ACIT, Jaipur V. PRATIMA SANKHLA, Jaipur

ITA 605/JPR/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1998 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 03-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Business income; Search and seizure; Capital receipt
• Section: 54B; 2(14); 69

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES , JAIPUR JH HKKXPUN] YS[KK LNL; ,O JH DQY HKKJR] U;KF;D L NL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHAR AT, JM VK;DJ VIHY LA-@ ITA NO. 605/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2010-11 THE ACIT CENTRAL CIRCLE 1 JAIPUR CUKE VS. SMT. PRATIMA SANKHLA A-3, MOTI LAL ATAAL ROAD JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AGBPS 4131 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY:SHRI VARINDER MEHTA, CIT - DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI P.C. PARWAL, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07/09/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13 /10/2017 VKNS'K@ ORDER PER BHAGCHAND, AM THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-4, JAIPUR DATED 29-03-2016 FOR THE ASSESSMEN T YEAR 2010-11 RAISING FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS . 38,00,050/- MADE ON ACCOUNT OF TRANSACTION MADE IN REAL ESTATE BUSINESS WITHOUT APPRECIATING THE FACT THAT DURING THE YEAR ASSESSEE WAS ACTUALLY ENG AGED IN BUSINESS OF REAL ESTATE. ITA NO. 605/JP/2016 ACIT, CENTRAL CIRCLE-1. JAIPUR VS SMT. PRATIMA SANKHLA, JAIPUR 2 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS .23,07,000/- MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT WITHOUT APPRECIAT ING THE FACT THAT THIS PROPERTY WAS NOT DISCLOSED IN THE BALANCE SHEET. 2.1 IN GROUND NO. 1, THE REVENUE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 38,00,050/- M ADE BY THE AO ON ACCOUNT OF TRANSACTION MADE IN REAL ESTATE BUSINESS WITHOUT APPRECIATING THE FACTS THAT DURING THE YEAR THE ASSESSEE WAS ACT UALLY ENGAGED IN BUSINESS OF REAL ESTATE . BRIEF FACTS OF THE CASE A RE THAT THE AO HELD THAT PROFIT ON SALE OF FLAT AT TILAK NAGAR AND LAND AT V ILLAGE KHATWARA WHICH WERE ACQUIRED IN THE YEAR 1997-98 AND 2005-06 RESPE CTIVELY IS ADVENTURE IN THE NATURE OF TRADE. HE THEREFORE TREATED THE SA LE OF THESE PROPERTIES AS BUSINESS RECEIPT AND ASSESSED THE GAIN OF RS.38,00, 050/- AS BUSINESS INCOME. HE ALSO DID NOT ALLOW THE EXPENSES INCURRED IN CONNECTION WITH PURCHASE/SALE OF THESE ASSETS AND ALSO THE CLAIM O F DEDUCTION U/S 54B ON SALE OF AGRICULTURAL LAND AT VILLAGE KHATWARA. 2.2 IN THE APPELLATE HEARING, THE ASSESSEE HAS TAK EN A SPECIFIC GROUND AS GROUND NO.1 WHEREBY THE ACTION OF THE AO IN HOLD ING THE VARIOUS IMMOVABLE PROPERTIES OWNED BY THE ASSESSEE AND THOS E PURCHASED DURING THE YEAR AS ADVENTURE IN THE NATURE OF TRADE WAS CHALLENGED. THIS GROUND ITA NO. 605/JP/2016 ACIT, CENTRAL CIRCLE-1. JAIPUR VS SMT. PRATIMA SANKHLA, JAIPUR 3 WAS DECIDED BY LD. CIT(A) IN FAVOUR OF THE ASSESSEE AS PER HIS FINDING GIVEN AT PARA 4, PG 18-20 OF THE ORDER. THEREAFTER, THE LD. CIT(A) WITH RESPECT TO THE SALE OF FLAT AT TILAK NAGAR ACCEPTED THE CLAIM OF THE ASSESSEE THAT GAIN ARISING OUT OF DISPOSAL OF THIS FLAT CANN OT BE ASSESSED AS BUSINESS INCOME AND DIRECTED THE AO TO ASSESS THE SAME AS LO NG TERM CAPITAL GAIN. THE LD. CIT(A) ALSO ACCEPTED THE CLAIM OF THE ASSE SSEE WITH RESPECT TO SALE OF AGRICULTURAL LAND AT KHATWARA THAT THE SAME IS SITUATED BEYOND 8 KMS FROM THE MUNICIPAL LIMIT AND DIRECTED THE AO TO ASSESS THE SAME AS CAPITAL RECEIPT NOT CHARGEABLE TO TAX. THE RELEVANT OBSERVATION OF THE LD. CIT(A) ON THE ISSUE IN QUESTION IS AS UNDER:- 4. I HAVE DULY CONSIDERED ASSESSEE'S SUBMISSION A ND CAREFULLY PERUSED THE CASE RECORD. I HAVE ALSO TAKE N A NOTE OF FACTUAL MATRIX OF THE CASE AS WELL APPLICABLE CASE LAWS REL IED UPON BY THE ASSESSEE. THE MAGNITUDE OF TRANSACTION OF PURCHASE, THE NATUR E OF THE COMMODITY, SUBSEQUENT DEALING OF ASSESSEE, THE NATU RE OF ORGANIZATION TO BE EMPLOYED BY THE ASSESSEE AND MANNER OF DISPOS AL MAY BE SUCH THAT TRANSACTION MAY BE STAMPED WITH THE CHARACTER OF TRADING NATURE. IF A PERSON INVEST MONEY IN LAND INTENDING TO HOLD IT, ENJOY ITS INCOME FOR SOME TIME, THEN SALES IT AT PROFIT, IT WOULD BE A C LEAR CASE OF CAPITAL ACCRETION AND NOT PROFIT DERIVED FROM AN ADVENTURE IN NATURE OF TRADE. CASES OF REALIZATION OF INVESTMENT CONSISTING OF PU RCHASE AND RESALE, THOUGH PROFITABLE ARE CLEARLY OUTSIDE THE DOMAIN OF ADVENTURE IN THE NATURE OF TRADE. FURTHER HON'BLE APEX COURT WHILE D ECIDING THE CASE OF S. VENKATASWAMI NAIDU AND CO. (35 ITR 594) HAS GIV EN A ILLUSTRATIVE FACTORS (SUPRA) TO DECIDE A CASE TO BE FIT AS REAL ESTATE TRANSACTION OR NOT ? ITA NO. 605/JP/2016 ACIT, CENTRAL CIRCLE-1. JAIPUR VS SMT. PRATIMA SANKHLA, JAIPUR 4 ON PERUSAL OF ANNEXURE APPENDED WITH THE ASSESSMENT ORDER, IT IS ALSO SEEN THAT THERE ARE 15 TRANSACTIONS OF PURC HASE AND SALE OF IMMOVABLE PROPERTY AMONGST 6 MEMBERS OF THE GROUP O VER A PERIOD OF 6 YEARS.THESE TRANSACTIONS THEREFORE, CANNOT BE SAI D TO BE REGULAR OR FREQUENT OR VOLUMINOUS TO TREAT THE SAME AS ADVENTU RE IN THE NATURE OF TRADE. FURTHER THE TRANSACTION OF ARUNA SANKHLA, HE MANTRAJ SANKHLA AD HARSSHRAJ SANKHLA ARE NOT RELATED TO THE FAMILY OF ASSESSEE AND THEREFORE, IF THESE TRANSACTIONS ARE EXCLUDED, THER E ARE ONLY 6 TRANSACTIONS WHICH RELATE TO THE FAMILY OF ASSESSEE COMPRISING OF THE ASSESSEE PRATIMA SANKHLA, HER SPOUSE SHRI ASHOK KR SANKHALA AND SON AMRITRAJ SANKHLA. FURTHER, HERE IN THIS CASE, ASSESSEE WAS NEVER ENGA GED IN REAL ESTATE BUSINESS AND SHE HAD PURCHASED AGRICULTURAL LAND AT BORAJ IN THE YEAR2004 ALONGWITH OTHER FAMILY MEMBERS, 2.74 BIGHA LAND (RS. S31,57,000/-) AT KHATWARA INDEC. 2004, 8.00 BIGHA L AND AT PHOGADIWALA (RS. 12,93,060/-) IN MAY AUG 2004 AND AGRICULTURAL LAND AT BICHAPURI ON 01-02-2005 BY M/S. SREERAM FAR MS FOR RS. 4,95,000/- IN ASSESSEE'S NAME. ASSESSEE SOLD THE LA ND AT PHOGADIWALA ON 30-11-2004 TO M/S. MEGANAIMUS TRADE AND FINANCE LTD.FOR RS. 36,00,000/-. APART FROM THIS, ASSESSEE WAS ALSO ALL OTTED A FLAT (A 301 PARK VIEW) AT GURGAON BY M/S. PARK VIEW INFRASTRUCT URE (P) LTD.AND ASSESSEE PAID RS. 3,50,875/-. ASSESSEE HAS ALSO BOO KED A FLAT WITH RAHEJA DEVELOPERS AND DURING THE F.Y. RELEVANT TO A .Y. 2005-06 HAD PAID RS. 8,79,986/-. ASSESSEE SOLD THESE FOLLOWING PROPERTIES SUBSEQUENTLY. LAND AT PHAGODIAWALA IN MAY-AUG 2004 RS. 12,93,06 0/- LAND AT KHATWARA IN DEC. 2004 RS. 31,57,000/- RIGHT OF ALLOTMENT OF PARK VIEW FLAT IN A.Y.09-10 RS.52,99,105/- FLAT WITH RAHEJA DEVELOPERS TRANSFERRED TO SMT. SANKHALA IN 2008-09 FOR RS. 38,73,336/- BUT FROM THESE TRANSACTIONS, IT CANNOT BE COMPREHEN DED THAT ASSESSEE WAS INDULGING IN REAL ESTATE BUSINESS. FUR THER EVEN IF WE APPLY 8 ILLUSTRATIVE FACTORS AS PRESCRIBED BY THE HON'BLE APEX COURT IN 35 ITR 594, IT IS SEEN THAT THIS TRANSACTION CANNOT BE TERMED AS REAL ESTATE TRANSACTION. IT IS FACT THAT ASSESSEE'S FAMILY MEMB ERS HAVE MADE AS MANY AS 67 TRANSACTIONS OF PURCHASE AND SALE (REFER ENCE ANNEXURE A ENCLOSED WITH THE ASSESSMENT ORDER). FROM THIS IT C AN NEVER BE ASSUMED THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF REAL ES TATE. ITA NO. 605/JP/2016 ACIT, CENTRAL CIRCLE-1. JAIPUR VS SMT. PRATIMA SANKHLA, JAIPUR 5 FURTHER, ON PERUSAL OF BALANCE SHEET AS ON 31-03-20 10, THE ASSESSEE HAS SHOWN AGRICULTURAL LAND AT KHATWARA & OTHERS AT RS. 19,70,000/- UNDER THE HEAD ASSETS AND THE SAME HAS ALSO BEEN DULY ACKNOWLEDGE BY THE DEPARTMENT FOR A.Y. 2010-11 IN R ETURN FILED U/S 139(1) OF THE ACT FOR THE YEAR. IT IS ALSO SEEN THA T THE FACTS OF THE ASSESSEE'S CASE ARE TOTALLY DIFFERENT FROM THE FACT S OF THE CASE LAWS RELIED UPON BY THE AO, THEREFORE, THE SAME CANNOT B E APPLIED HERE. IT IS ALSO A FACT THAT NO INCRIMINATING DOCUMENT SUGGESTI NG THAT ASSESSEE BEING ENGAGED IN THE BUSINESS OF REAL ESTATE WAS FO UND FROM THE ASSESSEES PREMISES DURING THE SEARCH AND SEIZURE O PERATION. AS AGAINST THIS, THE CONDUCT OF ASSESSEE SHOW THAT ASSESSEE IS AN INVESTOR. THE FOLLOWING CASES RELIED BY THE A.R. ALSO SUPPORT THE CASE OF ASSESSEE. (A) M/S. SKM CONSTRUCTION PVT. LTD (ITAT MUMBAI) 2011-T IOL-470 (B) SAROJ KUMAR MAJUMDAR (SC) (37 ITR 242) (C) JANKI RAM BADHURRAM (SC) (57 ITR 21) (D) MICHAEL A KALLIVAYALIL (KERALA) 102 ITR 202 (E) SAIRAM (2002) (MADRAS) 242 ITR 104 ON SIMILAR FACTS AND CIRCUMSTANCES IN CASE OF SHRI ASHOK SANKHALA (HUSBAND OF ASSESSEE) IN A.Y. 2010-11 (ITA NO.877/2011- 12), HE HAS BEEN TREATED AS INVESTOR, NOT BEING IND ULGED IN THE BUSINESS OF REAL ESTATE. THEREFORE, CONSIDERING ALL THESE FA CTS AND CASE LAWS RELIED UPON THE CLAIM OF ASSESSEE THAT SHE, BEING A N INVESTOR, IS ACCEPTED. ASSESSEE'S APPEAL IN GR NO. 1 IS ALLOWED. FURTHER, IN THIS YEAR, ASSESSEE SOLD THE FLAT AT TI LAK NAGAR FOR RS. 9,75,500/- ON 19-08-2009 WHICH WAS PURCHASED DO ND 6-12-1997 FOR RS. 4,74,450/- RESULTING INTO GAIN OF RS. 5,01, 050/-. THIS FLAT WAS LET OUT FROM WHICH THE ASSESSEE REGULARLY DECLARED RENT AL INCOME. THIS TILAK NAGAR FLAT WAS SOLD AFTER HOLDING THE SAME AB OUT 12 YEARS AND FOR THESE YEARS RENTAL INCOME ON THIS FLAT HAS BEEN DECLARED BY THE ASSESSEE UNDER HOUSE PROPERTY INCOME WHICH WAS ALSO ACCEPTED BY THE AO IN THE RESPECTIVE YEAR. THEREFORE, CONSIDER ING THE INDEXED COST, LONG TERM CAPITAL GAIN OF RS. 69,602/- WAS DECLARED IN THE RETURN BY THE ASSESSEE. ITA NO. 605/JP/2016 ACIT, CENTRAL CIRCLE-1. JAIPUR VS SMT. PRATIMA SANKHLA, JAIPUR 6 FURTHER, THE ASSESSEE ALSO SOLD THE AGRICULTURAL LA ND AT KHATWARA FOR RS. 50,49,000/- ON 02-03.10 WHICH WAS ACQUIRED ON29-09-05 FOR RS. 18,48,000/-(17,50,000+98,000). THE GAIN OF THIS LAND WAS CLAIMED EXEMPT AS IT WAS SITUATED BEYOND 8 KM FROM MUNICIPA L LIMIT. IT IS ALSO A FACT THAT IN THE SEARCH OPERATION COND UCTED AGAINST THE ASSESSEE , NO INCRIMINATING DOCUMENT, WHATSOEVE R, WAS FOUND FORM HER PREMISES TO SUGEST THAT ASSESSEE WAS INDULGED I N REAL ESTATE BUSINESS; WAS FOUND AND SEIZED. AS IN GROUND NO. 1, IT HAS ALREADY BEEN HELD THAT THE PROPERTIES IN QUESTION WERE HELD FOR INVESTMENT, ACCORDINGLY, I DO NOT FIND ANY JUSTIFIABLE REASON T O SUSTAIN AOS ACTION IN TREATING THE SALE OF THESE PROPERTIES AS BUSINES S RECEIPT TO ASSESS THE GAIN OF RS. 38,00,050/- AS BUSINESS INCOME. SINCE, THE AGRICULTURAL LAND AT KHATWARA IS SITUATED BEYOND 8KM FROM THE MUNICIP AL LIMIT, WHICH HAS NOT BEEN DISPUTED BY THE AO, THE GAIN ON SALE O F THESE AGRICULTURAL LAND IS A CAPITAL RECEIPTS, NOT LIABLE FOR TAX. SI NCE THIS GAIN IS NOT LIABLE FOR TAX, THEREFORE, QUESTION OF ALLOWABILITY OF DED UCTION U/S 54B OF THE ACT DOES NOT ARISE. IN VIEW OF THESE FACTS AND CIRC UMSTANCES OF THE CASE, AO IS HEREBY DIRECTED TO ASSESS THE GAIN ON SALE OF PROPERTY AT TILAK NAGAR, UNDER THE HEAD LONG TERM CAPITAL GAIN AN D ON SALE OF AGRICULTURAL LAND AT VILLAGE KHATWARA AS CAPITAL RE CEIPTS NOT CHARGEABLE TO TAX. ASSESSEE'S APPEAL IN GR NO. 2 STANDS ALLOWE D. 2.3 DURING THE COURSE OF HEARING, THE LD. DR RELIED ON THE ORDER OF THE AO. 2.4 ON THE OTHER HAND, THE LD.AR OF THE ASSESSEE SU PPORTED THE ORDER OF THE LD. CIT(A) FOR WHICH THE LD.AR OF THE ASSESSEE FILED THE FOLLOWING WRITTEN SUBMISSION. SUBMISSION:- A. TILAK NAGAR FLAT :- 1. AT THE OUTSET IT IS SUBMITTED THAT DEPARTMENT HAS N OT FILED ANY APPEAL AGAINST THE FINDING OF CIT(A) WHERE HE HAS HELD THAT THAT ASSES SEE HAS HOLD VARIOUS IMMOVABLE PROPERTIES AS INVESTMENT AND THE SAME IS NEITHER AN ADVENTURE IN THE NATURE OF TRADE OR THE BUSINESS STOCK OF THE ASSESS EE. ONCE THIS FINDING IS NOT ITA NO. 605/JP/2016 ACIT, CENTRAL CIRCLE-1. JAIPUR VS SMT. PRATIMA SANKHLA, JAIPUR 7 CHALLENGED, THE SALE OF FLAT UNDER CONSIDERATION CA NNOT BE CONSIDERED AS A BUSINESS TRANSACTION AND THEREFORE THE GROUND OF TH E DEPARTMENT NEEDS TO BE DISMISSED AT THE THRESHOLD. 2. IT IS SUBMITTED THAT THE FLAT AT TILAK NAGAR WAS PU RCHASED BY ASSESSEE ON 06.12.1997 FOR RS.4,74,450/- (PB 58-72) AND SINCE THEN IT WAS LET OUT . THIS FLAT WAS SOLD ON 19.08.2009 FOR RS.9,75,500/- (PB 73-82) . RENTAL INCOME RECEIVED WAS DULY DECLARED UNDER HEAD INCOME FROM HOUSE PRO PERTY AND ACCEPTED BY AO AS UNDER:- ASSESSMENT YEAR RENT FROM FLAT AT TILAK NAGAR SHOWN IN RETURNS 2004-05 80,628/- 2005-06 87,180/- 2006-07 92,638/- 2007-08 99,582/- 2008-09 1,07,050/- 2009-10 1,12,615/- 3. FROM THE ABOVE FACTS IT IS CLEAR THAT ASSESSEE HELD THIS FLAT AS INVESTMENT AND SOLD IT AFTER HOLDING IT FOR ABOUT 12 YEARS. HENCE, IT CANNOT BE PRESUMED THAT THE INVESTMENT MADE IN THIS FLAT WAS WITH AN INTENTION TO SALE THE SAME TO EARN PROFIT. THEREFORE, SUCH INVESTMENT MADE BY THE ASSESSEE IS NOT A BUSINESS TRANSACTION OR A TRANSACTION OF AN ADVENTURE IN THE NATURE OF TRADE AND THE GAIN ARISING ON DISPOSAL OF THIS INVESTMENT CANNOT BE ASSESSED AS BUSINESS INCO ME. RELIANCE IN THIS CONNECTION IS PLACED ON VARIOUS DECISIONS AS MENTIONED AT PG 13-1 5 OF THE ORDER OF CIT(A). B. AGRICULTURAL LAND AT VILLAGE KHATWARA:- 1. THE AGRICULTURAL LAND WAS PURCHASED BY THE ASSESSEE ON 31.05.2005 (PB 83-89) . THE TOTAL COST OF THE LAND INCLUDING THE REGISTRATI ON EXPENSES WAS RS.18,48,000/- (17,50,000+98,000). THIS AGRICULTURAL LAND WAS SOLD ON 02.03.2010 TO SH. AKHEY RAM CHOWDHERY OF VILLAGE BALMUKUNDPURA FOR RS.50,49 ,000/- (PB 90-94). THE LAND WAS USED BY THE ASSESSEE FOR AGRICULTURAL PURP OSE. THE AGRICULTURAL INCOME DECLARED BY THE ASSESSEE IN VARIOUS YEARS IS AS UND ER. ASSESSMENT YEAR AGRICULTURAL INCOME SHOWN IN RETURNS 2004-05 25,000/- 2005-06 1,69,650/- 2006-07 1,50,000/- 2007-08 1,42,616/- 2008-09 1,69,702/- 2009-10 1,73,915/- 2010-11 69,996/- ITA NO. 605/JP/2016 ACIT, CENTRAL CIRCLE-1. JAIPUR VS SMT. PRATIMA SANKHLA, JAIPUR 8 2. FROM THE ABOVE FACTS IT IS CLEAR THAT THIS LAND WAS SOLD BY THE ASSESSEE AFTER HOLDING IT FOR AROUND 4 YEARS AND 9 MONTHS. THE LAN D WAS USED FOR AGRICULTURAL PURPOSE FOR WHICH AGRICULTURAL INCOME WAS DECLARED AND ACCEPTED BY THE AO. THEREFORE, IT CANNOT BE PRESUMED THAT ASSESSEE HELD THIS LAND AS BUSINESS STOCK AND THE GAIN ON SALE OF THIS LAND IS AN ADVENTURE IN TH E NATURE OF TRADE. THE LONG TERM CAPITAL GAIN ON SALE OF THIS LAND WORKS OUT AT RS.2 6,99,028/- [50,49,000-23,49,972 (INDEXED COST)]. THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54B ON THE CAPITAL GAIN ARISING ON SALE OF THIS LAND AS SHE HAS MADE INVEST MENT OF RS.43,57,800/- INCLUDING THE REGISTRATION EXPENSES ON 23/09/2010 (PB 95-104) FOR PURCHASE OF AGRICULTURAL LAND AT VILLAGE KISHANPURA AT TEHSIL SANGANER. THEREFORE, T HE GAIN ON SALE OF THIS LAND IS NOT LIABLE FOR TAX. OTHERWISE ALSO, THIS AGRICULTURAL L AND WAS SITUATED BEYOND 8 KMS. FROM THE MUNICIPAL LIMIT AND THEREFORE IT IS NOT A CAPIT AL ASSET U/S 2(14) OF THE ACT AND HENCE GAIN ARISING ON SALE OF THIS LAND IS EXEMPT F ROM TAX. IN VIEW OF THE ABOVE, THE ORDER OF CIT(A) BE UPHELD BY DISMISSING THE GROUND OF THE DEPARTMENT. 2.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IN THIS CASE, IT IS NOTED THAT THE AO MADE THE ADDITION OF RS. 38,00,050/- IN THE HANDS OF THE ASSESSEE HOL DING IT AS BUSINESS INCOME WHICH IN FIRST APPEAL HAS BEEN DELETED BY TH E LD. CIT(A) BY OBSERVING AS UNDER:- IT IS ALSO A FACT THAT IN THE SEARCH OPERATION COND UCTED AGAINST THE ASSESSEE , NO INCRIMINATING DOCUMENT, WHATSOEVE R, WAS FOUND FORM HER PREMISES TO SUGEST THAT ASSESSEE WAS INDULGED I N REAL ESTATE BUSINESS; WAS FOUND AND SEIZED. AS IN GROUND NO. 1, IT HAS ALREADY BEEN HELD THAT THE PROPERTIES IN QUESTION WERE HELD FOR INVESTMENT, ACCORDINGLY, I DO NOT FIND ANY JUSTIFIABLE REASON T O SUSTAIN AOS ACTION IN TREATING THE SALE OF THESE PROPERTIES AS BUSINES S RECEIPT TO ASSESS THE GAIN OF RS. 38,00,050/- AS BUSINESS INCOME. SINCE, THE AGRICULTURAL LAND AT KHATWARA IS SITUATED BEYOND 8KM FROM THE MUNICIP AL LIMIT, WHICH HAS NOT BEEN DISPUTED BY THE AO, THE GAIN ON SALE O F THESE AGRICULTURAL LAND IS A CAPITAL RECEIPTS, NOT LIABLE FOR TAX. SI NCE THIS GAIN IS NOT LIABLE FOR TAX, THEREFORE, QUESTION OF ALLOWABILITY OF DED UCTION U/S 54B OF THE ACT DOES NOT ARISE. IN VIEW OF THESE FACTS AND CIRC UMSTANCES OF THE CASE, AO IS HEREBY DIRECTED TO ASSESS THE GAIN ON SALE OF PROPERTY AT TILAK ITA NO. 605/JP/2016 ACIT, CENTRAL CIRCLE-1. JAIPUR VS SMT. PRATIMA SANKHLA, JAIPUR 9 NAGAR, UNDER THE HEAD LONG TERM CAPITAL GAIN AN D ON SALE OF AGRICULTURAL LAND AT VILLAGE KHATWARA AS CAPITAL RE CEIPTS NOT CHARGEABLE TO TAX. ASSESSEE'S APPEAL IN GR NO. 2 STANDS ALLOWE D. IT IS ALSO NOTED THAT THE LD. DR COULD NOT CONTROVE RT THE FINDINGS OF THE LD. CIT(A) ON THE ISSUE IN QUESTION. IT IS FURTHER NOTE D THAT IN SEARCH OPERATION, THERE WAS NO INCRIMINATING DOCUMENT AGAI NST THE ASSESSEE WHICH COULD SUGGEST THAT THE ASSESSEE WAS INDULGED IN THE REAL ESTATE BUSINESS. IN THIS VIEW OF THE MATTER, WE FIND NO RE ASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). HENCE, THE GROUND NO. 1 OF THE REVENUE IS DISMISSED. 3.1 IN GROUND NO. 2, THE REVENUE IS AGGRIEVED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 23,07,000/- M ADE BY THE AO ON ACCOUNT OF UNDISCLOSED INVESTMENT WITHOUT APPRECIAT ING THE FACT THAT THIS PROPERTY WAS NOT DISCLOSED IN THE BALANCE SHEET. BR IEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT AS PER THE TRADING ACCOUN T PREPARED BY HIM, THE VALUE OF IMMOVEABLE PROPERTIES HELD BY THE ASSESSEE AS ON 31.03.2010 IS OF RS.1,20,63,114/- WHEREAS AS PER THE STATEMENT OF AFFAIRS FILED BY THE ASSESSEE THE VALUE OF SUCH IMMOVEABLE PROPERTIES IS RS.97,56,114/-. THE AO, THEREFORE, MADE ADDITION OF RS.23,07,000/- U/S 69 OF THE ACT . ITA NO. 605/JP/2016 ACIT, CENTRAL CIRCLE-1. JAIPUR VS SMT. PRATIMA SANKHLA, JAIPUR 10 3.2 IN FIRST APPEAL, THE LD. CIT(A) DELETED THE AD DITION OF RS. 23,07,000/- BY OBSERVING AS UNDER:-. 5.1.3 I HAVE DULY CONSIDERED ASSESSEE'S SUBMISSI ON AND CAREFULLY PERUSED THE CASE RECORD. I HAVE ALSO TAKEN A NOTE O F FACTUAL MATRIX OF THE CASE. HERE IN THIS CASE, AO HAS MADE ADDITION OF RS. 23,0 7,000/- AS UNDISCLOSED INVESTMENT U/S 69 OF THE ACT ON THE GROUND THAT AS ON31-03-2010 ASSESSEE HOLD AGRICULTURE LAND AT RS. 1,20,63,114/- WHERE IN THE BALANCE SHEET IT IS DECLARED AT RS. 97,56,114/-. IT IS ALSO SUBMITTED T HAT WHILE PREPARING THE TRADING A/C, AO HAS NOT CORRECTLY APPRECIATED THE F ACTS. IN THIS REGARD, IT IS SUBMITTED THAT THE ADDITION OF RS. 23,07,000/- WAS MADE ON THE BASIS THAT ASSESSEE WAS HOLDING LAND AT KHATWARA FOR RS. 31,57 ,000/- AND LAND AT NATLAPURA FOR RS. 11,20,000/- AGGREGATING TO RS. 42 ,77,000/0 BUT IN THE STATEMENT OF AFFAIRS ONLY THE LAND AT KHATWARA IS S HOWN AT RS. 19,70,000/-. FOR THIS, IT IS SUBMITTED THAT THE AMOUNT OF RS. 19,70, 000/- IS APPEARING IN THE STATEMENT OF AFFAIRS IN RESPECT OF LAND AT KHATWARA AND NATLAPURA AS IN A.Y. 2005-06 AND IF THE GAIN ON SALE OF LAND AT PHOGADIW ALA AT RS. 23,07,000/- (36,00,000 12,93,000), LEAVING THE BALANCE AT RS. 8,50,000/-. IN THIS AMOUNT IF THE LAND AT NATLAPURA PURCHASED IN A.Y. 2006-07 AT RS. 11,20,000/- IS ADDED, THE VALUE OF BOTH THE LAND BECOMES AT RS. 19,70,000 /- WHICH IS REFLECTED IN THE STATEMENT OF AFFAIRS AS ON 31-03-2010. ON PERUSAL OF THE AFOREMENTIONED FACTS, I FIND THA T THE ASSESSEE HAS ALREADY SHOWN THE INVESTMENT IN THE BALANCE SHEET F ILED WITH THE RETURN AND THEREFORE, ADDITION MADE BY THE AO IS DELETED. 3.3 DURING THE COURSE OF HEARING, THE LD. DR SUPPORTED THE ORDER OF THE AO. 3.4 ON THE OTHER HAND, THE LD.AR OF THE ASSESSEE SU PPORTED THE ORDER OF THE LD. CIT(A). ITA NO. 605/JP/2016 ACIT, CENTRAL CIRCLE-1. JAIPUR VS SMT. PRATIMA SANKHLA, JAIPUR 11 3.5 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. SO FAR AS ADDITION OF RS.23,07 ,000/- MADE BY THE AO IS CONCERNED, IT IS BASICALLY FOR THE REASON THAT A SSESSEE IS HOLDING LAND AT KHATWARA FOR RS.31,57,000/- AND LAND AT NATLALPURA FOR RS.11,20,000/- AGGREGATING TO RS.42,77,000/- WHEREAS IN THE STATEM ENT OF AFFAIRS ONLY THE LAND AT KHATWARA IS SHOWN AT RS.19,70,000/-. HOWEVE R, THE FACT IS THAT THE AMOUNT OF RS.19,70,000/- IS APPEARING IN THE STATEM ENT OF AFFAIRS BOTH IN RESPECT OF LAND AT KHATWARA AND NATLALPURA AS IN AY 2005-06, THE GAIN ON SALE OF LAND AT FOGADIWALA AT RS.23,07,000/- (36000 00-1293000) WAS REDUCED FROM THE COST OF LAND AT KHATWARA PURCHASED FOR RS.31,57,000/-, LEAVING THE BALANCE AT RS.8,50,000/-. IN THIS AMOUN T IF THE LAND AT NATLALPURA PURCHASED IN AY 2006-07 AT RS.11,20,000/ - IS ADDED, THE VALUE OF BOTH THE LAND BECOMES RS.19,70,000/- WHICH IS RE FLECTED IN THE STATEMENT OF AFFAIRS AS ON 31.03.2010. IT MAY ALSO BE NOTED THAT THE AMOUNT OF RS.23,07,000/- IS ALREADY ADDED BY THE AO IN AY 2005-06 BEING PART OF RS.23,64,450/-. HENCE, AGAIN MAKING A DDITION OF THIS AMOUNT IN AY 2010-2011 HAS RESULTED IN DOUBLE ADDIT ION. IN THIS VIEW OF THE MATTER, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). THUS GROUND NO. 2 OF THE REVENUE IS DISMISSED. ITA NO. 605/JP/2016 ACIT, CENTRAL CIRCLE-1. JAIPUR VS SMT. PRATIMA SANKHLA, JAIPUR 12 4.0 IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 -10-20 17. SD/- SD/- DQY HKKJR HKKXPUN (KUL BHARAT) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13/10/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ACIT, CENTRAL CIRCLE-1, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- SMT. PRATIMA SANKHLA, JAIPUR , JAI PUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 605/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR