Balbir Singh (HUF), Chandigarh V. DCIT, Mohali

ITA 49/CHANDI/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68603 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-10-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 14-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B M MAN GA
• Assessee Lawyers: J S NAGAR
• Keywords: Capital asset; Gift; Business income; Business expenditure; Additional evidence; Question of law; Cost of acquisition
• Section: 143(3); 54B; 54; 263

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 49/CHD/2013 ASSESSMENT YEAR: 2004-05 SHRI BALBIR SINGH (HUF), VS THE DCIT, CIRCLE 6(1) , PROP OF M/S SOHI BANQUET HALL, MOHALI H.NO.10, SECTOR 3, CHANDIGARH PAN NO. AADHB4674A & ITA NO. 1356/CHD/2012 ASSESSMENT YEAR: 2004-05 THE ITO, WARD-1(3), VS SHRI BALBIR SINGH (HUF), CHANDIGARH CHANDIGARH PAN NO. ACJPS6700J (APPELLANT) (RESPONDENT) DATE OF HEARING : 29.10.2013 DATE OF PRONOUNCEMENT : 23.12.2013 APPELLANT BY : SHRI J.S.NAGAR RESPONDENT BY : SHRI RAVI SHANKAR & SHRI B.M. MAN GA ORDER PER T.R.SOOD, A.M. THE APPEALS FILED BY THE ASSESSEE AND REVENUE ARE DIRECTED AGAINST THE ORDER DATED 12.10.2012 OF CIT(A) CHANDIGARH 2. BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS MOVE D AN APPLICATION DATED 21.10.2013 FOR ADMISSION OF ADDITIONAL EVIDENCE. TH E FOLLOWING DOCUMENTS ARE SOUGHT TO BE ADMITTED. 2 SR. NO. PARTICULARS PAGE NO. 1. CERTIFICATE OF THE CHARTERED ACCOUNTANT SHOWING LAND-TOTAL, SOLD AND BALANCE, ALONG WITH THE ANNEXURES. 1-7 2. COPIES OF 4 SALE-DEEDS IN ENGLISH-TRANSLATION AN D IN PUNJABI VERSION. 8-37 3. COPIES OF JAMABANDIES (IN TRUE ENGLISH TRANSLA TION ) AND IN PUNJABI FOR THE YEAR 1987-88 AND 1992-93. 38-43 3. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS CASE WAS NOT PROPERLY HANDLED EARLIER PARTICULARLY BECAUSE ASSES SEE WHO IS ABOUT 85 YEARS OF AGE HAS LOST HIS ONLY SON SHRI RAVINDER SINGH DUE T O BRAIN HEMORRHAGE. HE SUBMITTED THAT COPIES OF THE DETAILS OF THE TOTAL L AND AND COPIES OF THE SALE DEEDS WERE NOT FILED BEFORE THE ASSESSING OFFICER BUT THE Y ARE NOW BEING FILED TO ASSIST THE COURT TO UNDERSTAND THE CASE. THE COPIES OF TH E JAMABANDIS WHICH ARE ALSO NECESSARY FOR ADJUDICATION OF THE APPEAL ARE BEING FILED NOW. 4. ON THE OTHER HAND, THE LD. DR OPPOSED THE SUBMI SSIONS. 5. AFTER CONSIDERING THE SUBMISSIONS AND CONSIDERIN G THE CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT ADDITIONAL EVIDEN CE BEING FILED NOW IS RELEVANT TO THE ISSUE TO BE DECIDED BY US AND, THEREFORE, TH E SAME IS ADMITTED. ITA NO. 49/CHD/2013 6. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- 1. THAT THE ORDER OF LEARNED CIT(APPEALS), CHANDIGA RH UPHOLDING THE ADDITIONS OR AUTHORITIES BELOW IS BAD IN LAW AND CONTRARY TO THE FACTS ON RECORD AND LIABLE TO B E SET ASIDE. 2. THE LD. CIT(APPEALS) CHANDIGARH IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 13,00,000/- BEING THE MONEY FORFEITED WHICH WAS RECEIVED AS ADVANCE FOR THE SAL E OF AGRICULTURAL LAND. 3 3. THE CIT(APPEALS) CHANDIGARH IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 2,89,97,783/- HOLDING THIS TOTAL SALE CONSIDERATION, AS BUSINESS INCOME INSTEAD OF C APITAL GAIN OF RS. 1,06,25,077/- FROM SALE OF AGRICULTURAL LAND , AS HAD RIGHTLY BEEN CLAIMED BY THE ASSESSEE. 4. THE LD. CIT(APPEALS) HAS GROSSLY ERRED IN DISALL OWING THE CLAIM U/S 54 B OF THE INCOME TAX ACT BY HOLDING THAT THE LAND SOLD WAS NOT AGRICULTURAL LAND. 5. THE CIT (A) IS NOT JUSTIFIED WHILE UPHOLDING THE ADDITION OF RS. 20,76,224/- AS UNEXPLAINED CASH AND CHEQUE DEPOSITS IN BANK ACCOUNT OF THE APPELLANT IGNORING THE RECONCILIATION FILED BY THE ASSESSEE. 7. THE FACTS OF THE CASE IN BRIEF ARE THAT IN THIS CASE ORIGINAL ASSESSMENT ORDER WAS FRAMED U/S 143(3) IN WHICH CLAIM OF THE A SSESSEE WAS THAT SALE OF LAND IS TO BE ASSESSED AS LONG TERM CAPITAL GAIN WAS A CCEPTED. THE ASSESSEE HAD RECEIVED A SUM OF RS. 13 LAKHS AS ADVANCE FOR WHICH NO DETAILS WERE THERE. THAT WAS ALSO ASSESSED UNDER THE HEAD LONG TERM CAPITAL GAINS AND EXEMPT U/S 54B HAS ALSO BEEN ALLOWED. FURTHER, CERTAIN AMOUNT DEP OSITED IN THE BANK WHICH HAS NOT BEEN EXAMINED PROPERLY AND, THEREFORE, REVISION ARY ORDER U/S 263 WAS PASSED ON 19.3.2009. IN THAT ORDER, THE ASSESSMENT WAS C ANCELLED AND ASSESSING OFFICER WAS ASKED TO REFRAME THE ASSESSMENT AFTER M AKING ENQUIRIES AS RECORDED IN THE REVISIONARY ORDER. THIS ORDER WAS NOT CHALL ENGED BY THE ASSESSEE, THEREFORE, ASSESSMENT WAS AGAIN COMMENCED IN PURSUA NCE OF THE ORDER PASSED U/S 263 OF THE ACT. 8. GROUND NO.1 IS GENERAL IN NATURE AND DOES NOT RE QUIRE ANY SEPARATE ADJUDICATION 9. GROUND NO.2: AFTER HEARING BOTH THE PARTIES, WE FIND THAT DURING THE YEAR THE ASSESSEE HAS RECEIVED A SUM OF RS. 13 LAKH S WHICH WAS SHOWN AS 4 FORFEITED AND OFFERED AS INCOME UNDER THE HEAD LON G TERM CAPITAL GAINS. HOWEVER, NO DETAILS WERE FILED DESPITE VARIOUS OPPO RTUNITIES. THEREFORE, THE ASSESSING OFFICER TREATED THE INCOME OF RS. 13 LAKH S AS INCOME FROM OTHER SOURCES. 10. BEFORE CIT(A), IT WAS MAINLY SUBMITTED THAT EXE MPTION U/S 54B WAS CLAIMED ON ACCOUNT OF PURCHASE OF AGRICULTURAL LAND AND, THEREFORE, RECEIPT OF RS. 13 LAKHS HAVE NOT RESULTED IN ANY EXCESSIVE EXE MPTION. IT WAS FURTHER SUBMITTED THAT A SUM O F RS. 13 LAKHS WAS RECEIVED BY LATE SHRI RAVINDER SINGH WHO WAS THE ONLY SON OF SHRI BALBIR SINGH, KARTA OF HUF. SHRI RAVINDER SINGH EXPIRED DUE TO BRAIN HEMORRHAGE AND, THEREFORE, DE TAILS WERE NOT AVAILABLE. SINCE SHRI RAVINDER SINGH WAS MAINLY LOOKING AFTER THE ISSUE OF SELLING OF LAND, THEREFORE, THIS MONEY HAVE BEEN RECEIVED ON ACCOUNT OF LAND ONLY. THE LD. CIT(A) DID NOT FIND ANY FORCE IN THE SUBMISSIONS BE CAUSE NO EVIDENCE WAS THERE TO SHOW THAT MONEY WAS RECEIVED AGAINST SALE OF LAN D. 11. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT ASSESSEE HAS HIMSELF DISCLOSED THE SUM OF RS. 13 LAKHS IN COMPUT ATION OF INCOME AS FORFEITURE OF ADVANCE. THE DEAL IN THIS RESPECT WAS DONE BY SH RI RAVINDER SINGH WHO WAS THE ONLY SON OF SHRI BALBIR SIGH, KARTA OF HUF. SH RI RAVINDER SINGH UNFORTUNATELY EXPIRED SUDDENLY; THEREFORE, DETAILS ARE NOT AVAILABLE. SINCE THE ASSESSEE WAS IN PROCESS OF SELLING LAND, THEREFORE, THIS AMOUNT MUST HAVE BEEN RECEIVED ONLY AS ADVANCE. 12. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT I F IT WAS A CASE OF ADVANCE THEN SOMEBODY MUST HAVE COME FORWARD TO RECEIVE THE SAME BUT TILL DATE NOBODY IS COMING TO THE ASSESSEE FOR RECOVERY OF THIS ADVA NCE, THEREFORE, IT CANNOT BE CONSIDERED AS ADVANCE. 5 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF LD. DR. EVEN IF ASSUMING THAT IT WA S IN THE NATURE OF ADVANCE, THE AMOUNT WAS RECEIVED BY THE LATE SON OF THE ASSE SSEE THEN SOME PERSON MUST HAVE DEFINITELY APPROACHED THE ASSESSEE FOR RECOVER Y OF SUCH ADVANCE AND ASSESSEE WOULD HAVE KNOWN THE PARTICULARS OF SUCH PERSON BUT IT HAS NOT HAPPENED. THIS CLEARLY SUGGESTS THAT THIS AMOUNT H AS BEEN RECEIVED FROM SOME OTHER SOURCE AND IN THE ABSENCE OF THE DETAILS; WE ARE OF THE OPINION THAT SAME HAS BEEN CORRECTLY ASSESSED AS INCOME FROM OTHER S OURCES. 14. GROUND NO.3 AFTER HEARING BOTH THE PARTIES WE FIND THAT ASSESSEE HAD DISCLOSED SALE OF AGRICULTURAL LAND AMOUNTING TO RS . 3,05,23,983/- AND AFTER REDUCING THE INDEXED COST, DETERMINED THE CAPITAL G AIN OF RS. 1,06,25,077/- INCLUDING THE SUM OF RS. 13 LAKHS AFTER CLAIMING TH E EXEMPTION U/S 54B FOR PURCHASE OF NEW AGRICULTURAL LAND AMOUNTING TO RS. 1,03,26,200/-, THE NET AMOUNT WAS SHOWN AS LONG TERM CAPITAL GAINS. DURIN G ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT LAND WAS SOLD TH ROUGH POWER OF ATTORNEY AND DETAILS OF THE PERSONS TO WHOM POWER OF ATTORNEY WA S GIVEN AS UNDER;- NAME OF PERSONS TO WHOM POWER OF ATTORNEY WAS GIVEN ADDRESS. SH. RAJINDER SINGH S/O TEJA SINGH VILLAGE BALTANA, TEHSIL DERA BASSI SMT SURINDER KAUR D/O SH SADHU SINGH VILLAGE LALRU, TEHSIL DERA BASSI SH. JAGTAR SINGH S/O SH. JARNAIL SINGH VILLAGE BALTANA, TEHSIL DERA BASSI SH. SURJIT SINGH S/O SH. GURDIT SINGH VILLAGE BALTANA, TEHSIL DERA BASSI SMT KRISHANA ARORA W/O SH. RAJ KUMAR #712, SECTOR-16, PANCHKULA SH. RAVINDER SINGH S/O SH. DAVINDER SINGH H.NO. 1183, SECTGOR-18-C, CHANDIGARH SINCE LAND HAS BEEN SOLD IN SMALL PLOTS THROUGH ATT ORNEY HOLDERS, ACCORDING TO ASSESSING OFFICER THE SAME WOULD CONSTITUTE ADVENTU RE IN THE NATURE OF TRADE AND IN THIS REGARD HE RELIED ON THE FOLLOWING DECISIONS :- 6 CIT V NARASIMHA REDDY 150 ITR 347 (KARNATKA) RAJA J. RAMESH RAO VS CIT 42 ITR 179 (SC) JANKI RAM BAHADUR RAM V CIT 57 ITR 21 (SC) 15. THE ASSESSEE REPRESENTED THAT LAND WAS SOLD THR OUGH THE POWER OF ATTORNEY HOLDERS WHO IN TURN HAD SOLD THE LAND TO INDIVIDUAL PLOT HOLDERS. THE ASSESSING OFFICER EXAMINED ALL THESE SUBMISSIONS BUT DID NOT AGREE WITH THE SAME AND ON THE BASIS OF ABOVE NOTED CASE LAWS HELD THAT SALE O F LAND HAS TO BE TREATED AS ADVENTURE IN THE NATURE OF TRADE INSTEAD OF INCOME OF SALE OF LAND AS CAPITAL GAIN. HE ALSO OBSERVED THAT SINCE LAND WAS INHERI TED BY THE ASSESSEE, THEREFORE, NO COST OF ACQUISITION WAS INCURRED AND THEREFORE N OTHING WAS REDUCED FROM THE SALE PROCEEDS. HOWEVER, HE WAS OF THE OPINION THAT SOME EXPENSES MUST HAVE BEEN INCURRED AND ACCORDINGLY ALLOWED 5% OF THE SAL E PROCEEDS AS BUSINESS EXPENSES AND DEDUCTED THE SAME. HE ALSO OBSERVED THAT SALE PROCEEDS HAVE BEEN DEPOSITED IN THE INDIVIDUAL ACCOUNT OF THE AS SESSEE, THEREFORE, TAX WAS LEVIED IN THE HANDS OF THE ASSESSEE IN THE INDIVIDU AL CAPACITY. 16. ON APPEAL, IT WAS MAINLY SUBMITTED THAT WHETHER THE SALE OF LAND WAS IN THE NATURE OF ADVENTURE IN THE NATURE OF TRADE OR S ALE WOULD DEPEND UPON THE CIRCUMSTANCES OF THE CASE. ON THE BASIS OF VARIOUS CASE LAWS IT WAS SUBMITTED THAT FOLLOWING FACTS HAVE TO BE CONSIDERED. 1. THAT THE LAND SOLD BY THE ASSESSEE WAS ANCESTRA L LAND AND WAS ACQUIRED ABOUT 25 YEARS AGO. 2. THAT NO STEPS WERE TAKEN WITH THE INTENDED RESUL T TO IMPROVING ITS MARKET ABILITY. 3. THE ASSESSEE HAS NO COMMERCIAL BACKGROUND IN SIM ILAR AREA OR HAD PREVIOUS EXPERIENCE FOR A SIMILAR COMMERCIAL NATURE. 4. THE SALE HAS NOT TAKEN PLACE WITHIN A SMALL PERI OD OF TIME & AFTER THE ACQUISITION OF PROPERTY POINTING TO A TR ADING INTENTION. 5. THAT NO SUCH SALES WERE MADE IN THE PAST AND SUB SEQUENTLY. 7 6. THAT THE ASSESSEE STILL HOLDS HUGE AGRICULTURAL LANDS IN THE AREA. 7. THAT THE ASSESSEE HAS PURCHASED ANOTHER AGRICULT URAL LAND AT CHEAP RATES IN ANOTHER AREA AND MORE IN QUANTITY. 8. THAT THE AGRICULTURAL OPERATIONS WERE CARRIED ON LAND FOR THE LAST 50 YEARS. 17. THE JUDGMENTS RELIED UPON BY THE ASSESSING OFFI CER WERE DISTINGUISHED BY THE LD. COUNSEL OF THE ASSESSEE AND FURTHER RELIANC E WAS PLACED ON THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF RAJA MALWINDER SINGH ITA NO. 712 OF 2009, CIT VS SUSHILA DEVI JAIN 259 I TR 671(P&H) AND KAUR SINGH 144 ITR 756(P&H) . THE LD. CIT(A) EXAMINED THESE SUBMISSIONS. THE LD. CIT(A) FURTHER DISTINGUISHED THE CASES RELIED U PON BY THE ASSESSEE AND FOLLOWING THE CASE LAWS RELIED UPON THE ASSESSING O FFICER HELD THAT IT WAS A CASE OF ADVENTURE IN THE NATURE OF TRADE AND THEREFORE, INCOME FROM SALE OF LAND IS TO BE ASSESSED AS BUSINESS INCOME. HOWEVER, HE HELD TH AT INCOME HAS TO BE ASSESSED IN THE HANDS OF SHRI BALBIR SINGH HUF IN T HE STATUS OF HUF BECAUSE LAND WAS ANCESTRAL. 18. BEFORE US, IT WAS SUBMITTED THAT ASSESSEE HAS S OLD THE LAND WHICH WAS ANCESTRAL AGRICULTURAL LAND. IT WAS NOT POSSIBLE T O SELL THE HUGE CHUNK OF LAND I.E. WHY THE LAND WAS SOLD TO SEVERAL BUYERS. THE A SSESSEE HAD SOLD ONLY PART OF THE LAND, I.E. APPROX 8.25 ACRES OUT OF A HUGE CHU NK OF LAND OF 69.75 ACRES. SINCE ASSESSEE WAS AN OLD PERSON, THEREFORE, LAND W AS SOLD THROUGH ATTORNEY HOLDERS. HE FURTHER SUBMITTED THAT ASSESSEE HAS NOT CARRIED OUT ANY IMPROVEMENT OR EVEN THE LAND USE WAS ALSO NOT CONVERTED. NO ST EPS WHATSOEVER WERE TAKEN TO RUN A BUSINESS OF SELLING OF LAND. THE ASSESSEE HA D NO COMMERCIAL BACKGROUND AND WAS A SIMPLE AGRICULTURIST. THE ASSESSEE NEVER CONVERTED THE LAND INTO NON- AGRICULTURAL USE. HE REFERRED TO THE VARIOUS CASES RELIED ON BY THE ASSESSING OFFICER AND DISTINGUISHED THE SAME. HE ALSO RELIED ON THE FOLLOWING JUDGMENTS:- 8 I) CIT V SHASHI KUMAR AGGARWAL 195 ITR 767 (ALL.) II) RAJA MALWINDER SINGH ITA NO. 712 OF 2009 (P&H) III) CIT VS SUSHILE DEVI JAIN 259 ITR 671 (P&H) IV) KAUR SINGH VS CIT 144 ITR 756 (P&H) 19. ON THE OTHER HAND, THE LD. DR STRONGLY SUPPORT ED THE ORDER OF LD. CIT(A) AND SUBMITTED THAT ASSESSEE HAS SOLD THE LAND TO VA RIOUS SMALL PLOT HOLDERS WHICH CLEARLY SHOWS THAT THE ASSESSEE HAD INTENTION TO CA RRY ON THE BUSINESS OF SELLING OF LAND. HE ALSO RELIED ON THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF G. VENKATASWAMI NAIDU & CO. V CIT IN 35 ITR 594 (S C) AND DCIT V GOPAL RAMNARAYAN KASAT 328 ITR 556 (BOM). 20. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND FORCE IN THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE. THE AS SESSEE HAS INHERITED 69.75 ACRES OF LAND ABOUT 25 YEARS AGO WHICH WAS MAINLY U SED FOR AGRICULTURE PURPOSES. THE ASSESSEE HAS NOT CARRIED OUT ANY DEVE LOPMENT WORK BY LAYING OF ROADS, PROVISION OF LIGHTS, DRAINAGE AND OTHER FACI LITIES ETC. THE ASSESSEE HAS NOT EVEN CONVERTED USE OF LAND FROM AGRICULTURAL TO RES IDENTIAL OR COMMERCIAL. THE ONLY THING WHICH ASSESSEE HAS DONE IS THAT HE APPOI NTED SIX ATTORNEY HOLDERS WHO IN TURN SOLD THE LAND. COPY OF THE SALE DEED FILED IN THE ADDITIONAL EVIDENCE SHOWS THAT ATTORNEY HOLDERS HAVE THEMSELVES SOLD TH E LAND BECAUSE SALE DEEDS HAVE BEEN EXECUTED BY SUCH ATTORNEY HOLDERS ON BEHA LF OF THE ASSESSEE BEING ATTORNEY HOLDERS. EVEN IF ASSUMING THAT LAND WAS S OLD BY THE ASSESSEE AND THESE ATTORNEYS WERE ONLY PROPERTY DEALERS THAT FACT CAN ALSO NOT LEAD TO THE CONCLUSION THAT ASSESSEE HAS UNDERTAKEN AN ADVENTURE IN THE NA TURE OF TRADE. THE ASSESSEE IS A SIMPLE AGRICULTURIST AND NOT A BUSINESSMAN. MOREO VER, THE ASSESSEE IS AN OLD PERSONS OF ABOUT 85 YEARS OF AGE. EVEN WHEN THE LA ND WAS SOLD, ASSESSEE WOULD HAVE BEEN OF 75 YEARS OF AGE AND IF HE WANTED TO SE LL LAND MEASURING ABOUT 8 ACRES EVEN THEN HELP OF PROPERTY DEALERS OR ATTORN EY WAS REQUIRED. WE FIND FORCE IN THE SUBMISSIONS THAT ASSESSEE HAS NOT INDULGED I N THE TRADING IN LAND BEFORE 9 THESE TRANSACTIONS OR EVEN AFTER THESE TRANSACTIONS HE HAS CONDUCTED ANY BUSINESS IN SALE / PURCHASE OF LAND. 21. COMING TO THE CASE LAWS, THE FIRST DECISION REL IED UPON BY THE ASSESSING OFFICER AND LD. CIT(A) IS THAT OF HON'BLE KARNATKAS HIGH COURT IN THE CASE OF CIT V NARASIMHA (SUPRA). IN THAT CASE, THE ASSESSEE HAD PURCHASED L AND ALOGWITH HIS SON AS JOINT OWNER. BOTH OF THEM WERE BUSINESS MAN AND NOT AGRICULTURISTS. THE LAND WAS LOCATED IN AN URBAN AREA SURROUNDED BY FACTORIES. THE ASSESSEE HAD NOT CULTIVATED LAND FOR FIVE YEARS. THE ASSESSE E HAS ALSO OBTAINED PERMISSION FOR CONVERSION OF LAND TO NON AGRICULTURAL LAND. T HE ASSESSEE FURTHER MADE A LAY OUT OF HOUSE SITES AND SOLD SITES. ON THESE FACTS I T WAS HELD THAT ASSESSEE HAS CARRIED ON AN ADVENTURE IN THE NATURE OF TRADE. BU T IN THE CASE BEFORE US, THE ASSESSEE HAS INHERITED AGRICULTURAL LAND WHICH WAS USED AS FOR AGRICULTURE AND ASSESSEE HAS DECLARED AGRICULTURAL INCOME. THE ASS ESSEE IS NOT A BUSINESSMAN. THE ASSESSEE HAS NOT GOT THE USE OF LAND CHANGED. THE LAND WAS NOT DIVIDED INTO THE HOUSE SITES, THEREFORE, CLEARLY THIS CASE IS NO T APPLICABLE TO THE FACTS IN THE CASE BEFORE US. 22. THE NEXT CASE RELIED ON IS RAJA J. RAMESH RAO V S CIT (SUPRA) . IN THAT CASE THE ASSESSEE WAS A JAGIRDAR AND WAS HAVING INC OME FROM JAGIR AND OTHER SOURCES. HE ACQUIRED A VILLAGE KNOWN AS MAKHTA F OR RS. 25,000/-. HE ALSO PURCHASED 217 ACRES OF LAND FROM PATTADARS AND A S UM OF RS. 19,816/- WAS PAID OUT OF THE TOTAL CONSIDERATION OF RS. 25,502/-. TH E ASSESSEE ALSO CONSTRUCTED A PORTION OF LAND AND ACQUIRED GANJ AND SHOPS. THE RE ST OF LAND WAS LAID OUT IN PLOTS. IN THIS CASE IT WAS ULTIMATELY HELD BY THE HON'BLE APEX COURT THAT ASSESSEE HAS CARRIED ON THE BUSINESS. CLEARLY, IN THIS CASE THE ASSESSEE HAD MADE CONSTRUCTION AND HAS ALSO DIVIDED THE LAND INTO PLO TS AND THAT IS WHY IT WAS HELD TO BE BUSINESS INCOME. AS OBSERVED EARLIER, IN TH E CASE BEFORE US, THE ASSESSEE 10 HAS NOT DONE ANY DEVELOPMENT WORK, THEREFORE, THIS CASE CAN ALSO NOT BE APPLIED TO THE FACTS OF THE ASSESSEES CASE. 23. THE THIRD CASE RILED ON BY THE ASSESSING OFFICE R AND CIT(A) IS THAT OF JANKI RAM BAHADUR RAM V CIT (SUPRA) . IN THIS CASE, THE ASSESSEE WHO WAS A DEALER IN IRON SCRAP & HARDWARE AGREED TO PURCHASE ALL THE RIGHTS OF A COMPANY IN A JUTE PRESSING FACTORY INSTALLED ON A PIECE OF LAND BELONGING TO IT, TOGETHER WITH CERTAIN LANDS HELD ON LEASE AND A WAREHOUSE TH EREON, AND TWO WAREHOUSES ON LAND HELD AS A LICENSEE. AT THAT TIME THE FACTOR Y PREMISES WERE IN THE OCCUPATION OF A LESSEE AND A SUIT IN EJECTMENT WAS PENDING AGAINST HIM. POSSESSION OF THE PROPERTY EXCEPT THE FACTORY PREMI SES AND THE MACHINERY WAS OBTAINED ON NOVEMBER 14, 1942, AND THE SALE DEED WA S EXECUTED IN FAVOUR OF THE ASSESSEE ON FEBRUARY 26, 1943. ON JUNE 12, 1943, T HE ASSESSEE AGREED TO SELL THE PROPERTY TO ONE SAHA. AFTER SUBSTITUTING ITSELF AS PLAINTIFF IN THE EJECTMENT SUIT, THE ASSESSEE OBTAINED POSSESSION OF THE FACT ORY PREMISES FROM THE LESSEE ON AUGUST 10, 1943, AND THEREAFTER EXECUTED A SALE DEED ON SEPTEMBER 30, 1943, CONVEYING THE PROPERTY TO SAHA. THE APPELLATE TRIBU NAL FOUND (I) THAT THE ASSESSEE DID NOT CARRY ON BUSINESS IN JUTE AT ANY TIME BEFORE THE PURCHASE OF THE JUTE PRESS, (II) THAT APART FROM EFFECTING CERTAIN REPAIRS AND PUTTING THE FACTORY IN WORKING CONDITION THE APPELLANT DID NOT ATTEMPT TO WORK THE FACTORY, AND (III) THAT A WAREHOUSE OR WAREHOUSES WERE DEMOLISHED BY T HE APPELLANT BUT SOLD AS PART OF THE PROPERTY. ON THESE FACTS IN WAS HELD A S UNDER:- HELD, ON THE FACTS, THAT THE PURCHASE AND SALE OF THE PROPERTY WAS NOT AN ADVENTURE IN THE NATURE OF TRAD E WITHIN THE MEANING OF SECTION 2(4) AND THE PROFIT REALISED THEREFROM WAS NOT TAXABLE UNDER SECTION 10 OF THE INDIAN INCO ME-TAX ACT, 1922. THE FACTS THAT THE APPELLANT MADE A PROF ITABLE BARGAIN WHEN IT PURCHASED THE PROPERTY AND THAT IT HAD A DESIRE TO SELL THE PROPERTY IF A FAVOURABLE OFFER W AS FORTHCOMING COULD NOT WITHOUT OTHER CIRCUMSTANCES J USTIFY AN 11 INFERENCE THAT THE APPELLANT INCLUDED BY PURCHASING THE PROPERTY TO START A VENTURE IN THE NATURE OF TRADE. IT IS FOR THE REVENUE TO ESTABLISH THAT THE PROFIT EARNED IN A TRANSACTION IS WITHIN THE TAXING PROVISION AND IS O N THAT ACCOUNT LIABLE TO BE TAXED AS INCOME. THE NATURE OF THE TRANSACTION MUST BE DETERMINED ON A CONSIDERATION O F ALL THE FACTS AND CIRCUMSTANCES WHICH ARE BROUGHT ON THE RE CORD OF THE INCOME-TAX AUTHORITIES. THUS, IT IS CLEAR THAT DESPITE THE FACT THAT ASSESS EE BEING A BUSINESSMAN AND PURCHASED SOME RIGHT IN A COMPANY WHICH WAS ENGAGED IN THE JUTE PROCESSING, IT WAS ULTIMATELY HELD THAT IT WAS NOT A CASE OF AN AD VENTURE IN THE NATURE OF TRADE. WE FAIL TO UNDERSTAND HOW REVENUE TAKES ASSISTANCE FROM THIS DECISION. 24. BEFORE US, LD. DR HAS ALSO RELIED ON THE DECISI ON OF IN THE CASE OF G. VENKATASWAMI NAIDU & CO. V CIT (SUPRA). IN THAT C ASE THE ASSESSEE-FIRM WHICH ACTED AS MANAGING AGENTS PURCHASED, FOR A TOTAL CON SIDERATION OF RS. 8,713, FOUR CONTIGUOUS PLOTS OF LAND ADJACENT TO THE PLACE WHER E THE MILLS OF THE COMPANY MANAGED BY IT WERE SITUATED. THE FIRST PURCHASE WAS MADE IN OCTOBER, 1941, IN THE NAME OF A BENAMIDAR COVERING LAND MEASURING ABO UT 28 CENTS AND THE SECOND AND SUBSEQUENT PURCHASES WERE MADE IN NOVEMBER, 194 1, JUNE, 1942, AND NOVEMBER, 1942, THE PLOTS OF LAND MEASURING ABOUT 2 ACRES 79 CENTS, 28 CENTS AND 1 ACRE AND 90 CENTS, RESPECTIVELY. AS LONG AS T HE ASSESSEE WAS IN POSSESSION OF THE LANDS IT MADE NO EFFORT TO CULTIVATE THEM OR ERECT ANY SUPERSTRUCTURE ON THEM BUT ALLOWED THEM TO REMAIN UNUTILIZED EXCEPT F OR THE RENT RECEIVED FROM THE HOUSE WHICH EXISTED ON ONE OF THE PLOTS. THE AS SESSEE SOLD THESE LANDS TO THE COMPANY MANAGED BY IT IN TWO LOTS IN SEPTEMBER AND NOVEMBER, 1947, FOR A TOTAL CONSIDERATION OF RS. 52,600. THE QUESTION WAS WHETHER THE SUM OF RS. 43,887 BEING THE EXCESS REALISED BY THE ASSESSEE B Y THE TWO SALES OVER ITS PURCHASE PRICE WAS ASSESSABLE TO INCOME-TAX. THE AP PELLATE TRIBUNAL REJECTED 12 THE CONTENTIONS OF THE ASSESSEE THAT THE PROPERTIE S WERE BOUGHT AS AN INVESTMENT AND THAT THE PLOTS WERE ACQUIRED FOR BUILDING TENEM ENTS FOR THE LABOURERS OF THE MILLS AS WELL AS THE ALTERNATIVE CONTENTION THAT TH E MANAGED COMPANY DESIRED TO PURCHASE THE PLOTS ON ACCOUNT OF AN AWARD OF AN IND USTRIAL TRIBUNAL RECOMMENDING THAT THE COMPANY SHOULD PROVIDE TENEME NTS FOR ITS LABOURERS, AND HELD THAT SINCE THE APPELLANT WAS IN A POSITION TO INFLUENCE THE DECISION OF THE MANAGED COMPANY TO PURCHASE THE PROPERTIES, THE PLO TS WERE PURCHASED BY THE APPELLANT WHOLLY AND SOLELY WITH THE IDEA OF SELLIN G THEM AT A PROFIT TO THE COMPANY. THE TRIBUNAL, THEREFORE, CAME TO THE CONCL USION THAT THE AMOUNT WAS NOT A CAPITAL ACCRETION BUT WAS A GAIN MADE IN AN A DVENTURE IN THE NATURE OF BUSINESS AND WAS THEREFORE, TAXABLE. ON A REFERENCE , THE HIGH COURT HELD THAT THE TRANSACTION WAS AN ADVENTURE IN THE NATURE OF TRADE AND THAT THE DEPARTMENT WAS JUSTIFIED IN TAXING THE AMOUNT. HOWEVER, ON APPEAL TO THE SUPREME COURT IN THESE FACTS IT WAS HELD AS UNDER:- HELD, ON THE FACTS, THAT THE APPELLATE TRIBUNAL WA S RIGHT IN INFERRING THAT THE APPELLANT KNEW THAT IT WOULD BE ABLE TO SELL THE LANDS TO THE MANAGED COMPANY WHENEVER IT THOUGH T IT PROFITABLE SO TO DO; THAT THE APPELLANT PURCHASED T HE FOUR PLOTS OF LAND WITH THE SOLE INTENTION OF SELLING TH EM TO THE MILLS AT A PROFIT WHICH INTENTION RAISED A STRONG P RESUMPTION IN FAVOUR OF THE VIEW TAKEN BY THE TRIBUNAL; AND TH AT THE HIGH COURT WAS RIGHT IN HOLDING THAT THE TRANSACTION IN QUESTION WAS AN ADVENTURE IN THE NATURE OF TRADE. FROM THE ABOVE, IT EMERGES THAT ASSESSEE ALONG WITH SOME BENEMI HOLDERS PURCHASED FOUR PLOTS WHICH WERE CONTIGUOUS TO THE M ILLS OF THE COMPANY WHICH WERE MANAGED BY THE ASSESSEE, THEREFORE, IT WAS CLE AR THAT ASSESSEE WAS KNOWING BEFORE HAND THAT THIS LAND WOULD BE REQUIRED BY THE ASSESSEE AND THAT IS WHY IT WAS ULTIMATELY HELD CONFIRMING THE DECISION OF APPE LLATE TRIBUNAL THAT ASSESSEE HAD PURCHASED THE LAND WITH THE SOLE INTENTION OF S ELLING THEM TO THE MILLS AND THEREFORE, THE SAME WAS AN ADVENTURE IN THE NATURE OF TRADE. THE FACTS OF THE 13 CASE ARE QUITE DISTINGUISHABLE FROM THE FACTS IN TH E CASE BEFORE US. THE ASSESSEE HAS MERELY INHERITED THE LAND AND IT CANNOT BE SAID THAT THIS LAND WAS ACQUIRED WITH A CLEAR MOTIVE OF SELLING THE SAME ON PROFIT T O A KNOWN PERSON. 25. IN THE CASE OF DCIT V GOPAL RAMNARAYAN KASAT 328 ITR 556 (BOM), T HREE BROTHERS ALONG WITH AN ADVOCATE PURCHASED CERTAIN A GRICULTURAL LAND BETWEEN 1992 AND 1998. THE LAND WAS ACQUIRED IMMEDIATELY T HEREAFTER BY THE STATE GOVT AND ASSESSEE RECEIVED COMPENSATION / ENHANCED COMP ENSATION. THE ASSESSING OFFICER OBSERVED THAT ASSESSEE DID NOT HAVE ANY INT ENTION TO HOLD THIS LAND AND CULTIVATED THE SAME, THEREFORE, SURPLUS RECEIVED BY THE ASSESSEE IN RESPECT OF THIS LAND WAS HELD TO BE TAXABLE AS BUSINESS INCOME TERM ING THE TRANSACTION AS AN ADVENTURE IN THE NATURE OF TRADE. ON THESE FACTS, I T WAS HELD AS UNDER;- HELD, (I) THAT FROM THE MATERIAL PLACED ON RECORD, ON THE BASIS OF WHICH THE THREE AUTHORITIES HAD CONCURRENT LY HELD THAT THE TRANSACTIONS WERE 'ADVENTURE IN THE NATURE OF TRADE', IT COULD CLEARLY BE INFERRED THAT THE ASSESSEES WER E INVOLVED IN A SERIES OF TRANSACTIONS OF PURCHASING LANDS WHI CH WERE NOTIFIED OR LIKELY TO BE NOTIFIED FOR ACQUISITION B Y THE GOVERNMENT. THE TRANSACTIONS WERE NOT ONLY PERTAINI NG TO THE JALGAON DISTRICT BUT ALSO AURANGABAD DISTRICT, WHIC H WAS FAR AWAY FROM THE PLACE OF RESIDENCE OF THE ASSESSEES. THERE WAS NO PERVERSITY IN THE FINDING OF FACT RECORDED BY TH E ASSESSING OFFICER AND CONFIRMED BY THE COMMISSIONER (APPEALS) AND THE TRIBUNAL, THAT THE TRANSACTIONS WERE 'ADVENTURE IN THE NATURE OF TRADE' AND THE GAINS THEREFROM WERE CHARGEABLE T O TAX UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PR OFESSION'. AGAIN THE FACTS ARE QUITE DISTINGUISHABLE BECAUSE A SSESSEE WAS INVOLVED IN PURCHASING OF LAND IN SERIES OF TRANSACTIONS WHICH WERE ALREADY NOTIFIED OR LIKELY TO BE NOTIFIED BY THE GOVERNMENT FOR ACQUISITION. THESE FACTS ARE TOTALLY DISTINGUISHABLE FROM THE FACTS IN THE CASE BEFORE U S. 14 26. COMING TO THE CASES RELIED ON BY THE LD. COUNSE L FOR THE ASSESSEE, WE FIND THAT IN THE CASE OF KAUR SINGH V CIT 44 ITR 756 (P& H). THE HON'BLE PUNJAB & HARYANA HIGH COURT WAS CONCERNED WITH A CASE WHERE THE ASSESSEE ALONGWITH HIS TWO BROTHERS PURCHASED TWO BUNGALOWS. ONE BUNGALOW WITH 8 BIGHAS OF LAND WAS PURCHASED IN 1965 AND THE OTHER BUNGALOW WITH 1 74 KANALS OF LAND WAS PURCHASED IN 1967. BOTH THE BUNGALOWS WERE RENTED O UT BY THE CO-OWNERS. THE ASSESSEE, INSTEAD OF DECLARING HIS INCOME FROM PROP ERTY AT 1/3RD OF THE TOTAL AMOUNT, CLAIMED THAT HIS SHARE IN THE INCOME WAS 1/ 9TH, BECAUSE IN HIS 1/3RD SHARE THERE WERE 3 CO-OWNERS, VIZ., THE ASSESSEE HI MSELF AND HIS TWO SONS. IN SUPPORT OF THE CLAIM THE ASSESSEE PRODUCED THE DECR EES PASSED BY THE CIVIL COURT IN THE SUITS FILED BY THE ASSESSEE'S SONS AGAINST H IM. THE ITO REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE DECREES HAD BEEN PASSED BY THE CIVIL COURT AFTER THE PREVIOUS YEAR FOR THE RELEVANT ASSE SSMENT YEAR. THE ITO ALSO FOUND THAT OUT OF THE AGRICULTURAL LAND OF ABOUT 65 BIGHAS ATTACHED TO ONE OF THE BUNGALOWS, A BIG PIECE OF LAND HAD BEEN CONVERTED I NTO CERTAIN PLOTS OUT OF WHICH SEVEN PLOTS WERE SOLD DURING THE RELEVANT PRE VIOUS YEAR FOR A CONSIDERATION OF RS. 18,500. THE ITO, THEREFORE, HE LD THAT THE ASSESSEE HAD ENTERED INTO AN ADVENTURE IN THE NATURE OF TRADE AN D ADDED A SUM OF RS. 7,000 AS THE ASSESSEE'S INCOME. THE APPELLATE ASSISTANT COMM ISSIONER DELETED THE ADDITION ON THE GROUND THAT THE ASSESSEE HAD MADE O NLY AN INVESTMENT IN THE PURCHASE OF THE PROPERTY AND IF THERE WAS ANY ACCRE TION ON THE SALE OF A PART OF SUCH INVESTMENT, SUCH ACCRETION, IF ANY, COULD NOT BE TREATED AS THE ASSESSEE'S INCOME. ON APPEAL BOTH BY THE ASSESSEE AND THE REVE NUE, THE TRIBUNAL UPHELD THE ADDITION OF THE SUM OF RS. 7,000 AS INCOME OF T HE ASSESSEE FROM AN ADVENTURE IN THE NATURE OF TRADE. THE TRIBUNAL ALSO FOUND THAT THE ASSESSEE WAS THE OWNER OF L/3RD SHARE IN THE PROPERTY ALONG WITH THE AGRICULTURAL LANDS ATTACHED TO THEM. 27. ON THE ABOVE FACTS IT WAS HELD AS UNDER:- 15 HELD, (I) THAT THE TRIBUNAL HAD TAKEN INTO CONSID ERATION THE DECREES AND AWARDS PASSED BY THE CIVIL COURT AN D HAD COME TO THE CONCLUSION THAT THE ASSESSEE HAD FAILED TO PROVE THAT HIS TWO SONS ALSO HAD A SHARE IN HIS 1/3 RD SHARE. THE FINDING OF THE TRIBUNAL WAS JUSTIFIED. (II) THOUGH EVEN A SINGLE VENTURE MAY BE REGARDED A S A TRADE OR BUSINESS, YET THERE HAVE TO BE CIRCUMSTANC ES WHICH MAY GIVE RISE TO SUCH A CONCLUSION. NO HARD A ND FAST RULE CAN BE LAID DOWN. THE DECISION OF A CASE MUST TURN ON ITS OWN FACTS. FOR ARRIVING AT THE FINDING THAT THE TRANSACTION WAS AN ADVENTURE IN THE NATURE OF TRADE , THE TRIBUNAL WAS MAINLY INFLUENCED BY THE FACT THAT OUT OF THE LAND ATTACHED TO ONE OF THE BUNGALOWS, 42 PLOTS HAD BEEN EARMARKED FOR SALE, THAT, IN THE RELEVANT YEAR, SEV EN PLOTS WERE SOLD AND THAT ADVANCES HAD BEEN RECEIVED IN RE SPECT OF OTHER PLOTS. ON THE BASIS OF THESE FACTS ALONE, NO INFERENCE COULD BE DRAWN THAT THE TRANSACTION WAS A VENTURE IN THE NATURE OF TRADE. THE ASSESSEE HAD PU RCHASED THE PROPERTY IN THE YEAR 1967 AND THE REVENUE HAD N OT BROUGHT ANY EVIDENCE TO SHOW THAT AT THE TIME OF PU RCHASE, THE ASSESSEE HAD AN INTENTION TO SELL THE PROPERTY. THE MERE FACT OF CARVING OUT THE PLOTS IN A PORTION OF THE LAND, WITHOUT PROOF OF ANYTHING MORE, COULD NOT GIVE RISE TO THE CONCLUSION THAT THE TRANSACTION WAS AN ADVENTURE IN THE NATURE OF TRADE. THEREFORE, THE TRIBUNAL WAS NOT RI GHT IN HOLDING THAT THE INCOME DERIVED BY THE ASSESSEE FRO M THE SALE OF PLOTS WAS FROM AN ADVENTURE IN THE NATURE O F TRADE. THUS, IT IS CLEAR FROM THE ABOVE DOCUMENTARY EVIDEN CE THAT MERE SELLING OF THE HUGE CHUNK OF LAND IN SMALLER PLOTS BY DIVIDING THE LAND INTO SMALLER PLOTS WITHOUT DOING ANYTHING FURTHER CANNOT BE TERMED AS AN ADVENTURE IN THE NATURE OF TRADE. THIS DECISION HAS BEEN FOLLOWED BY HON'BLE P UNJAB & HARYANA HIGH COURT IN THE CSAE OF CIT V RAJA MALVINDER SINGH (SUPRA). IN THAT CASE THE ASSESSEE WAS OWNING A RESIDENTIAL HOUSE WHICH WAS A SEPARATE BUI LDING IN PATIALA KNOWN AS 16 LILA BHAWAN. THIS BUILDING WAS CONSTRUCTED BY GR AND FATHER OF THE ASSESSEE LATE MAHARAJA BHUPINDER SINGH IN 1925 AND GIFTED TO THE ASSESSEE BY HIS LATE FATHER MAJARAJA YADVINDRA SINGH VIDE DEED OF GIFT D ATED 10.8.1961. A PART OF THE BUILDING WAS SOLD IN ASSESSMENT YEARS 1977-78 T O 1979-80 WHICH WAS ACCEPTED BY THE REVENUE AS CAPITAL ASSET. THEREAFT ER BECAUSE OF THE MULTISTORY BUILDING COMING UP IN THE AREA ALREADY SOLD AND ALS O BY NOTIFICATION THE AREA WAS DECLARED AS COMMERCIAL. IN THESE CIRCUMSTANCES, TH E ASSESSEE DECIDED TO SELL THE PROPERTY IN QUESTION AND BUILD A NEW COMMERCIAL ARE A. HE OBTAINED APPROVAL FOR COMMERCIAL HOUSE OF THE PROPERTY AND AUTHORIZE ONE SHRI RADHEY SHYAM FOR SALE OF SAID PROPERTY. THE ASSESSING OFFICER DID NOT DI SPUTE THAT ASSETS SO HELD AND SOLD WAS ANCESTRAL PROPERTY AND WAS INITIALLY A CAP ITAL ASSET. HOWEVER, HE FURTHER HELD THAT SINCE THE ASSESSEE CONVERTED HIS RESIDENT IAL HOUSE INTO COMMERCIAL PROPERTY AND ALSO EARMARKED 42% OF THE AREA FOR ROA DS AND SOLD THE SAME BY HER SERVICES AND AS PROPERTY DEALER, THE ASSESSEE HAD C ONVERTED THE CAPITAL ASSETS INTO STOCK IN TRADE AND THEREFORE, THE PROCEEDS WER E TAXED UNDER THE HEAD BUSINESS INCOME. THE TRIBUNAL ALLOWED RELIEF BY F OLLOWING THE DECISION OF KAUR SINGH V CIT (SUPRA). THE HON'BLE HIGH COURT C ONFIRMED THE DECISION OF THE TRIBUNAL BY FOLLOWING PARA:- WE HAVE HEARD LEARNED COUNSEL FOR THE REVENUE-APPE LLANT AT A CONSIDERABLE LENGTH. ON 21.4.2010, WHEN THE MATTE R CAME UP FOR CONSIDERATION WE HAD ADJOURNED THE HEARING T O ENABLE THE LEARNED COUNSEL TO PRODUCE ANY LAW SHOWING THAT IN THE FACTS AND CIRCUMSTANCES OF THIS CASE, THE PROPERTY BELONGING TO THE ASSESSEE-RESPONDENT COULD BE ASSESSED AS BU SINESS INCOME OR IT WOULD CONTINUE TO ENJOY THE STATUS OF CAPITAL ASSET AND ASSESSABLE AS LONG TERM CAPITAL GAIN. MS. URVASHI DHUGGA HAS NOT BEEN ABLE TO SUBSTANTIATE HE R ARGUMENT BY CITING ANY VIEW WHICH MAY BE APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. HOWEVE R, SHE CITED THE VIEW OF A DIVISION BENCH OF ALLAHABAD HIG H COURT RENDERED IN THE CASE OF I.T.O. V. RANI RATNESH KUMA RI, [1980] 123 ITR 343. THE AFORESAID JUDGMENT WOULD NOT BE AP PLICABLE 17 BECAUSE IN THAT CASE THE ASSESSEE HAD PURCHASED THE PROPERTY AND RE-SOLD THE SAME AFTER DEVELOPING IT. THERE WAS FINDING OF FACT WITH REGARD TO FINANCIAL INTENTION OF THE ASSE SSEE WHO HAD PURCHASED THE LAND TO IMPROVE AND DEVELOP IT AN D THEN SOLD. THEREFORE, WE DO NOT FEEL PERSUADED BY THE SU BMISSION MADE BY MS. DHUGGA. THE APPEALS DO NOT MERIT ADMISS ION AS NO QUESTION OF LAW, MUCH LESS ANY SUBSTANTIVE QUEST ION OF LAW WOULD ARISE. THE MATTER, IN FACT, SEEMS TO BE COVER ED AGAINST THE REVENUE BY THE VIEW TAKEN BY THIS COURT IN KAUR SINGHS CASE (SUPRA). ACCORDINGLY, THESE APPEALS FAIL AND T HE SAME ARE DISMISSED. THUS, DESPITE THE FACT THAT THE RESIDENTIAL HOUSE P REMISES WAS GOT CONVERTED INTO COMMERCIAL AREA AND EVEN SOME AREA WAS EARMARKED FO R ROADS EVEN THEN THE HON'BLE HIGH COURT HELD THAT THE SAME CANNOT BE HEL D AS ADVENTURE IN THE NATURE OF TRADE. THE CASE OF THE ASSESSEE IS ON MUCH BETT ER FOOTING BECAUSE THE USE OF LAND WAS NEVER GOT CONVERTED AND NO DEVELOPMENT SUC H AS ROADS WAS DONE BY THE ASSESSEE. 28. THE NEXT CASE RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE IS OF SUSHILA DEVI JAIN (SUPRA). IN THAT CASE THE ASSESSEE HAD I NCLUDED A PIECE OF AGRICULTURAL LAND. SOME PART OF THE LAND WAS SOLD FOR A CONSIDE RATION OF RS. 40 LAKHS AND ASSESSEE OFFERED THE SAME UNDER THE HEAD LONG TERM CAPITAL GAINS. HOWEVER, THE ASSESSING OFFICER DID NOT ACCEPT HER PLEA AND H ELD THAT ASSESSEE HAD SOLD SOME PIECES OF LAND TO DIFFERENT CONCERNS AND, THER EFORE, THERE WAS A PROFIT MOTIVE IN ACQUIRING THE LAND AND SELLING THE SAME AND THE INCOME WAS TAKEN AS ARISING FROM THE TRADE. ON THESE FACTS IT WAS H ELD AS UNDER:- HELD, THAT WHAT WAS NECESSARY WAS TO FIND OUT THE INTENTION OF THE ASSESSEE AT THE TIME OF THE PURCHASE OF LAND . IN THE INSTANT CASE, THE LAND WAS NEVER PURCHASED BY HER. SHE ACQUIRED THE SAME ON THE BASIS OF A WILL ON THE DEA TH OF HER HUSBAND. SHE SOLD THE SAME IN PARCELS BECAUSE THE H UGE AREA 18 COULD NOT BE SOLD IN ONE TRANSACTION. SUCH AN ACTIV ITY COULD NOT AMOUNT TO TRADE OR BUSINESS WITHIN THE MEANING OF THE ACT. NO SUBSTANTIAL QUESTION OF LAW AROSE. FROM THE ABOVE, IT IS CLEAR THAT PROFIT MOTIVE CAN NOT BE ATTRIBUTED WHEN THE LAND HAS BEEN INHERITED. IT IS ALSO IMPORTANT TO NOTE THAT IT IS NOT POSSIBLE TO SELL HUGE AREA AS A CHUNK OF LAND TO THE BUYER EVEN IF T HE ASSESSEE HAS SOLD SUCH LAND IN SMALLER PIECES, IT CANNOT BE SAID THAT SAME IS T O BE TREATED AS AN ADVENTURE IN THE NATURE OF TRADE. 29. THE LAST JUDGMENT RELIED ON BY THE LD. COUNSEL IS THAT OF CIT V SHASHI KUMR AGGARWAL. THIS JUDGMENT IS ALSO SIMILAR TO TH E DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS S USHILA DEVI JAIN BECAUSE IN THIS CASE ALSO THE ASSESSEE HAS INHERITED SAME L AND WHICH WAS SOLD IN SMALL PIECES. FROM THE ABOVE DISCUSSION, IT BECOMES CLEA R THAT SINCE THE ASSESSEE HAS NOT DONE ANY DEVELOPMENT, THE USAGE OF LAND WAS NOT CONVERTED, THE ASSESSEE IS NOT A BUSINESSMAN AND ALL OTHER FACTORS, WE ARE OF THE OPINION, THAT THIS IS A SIMPLE CASE OF SALE OF AN ASSET, THEREFORE, THE SAM E IS REQUIRED TO BE TAXED UNDER THE HEAD CAPITAL GAINS. THEREFORE, WE SET ASIDE T HE ORDER OF LD. CIT(A) AND DIRECT THE ASSESSING OFFICER TO ASSESS THE INCOME F ROM THE SALE OF LAND UNDER THE HEAD CAPITAL GAIN. 30. GROUND NO.4: AFTER HEARING BOTH THE PARTIES, W E FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICE D THAT THE ASSESSEE HAS CLAIMED EXEMPTION U/S 54B OF THE ACT. ACCORDING TO HIM THIS EXEMPTION IS AVAILABLE IF THE LAND WHICH HAS BEEN SOLD WAS BEIN G USED IN THE IMMEDIATELY PRECEDING TWO YEARS BEFORE THE TRANSFER BY THE ASSE SSEE OR HIS PARENT FOR AGRICULTURAL PURPOSES. HE OBSERVED THAT LAND SOLD BY THE ASSESSEE WAS NOT AGRICULTURAL LAND AND WAS LOCATED WITHIN THE MUNICI PAL LIMITS. NO AGRICULTURAL OPERATION WAS BEING PERFORMED ON THE LAND. THE ASSE SSEE DESPITE MANY 19 OPPORTUNITIES COULD NOT BRING ANY EVIDENCE TO SHOW THAT LAND WAS USED FOR AGRICULTURAL PURPOSES. IT WAS ALSO OBSERVED THAT M AJORITY OF THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE WAS FROM THE LAND BELONGING TO THE ASSESSEE IN THE DISTRICT OF YAMUNANAGAR. IN THIS BACKGROUND, E XEMPTION U/S 54B WAS DENIED. 31. ON APPEAL, THE LD. CIT(A) CONFIRMED THE DENIAL OF DEDUCTION BECAUSE THE INCOME FROM SALE OF LAND WAS UNDER THE HEAD BUSIN ESS INCOME. 32. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT LAND WAS INHERITED BY THE ASSESSEE AS AGRICULTURAL LAND AND WAS ALSO U SED FOR AGRICULTURAL PURPOSES. HOWEVER, ON A SPECIFIC QUERY BY A BENCH, WHETHER HE HAS ANY EVIDENCE TO SHOW THAT LAND WAS USED FOR AGRICULTURAL PURPOSES, HE AD MITTED THAT THERE WAS NO EVIDENCE TO SHOW THAT LAND WAS USED FOR AGRICULTURA L PURPOSES. 33. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT W HEN LAND WAS NOT BEING USED FOR AGRICULTURAL PURPOSES, THEN EXEMPTION U/S 54B IS NOT AVAILABLE. 34. AFTER CONSIDERING THE RIVAL SUBMISSIONS CAREFUL LY, WE FIND THAT NO EVIDENCE WAS PRODUCED BEFORE ASSESSING OFFICER OR C IT(A) TO PROVE THAT LAND WHICH WAS SOLD WAS BEING USED FOR AGRICULTURAL PURP OSES. EVEN BEFORE US, RATHER IT WAS ADMITTED THAT THERE IS NO EVIDENCE TO SHOW T HAT LAND WAS BEING USED FOR AGRICULTURAL PURPOSES, THEREFORE, IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT LAND WAS BEING USED FOR AGRICULTURAL PURPOSES, EXEM PTION U/S 53B HAS BEEN RIGHTLY DENIED BY THE LOWER AUTHORITIES. ACCORDING LY, WE CONFIRM THE ORDER OF LD. CIT(A). 35. GROUND NO.5: AFTER HEARING BOTH THE PARTIES, W E FIND THAT DURING ASSESSMENT PROCEEDINGS THE ASSESSEE WAS ASKED TO GI VE DETAILS OF VARIOUS BANK 20 ACCOUNTS AND ALSO NARRATIONS OF THE BANK ACCOUNT. T HE DETAILS WERE FILED AS UNDER:- S.NO. BANK NAME & A/C NO. NAME OF THE A/C HOLDER CHEQUE DEPOSITED CASH DEPOSITED TOTAL REMARKS 1 CENTRAL BANK OF INDIA (7481) MRS. SWARANJIT KAUR & SH. BALBIR 25,20,000 30,08,000 55,28,000 DEPOSITS FROM SALE OF LAND IN CASH & CHEQUES 2 KARNATAKA BANK LTD. (1462500100240001) SH. BALBIR SINGH & MRS. SWARAJIT KAUR 22,22,000 37,31,800 59,53,800 DEPOSITS FROM SALE OF LAND IN CASH & CHEQUES 3 KARNATAKA BANK LTD. PANCHKULA (6082500100218501) SH. BALBIR SINGH 51,20,007 1,05,56,700 1,56,76,707 DEPOSITS FROM SALE OF LAND IN CASH & CHEQUES 4 ICICI BANK LTD. (001301043473) MRS. SWARANJIT KAUR & SH. BALBIR SINGH 12,71,410 18,12,290 30,83,700 DEPOSITS FROM SALE OF LAND IN CASH & CHEQUES 5 PUNJAB NATIONAL BANK (3956000101010420) SH. BALBIR SINGH & MRS. SWARANJIT KAUR 3,00,000 DEPOSITS IN CHEQUE 6 STATE BANK OF PATIALA (01170006466) SH. BALBIR SINGH & MRS. SWARANJIT KAUR 18,91,574 2,86,280 21,77,854 DEPOSIT OF AGRICULTURAL PROCEEDS FROM THE ABOVE, THE ASSESSING OFFICER ANALYZED THE DETAILS AND WAS OF THE OPINION THAT THERE WAS NO SOURCE OF DEPOSITS TO THE EXTENT OF RS. 28,76,224/- BY THE FOLLOWING :- 1. NONE OF THE BANK ACCOUNTS ARE IN THE NAME OF M/S BALBIR SINGH (HUF) OR SH. BALBIR SINGH KARTA. ALL THE BANK ACCOUNTS WERE IN THE NAME OF SH. BALBIR SINGH (INDIVIDUAL) O R IN JOINT NAME WITH HIS WIFE. 2. AS PER THE EXPLANATION OFFERED BY THE COUNSEL OF THE ASSESSEE THAT IN BANK ACCOUNTS FROM S.NO. 1-4 THE M ONEY FROM THE SALE OF LAND IN BALTANA HAS BEEN DEPOSITED AND THE BANK 21 ACCOUNT IN THE STATE BANK OF PATIALA THE SALE PROCE EDS FROM AGRICULTURAL PROCEEDS ARE DEPOSITED. 3. THE LAND THAT HAS BEEN PURCHASED IN VILLAGE BALT ANA AND DISTT. YAMUNANAGAR HAVE BEEN PURCHASED FROM THE FUN DS FROM THESE BANK ACCOUNTS. THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CAS H & CHEQUE DEPOSITS IN THESE BANK ACCOUNTS. THE COUNSEL OF THE ASSESSEE SUBMITTED THAT THE SOURCE OF CHEQUE & CASH DEPOSITS IN BANK ACCOUNT AT SR. NO. 1-5 IS FROM AGRICULTURAL LAND SA LE PROCEEDS. THIS FACT WAS COMPARED TO THE CASH AND CHEQUE DETAILS AS PER THE SALES DEED AND AGREEMENT SUBMITTED. AS PER REGISTRIES SUB MITTED WHICH FORMS ANNEXURE C TO THE ORDER THE CASH AND CHEQUE C OMPONENT IS RS. 1,63,04,566/- AND RS. 75,41,417/- RESPECTIVELY. AS PER THE AGREEMENT TO SELL DATED 29.04.2003 (COPY OF THE AGR EEMENT FORMS ANNEXURE E TO THE ORDER) THE ASSESSEE HAS RECEIVED RS. 10,00,000/- IN CASH AND RS. 5,00,000/- IN CHEQUE DURING THE YEA R. LATER ON 24.12.09, THE COUNSEL OF THE ASSESSEE SUBMITTED A L ETTER FROM SH. RAOVINDER SINGH THAT HE HAD MADE PAYMENT OF RS. 28, 20,000 BY CHEQUE AND RS. 30,08,000/- BY CASH FOR PURCHASE OF LAND FROM SH. BALBIR SINGH IN VILLAGE- BALTANA BUT IN THE ABSENCE OF ANY RECEIPT/AFFIDAVIT/REGISTRY/POWER OF ATTORNEY, THE E XPLANATION REGARDING CASH COMPONENT CANNOT BE ACCEPTED. ONLY C ASH PAID OF RS. 10,00,000/- AS PER THE AGREEMENT AS PER THE AGR EEMENT IS BEING ACCEPTED. HOWEVER, AS PER THE BANK ACCOUNTS AT S.NO . 1-5 THE TOTAL CHEQUE DEPOSIT ARE FOR RS. 1,14,33,417/- AND CASH D EPOSIT ARE FOR RS. 1,91,08,790/-. EVEN IF WE ACCEPT THE ASSESSEE R EPLY THAT THE CHEQUE & CASH DEPOSITS IN BANK ARE FROM THE SALE OF LAND THERE IS DIFFERENCE OF RS. 18,04,224/- IN CASH DEPOSITED AND RS. 10,72,000/- IN CHEQUE DEPOSITS. THE COUNSEL OF THE ASSESSEE COU LD NOT OFFER ANY EXPLANATION REGARDING THE DIFFERENCE OF RS. 28,76,2 24/- 36. ON APPEAL, THE ASSESSEE MADE DETAILED SUBMISSIO NS BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OB SERVED THAT WORKING GIVEN BY THE ASSESSING OFFICER HAVE TO BE TAKEN AS CORREC T BECAUSE ASSESSEE HAS NOT BEEN ABLE TO CONTROVERT THE SAME. HOWEVER, HE ALSO NOTED THAT A SUM OF RS. 22 13,92,000/- DEPOSITED WAS OUT OF AGRICULTURAL INCOM E AND, THEREFORE, BENEFIT TO THE TUNE OF RS. 8 LAKHS WAS GIVEN. 37. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITT ED THAT ASSESSING OFFICER HAS PERHAPS CONFUSED SOME CHEQUES WITH THE CASH. HE FURNISHED FOLLOWING BREAK-UP:- TOTAL SALE PROCEEDS : RS. 3,05,23,983/- TOTAL DEPOSITS IN THE BANK AS PER ASSESSING OFFICE R : A) BY CHEQUE RS. 1,14,33,417/- B) BY CASH RS. 1,91,08,790/- TOTAL RS. 3,05,42,207/- FROM THE ABOVE, IT BECOMES CLEAR THAT SOURCE OF DEP OSITS WAS SALE OF AGRICULTURAL LAND ONLY. IN ANY CASE PART APART FROM SALE CONSID ERATION OF LAND, THE ASSESSEE WAS ALSO HAVING AGRICULTURAL INCOME OF RS. 35 LAKHS AND ALSO AN ADVANCE OF RS. 13 LAKHS WHICH WAS OFFERED FOR TAXATION. 38. ON THE OTHER HAND, THE LD. DR STRONGLY RELIED O N THE ORDER OF ASSESSING OFFICER AND CIT(A). 39. AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND FO RCE IN THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE. HOWEVER, HE HAS CONVE NIENTLY FORGOTTEN TO POINT OUT THAT WITH SUM OF RS. 30,08,000/- WAS PAID BY WA Y OF CASH FOR PURCHASE OF FRESH AGRICULTURAL LAND AND, THEREFORE, TOTAL SOURC ES HAVE TO BE REDUCED FROM THIS AMOUNT. THIS WHOLE ISSUE REQUIRES DETAILED EXAMINA TION BUT SINCE THE ASSESSEE IS A VERY OLD PERSON, WE ARE OF THE OPINION THAT TH ERE IS NO POINT FOR SENDING THE MATTER BACK TO THE ASSESSING OFFICER, THEREFORE, CO NSIDERING THE OVER ALL CIRCUMSTANCES, WE FURTHER ALLOW A SUM OF RS. 7.5 L AKHS OUT OF AGRICULTURAL INCOME. THIS AMOUNT HAS BEEN WORKED OUT BY US AS U NDER:- 23 SOURCES AVAILABLE: AGRICULTURAL INCOME RS. 35,00,000 ADDITION ON ACCOUNT OF ALLEGED ADVANCES RECEIVED RS. 13,00,000/- TOTAL SOURCES RS. 48,00,000/- AMOUNT UTILIZED BY THE ASSESSEE FOR PURCHASING LAND RS., 30,00,000/- APPROX. NET SOURCES RS. 18,00,000/- RELIEF GRANTED BY CIT(A) RS. 8 LAKHS NET AVAILABLE RS. 10,00,000/-= OUT OF THE ABOVE, THE ASSESSEE MIGHT HAVE INCURRED SOME EXPENSES ALSO AND THEREFORE, CREDIT CAN BE GIVEN ONLY FOR A SUM OF RS . 7.5 LAKHS. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AS SESSING OFFICER TO FURTHER REDUCE THE AMOUNT OF ADDITION ON ACCOUNT OF DEPOSIT S BY 7.5 LAHS. 40. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ITA NO. 1356/CHD/2012:- 41. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUND:- THE LD. CIT(A) HAS ERRED IN FACTS AS WELL AS LAW IN DELETING THE ADDITION IN THE CASE OF SH. BALBIR SINGH (INDL) PREMATURELY WITHOUT WAITING FOR THE ASSESSEE TO ACC EPT THE SAME IN THE HANDS OF SH. BALBIR SINGH (HUF) OR WITH OUT WAITING FOR ANY FINALITY ARRIVED IN APPELLATE PROCE EDINGS BEFORE HIGHER AUTHORITIES. 42. BEFORE US, LD. DR RELIED ON THE ORDER OF ASSESS ING OFFICER. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUPPORTED THE IM PUGNED ORDER. 24 43. AFTER CONSIDERING THE RIVAL SUBMISSIONS, WE FIN D THAT THE LD. CIT(A) HAS ADJUDICATED THIS ISSUE VIDE PARA 5.3 WHICH READS S UNDER:- 5.3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. CO UNSEL. FIRST ISSUE TO BE DECIDED IN THIS CASE IS WHETHER I NCOME ON SALE OF ANCESTRAL LAND IS TO BE ASSESSED IN THE HAN DS OF THE HUF OR INDIVIDUAL. THE ASSESSING OFFICER HAS ASSESS ED INCOME IN THE HANDS OF THE APPELLANT ON PROTECTIVE BASIS. IT IS SEEN THAT THE IMPUGNED LAND WAS ANCESTRAL LAND AND SALE OF ANCESTRAL LAND IS TO BE ASSESSED IN THE HANDS OF AP PELLANT (HUF), EVEN IF THE SALE PROCEEDS ARE DEPOSITED IN T HE INDIVIDUAL BANK ACCOUNT OR SALE PROCEEDS HAVE BEEN UTILIZED FOR PURCHASE OF AGRICULTURAL LAND IN INDIVIDUAL HAN DS. ALSO, THE FACT THAT LAND HAD BEEN SOLD BY SH. BALBIR SING H AND NOT M/S BALBIR SINGH (HUF) AS PER THE REGISTRATION DEED S IS NOT RELEVANT AND THE AMOUNT RECEIVED IS TO BE ASSESSED IN THE HANDS OF M/S BALBIR SINGH (HUF), SINCE IT WAS ON AC COUNT OF SALE OF ANCESTRAL LAND. HENCE, THE ASSESSING OFFICE R IS NOT RIGHT IN MAKING ASSESSMENT OF THE AMOUNT OF SALE OF LAND IN THE HANDS OF THE APPELLANT (HUF) ON PROTECTIVE BASI S, WHICH HAS TO BE ASSESSED ON SUBSTANTIVE BASIS. 44. WE ARE OF THE OPINION THAT LD. CIT(A) HAS CORRE CTLY ADJUDICATED THE ISSUE BECAUSE UNDISPUTEDLY THE ASSESSEE HAS INHERITED THE LAND FROM HIS ANCESTOR, THEREFORE, WE CONFIRM THE ORDER OF LD. CIT(A). 45. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.12.2013. SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 23 RD DECEMBER, 2013 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 25