADE IN A.Y. 83-84 IT AMOUNTS TO DOUBLE TAXATION IN A.Y. 84 -85. 4. THAT THE LEARNED ITO HAS NOT TAKEN ON RECORD THE AUTHORISED REPRESENTATIVES PERSONAL APPEARANCE AND OBJECTIONS DISCUSSED PERSONALLY AT EARLIER MEETINGS AND HAS WR ONGLY CONSIDERED THAT NONE ATTENDED ON 6-2-02. IN FACT I T WAS SUBMITTED TO HIM THAT IN A.Y. 84-85 NO AMOUNT WAS L IABLE TO BE INCLUDED AS INCOME AND BE CHARGED AS LONG TERM C APITAL GAIN IN A.,Y. 84-85 AGAINST THE DECISION OF SUPREME COURT TO THE FACTS OF THE CASE. THE LEARNED A.O. HAS NOT CO NSIDERED THAT THE VALUATION REPORT WAS WRONGLY CONSIDERED BY THE LEARNED A.O. FOR A.Y. 83-84 SINCE IT REFERS VALUE O F FLAT AND THE ADDITION OF INCOME IS WITH REFERENCE TO THE CON VERSION OF LAND. 4.2 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS ) OUGHT TO HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT TH AT THE A.O. WAS MAKING AN ASSESSMENT OF INCOME AND NOT GIV ING EFFECT TO LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) DIRECTIONS. HE OUGHT TO HAVE CONSIDERED THAT BEING AN INDEPENDENT ASSESSMENT ORDER BASED UPON FACTS OF TH E CASE AND HE OUGHT NOT TO HAVE GIVEN DECISION BY STATING THAT IN ITA NO 459/A/97 & I.T.A. NO.2040/A/03 7 A.Y. 83-84 DECISION WAS TAKEN WHICH WAS BINDING AND FINAL FOR A.Y. 84-85. 5. THAT THE LEARNED INCOME-TAX OFFICER WRONGLY CONS IDERED THAT THE CONVERSION OF LONG TERM CAPITAL ASSETS BY THE A SSESSEE IN HER OWN HANDS WAS TRANSFER WITHIN THE DEFINITION OF TRANSFER UNDER INCOME-TAX ACT, 1961 WHICH WAS SUFFICIENT TO MAKE THE ASSESSEE LIABLE FOR TAXING INCOME HAS LONG TERM CAP ITAL GAIN ON SUCH CONVERSION OF ASSETS AND THE PROVISIONS OF INCOME- TAX ACT, 1961 WERE ATTRACTED TO TAX SUCH DIFFERENCE CREDITED BY THE ASSESSEE, HAS INCOME OF THE ASSESSEE IN A.Y. 1983- 84. 6. THAT THE LEARNED INCOME-TAX OFFICER RELIED ON TH E DIRECTION OF THE CIT(A)-VI GIVEN IN HIS ORDER DATED 28-11-96 FOR A.Y. 1983-84 THAT THE ASSESSING OFFICER COULD RE-OPEN TH E CASE FOR A.Y. 1984-85 IN ORDER TO TAX CAPITAL GAINS IN ASSES SMENT YEAR. THE ASSESSING OFFICER HAS NOT INDEPENDENTLY COME TO THE CONCLUSION AND HENCE THE ASSESSING OFFICER IS N OT SATISFIED IN RECORDING REASONS AND ISSUING NOTICE U /S 148 OF THE IT ACT, 1961. 7. THE LEARNED INCOME-TAX OFFICER HAS NOT APPRECIAT ED THE FACTS AND CIRCUMSTANCES OF THE CASE AND HENCE ERRONEOUSLY HELD THAT THE CONVERSION OF PROPERTY AS STOCK IN TRADE I N ASSESSEE OWN HAND WAS LIABLE TO BE TAXED AS LONG TERM CAPITA L GAIN INCOME TAXABLE IN THE A.Y. 1984-85. 8. THE LEARNED INCOME-TAX OFFICER HAS NOT FOLLOWED THE RATIO AND PRINCIPLES LAID DOWN BY THE SUPREME COURT JUDGM ENT ALREADY DECIDED IN THE CASE OF SHIRINBHAI KOOKA, WH ICH HAD DIRECTLY DECIDED THE ISSUE THAT THERE WAS NO INCOME ARISING IN THE HANDS OF THE ASSESSEE WHEN ASSESSEE CONVERTED H ER LONG TERM CAPITAL ASSET INTO STOCK-IN-TRADE IN HER OWN HANDS. 9. THE SUBSEQUENT EVENTS WHICH HAVE BEEN CONSIDERED BY THE INCOME-TAX OFFICER OCCURRING AFTER THE RELEVANT ASS ESSMENT YEAR IN WHICH CONVERSION TOOK PLACE, CANNOT HAVE MA TERIAL BEARING IN DECIDING THE ISSUE IN ASSESSMENT YEAR 19 84-85. 10. THE APPELLANT CONTENDS THAT THE SETTLEMENT COMM ISSION AND THE ASSESSING OFFICER HAS HELD THAT THE PARTNERSHIP FIRM OF M/S BHOOMI CORPORATION IS A GENUINE FIRM CARRYING O N BUSINESS AND HENCE FOLLOWING SUPREME COURT DECISION IN THE CASE OF KARTIKEY SARABHAI IN A.Y. 84-85 NO ADDITION TO INCOME OF APPELLANT CAN BE MADE AND MAINTAINED. ITA NO 459/A/97 & I.T.A. NO.2040/A/03 8 11. THE LEARNED INCOME-TAX OFFICER HAS WRONGLY CONS IDERED THAT INTEREST WAS CHARGEABLE UNDER SECTION 234A, B, C OF THE ACT AS HAS THIS PROVISION WAS NOT ON THE STATUTE BOOK A ND HAS WRONGLY INITIATED PENALTY PROCEEDINGS U/S 271(1)(B) AND 271(1)(C) OF INCOME-TAX ACT, 1961. 12. THE APPELLANT CONTENDS THAT THE GROUNDS OF APPE AL IN A.Y. 83-84 BE ALSO INCLUDED AND CONSIDERED AS GROUNDS OF APPEAL FOR ADJUDICATION IN A.Y. 84-85 AS GROUNDS TAKEN HER EIN. THE APPELLATE GROUNDS TAKEN IN APPEAL BEFORE HONBLE IT AT, AHMEDABAD AND GROUNDS OF APPEAL BEFORE CIT (APPEAL) FOR A.Y. 83-84 ARE ENCLOSED AND ATTACHED AS GROUNDS FOR MING PART OF THESE GROUNDS OF APPEAL. 13. THE LEARNED INCOME TAX OFFICER HAS WRONGLY TAKE N THE COST PRICE OF THE PROPERTY AT RS.51,501/- IN DETERMINING THE INCOME TAXABLE AS LONG TERM CAPITAL GAIN, HE HAS WR ONGLY NOT INCLUDED INCOME OF RS.5,791 DISCLOSED AND FILED IN THE RETURN OF INCOME BY ASSESSEE AND HE HAS ERRED IN NOT GRANT ING DEDUCTIONS AND RELIEFS UNDER SECTION 80T OF THE ACT . 14. IN VIEW OF WHAT IS STATED HEREINABOVE AND OTHER S THAT MAY BE URGED AT THE TIME OF HEARING THE APPELLANT PRAYS TH AT : (A) THE ASSESSMENT ORDER PASSED BY THE INCOME TAX O FFICER ON 22 ND MARCH, 2002 MAY PLEASE BE CANCELLED AND OR ADDITIONS MADE TO INCOME MAY PLEASE BE DELETED. (B) THAT THE PROCEEDINGS INITIATED UNDER SECTION 14 8 AND ORDER PASSED U/S 144 R.W.S. 147 BE DECLARED AS VOID . (C) INTEREST CHARGED MAY PLEASE BE DELETED. (D) THAT THE INCOME OF RS.8,423,499/- TAXABLE AS LO NG TERM CAPITAL GAIN FOR THE ASSESSMENT YEAR 1984-85 MAY PL EASE BE DELETED AND OR SUCH REDUCT6ION BE GRANTED AS THE FACTS AND CIRCUMSTANCES OF THE CASE SO REQUIRES. (E) AND GRANT SUCH FURTHER RELIEF AND DEDUCTIONS AC CORDING TO THE FACTS AND CIRCUMSTANCES OF THE CASE. 15. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR TO MODIFY ANY OF THE GROUNDS, AFORESAID, AS AND WHEN I T IS NECESSARY TO DO SO. SINCE THESE APPEALS PERTAINING TO THE SAME ASSESSEE RAISED CONNECTED ISSUES, THESE WERE HEARD SIMULTANEOUSLY FOR THE SAK E OF CONVENIENCE AND ARE BEING DISPOSED OF THROUGH THIS COMMON ORDER. ITA NO 459/A/97 & I.T.A. NO.2040/A/03 9 ITA NO.459/AHD/1997[ AY 1983-84] 2. AT THE OUTSET, GROUND NOS. I & II INCLUDING THE SUB-GROUNDS PERTAINING TO REOPENING OF THE ASSESSMENT U/S 147 OF THE INCOME -TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT] IN THE APPEAL FOR THE AY 1983-84, WERE NOT PRESSED BEFORE US AT THE TIME OF HEARING BY THE LD. AR ON B EHALF OF THE ASSESSEE. THEREFORE, THESE GROUNDS ARE DISMISSED AS SUCH. 3. GROUND NOS. III(1) TO (12) IN THE APPEAL F OR THE AY 1983-84 RELATE TO TAXATION OF CAPITAL GAINS AMOUNTING TO RS.11,86,499 /- ON CONVERSION OF LAND INTO STOCK-IN-TRADE PRIOR TO CONTRIBUTION THEREOF TOWARD S HER CAPITAL BY THE ASSESSEE IN THE FIRM STYLED M/S BHOOMI CORPORATION. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT IN PURSUANCE TO A NOTICE ISSUED ON 22.2.1 989 U/S 148 OF THE ACT, THE ASSESSEE FILED RETURN DECLARING INCOME OF RS.45,555 /- ON 20.2.1991. DURING THE COURSE OF REASSESSMENT PROCEEDINGS, THE ASSESSING O FFICER [AO IN SHORT] NOTICED THAT IN THE YEAR UNDER ASSESSMENT ON 21.9.1982, THE ASSESSEE CONVERTED HER 1/4 TH SHARE IN THE IMMOVABLE PROPERTY KNOWN AS CHAITANY A RECEIVED ON PARTITION OF MANUBHAI BHIKHABHAI (HUF ) FROM CAPITAL ASSET IN TO STOCK-IN-TRADE. THE ACTUAL COST OF THE SAID LAND UPTO THE DATE OF PARTI TION WAS RS.2,06,300/- WHILE THE VALUE OF THIS PROPERTY HAD BEEN TAKEN ON THE DATE O F PARTITION AT RS.5,63,830. ON 21-09-1982, THE AFORESAID PROPERTY HAS BEEN VALUED AT RS.48.64 LAKHS ADOPTING VALUE OF LAND AT RS.45.64 LAKHS AND THE VALUE OF SU PERSTRUCTURE AT RS.3 LAKHS. AN ENTRY HAS BEEN PASSED ON 21.9.82 IN THE ASSESSEES BOOKS FOR RS.10,78,942, BEING THE APPRECIATION IN VALUE OVER THE BOOK VALUE OF RS.1,59,058/-. ACCORDINGLY, THE ASSESSEE WAS SHOWCAUSED TO EXPLAIN AS TO WHY CAPITAL GAINS SHOULD NOT BE CHARGED TO TAX ON CONVERSION OF THE P ROPERTY UNDER REFERENCE. THE ASSESSEE REPLIED VIDE HER LETTER DATED 18-03-1991 THAT THE VALUE OF CHAITANYA PROPERTY AS IT APPEARED IN THE BOOKS OF ACCOUNTS OF MANUBHAI BHIKHABHAI HUF, BEFORE THE DATE OF PARTITION WAS RS.2,06,300/- AND ON BEING VALUED FOR PARTITION, VALUE IN BOOKS INCREASED TO RS.5,63,830/- AND THER EFORE, 25% COST TOWARDS ITA NO 459/A/97 & I.T.A. NO.2040/A/03 10 THEREOF WOULD BE THAT OF THE ASSESSEE KANCHANBEN MANUBHAI. SINCE THE DATE OF PARTITION, THE ASSESSEE HAD SHOWN THE PROPERTY AS S ELF-OCCUPIED PROPERTY AND THE ASSESSEE WAS RESIDING THEREIN WITH HER HUSBAND AND SONS. IN THE BALANCE 75%, 50% PROPERTY BELONG TO CHAITANYA MANUBHAI HUF AND 2 5% OF THE PROPERTY TO NALINBHAI MANUBHAI HUF. IT WAS FURTHER STATED THAT ON 21.9.82 THE PROPERTY WAS VALUED AT RS.48.64 LAKHS AND THE ASSESSEES SHARE B EING 25% ON CONVERSION OF CAPITAL ASSET TO STOCK-IN-TRADE, ENTRY OF APPRECIAT ION WAS PASSED ON THE BOOKS OF THE ASSESSEE FOR THE DIFFERENTIAL AMOUNT OF RS.10,7 8,942/-. IN THE ASSESSEES BOOKS OF ACCOUNT, THE VALUE OF PROPERTY AT COST PRI CE WAS APPEARING AT RS.1,59,058/-, BEING 25% OF THE COST RECORDED IN TH E BOOKS OF MANUBHAI BHIKHABHAIS HUF .THE APPRECIATION BETWEEN THE MARK ET VALUE AND THE BOOK VALUE WAS CREDITED TO HER CAPITAL ACCOUNT ON 21.9.8 2. SINCE THERE WAS NO TRANSFER WITHIN THE MEANING OF THE PROVISIONS OF S ECTION 2(47) OF THE ACT IN A.Y. 1983-84, THE ASSESSEE POINTED OUT THAT NO QUESTIO N OF CAPITAL GAIN AROSE BY VALUING THE PROPERTY OR CONVERTING THE PROPERTY IN ASSESSEES OWN HANDS AT THE TIME OF CONVERTING THE CAPITAL ASSET INTO STOCK-IN- TRADE, IT WAS SUBMITTED. CONTINUING, IT WAS FURTHER SUBMITTED THAT AFTER CON VERTING THE PROPERTY FROM CAPITAL ASSET TO STOCK-IN-TRADE, THE ASSESSEE HAD INDUCTED THE PROPERTY IN TO THE PARTNERSHIP FIRM FOR THE PURPOSE OF DEVELOPMENT OF PROPERTY ON 17.11.82 IN THE PERIOD RELEVANT TO THE A.Y. 1984-85. THE ASSESSEE CONTENDED THAT THERE BEING NO TRANSFER ON CONVERSION OF CAPITAL ASSET IN TO S TOCK-IN-TRADE AND MORE SO, WHEN SUCH CONVERTED PROPERTY IS TRANSFERRED TO THE FIRM AT THE PRICE FOR WHICH IT IS CONVERTED INTO STOCK-IN-TRADE, NO AMOUNT WOULD BE I NCLUDED AS PART OF CAPITAL GAIN. THE ASSESSEE ADDED THAT EVEN THE HONBLE SUPREME COURT IN THE CASE OF BAI SHIRINBAI K KOOKAS CASE(SUPRA) HELD THAT N O CAPITAL GAIN ARISES ON CONVERSION FROM CAPITAL ASSET TO STOCK-IN-TRADE WHI LE THE RELEVANT PROVISIONS OF SEC. 45 WERE AMENDED ONLY FROM THE A.Y. 1985-86 . 4. HOWEVER, THE AO DID NOT AGREE WITH THE AFORE SAID SUBMISSIONS OF THE ASSESSEE AND CONCLUDED THAT THE FACTS OF THE ASSESS EES CASE WERE QUITE DIFFERENT FROM THE FACTS IN THE CASE OF BAI SHIRINB AI K KOOKAS CASE(SUPRA). IN THE ITA NO 459/A/97 & I.T.A. NO.2040/A/03 11 PRESENT CASE, THE THREE OWNERS OF THE IMMOVABLE PRO PERTY KNOWN AS CHAITANYA CONVERTED THEIR SHARE IN THE PROPERTY INTO STOCK-IN -TRADE DURING THE ACCOUNTING YEAR RELEVANT TO A.Y. 1983-84 AND THE ENTRIES FOR A PPRECIATION IN VALUE WERE PASSED IN THEIR PERSONAL BOOKS. THE PURPOSE BEHIND THE CONVERSION WAS TO FORM A PARTNERSHIP FIRM IN THE NAME OF M/S BHOOMI CORPOR ATION TO DEVELOP THE PROPERTY AND TO CONSTRUCT FLATS OUT OF WHICH EACH PARTNER WO ULD GET A FLAT EACH FOR THEIR OWN RESIDENCE. WHILE REFERRING TO THE PARTNERSHIP D EED OF M/S BHOOMI CORP. , THE AO OBSERVED THAT UPTO A.Y. 89-90, THE FIRM DEVELOP ED ONLY ONE PROJECT, I.E. CHAITANYA APARTMENTS ON THE ORIGINAL PROPERTY KNOWN AS CHAITANYA AS MENTIONED ABOVE AND NO OTHER LAND OR PROPERTY HAS B EEN PURCHASED BY THE FIRM. THE AO NOTICED FROM THE RECORDS OF THE ASSESSEE AND RECORDS OF ANOTHER PARTNER, SHRI CHAITANYA MANUBHAI (HUF) THAT DURING THE ACCOU NTING YEAR RELEVANT TO A.Y. 1987-88, THE ASSESSEE RECEIVED ONE FLAT IN CHAITANY A APARTMENTS CONSTRUCTED BY THE FIRM M/S BHOOMI CORP. ON THE PROPERTY CONVERTE D INTO STOCK-IN-TRADE AS MENTIONED ABOVE. THUS, THE MAIN OBJECT OF CONVERTIN G THE PROPERTY INTO STOCK-IN- TRADE WAS TO DEVELOP THE PROPERTY BY CONSTRUCTING F LATS AND AT THE SAME TIME TO GET ONE FLAT EACH BY PARTNERS FOR THEIR OWN RESIDEN CE IN TERMS OF THE AGREEMENT ENTERED ON 15.12.82 BETWEEN M/S BHOOMI CORPORATION AND MONOLITH CONSTRUCTION P LTD., FOR CONSTRUCTION/ SALE OF SUCH FLATS. IN T HE LIGHT OF THESE FACTS, THE AO WHILE CONSIDERING THE PRINCIPLES LAID DOWN BY THE H ONBLE SUPREME COURT IN THE CASE OF SUNIL SUDHAKARBHAI AND KARTIKEYA V. SARABHA I,156 ITR 509(SC) THAT IF THE TRANSFER OF THE PERSONAL ASSET BY THE ASSESSEE TO A PARTNERSHIP IN WHICH HE IS OR BECOMES A PARTNER IS MERELY A DEVICE OR RUSE FOR CONVERTING THE ASSET INTO MONEY WHICH WOULD SUBSTANTIALLY REMAIN AVAILABLE FO R HIS BENEFIT WITHOUT LIABILITY TO TAX ON CAPITAL GAIN, IT WILL BE OPEN TO THE I.T. AUTHORITIES TO GO BEHIND THE TRANSACTION AND EXAMINE WHETHER THE TRANSACTION OF CREATING THE PARTNERSHIP IS A GENUINE OR A SHAM TRANSACTION AND EVEN WHERE THE PA RTNERSHIP IS GENUINE, THE TRANSACTION OF TRANSFERRING THE PERSONAL ASSET TO T HE PARTNERSHIP FIRM REPRESENTS A REAL ATTEMPT TO CONTRIBUTE TO THE SHARE CAPITAL OF THE PARTNERSHIP FIRM FOR THE PURPOSE OF CARRYING ON THE PARTNERSHIP BUSINESS OR IS NOTHING BUT A DEVICE OR RUSE ITA NO 459/A/97 & I.T.A. NO.2040/A/03 12 TO CONVERT THE PERSONAL ASSET INTO MONEY SUBSTANTIA LLY FOR THE BENEFIT OF THE ASSESSEE WHILE EVADING TAX ON CAPITAL GAIN, CONCLUD ED IN THE FOLLOWING TERMS:- 3(V) A) THE PROPERTY UNDER REFERENCE WAS FIRST CONVERTED INTO STOCK-IN-TRADE OF THE ASSESSEE ON 21 .9.82 AND THEN INTRODUCED AS CAPITAL IN THE FIRM OF M/S BHOOMI COR PORATION ON 17.11.82. THE MAIN PURPOSE BEHIND THE CONVERSION O F PROPERTY INTO STOCK-IN-TRADE WAS TO INTRODUCE IT AS CAPITAL IN TH E FIRM OF M/S BHOOMI CORPORATION AS STOCK-IN-TRADE. THIS IS EVID ENT FROM THE FACTS THAT (A) THE FIRM OF M/S BHOOMI CORPORATION C AME INTO EXISTENCE FROM 9.8.82 I.E. BEFORE THE PROPERTY WAS CONVERTED INTO STOCK-IN-TRADE IN THE BOOKS OF ACCOUNTS OF THE ASSE SSEE ON 21.9.82. B) THE ASSESSEE DID NOT HAVE ANY INDIVIDUAL BUSINES S OF CONSTRUCTION OR DEVELOPING OF PROPERTIES AT THE TIM E OF CONVERSION OF THE PROPERTY INTO STOCK-IN-TRADE; C) EVEN AFTER CON VERSION OF THE PROPERTY INTO STOCK-IN-TRADE, THE ASSESSEE HAS NOT CARRIED ANY INDIVIDUAL BUSINESS IN THE CONSTRUCTION OR DEVELOPM ENT OF PROPERTIES; (D) THE VALUE OF THE PROPERTY TAKEN AT THE TIME OF CONVERSION OF THE SAME INTO STOCK-IN-TRADE IN THE B OOKS OF ACCOUNTS OF THE ASSESSEE AND THE VALUE TAKEN IN THE BOOKS OF ACCOUNTS OF THE FIRM OF M/S BHOOMI CORPORATION IS THE SAME. CONSID ERING THE ABOVE FACTS, THE CONVERSION OF PROPERTY AND INTRODU CTION OF THE SAME AS CAPITAL IN THE FIRM AMOUNTED TO TRANSFER OF THE PROPERTY DURING THE YEAR UNDER ASSTT. WHICH ATTRACTS THE CAP ITAL GAINS TAX U/S 45 OF THE I.T. ACT IN VIEW OF THE HONBLE SUPREME C OURTS JUDGMENT CITED ABOVE. B) THE ASSESSEE HAS RECEIVED A CONSIDERATION FROM T HE FIRM IN RESPECT OF THE PROPERTY CONVERTED INTO STOCK-IN-TRA DE, BY WAY OF RESERVATION OF A FLAT AT THE INITIAL STAGE, THE FLA T HAVING BEEN RECEIVED DURING ACCOUNTING PERIOD RELEVANT TO A.Y. 87-88. T HE ASSESSEE IS ALSO ENTITLED TO THE SHARE IN PROFITS OF THE FIRM I N CONSTRUCTION OF FLATS ON THE PROPERTY CONVERTED. MOREOVER, THE ONLY PROP ERTY DEVELOPED BY THE FIRM M/S BHOOMI CORP. IS THE PROPERTY CONVE RTED BY THE 3 PARTNERS INTO STOCK-IN-TRADE, WHICH SHOWS THAT THE ASSESSEE OR OTHER CO-OWNERS WHO ARE HER SONS HAD NO REGULAR BUSINESS IN CONSTRUCTION AND THE BUSINESS IN CONSTRUCTION HAS B EEN DONE BY THEM ONLY ON THE PROPERTY CONVERTED BY THEM INTO ST OCK-IN-TRADE. THESE FACTS ATTRACT THE PROVISIONS OF SEC.48 READ W ITH SEC.45 OF THE I.T. ACT. 3.VI) CONSIDERING THE POINTS DISCUSSED ABOVE, THE L ONG TERM CAPITAL GAINS, WHICH HAS ARISEN ON CONVERSION OF TH E PROPERTY INTO STOCK-IN-TRADE OF THE FIRM, IS ADDED TO ASSESSEES INCOME. THE VALUE OF CONSIDERATION OF THE PROPERTY IS TAKEN AT RS.12,38,000/- ITA NO 459/A/97 & I.T.A. NO.2040/A/03 13 BEING THE VALUE TAKEN AT THE TIME OF CONVERSION OF THE PROPERTY. THE COST OF THE WHOLE PROPERTY PARTITIONED BY THE HUF O F MANUBHAI BHIKHABHAI WAS RS.206,003/- AS PER DETAILS FILED BY THE ASSESSEE. THE ASSESSEE RECEIVING 1/4 TH SHARE IN THE SAID PROPERTY ON PARTITION, THE COST OF THE ASSESSEE IS TAKEN AT RS.51,501/- (1 /4 TH OF RS.2,06,003). 4.1 ON THE ABOVE BASIS, THE AO ADDED AN AMOUNT OF RS.11,86,499/- BY WAY OF LONG TERM CAPITAL GAINS. 5. ON APPEAL, THE ASSESSEE ARGUED THAT NO TRA NSFER OF ASSET WAS INVOLVED IN THE INSTANT CASE AS THE PROVISIONS OF SECTION 45(2 ) WERE NOT APPLICABLE PRIOR TO THE AY 1985-86 WHILE SEC. 45(3) WAS APPLICABLE W.E .F 1.4.1988. THE SHARE OF LANDED PROPERTY RECEIVED BY THE ASSESSEE ON PARTITI ON OF THE HUF IN THE YEAR 1975 WAS CONVERTED INTO STOCK-IN-TRADE ON 21-9-1982 IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND, THEREFORE, NO TRANSFER COULD BE S AID TO HAVE BEEN INVOLVED AS SUCH AND THE DECISION IN THE CASE OF SUNIL SIDDHART H AND KARTIKEY V. SARABHAI VS. CIT, 156 I.T.R. 509(SC) HAS WRONGLY BEEN RELIED ON BY THE AO. IN FACT, THE SAID DECISION SUPPORTED HIS CASE SINCE NO CAPITAL GAIN A RISES ON CONTRIBUTION OF ASSET AS ONES CAPITAL TO THE PARTNERSHIP FIRM. IN THE S AID DECISION THE HONBLE SUPREME COURT HAS CLEARLY LAID DOWN THAT THE VALUE AT WHICH THE ASSET WAS TRANSFERRED TO THE PARTNERSHIP AND THE SAME AMOUNT WHICH WAS CREDI TED TO THE CAPITAL ACCOUNT OF THE PARTNER / PARTNERS IN LIEU OF TRANSFER OF AS SET, WOULD NOT GIVE RISE TO ANY CAPITAL GAIN. SINCE THE AO ADOPTED THE FIGURE FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN OF RS.12,38,000 WHICH IS THE AMOUNT CR EDITED TO THE CAPITAL ACCOUNT OF THE PARTNER REPRESENTING THE VALUE OF ASSET INTR ODUCED BY HER, THE CAPITAL GAIN HAS BEEN WORKED OUT IN TOTAL DISREGARD TO THE PRINC IPLES LAID DOWN BY THE SUPREME COURT IN THE CASE OF SUNIL SIDDHARTHBHAI & KARTIKEY V. SARABHAI, IT WAS ARGUED. THE ASSESSEE FURTHER CONTENDED THAT THE ASS ET WAS TRANSFERRED AS HER SHARE OF CAPITAL ONLY ON 17-11-1982, WHEREAS THE AC COUNTING YEAR OF THE ASSESSEE ENDED ON 15-11-1982. THEREFORE, THE TRAN SFER OF ASSET TOOK-PLACE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 1 984-85 AND NOT IN THE ASSESSMENT YEAR 1983-84. THE AO WRONGLY TAXED THE CAPITAL GAIN IN THE ITA NO 459/A/97 & I.T.A. NO.2040/A/03 14 ASSESSMENT YEAR 1983-84 THOUGH NO SUCH JURISDICTION VESTED WITH HIM. MOREOVER, AS ON 21-9-1982 THE ASSESSEE HAD TAKEN TH E VALUE OF STOCK-IN-TRADE ON THE DATE OF CONVERSION AT RS.10,78,942/-, WHEREA S THE ASSESSING OFFICER HAS ADOPTED THE FIGURE OF RS.51,501 ON THE DATE OF PART ITION OF THE HUF PROPERTY IN THE YEAR 1975. THE ASSESSEE, THEREFORE, URGED THAT THE FIGURE OF RS.51,501 ADOPTED BY THE AO AS COST OF ACQUISITION BE SUBSTIT UTED BY THE FIGURE OF RS.10,78,942 I.E THE VALUE OF ASSET ON CONVERSION INTO STOCK-IN-TRADE IN THE ASSESSEES BOOKS OF ACCOUNT IN VIEW OF THE SUPREME COURT DECISION CITED ABOVE. HOWEVER, THESE SUBMISSIONS DID NOT FIND FAVOUR WIT H THE CIT(A) AND ACCORDINGLY, HE CONCLUDED AS UNDER: 3.5 I HAVE HEARD THE ORAL ARGUMENTS PUT FORWARD BY SHRI S.D. PHANSE, LEARNED A.R. AND HAVE ALSO GONE THROUGH THE WRITTEN SUBMISSION MADE ON BEHALF OF THE APPELLANT AS ALSO THE RELEVANT DOCUMENTS AND PAPERS FILED IN SUPPORT OF HIS CONTEN TION. THE ISSUE AS TO WHETHER TRANSFER OF ASSET WAS INVOLVED OR NOT HAS BEEN SETTLED ONCE AND FOR ALL BY THE HONBLE SUPREME COURT IN TH E CASE OF SUNIL SIDDHARTHBHAI AND KARTIKEY SARABHAI REPORTED IN 156 I.T.R. 509 THAT CAPITAL CONTRIBUTION IN THE FORM OF ASSET MADE BY A NY PARTNER TO THE FIRM RESULTED IN TRANSFER OF ASSET. HOWEVER, THE H ONBLE SUPREME COURT IN THE AFORESAID DECISION HAS CLEARLY LAID DO WN THAT THE AMOUNT CREDITED TO THE PARTNERS CAPITAL ACCOUNT IN LIEU OF TRANSFER OF SUCH CAPITAL ASSET TO THE FIRM WOULD NOT FORM CONSI DERATION RECEIVED BY THE APPELLANT FOR TRANSFERRING OF SUCH ASSET AND NO CAPITAL GAIN IS LEVIABLE ON THE BASIS OF VALUE OF TRANSFERRED ASSET CREDITED TO THE PARTNERS CAPITAL ACCOUNT. HOWEVER, IN THE PRESENT CASE THE ASSESSING OFFICER HAS GIVEN A CLEAR FINDING THAT AS PER THE WRITTEN AGREEMENT INTO M/S BHOOMI CORPORATION AND MONOLITH CONSTRUCTION PVT LTD ON 15-12-1982 THAT 3 FLATS SHALL NOT BE SOL D AND SHALL BE KEPT RESERVE FOR THE PARTNERS OF M/S BHOOMI CORPORA TION. IN OTHER WORDS, THE APPELLANT RESERVES THE RIGHT TO ACQUIRE ONE FLAT IN THE HOUSE PROPERTY TO BE CONSTRUCTED BY MONOLITH CONSTR UCTION PVT LTD AT A FUTURE DATE ON COMPLETION OF CONSTRUCTION OF F LAT. THE FACTS REMAIN THAT ON COMPLETION OF CONSTRUCTION OF HOUSE PROPERTY ON LANDED ASSET CONTRIBUTED BY THE PARTNERS, 3 FLATS W ERE EARMARKED FOR THEM (ONE EACH) AND THE APPELLANT ACQUIRED ONE FLAT IN CONSIDERATION FOR THE CAPITAL CONTRIBUTION OF LANDE D PROPERTY MADE BY HER TO THE FIRM. THEREFORE, THE APPELLANT RECEI VED BY WAY OF CONSIDERATION A READY-MADE FLAT AND, THEREFORE, THE VALUE OF FLAT AS ON THE DATE OF ACQUISITION WOULD BE THE VALUE OF CO NSIDERATION RECEIVED BY HER IN LIEU OF TRANSFER OF CAPITAL ASS ET (LANDED PROPERTY) ITA NO 459/A/97 & I.T.A. NO.2040/A/03 15 TO THE FIRM AS HER SHARE OF CAPITAL CONTRIBUTION. THE LEARNED A.R. ON THE LAST DAY OF HEARING ON 12-9-1996 WAS SPECIFICAL LY ASKED TO FURNISH THE INFORMATION REGARDING THE FLAT ALLOCATE D TO THE APPELLANT AS PER THE TERMS AND AGREEMENT DATED 15-2-19082. T HE LEARNED A.R. WAS ASKED TO FURNISH THE DETAILS OF MEASUREMEN T OF THE FLAT, PLINTH AREA, ITS CARPET AREA, ITS VALUE AS ON THE D ATE OF ACQUISITION OF FLAT BY THE APPELLANT AND SUCH INFORMATIONS WERE TO BE FURNISHED ON 23-9-1996. HOWEVER, THERE WAS NO COMPLIANCE ON 23- 9-1996 AND ON REQUEST THE CASE WAS ADJOURNED TO 8-10-1996, AGA IN THERE WAS NO COMPLIANCE ON THE FIXED DATE OF HEARING. ON REQ UEST THE CASE WAS AGAIN FIXED FOR HEARING ON 25-10-1996, AGAIN TH ERE WAS NO COMPLIANCE. THEREFORE, IT APPEARS THAT THE A.R. H AS NO INTENTION TO FURNISH THE REQUISITE INFORMATION SPECIFICALLY CAL LED FOR BY ME. I AM OF THE VIEW THAT TRANSFER OF ASSET DID TAKE PLACE O N CAPITAL CONTRIBUTION OF LANDED PROPERTY BY THE APPELLANT TO THE FIRM ON 17- 11-1982. THIS VIEW IS ALSO AFFIRMED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF C.I.T. VS. SMT. GIRA SARABHAI REPORTED IN 209 I.T.R. 356. THE GUJARAT HIGH COURT HAS HELD THAT W HEN A PARTNER OF A FIRM OFFERED CAPITAL ASSET TO A FIRM AS HIS CONTR IBUTION TOWARDS CAPITAL, THERE IS A TRANSFER OF CAPITAL ASSET WITHI N THE TERMS OF SECTION 45 OF THE I.T. ACT, 1961 BECAUSE THE EXCLUS IVE INTEREST OF THE PARTNER IS REDUCED ON THEIR ENTRY INTO THE FIRM INTO A SHARE INTEREST. THE HIGH COURT HAS FURTHER HELD THAT THE CONSIDERATION FOR THE TRANSFER OF THE PERSONAL ASSET IS THE RIGHT WHI CH ARISE OR ACCRUE TO A PARTNER DURING THE SUBSISTENCE OF THE PARTNERS HIP TO GET HIS SHARE OF PROFIT FROM TIME TO TIME AND AFTER THE DIS SOLUTION OF THE PARTNERSHIP OR THAT HIS RETIREMENT FROM THE PARTNER SHIP TO GET THE VALUE OF HIS SHARE IN THE NET PARTNERSHIP ASSET AS ON THE DATE OF THE DISSOLUTION OR RETIREMENT AFTER DEDUCTION OF LIABIL ITY AND PROPER CHARGES. THEREFORE, IT IS AN UNDISPUTED POSITION O F LAW AFTER THE SUPREME COURT VERDICT SUBSEQUENTLY FOLLOWED BY THE GUJARAT HIGH COURT THAT THE CONTRIBUTION OF CAPITAL BY A PARTNER TO THE FIRM AS HIS OR HER SHARE OF CAPITAL RESULTED IN TRANSFER OF ASS ET GIVING RISE TO CAPITAL GAIN TAX. AS I ALREADY POINTED OUT, ON THE CONSIDERATION FOR TRANSFER OF CAPITAL ASSET THE APPELLANT ACQUIRED A FLAT AND ITS MARKET VALUE ON THE DATE OF ACQUISITION BY THE APPELLANT H AS TO BE TREATED AS CONSIDERATION FOR THE PURPOSE OF WORKING OUT THE CAPITAL GAIN. THE ASSESSING OFFICER IS, THEREFORE, DIRECTED TO GE T THE MARKET VALUE OF THE FLAT ACQUIRED BY HER DETERMINED AND AS HAS B EEN NOTED BY THE ASSESSING OFFICER THE APPELLANT TOOK POSSESSION OF THE FLAT IN THE YEAR 1987-88 AND THE VALUE OF THE FLAT SO DETER MINED SHOULD BE TREATED TO BE THE CONSIDERATION FOR TRANSFER OF CAP ITAL ASSET (LANDED PROPERTY) FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. ITA NO 459/A/97 & I.T.A. NO.2040/A/03 16 6. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR ON BEHALF OF THE ASSESSE E WHILE CARRYING US THROUGH THE IMPUGNED ORDERS AND RELYING ON THE DECISIONS IN THE CASE OF SUNIL SIDDHARTHBHAI AND KARTIKEY SARABHAI VS. CIT , 156 ITR 509 (SC) AND CIT VS. SMT. GIRA SARABHAI,209 ITR 356(GUJ) CONTENDED THAT NO CAPITA L GAINS ARISES ON CONVERSION OF A CAPITAL ASSET IN TO STOCK IN TRADE . THE LD. AR FURTHER POINTED OUT THAT THE LD. CIT(A) DID NOT HAVE THE POWER TO VARY THE PREVIOUS YEAR, ADOPTED BY THE ASSESSEE AND IN THIS CONNECTION RELIED ON THE D ECISION IN THE CASE OF HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF CIT VS . PATIALA SALES CORPORATION PVT. LTD. & ANOTHER,77 ITR 443. HE ADDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN ISSUING DIRECTIONS FOR REOPENING THE ASSESSMENT FOR THE AY 1984-85 WHILE ADJUDICATING THEIR APPEAL FOR THE AY 1983-84 AND IN THIS CONNECTION RELIED UPON DECISION IN THE CASE OF SUN METAL FACTORY (I) P LTD . VS. ACIT,15 DTR(CHENNAI)(TRIB)274. 7. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE DECISIONS RELIED UPON. AS IS APPARENT FR OM THE ELABORATE GROUNDS OF APPEAL IN THE APPEAL BEFORE US, ISSUE RAISED IN SU B-GROUNDS 1 TO 7 OF GROUND NO. III IS AS TO WHETHER CAPITAL GAIN ARISES ON MERE C ONVERSION OF A CAPITAL ASSET IN TO STOCK IN TRADE AND ITS REVALUATION ON 21.9.1982, F ALLING IN THE YEAR UNDER CONSIDERATION. EVEN IN THE APPEAL BEFORE THE LD. CI T(A), THE ASSESSEE IN THEIR GROUND NOS. 6 TO 11 RAISED THE ISSUE THAT THE ITO W RONGLY CONSIDERED THE CONVERSION OF LONG TERM CAPITAL ASSET BY THE ASSESS EE IN HER OWN HANDS AS TRANSFER FOR TAXING LONG TERM CAPITAL GAINS AND THA T EVENTS OCCURRING AFTER THE RELEVANT ASSESSMENT YEAR COULD NOT HAVE MATERIAL BE ARING IN DECIDING THE ISSUE IN THIS ASSESSMENT YEAR. UNDISPUTED FACTS ON RECORD REVEAL THAT THE ASSESSEE CONVERTED HER 1/4 TH SHARE IN THE IMMOVABLE PROPERTY KNOWN AS CHAITANY A RECEIVED ON PARTITION OF MANUBHAI BHIKHABHAI (HUF ) FROM CAPITAL ASSET IN TO STOCK-IN-TRADE ON 21.9.1982. THE ACTUAL COST OF TH E SAID LAND UPTO THE DATE OF PARTITION WAS RS.2,06,300/- WHILE THE VALUE OF THIS PROPERTY HAD BEEN TAKEN ON THE DATE OF PARTITION AT RS.5,63,830. ON 21-09-1982, T HE AFORESAID PROPERTY HAS BEEN ITA NO 459/A/97 & I.T.A. NO.2040/A/03 17 VALUED AT RS.48.64 LAKHS ADOPTING VALUE OF LAND A T RS.45.64 LAKHS AND THE VALUE OF SUPERSTRUCTURE AT RS.3 LAKHS. AN ENTRY HA S BEEN PASSED ON 21.9.82 IN THE ASSESSEES BOOKS FOR RS.10,78,942, BEING THE AP PRECIATION OF VALUE OVER THE BOOK VALUE OF RS.1,59,058/-. THE ASSESSEE DID NOT HAVE ANY BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF PROPERTIES EITHER B EFORE OR AFTER CONVERSION OF LAND IN TO STOCK IN TRADE. IN THE ASSESSEES BOOKS OF ACCOUNT, THE VALUE OF PROPERTY AT COST PRICE WAS APPEARING AT RS.1,59,058 /-, BEING 25% OF THE COST RECORDED IN THE BOOKS OF MANUBHAI BHIKHABHAIS HUF .THE APPRECIATION BETWEEN THE MARKET VALUE AND THE BOOK VALUE WAS CREDITED TO HER CAPITAL ACCOUNT ON 21.9.82. AFTER CONVERTING THE PROPERTY FROM CAPITAL ASSET TO STOCK-IN-TRADE, THE ASSESSEE INDUCTED THE PROPERTY IN TO THE PARTNERSHI P FIRM M/S BHOOMI CORPORATION FOR THE PURPOSE OF DEVELOPMENT OF PROPE RTY, ON 17.11.82 IN THE PERIOD RELEVANT TO THE A.Y. 1984-85. THE CONTENTI ON ON BEHALF OF THE ASSESSEE WAS THAT THERE BEING NO TRANSFER ON CONVERSION OF C APITAL ASSET IN TO STOCK-IN- TRADE AND MORE SO, WHEN SUCH CONVERTED PROPERTY WA S TRANSFERRED TO THE FIRM AT THE PRICE AT WHICH IT WAS CONVERTED INTO STOCK-IN-T RADE, NO CAPITAL GAIN HAD ARISEN. INTER ALIA, THE ASSESSEE RELIED UPON AFORESAID DECI SION IN THE CASE OF BAI SHIRINBAI K KOOKA(SUPRA) AND POINTED OUT THAT THE RELEVANT PR OVISIONS OF SEC. 45 WERE AMENDED ONLY FROM THE A.Y. 1985-86 . HOWEVER, THE AO WHILE RELYING UPON DECISION IN THE CASE OF SUNIL SIDDHARTHBHAI & KARTI KYA V SARABHAI VS. CIT,156 ITR 509(SC) OBSERVED THAT SINCE MAIN PURPOSE BEHIND CONVERSION OF PROPERTY IN TO STOCK-IN-TRADE WAS TO INTRODUCE IT AS CAPITAL I N BHOOMI CORPORATION EVEN WHEN THE ASSESSEE DID NOT HAVE ANY BUSINESS AND TO HAVE CONSIDERATION IN THE FORM OF A FLAT , THE PROVISIONS OF SEC. 45 & 48 WERE ATTRA CTED. ACCORDINGLY, THE AO WHILE ADOPTING THE VALUE OF RS. 12,38,000/- CREDITED TO T HE CAPITAL ACCOUNT OF THE ASSESSEE AND REDUCING THE COST OF RS. 51,501/, BEI NG TH OF THE VALUE SHOWN BY THE HUF, TAXED CAPITAL GAINS OF RS.11,86,499/-.O N APPEAL, THE LD. CIT(A) WHILE RELYING UPON THE AFORESAID DECISION OF THE HONBLE APEX COURT IN SUNIL SIDDHARTHBHAI & KARTIKYA V SARABHAI (SUPRA) CONCLUD ED THAT CAPITAL CONTRIBUTION IN THE FORM OF AN ASSET BY A PARTNER TO THE FIRM RE SULTED IN TRANSFER OF ASSET ON 17.11.1982 AND SINCE IN TERMS OF THE AGREEMENT DATE D 15.12.1982 BETWEEN M/S ITA NO 459/A/97 & I.T.A. NO.2040/A/03 18 BHOMI CORPORATION AND M/S MONOLITH CONSTRUCTION PVT . LTD., THE ASSESSEE RECEIVED CONSIDERATION IN THE FORM OF A FLAT, MARKE T VALUE OF THE FLAT BE TREATED AS CONSIDERATION FOR TRANSFER OF LAND. THE LD. CIT(A) FURTHER HELD THAT PREVIOUS YEAR FOR ASSESSING THE CAPITAL GAINS WOULD BE THE PERIO D OF 12 MONTHS ENDING ON 31ST MARCH AND THEREFORE, CAPITAL GAINS WAS RIGHTLY ASS ESSED BY THE AO IN THE YEAR UNDER CONSIDERATION. AS REGARDS COST OF ACQUISITION FOR WORKING THE CAPITAL GAINS, THE LD. CIT(A) WHILE RELYING UPON DECISIONS IN THE CASE OF RANCHODBHAI BHAIJIBHAI PATEL VS. CIT,81 ITR 446(GUJ) AND KESHAVJI KARSANDA S VS. CIT,207 ITR 737(BOM.) AND DISTINGUISHING THE AFORESAID DECISION IN BAI SHIRINBAI K KOOKA(SUPRA)CONCLUDED THAT COST OF ACQUISITION PREV AILING ON THE DATE OF PARTITION OF HUF HAS TO BE ADOPTED. ALTERNATIVELY, THE LD. CI T(A) AFTER ANALYSING THE PROVISIONS OF SEC. 153(3) OF THE ACT OBSERVED THAT THE AO IS FREE TO CONSIDER REOPENING THE ASSESSMENT FOR BRINGING THE CAPITAL GAINS TO TAX IN THE AY 1984-85 SINCE LAND WAS TRANSFERRED TO THE FIRM ONLY ON 17 .11.1982. 7.1 BEFORE ADJUDICATING THE VARIOUS GROUND S OF APPEAL RAISED ON BEHALF OF THE ASSESSEE BEFORE US, THE ISSUE OF PREVIOUS YEAR FOR ASSESSABILITY OF CAPITAL GAINS VIZ. WHETHER ON THE DATE OF CONVERSION OF PRO PERTY IN TO STOCK-IN-TRADE OR ON THE DATE WHEN THE PROPERTY WAS CONTRIBUTED TOWARDS CAPITAL IN THE FIRM ,NEEDS TO BE ADVERTED TO. THERE IS NO DISCUSSION IN THE ASSE SSMENT ORDER AS TO WHAT WOULD BE THE PREVIOUS YEAR FOR ASSESSING THE CAPIT AL GAINS AND CONSEQUENTLY, NO SUCH GROUND WAS RAISED BEFORE THE LD. CIT(A). WE FI ND THAT THE AO ADOPTED SY 2038 OR THE DIWALI YEAR I.E THE PERIOD ENDING ON 15.11.1982 AS THE PREVIOUS YEAR WHILE THE LD. CIT(A) CONCLUDED ON HIS OWN THA T THE PREVIOUS YEAR FOR ASSESSING CAPITAL GAINS WOULD BE 12 MONTHS ENDING O N 31.3.1983 AND SINCE PROPERTY WAS CONTRIBUTED TOWARDS CAPITAL IN THE FIR M M/S BHOOMI CORPORATION ON 17.11.1982, CAPITAL GAINS WOULD BE ASSESSABLE IN TH E AY 1983-84. THERE IS NO SUCH FINDING IN THE IMPUGNED ORDER THAT CAPITAL GA INS WOULD BE CHARGEABLE ON CONVERSION OF PROPERTY IN TO STOCK-IN-TRADE ON 21. 9.1982. WE WILL ADVERT TO THIS ASPECT OF ASSESSABILITY OF CAPITAL GAINS A LITTLE L ATER. AS REGARDS CHANGE IN PREVIOUS YEAR, THOUGH NO SPECIFIC GROUND HAS BEEN R AISED BEFORE US REGARDING ITA NO 459/A/97 & I.T.A. NO.2040/A/03 19 FINDINGS OF THE LD. CIT(A) IN HOLDING THAT PREVIOU S YEAR WOULD BE THE PERIOD OF 12 MONTHS ENDING ON 31 ST MARCH,1983, THE ISSUE BEING QUITE RELEVANT FOR A SSESSING THE CAPITAL GAINS, NEEDS TO BE ADJUDICATED IN VIEW OF PLEA OF THE LD. AR ON BEHALF OF THE ASSESSEE THAT THE LD. CIT(A) DID NOT HAVE TH E POWER TO VARY THE PREVIOUS YEAR ADOPTED BY THE ASSESSEE AND IN THIS CONNECTION RELIED ON THE DECISION IN THE CASE OF HONBLE PUNJAB AND HARYANA HIGH COURT I N THE CASE OF CIT VS. PATIALA SALES CORPORATION PVT. LTD. & ANOTHER,77 IT R 443. THE LD. AR WHILE CARRYING US THROUGH THE IMPUGNED ORDER CONTENDED TH AT THE LD. CIT(A) WAS NOT JUSTIFIED IN ISSUING DIRECTIONS DIRECTIONS IN PARA 7 TO 7.2 OF THE IMPUGNED ORDER IN RELATION TO PROVISIONS OF SEC. 153(3) OF THE ACT AN D IN THIS RESPECT RELIED ON DECISION IN THE CASE OF SUN METAL FACTORY(I) P LTD. VS. ACIT,15 DTR(CHENNAI)(TRIB)274. 7.11 BEFORE PROCEEDING FURTHER, WE MAY HAVE A LOO K AT THE RELEVANT PROVISIONS EXTANT PROVISIONS RELATING TO PREVIOUS YEAR READ AS UNDER: 3. PREVIOUS YEAR' DEFINED. (1) FOR THE PURPOSES OF THIS ACT, 'PREVIOUS YEAR' M EANS- (A) THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE AS SESSMENT YEAR; OR (B) IF THE ACCOUNTS OF THE ASSESSEE HAVE BEEN MADE UP TO THE DATE WITHIN THE SAID FINANCIAL YEAR, THEN, AT THE OPTION OF THE ASSESSEE, THE TWELVE MONTHS ENDING ON SUCH DATE; OR (C) IN THE CASE OF ANY PERSON OR BUSINESS OR CLASS OF PERSONS OR BUSINESS NOT FALLING WITHIN CLAUSE (A) OR CLAUSE (B ), SUCH PERIOD AS MAY BE DETERMINED BY THE BOARD OR BY ANY AUTHORITY AUTH ORISED BY THE BOARD IN THIS BEHALF; OR (D) IN THE CASE OF A BUSINESS OR PROFESSION NEWLY S ET UP IN THE SAID FINANCIAL YEAR, THE PERIOD BEGINNING WITH THE DATE OF THE SETTING UP OF THE BUSINESS OR PROFESSION AND- (I) ENDING WITH THE SAID FINANCIAL YEAR, OR (II) IF THE ACCOUNTS OF THE ASSESSEE HAVE BEEN MADE UP TO A DATE WITHIN THE SAID FINANCIAL YEAR, THEN, AT THE O PTION OF THE ASSESSEE, ENDING ON THAT DATE, OR ITA NO 459/A/97 & I.T.A. NO.2040/A/03 20 (III) ENDING WITH THE PERIOD, IF ANY, DETERMINED UN DER CLAUSE (C), AS THE CASE MAY BE; OR (E) IN THE CASE OF A BUSINESS OR PROFESSION NEWLY S ET UP IN THE TWELVE MONTHS IMMEDIATELY PRECEDING THE SAID FINANCIAL YEA R- (I) IF THE ACCOUNTS OF THE ASSESSEE HAVE BEEN MADE UP TO A DATE WITHIN THE SAID FINANCIAL YEAR AND THE PERIOD FROM THE DATE OF THE SETTING UP OF THE BUSINESS OR PROFESSION TO SUC H DATE DOES NOT EXCEED TWELVE MONTHS, THEN, AT THE OPTION OF TH E ASSESSEE, SUCH PERIOD, OR (II) IF ANY PERIOD HAS BEEN DETERMINED UNDER CLAUSE (C), THEN THE PERIOD BEGINNING WITH THE DATE OF THE SETTING U P OF THE BUSINESS OR PROFESSION AND ENDING WITH THAT PERIOD, AS THE CASE MAY BE; OR (F) WHERE THE ASSESSEE IS A PARTNER IN A FIRM AND T HE FIRM HAS BEEN ASSESSED AS SUCH, THEN, IN RESPECT OF THE ASSESSEE' S SHARE IN THE INCOME OF THE FIRM, THE PERIOD DETERMINED AS THE PR EVIOUS YEAR FOR THE ASSESSMENT OF THE INCOME OF THE FIRM; OR (G) IN RESPECT OF PROFITS AND GAINS FROM LIFE INSUR ANCE BUSINESS, THE YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR FOR WHICH ANNUAL ACCOUNTS ARE REQUIRED TO BE PREPARED UNDEER THE INS URANCE ACT, 1938 (4 OF 193F8), OR UNDER THAT ACT READ WITH SECTION 4 3 OF THE LIFE INSURANCE CORPORATION ACT, 1956 (31 OF 1956). (2) WHERE AN ASSESSEE HAS NEWLY SET UP A BUSINESS O R PROFESSION IN THE SAID FINANCIAL YEAR AND HIS ACCOUNTS ARE MADE UP TO A DA TE IN THE ASSESSMENT YEAR IN RESPECT OF A PERIOD NOT EXCEEDING TWELVE MONTHS FROM THE DATE OF SUCH SETTING UP, THEN, NOTWITHSTANDING ANYTHING CONTAINE D IN SUB-CLAUSE (III) OF CLAUSE (D) OF SUB-SECTION (1), THE ASSESSEE SHALL, IN RESPECT OF THAT BUSINESS OR PROFESSION, AT HIS OPTION, BE DEEMED TO HAVE NO PRE VIOUS YEAR FOR THE SAID ASSESSMENT YEAR UNDER THAT CLAUSE AND SUCH OPTION S HALL, IN RELATION TO THE IMMEDIATELY SUCCEEDING ASSESSMENT YEAR, HAVE EFFECT AS AN OPTION EXERCISED UNDER SUB-CLAUSE (I) OF CLAUSE (E) OF SUB-SECTION ( 1). (3) SUBJECT TO THE OTHER PROVISIONS OF THIS SECTION AN ASSESSEE MAY HAVE DIFFERENT PREVIOUS YEARS IN RESPECT OF SEPARATE SOU RCES OF HIS INCOME. (4) WHERE IN RESPECT OF A PARTICULAR SOURCE OF INCO ME OR IN RESPECT OF A BUSINESS OR PROFESSION NEWLY SET UP, AN ASSESSEE HA S ONCE EXERCISED THE OPTION UNDER CLAUSE (B) OR SUB-CLAUSE (II) OF CLAUS E (D) OR SUB-CLAUSE (I) OF CLAUSE (E) OF SUB-SECTION (1) OR HAS ONCE BEEN ASSE SSED, THEN, HE SHALL NOT, IN RESPECT OF THAT SOURCE, OR, AS THE CASE MAY BE, BUS INESS OR PROFESSION, BE ENTITLED TO VARY THE MEANING OF THE EXPRESSION 'PRE VIOUS YEAR' AS THEN APPLICABLE TO HIM, EXCEPT WITH THE CONSENT OF THE I NCOME-TAX OFFICER AND UPON SUCH CONDITIONS AS THE INCOME-TAX OFFICER MAY THINK FIT TO IMPOSE. ITA NO 459/A/97 & I.T.A. NO.2040/A/03 21 7.12 AS IS APPARENT FROM THE AFORESAID PROVISION S, THE OPTION TO CHOOSE PREVIOUS YEAR FOR ANY SOURCE OF INCOME, VESTS WITH THE ASSESSEE AND NOT WITH THE AO OR THE CIT(A). OPTION IS GIVEN BY THE ABOVE-QUOT ED STATUTORY PROVISION TO THE ASSESSEE AND NOT TO THE DEPARTMENT AS HELD IN THE C ASE OF, PATIALA SALES CORPORATION PVT. LTD. & ANOTHER(SUPRA). IN THE LIG HT OF RELEVANT STATUTORY PROVISIONS AND THE VIEW TAKEN IN THE AFORESAID DECI SION WHILE NO CONTRARY DECISION HAS BEEN BROUGHT TO OUR NOTICE ON BEHALF OF THE REV ENUE, WE ARE OF THE OPINION THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN ADOPTING T HE PERIOD OF 12 MONTHS ENDING ON 31.3.1983 IN ORDER TO ASSESS CAPITAL GAINS ON THE C ONTRIBUTION OF CAPITAL BY A PARTNER TO THE FIRM AS HER SHARE OF CAPITAL ON 17. 11.1982. 7.2 AS REGARDS ISSUE RAISED IN SUB-GROUNDS NO. 1 TO 7 OF GROUND NO.III IN RESPECT OF CAPITAL GAINS ON CONVERSION OF CAPITAL ASSET IN TO STOCK IN TRADE BY THE ASSESSEE ON 21.9.1982, WE FIND THAT THE LD. CIT(A) HAS NOWHERE RECORDED ANY FINDING THAT MERE CONVERSION OF CAPITAL ASSETS IN TO STOCK IN TRADE AND/OR ON REVALUATION THEREOF IN THE ASSESSEES BOOKS, ANY CA PITAL GAINS WOULD ARISE. SINCE THESE GROUNDS DO NOT ARISE OUT OF THE IMPUGNED ORDE R, THEREFORE, THESE ARE TREATED AS INFRUCTUOUS . EVEN OTHERWISE THERE IS NO TRANSFER ON MERE CONVER SION OF CAPITAL ASSETS INTO STOCK IN TRADE AND/OR ON REV ALUATION THEREOF IN THE ASSESSEES BOOKS AND NO INCOME ARISING ON SUCH CONV ERSION. IN OTHER WORDS, THERE COULD NOT BE ANY ACTUAL PROFIT OR LOSS ON CON VERSION OF CAPITAL ASSET IN TO STOCK- IN-TRADE IN TERMS OF THE EXTANT PROVISIONS. IN THE CASE OF CIT VS. HIND CONSTRUCTION LTD..83 ITR 211(SC) , IT WAS HELD THAT WHEN A PERSON REVALUES THE ASSETS IN HIS ACCOUNTS, HE CANNOT BE CONSIDERED AS HAVING SOLD THE ASSETS AND MADE PROFITS THEREFROM SINCE A SALE SHOULD CONSIST OF A SELLER AND A BUYER. AS POINTED OUT BY THE LD. AR, THE RELEVANT PROVISIONS OF SEC. 45(2) DEEMING SUCH TRANSFER BY WAY OF CONVERSION OF CAPITAL ASSET IN T O STOCK-IN-TRADE LIABLE TO CAPITAL GAINS TAX IN THE YEAR IN WHICH SUCH STOCK-IN-TRADE IS SOLD OR OTHERWISE TRANSFERRED, .CAME IN TO EFFECT W.E.F 1.4.1985 BY THE FINANCE AC T,1984. NO MAN CAN MAKE A PROFIT OUT OF HIMSELF OR THERE COULD NOT BE ANY ACT UAL OR REAL PROFIT OR LOSS ON SUCH CONVERSION IN THE YEAR UNDER CONSIDERATION . HOWEVER, THE POSITION WOULD BE ITA NO 459/A/97 & I.T.A. NO.2040/A/03 22 DIFFERENT IN CASES WHERE ON OR AFTER SUCH CONVERSIO N OF A CAPITAL ASSET IN TO STOCK IN TRADE BY AN ACT OR CONDUCT OF THE ASSESSEE IS CO NTRIBUTED TO A FIRM AS CAPITAL CONTRIBUTION BY A PARTNER AT THE VALUE MORE THAN TH E COST TO THE ASSESSEE. IN THE CASE OF SUNIL SIDDHARTHBHAI V. CIT [1985] 156 ITR 509 , AFTER EXAMINING THE SCHEME OF THE INCOME-TAX ACT, 1961, AND THE RIGHTS AND LIABILITIES OF THE PARTNER OF A FIRM, IT HAS BEEN HELD THAT WHEN THE PARTNER OF T HE FIRM MAKES OVER CAPITAL ASSETS TO A FIRM AS HIS CONTRIBUTION TOWARDS CAPITA L, THERE IS A TRANSFER OF A CAPITAL ASSET WITHIN THE TERMS OF SECTION 45 OF THE INCOME- TAX ACT, 1961, BECAUSE AN EXCLUSIVE INTEREST OF THE PARTNER IN PERSONAL ASSET S IS REDUCED, ON THEIR ENTRY INTO THE FIRM, INTO A SHARE INTEREST. HOWEVER, REGARDIN G CONSIDERATION, HONBLE APEX COURT OBSERVED THAT THE CONSIDERATION WHICH A PARTNER ACQUIRES ON MAKIN G OVER HIS PERSONAL ASSET TO THE FIRM AS HIS CONTRIBUTION TO ITS CAPITAL CANNOT FALL WITHIN THE TERMS OF SECTION 48 AND AS THAT PROVISION IS FU NDAMENTAL TO THE COMPUTATION MACHINERY INCORPORATED IN THE SCHEME RELATING TO TH E DETERMINATION OF THE CHARGE PROVIDED IN SECTION 45, SUCH A CASE MUST BE REGARDE D AS FALLING OUTSIDE THE SCOPE OF CAPITAL GAINS TAXATION ALTOGETHER. HOWEVE R, IN THE INSTANT CASE UNDISPUTEDLY, THE ASSESSEE CONTRIBUTED HER IMMOVAB LE PROPERTY TO THE FIRM M/S BHOOMI CORPORATION ONLY ON 17.11.1982, WHICH DATE FALLS BEYOND THE YEAR UNDER CONSIDERATION. THEREFORE, WE ARE NOT EXPRESSI NG ANY OPINION IN THIS APPEAL AS TO WHETHER OR NOT CAPITAL GAINS WOULD ARISE WH EN THE PARTNER MADE OVER HER ASSET TO A FIRM AS HER CONTRIBUTION TOWARDS CAPITAL NOR ON THE ISSUE RAISED IN SUB- GROUNDS NO. 8 TO 12 OF GROUND NO.III THAT THE ASSE SSEE INDULGED IN A DEVICE OR RUSE FOR CONVERTING THE ASSET IN TO STOCK- IN-TRADE AND THEREAFTER, CONTRIBUTING TO THE FIRM ,IN WHICH SHE WAS PARTNER, SINCE THESE ISS UES WOULD BE PURELY ACADEMIC IN THE YEAR UNDER CONSIDERATION AND CAN BE CONSIDER ED IN THE AY 1984-85 ALONE. WITH THESE OBSERVATIONS GROUND NO. III IN THE APPEA L IS DISPOSED OF. 8 GROUND NO. IV IN THE APPEAL RELATES TO OBSERVATIONS OF THE LD. CIT(A) IN RELATION TO PROVISIONS OF SEC. 153(3) OF THE ACT. THE LD. AR CONTENDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN ISSUING ANY DIRECTIONS FOR REOPENING THE ASSESSMENT FOR THE AY 1984-85 AFTER CONSIDERING THE PROVISION OF SEC. 153 OF THE ACT IN THE ITA NO 459/A/97 & I.T.A. NO.2040/A/03 23 APPEAL FOR THE AY 1983-84I. WE FIND MERIT IN THE CO NTENTIONS OF THE LD. AR. WE ARE OF THE OPINION THAT THE LD. CIT(A) WAS NOT JUST IFIED IN ISSUING DIRECTIONS ON A MATTER WHICH WAS NOT IN APPEAL BEFORE HIM AND THAT TOO FOR ANOTHER ASSESSMENT YEAR. THE HONBLE SUPREME COURT IN THE CASE OF RA JINDER NATH V. CIT [1979] 120 ITR 14 HELD THAT A FINDING GIVEN IN AN APPEAL, REVISION OR REFERENCE ARISING OUT OF AN ASSESSMENT MUST BE A FINDING NECESSARY FO R THE DISPOSAL OF THE PARTICULAR CASE, THAT IS TO SAY, IN RESPECT OF THE PARTICULAR ASSESSEE AND IN RELATION TO THE PARTICULAR ASSESSMENT YEAR. TO BE A NECESSAR Y FINDING, IT MUST BE DIRECTLY INVOLVED IN THE DISPOSAL OF THE CASE. IT IS NOW WEL L-SETTLED THAT IT MUST BE AN EXPRESS DIRECTION NECESSARY FOR THE DISPOSAL OF THE CASE BEFORE THE AUTHORITY OR COURT AND IT MUST ALSO BE A DIRECTION WHICH THE AU THORITY OR COURT IS EMPOWERED TO GIVE WHILE DECIDING THE CASE BEFORE IT. IN CIT VS. MANICK SONS,74 ITR 1(SC), HONBLE APEX COURT HELD THAT T HE TRIBUNAL HEARING AN APPEAL MAY GIVE DIRECTIONS FOR REOPENING ASSESSMENT OF THE YEAR TO WHICH THE A PPEAL RELATES; IT CANNOT GIVE ANY DIRECTIONS TO REASSESS IN CASE OF A PERIOD NOT COVERED BY THAT YEAR. WHILE ADJUDICATING A SIMILAR ISSUE, HONBLE KERALA HIGH C OURT IN COMMISSIONER OF INCOME-TAX. VS CHACKOLA SPINNING AND WEAVING MILLS LIMITED,188 ITR 432(KERALA) HELD THAT THE OBSERVATION THAT THE PAYMENT WILL BE DED UCTIBLE FOR THE ASSESSMENT YEAR 1981-82, WHILE DISPOSING OF THE APPEAL FOR THE ASSE SSMENT YEAR 1980-81, WAS ONLY AN INCIDENTAL ONE ; SUCH A MATTER NEVER AROSE FOR CONSIDERATION. THE OBSERVATION WAS UNAUTHORISED AND UNCALLED FOR. IT I S TRUE THAT THERE IS NO FINDING IN THE STRICT SENSE. EVEN SO, THE OBSERVATION AFORESAI D IS ILLEGAL AND UNJUSTIFIED. WE ARE FORTIFIED IN THIS VIEW BY THE FOLLOWING, AMONG OTHER DECISIONS : ITO V. MURLIDHAR BHAGWAN DAS [1964] 52 ITR 335 (SC); P. J. UDANI V. CIT [1967] 63 ITR 766 (AP) AND BAKSHISH SINGH V. ITO [1974] 93 ITR 178 (CAL). IN THIS CONNECTION, IT SHOULD BE REMEMBERED THAT THE TRIBUNAL WAS DISPOSING OF TH E APPEAL FILED BY THE REVENUE BEFORE IT FOR THE YEAR 1980-81, AND NOT AN APPEAL FILED BY THE ASSESSEE. AND THERE IS NO MATERIAL OR EVEN WHISPER TO SHOW TH AT AN ALTERNATE PLEA OR APPROACH WAS MOOTED BY THE ASSESSEE FOR THE CLAIM M ADE BY IT WHEN THE TRIBUNAL ADJUDICATED THE APPEAL, NAMELY, THAT THE A MOUNT IS CLAIMABLE FOR THE SUBSEQUENT YEAR 1981-82 AND THAT THE ALTERNATE PLEA NECESSITATED THE OBSERVATIONS MADE, IN WHICH CASE, THE RATIO OF THE DECISION IN MOTILAL BAWALAL V. CIT [1963] 50 ITR 249 (BOM) MAY CALL FOR APPLICATION. SUCH IS NOT THE CA SE HERE . ITA NO 459/A/97 & I.T.A. NO.2040/A/03 24 8.1 IN THE INSTANT CASE, WE FIND THAT THE LD. C IT(A) WAS DISPOSING OF THE APPEAL FOR THE AY 1983-84 & NOT FOR THE AY 1 984-85. THE APPELLATE AUTHORITY CAN GIVE FINDINGS AND DIRECTION S ONLY IN RESPECT OF THE ISSUES AND THE YEAR , WHICH ARE BEFORE HIM AND NO DIRECTIONS OR FINDINGS CAN BE GIVEN IN RESPECT OF OTHER YEARS, NOT PENDING BEFORE HIM. SIMILAR VIEW WAS TAKEN BY A CO-ORDINATE BENCH IN THE CASE OF SUN METAL FACTORY(I) P LTD.(SUPRA) WHEREIN WHILE RELYING UPON THE DECISIONS IN THE CASE OF ACIT VS. RAJARAM & BROTHERS,274 ITR 122(MP),CIT & ANOTHER VS. FROAMER FRANCE,264 IT R 566(SC),CIT VS. BANWARILAL & SONS (P) LTD.,257 ITR 518(DEL.),ITO VS. MURLIDHAR BHAGWAN DAS,52 ITR 335(SC).PT. HAZARI LAL VS. ITO,39 ITR 265(ALL),RAJ KISHORE PRASAD VS. ITO,195 ITR 438(ALL.) AND ABDUL WAHID GEHLOT VS. ITO,93 TTJ(JODHPUR) 232, HELD THAT THE APPELLATE AUTHORITY CAN GIVE FINDINGS AND DIRECTION S ONLY IN RESPECT OF YEAR WHICH IS BEFORE THAT AUTHORITY AND NO DIREC TION OR FINDING CAN BE GIVEN IN RESPECT OF OTHER YEARS. IN THE LIGHT OF VIEW TAKEN IN THE AFORECITED DECISIONS, WE ARE OF THE OPINION THAT SI NCE THE DIRECTIONS/OBSERVATION OF THE LD. CIT(A) IN THE CON TEXT OF PROVISIONS OF SEC. 153(3) OF THE ACT RELATED TO THE AY 1984-85 AND NOT FOR THE YEAR UNDER CONSIDERATION , THE INCIDENTAL DIRECTI ONS ISSUED AND OBSERVATIONS MADE BY THE LD. CIT(A) FOR THE AY 198 4-85 WERE UNAUTHORISED AND UNCALLED FOR. THEREFORE, WE HAVE NO HESITATION IN VACATING THESE DIRECTIONS AND OBSERVATIONS OF THE LD. CIT(A) SO FAR AS THESE RELATE TO THE AY 1984-85. THUS, GROUND NOS. IV(1) TO 6 IN THE APP EAL ARE ALLOWED . 9. . GROUND NO. V RELATES TO LEVY OF INTEREST .T HE LD. AR ON BEHALF OF THE ASSESSEE DID NOT MAKE ANY SUBMISSIONS ON THIS GROUN D. THE LEVY OF INTEREST BEING MANDATORY [COMMISSIONER OF INCOME TAX. VS ANJ UM M. H. GHASWALA AND OTHERS,252 ITR 1(SC), AFFIRMED BY HON'BLE APEX COUR T IN THE CASE OF CIT V. HINDUSTAN BULK CARRIERS [2003] 259 ITR 449 (SC) AND IN THE CASE OF CIT V. SANT RAM MANGAT RAM JEWELLERS [2003] 264 ITR 564 (SC) ] AND NO INFIRMITY HAVING ITA NO 459/A/97 & I.T.A. NO.2040/A/03 25 BEEN POINTED OUT IN ITS LEVY, THIS GROUND IS DISMI SSED. HOWEVER, THE AO MAY ALLOW CONSEQUENTIAL RELIEF ,IF ANY, WHILE GIVING EF FECT TO THIS ORDER. 10. GROUND VI RELATES TO INITIATION OF PENALTY PROC EEDINGS U/S 271 & 273 OF THE ACT. NO APPEAL LIES AGAINST MERE INITIATION OF PENA LTY PROCEEDINGS NOR ANY SUBMISSIONS HAVE BEEN MADE BEFORE US. THEREFORE, T HIS GROUND IS ALSO DISMISSED. 11. NO ADDITIONAL GROUND HAVING BEEN MADE IN TERMS OF RESIDUARY GROUND NO.VII, THIS GROUND IS, THEREFORE, DISMISSED I.T.A. NO.2040/AHD/2003[AY 1984-85] 12. GROUND NO. 1 IN THIS APPEAL BEING GENERAL IN N ATURE, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION AND IS, THEREFORE, DISMISSED. 13. GROUND NOS. 2 & 3 IN THE APPEAL RELATE TO VALI DITY OF REOPENING OF THE ASSESSMENT U/S 147 OF THE ACT. IN THIS CASE, THE AO IS STATED TO HAVE REOPENED THE ASSESSMENT U/S 147 OF THE ACT ON THE BASIS OF F INDINGS OF THE LD. CIT(A) IN THE AY 1983-84 THAT THE TRANSFER OF ASSET HAD TAKEN PLA CE ON CONTRIBUTION OF LAND BY THE ASSESSEE TO THE FIRM M/S BHOOMI CORPORATION ON 17.11.1982 AND THEREFORE, CAPITAL GAINS HAD ARISEN TO THE ASSESSEE IN THE YEA R UNDER CONSIDERATION. INTER ALIA, THE LD. CIT(A) SUO MOTU ADOPTED THE PERIOD ENDING 12 MONTHS ON 31.3.1983 AS THE PREVIOUS YEAR AS ALSO ADJUDICATED ON THE AS PECT OF LIMITATION IN TERMS OF PROVISIONS OF SEC. 153(3) OF THE ACT. 13. IN THE APPEAL BEFORE US, THE LD. AR ARGUED T HAT THE AO WAS NOT JUSTIFIED IN REOPENING THE ASSESSMENT FOR THE YEAR UNDER CON SIDERATION IN ORDER TO ASSESS THE CAPITAL GAINS PROTECTIVELY MERELY ON THE BASIS OF DIRECTIONS OF THE LD. CIT(A), WHICH DIRECTIONS WERE NOT ISSUE DIN ACCORDANCE WITH LAW . WE FIND THAT THE LD. CIT(A) DID NOT ADJUDICATE THE VALIDITY OF REOPENIN G OF ASSESSMENT INDEPENDENTLY NOR RECORDED HIS SPECIFIC FINDINGS ON THE REASONS R ECORDED BY THE AO FOR ITA NO 459/A/97 & I.T.A. NO.2040/A/03 26 REOPENING THE ASSESSMENT AND MERELY UPHELD SUCH R EOPENING OF THE ASSESSMENT WITH THE FOLLOWING OBSERVATIONS: SINCE THE ASSESSMENT HAS BEEN REOPENED CON SEQUENT UPON DIRECTIONS / FINDINGS BY AN EQUAL APPELLATE AUTHORITY, I DO NOT THINK IT APPROPRIATE TO GO INTO THE DETAILS AND THE ACTION THEREOF TAKEN BY THE A.O. IS UPHELD. 14. VIDE OUR AFORESAID ORDER IN I.T.A. NO.459/AH D/1997 FOR THE 1983-84, WE HAVE ALREADY CONCLUDED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN EITHER CHANGING THE PREVIOUS YEAR OR ISSUING DIRECTIONS FOR THE AY 1984-85 WHILE ADJUDICATING APPEAL FOR THE AY 1983-84. IN THE LIGHT OF OUR FIND INGS IN THE APPEAL FOR THE AY 1983-84, THE AFORESAID OBSERVATIONS OF THE LD. CIT( A) WHILE ADJUDICATING VALIDITY OF REOPENING OF ASSESSMENT FOR THE AY 1984-85 DO NOT S URVIVE. MOREOVER, THE LD. CIT(A) HAS NOT RECORDED HIS INDEPENDENT FINDINGS ON THE VALIDITY OF REOPENING OF ASSESSMENT IN THE LIGHT OF REASONS RECORDED BY THE AO AND MERELY RELIED ON THE FINDINGS OF THE LD. CIT(A) FOR THE AY 1983-84 . E VEN ON MERITS, THE LD. CIT(A) FOLLOWED THE ORDER OF THE LD. CIT(A) FOR THE AY 198 3-84, EVEN WHEN THE ASSESSEE CONTRIBUTED HER LAND TOWARDS CAPITAL OF THE FIRM ON 17.11.1982 I.E. IN THE YEAR UNDER CONSIDERATION. THUS, ANY OBSERVATIONS MADE IN THE CONTEXT OF FACTS RELEVANT IN THE AY 1983-84 COULD NOT BE STRAIGHT A WAY FOLLOWED WITHOUT ANALYZING THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE YEAR UNDER CONSIDERATION. THIS APPROACH OF THE LD. CIT(A) IN DECIDING THE ISSUES W ITHOUT ANALYZING THE FACTS AND CIRCUMSTANCES OF THE CASE FOR THE YEAR UNDER CONSID ERATION, IS NOT IN ACCORDANCE WITH LAW .THE APPLICATION OF MIND TO THE MATERIAL F ACTS AND THE ARGUMENTS SHOULD MANIFEST ITSELF IN THE ORDER. SECTION 250(6) OF T HE ACT MANDATES THAT THE ORDER OF THE CIT(A) WHILE DISPOSING OF THE APPEAL SHALL BE I N WRITING AND SHALL STATE THE POINTS FOR DETERMINATION, THE DECISION THEREON AND THE REASON FOR THE DECISION. AS IS APPARENT FROM THE IMPUGNED ORDER, IN OUR OPIN ION, THE ORDER PASSED BY THE LD. CIT(A) IS CRYPTIC AND GROSSLY VIOLATIVE OF ONE OF THE FACETS OF THE RULES OF NATURAL JUSTICE, NAMELY, THAT EVERY JUDICIAL/QUASI- JUDICIAL BODY/AUTHORITY MUST PASS REASONED ORDER, WHICH SHOULD REFLECT APPLICATION OF MIND BY THE CONCERNED AUTHORITY TO THE ISSUES/POINTS RAISED BEFORE IT. TH E REQUIREMENT OF RECORDING OF REASONS AS ALSO COMMUNICATION THEREOF HAS BEEN READ AS AN INTEGRAL PART OF THE ITA NO 459/A/97 & I.T.A. NO.2040/A/03 27 CONCEPT OF FAIR PROCEDURE AND IS AN IMPORTANT SAFEG UARD TO ENSURE OBSERVANCE OF THE RULE OF LAW. IT INTRODUCES CLARITY, CHECKS THE INTRODUCTION OF EXTRANEOUS OR IRRELEVANT CONSIDERATIONS AND MINIMIZES ARBITRARINE SS IN THE DECISION-MAKING PROCESS. WE MAY REITERATE THAT A DECISION DOES NO T MERELY MEAN THE CONCLUSION. IT EMBRACES WITHIN ITS FOLD THE REASO NS FORMING BASIS FOR THE CONCLUSION.[MUKHTIAR SINGH VS. STATE OF PUNJAB,(199 5)1SCC 760(SC)]. AS IS APPARENT, THE IMPUGNED ORDER SUFFERS FROM LACK OF R EASONING AND IS NOT A SPEAKING ORDER. IN VIEW OF THE FOREGOING, ESPECIA LLY WHEN THE LD. CIT(A) HAS NOT PASSED A SPEAKING ORDER ON THE ISSUES RAISED IN VA RIOUS GROUNDS IN THE APPEAL BEFORE US, WE CONSIDER IT FAIR AND APPROPRIATE TO S ET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE FOR DECID ING THE ISSUES RAISED IN THESE GROUNDS AFRESH IN ACCORDANCE WITH LAW, KEEPING IN MIND OUR FINDINGS IN THE APPEAL FOR THE AY 1983-84, AFTER ALLOWING SUFFICIEN T OPPORTUNITY TO BOTH THE PARTIES. NEEDLESS TO SAY THAT WHILE REDECIDING THE APPEAL, THE LEARNED CIT(A) SHALL PASS A SPEAKING ORDER, KEEPING IN MIND, INTER ALIA, THE MANDATE OF PROVISIONS OF SEC. 250(6) OF THE ACT. WITH THESE OB SERVATIONS, GROUNDS IN THIS APPEAL ARE DISPOSED OF. 16. IN THE RESULT, APPEAL FOR AY 1983-984 IS PARTLY ALLOWED WHILE THAT FOR THE AY 1984-85 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 11TH DAY OF JUNE, 20 10. SD/- SD/- (BHAVNESH SAINI) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD, DATED : 11TH JUNE,2010 COPY TO: 1. THE ASSESSEE 2. ACIT, CIRCLE-.2(3) , AHMEDABAD 3 CIT(A)-VI & CIT(A)-XVI AHMEDABAD 4 CIT CONCERNED, AHMEDABAD 5 DR, C BENCH BY ORDER DEPUTY REGISTRAR, ITAT, AHMEDABAD